The Issue Whether Petitioner should be licensed as a life, variable annuity and health agent by the Department of Financial Services?
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing, the following findings of fact are made: Petitioner is 51 years old; has Associate of Arts degrees from Seminole Community College, Sanford, Florida, and Davenport University, Grand Rapids, Michigan; will soon acquire a bachelor of business administration degree from Belhaven College; and is applying for a doctoral program at the University of Central Florida. Petitioner holds a real estate sales associate license issued by the Department of Business and Professional Regulation, Division of Real Estate. The effective date of the license is September 29, 2003; it will expire on September 30, 2005. On November 28, 2001, Petitioner applied to Respondent for a license classified as a "life and variable annuity and health insurance agent." One of the screening questions on the license application was the following: "[H]ave you ever had any professional license subjected to any of the following actions by any state agency or public authority in any jurisdiction?" In response, Petitioner circled "Yes." The screening question was then followed by the following "actions": suspension, revocation, placed on probation, administrative fine or penalty levied, cease and desist order entered. In response, Petitioner circled "suspension." On July 17, 1997, a Final Order was entered in Department of Business and Professional Regulation, Division of Real Estate v. David Nelson Weiker, Case No. 95-85173, which reads, in part, as follows: . . . the Commission finds the Respondent guilty of violating ss 475.25(1)(c) and 475.42(1)(j), Florida Statutes, as charged in the Administrative Complaint. Therefore the Commission ORDERS that the license of David Nelson Weiker be suspended until the liens are removed. At the conclusion of the period of suspension, the Respondent is directed to contact the Records Section of the Division of Real Estate . . . to secure proper forms for reinstatement of Respondent's suspended license. The Commission further ORDERS that the Respondent pay a $1000 administrative fine and investigative costs of $768 within 30 days of the filing date of this order or the Respondent's license shall be suspended until such time as the fine and costs are paid in full. In Weiker, Case No. 95-85173, Petitioner, David N. Weiker, Sr., initially requested a formal hearing, then failed to respond to a request for admissions. As a result, he admitted being a licensed real estate salesperson who, as an employee of a builder, Mercedes Homes, Inc., filed 14 liens in a total amount of $23,301 against homes owned by Mercedes Homes, Inc., in an attempt to collect sales commissions he deemed he was owed. The administrative fine of $1,000, in Weiker, Case No. 95-85173, was paid by a check dated August 5, 1998, drawn on the account of David S. Piercefield, P.A. On August 13, 1998, an Amended Final Order was entered in Department of Business and Professional Regulation, Division of Real Estate v. David Nelson Weiker, Case No. 96-83238 (DOAH Case No. 97-4742), which reads, in part, as follows: . . . the Commission finds the Respondent guilty of violating s.475.25(1)(b) and (c), Florida Statutes, as charged in the Administrative Complaint. The Florida Real Estate Commission therefore ORDERS that the Respondent pay a $1,000.00 administrative fine. . . . Therefore the Commission ORDERS that the Respondent be placed on probation for a period of ninety days . . . In Weiker, Case No. 96-83238 (DOAH Case No. 97-4742), the Real Estate Commission adopted the Recommended Order of the Administrative Law Judge. In that Recommended Order, the Administrative Law Judge found that "he [Weiker] furthered a scheme of misrepresentation, false promises, and dishonest dealing." The administrative fine of $1,000, in Weiker, Case No. 96-83238 (DOAH Case No. 97-4742), was paid by a SouthTrust Bank check dated October 14, 2003. The remitter was Irene L. Weiker. On several occasions, in correspondence with representatives of Respondent, and while testifying at the final hearing, Petitioner testified that his real estate license had not been suspended. He also maintained, without substantive evidence or reasonable explanation, that the two administrative fines had been paid several times or by the wrong individuals. His attempts to explain the facts and circumstances of the two administrative actions disciplining his real estate license were unreasonable and not credible.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent's decision to deny Petitioner's application for a life, variable annuity and health insurance agent license is well-founded; Petitioner's license application should be denied. DONE AND ENTERED this 22nd day of December, 2003, in Tallahassee, Leon County, Florida. S JEFF B. CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 2003. COPIES FURNISHED: R. Terry Butler, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0399 David N. Weiker, Sr. 1506 Elfstone Court Casselberry, Florida 32707 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact The Respondent, John Edward Gonzalez, is licensed in the State of Florida as a life and variable annuity agent and as a life, health and variable annuity agent. During 1992, he was employed by Metropolitan Life Insurance Company (MetLife). The Respondent worked out of MetLife's Southeastern Head Office in Tampa under its marketing head, Rick Urso. Under Urso, the Tampa office developed a scheme for marketing whole life insurance to nurses as an "insured nurses' retirement" plan or program. The goal of the scheme was for the nurses to apply for a whole life insurance policy before they realized that the "insured nurses' retirement" plan or program consisted of nothing more than a whole life insurance policy. Under the marketing scheme, MetLife's Tampa office would mail unsolicited "pre-approach" letters to nurses informing them of a supposedly new retirement savings plan available to professional nurses. The "pre-approach" letter touted the retirement investment's high current interest rates, the availability of the investment's cash fund for emergencies and opportunities, the ability to make "deposits" monthly, an optional "disability benefit," and a guaranteed income at retirement. The wording of the "pre-approach" letter was designed to disguise the fact that the supposedly new retirement savings program was nothing more than a whole life insurance policy. The "pre-approach" letter allowed the recipient to tear off a form at the bottom of the letter to fill in and mail to MetLife for more information. In the spring of 1992, an unsolicited "pre-approach" letter was mailed from MetLife's Tampa office to Sharon Ward, a registered nurse living in Fort Worth, Texas. The letter was signed by the Respondent. If the "pre-approach" letter had given Ward notice that she was being solicited for life insurance, she would have disregarded it. She already had all the life insurance she wanted. However, she was interested in saving and investing for retirement, so she responded by requesting more information. Under the marketing scheme, responses from recipients of the "pre- approach" letter ordinarily would be referred to the MetLife insurance agent who mailed the letter. The agent would telephone to schedule an appointment. Ward's response was referred to the Respondent as the agent who signed the "pre- approach" letter to her. The Respondent was trained in MetLife's Career Success School (CSS) to telephone nurses responding to "pre-approach" letters to schedule an appointment. No information was intended to be imparted during this telephone contact; certainly, the agent was not to reveal that whole life insurance was being solicited. In accordance with his CSS training, the Respondent telephoned Ward during the spring of 1992 and scheduled an appointment to meet with her at her home in Fort Worth. If the Respondent had revealed to Ward that he was soliciting for life insurance, she would not have agreed to the appointment. However, as planned by the MetLife Tampa office and the Respondent, she agreed to an appointment to learn more about the "nurses' retirement savings" plan. CSS also trained the Respondent and other MetLife agents in how to deliver a scripted presentation to a nurse at the scheduled appointment. The script was carefully worded to entice the nurse to apply to be accepted in the "nurses' retirement savings" plan or program without revealing that it consisted of nothing more than a whole life insurance policy. Whole life insurance was not mentioned in the script; once in the eleven page script, it was mentioned that "the retirement account provides an insurance benefit to protect it." Otherwise, the script gave no indication that life insurance was involved. The script never mentioned insurance premiums; instead, it referred only to "deposits," "contributions," or "savings." While the "optional disability benefit" referred to in the "pre-approach" letter was nothing more than the standard life insurance "disability waiver of premium," those words were not used; instead, the script described how, in the event of a disability, "Met will keep saving for you." The word "policy" was not mentioned; instead, the script offered to have MetLife "open an account" for the prospect. One of the big selling points emphasized in the script was MetLife's reputation, assets and security. Another big selling point was flexibility. While informing the prospect that the retirement savings plan is meant for long- term investment, the plan is contrasted with IRA's and other investments that penalize withdrawal of cash before retirement. CSS trained the Respondent and other MetLife agents to use a "Track Book" for illustrative purposes while delivering the scripted presentation. Life insurance was mentioned in parts of the "Track Book," but the "Track Book" was to be shown to prospects during the course of a presentation in a manner designed to preserve the disguise of the nature of the "nurses' retirement savings" plan or program. When the Respondent met with Ward in the spring of 1992 at her home in Fort Worth, he followed the CSS scripted presentation exactly, and it worked as designed. When Ward agreed to "apply," she had no idea that she was applying for a whole life insurance policy; she thought she was opening a retirement savings and investment account. Had she known that the Respondent was soliciting life insurance, she would have declined. When Ward agreed to apply, the Respondent took information from Ward and filled out the application for her, as he was trained to do in CSS. Some of the information for the application--e.g., the names of beneficiaries--was consistent with a life insurance application, but also not inconsistent with information required for opening a retirement savings account. Other information was less consistent with opening a retirement savings account, such as health history; but that type of information may not have been considered to be inconsistent with the "insurance protection" and "disability option" the plan was supposed to have. After completing the information on the application, the Respondent had Ward sign. Under the marketing scheme, it was hoped that the nurse would sign the application without reading it to determine that it was an application for life insurance. On the other hand, a nurse who read the application and determined that it was a life insurance application might assume that it was an application for the "insurance protection" and "disability option" the plan was supposed to have. In Ward's case, the scheme worked to perfection. While the Respondent did not prevent Ward from reading the application, he did not encourage her to, and she did not read it. She did not know it was an application for life insurance. Had Ward known that it was an application for life insurance, and that the "retirement savings" program was nothing more than a whole life insurance policy, she would not have applied. In accordance with the CSS marketing scheme, the Respondent left a brochure with Ward before he returned to Tampa. The brochure reiterated the major selling points of the "Nurses Insured Retirement Plan." Like the other marketing literature, the brochure was worded so as not to reveal that the "retirement plan" consisted of nothing more than a whole life insurance policy. In accordance with the CSS marketing scheme, after the Respondent's return to Tampa, a letter was sent to Ward signed by the Respondent as "Account Representative," dated August 13, 1992, congratulating Ward on her "foresight in starting an insured retirement savings program." (The Respondent denied that he signed the letter or authorized it to be signed for him by someone else. But the Respondent knew the substance of the congratulatory letter sent to a prospect at this stage of the sales process, and he did not protest when he learned that one had been sent to Ward over his signature.) As with prior communications with Ward, the letter was worded so as not to alert her to the nature of the "program"--i.e., that it was nothing more than a whole life insurance policy. It never mentioned life insurance. In accordance with the CSS marketing scheme, the Respondent's manager also sent Ward a letter of congratulation later in August, 1992, advising her that her "plan" had been approved and that her "Account Representative" (the Respondent) would be telephoning to make an appointment to "review the benefits and flexibility of your Retirement Program in detail." As with the Respondent's August 13 letter, the manager's letter was worded so as not to alert Ward to the nature of the "program"--i.e., that it was nothing more than a whole life insurance policy. It never mentioned life insurance. When Ward received a whole life insurance policy in the mail, she filed it away without reading it. Had she read it, she probably would have been able to determine what it was. If she had made this determination within ten days of receipt of the policy, she might have been able to cancel it and get a full refund; on the other hand, she might have assumed that it was the "insurance protection" her "retirement savings plan" was supposed to have. After about a year of making her monthly payments as they came due, Ward changed jobs, and her new employer gave her the opportunity to begin a Section 401K retirement account. When she attempted to transfer her MetLife funds into it, she learned for the first time that her MetLife retirement "account" consisted of a whole insurance policy that had no cash value yet. Ward tried to contact the Respondent to complain but he did not return her calls. When she pursued it further with MetLife, MetLife initially refused to refund her money. MetLife asked for the Respondent's version of what had happened, and the Respondent reported essentially that he had followed the CSS training. The Respondent let MetLife handle the matter from there. It was not until after Ward requested the assistance of the Texas Insurance Commissioner that MetLife finally refunded her money. The Respondent did not question the legality of the marketing scheme devised by the Tampa office of MetLife. He assumed that MetLife and the Florida Department of Insurance had approved it. There was no evidence that the Department or even MetLife had in fact approved the scheme. The Respondent sold many whole life insurance policies using the CSS methods. (He received MetLife's Leader's Conference Award for high sales.) No customer other than Ward has filed a complaint against him.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Insurance and Treasurer enter a final order finding the Respondent guilty of the violations charged and suspending his licenses and eligibilities for six months. DONE and ENTERED this 7th day of August, 1996, in Tallahassee, Florida. J. LAWRENCE JOHNSTON, 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 7th day of August, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-2220 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1.-37. Accepted and incorporated to the extent not subordinate or unnecessary. Cumulative. Cumulative and argument. Respondent's Proposed Findings of Fact. 1.-2. Accepted and incorporated. 3. Conclusion of law. 4.-5. Accepted and incorporated to the extent not subordinate or unnecessary. 6. Accepted but subordinate and unnecessary. 7.-10. Accepted and incorporated. Rejected as contrary to the greater weight of the evidence that the Track Book "consistently referred to life insurance" or that it was used as a "visual aid." It contained some references to life insurance but did not, and was not used so as to, make it clear that what the Respondent was selling was a whole life insurance policy. Accepted and incorporated. Rejected as contrary to the greater weight of the evidence in that the entire marketing scheme gave him reason to believe it was illegal; accepted and incorporated that MetLife did not indicate to him that its scheme was illegal. In part, rejected as contrary to the greater weight of the evidence. See 13., above. In part, accepted and incorporated. See Finding 21, above. Cumulative. Rejected as contrary to the greater weight of the evidence. Accepted and incorporated. Accepted but subordinate and unnecessary. Rejected as contrary to the greater weight of the evidence that he gave her "every opportunity"; otherwise, accepted and incorporated. Rejected as contrary to the greater weight of the evidence that all were sent out by MetLife management or that any were approved by the Department. Otherwise, accepted and incorporated. it.) Accepted but subordinate and unnecessary. (The Respondent identified Rejected as contrary to the greater weight of the evidence. Accepted and incorporated. Accepted and incorporated. However, it was MetLife's explanation as to why she could not transfer funds from her MetLife "retirement account" that finally revealed to her that it was nothing more than a whole life insurance policy. Accepted but subordinate and unnecessary. Accepted and incorporated. COPIES FURNISHED: Willis F. Melvin, Jr., Esquire Department of Insurance and Treasurer 612 Larson Building Tallahassee, Florida 32399-0333 Stacey L. Turmel, Esquire Maney, Damsker, Harris and Jones, P.A. Post Office Box 172009 Tampa, Florida 33672 Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner Acting General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issue for consideration is whether Respondent's licenses as an insurance agent and his eligibility for licensure in various areas of insurance sales should be disciplined because of the matters set forth in the Administrative Complaint.
Findings Of Fact At all times pertinent to the allegations contained herein, the Department of Insurance and Treasurer was the state agency responsible for the regulation of and licensing of insurance professionals in Florida. The Respondent, Richard Lee Fast, was licensed and eligible for licensure in Florida as a life insurance agent, life and health insurance agent, home warranty association contracting sales representative, and solicitor-property, casualty, surety, and miscellaneous lines agent. In June, 1978, Fast & Co., an insurance sales firm, was organized under the laws of Florida. Corporate records and records maintained by the Florida Secretary of State's office reveal that at no time pertinent to the matters involved herein was Respondent listed as an officer, director or shareholder of the corporation. Notwithstanding, the evidence clearly indicates that Respondent was in charge of and dictated the daily operations of the firm. Richard Fast, Jr., the Respondent's son, was identified on the records as President of the firm yet had no managerial role whatever regarding the firm's activities. Both Respondent's wife and daughter were listed as corporate officers but the evidence also indicates that the majority of the company's accounts and business was generated and handled by the Respondent. At no time did Respondent dispute his control over the daily operations of Fast & Co. Therefore, though there may have been no direct evidence of who solicited or sold the policies to American and Sunniland banks, it is clear that Respondent was the guiding force for and architect of the company's business activities and knew at all times what major policies were in force and by whom they were written. Sydell Rubin was hired by Respondent as corporate secretary for Fast & Co. and indicated that during the lifetime of the corporation few if any formalities of corporate activity were observed. No shareholder, director, or officer meetings were held; no corporate minutes were kept; and only the Respondent could authorize the issue of checks drawn on the corporate bank account. Ms. Rubin, as corporate secretary, could sign corporate checks, but only with the Respondent's knowledge and consent, and he maintained complete control over the remittance of premium monies to insurers. In November, 1979, Fast & Co. entered into an agreement with Fidelity whereby Fast & Co. would serve as agent for Fidelity. This agreement was executed on behalf of Fast & Co. by Ms. Rubin and contained, in the various provisions thereof, the terms by which Respondent's company was to remit premiums earned to the insurance company. Specifically, at paragraph six, the agent, Fast & Co., was to provide Fidelity, before the 20th of each month, an account of all business written, renewed or cancel led during the preceding month and, thereafter, was to remit to the company, within 45 days after the end of the month for which the account was written, the net premium due. In the event the agent did not submit the account in a timely fashion, Fidelity was to submit its accounting to the agent for the preceding month, again, the net premium due was to be paid by 45 days after the end of the month for which the account was rendered. Paragraph eleven of the agreement provided that any monies collected on behalf of the company by the agent should be held in a fiduciary capacity and kept separate and apart from the agent's own funds and, consistent with paragraph fifteen of the agreement, the agreement could not be assigned without the consent of both parties. In October, 1985, a corporate resolution of Fast & Co. was executed by the Respondent which authorized certain individuals to have check signatory authority for the Fast & Co. business bank account with American National Bank. On this resolution, Respondent was identified as President of the corporation and signed the resolution as such. In fact, he was not President, but had he not appeared on the resolution as an officer, he would not have been allowed unlimited control over the corporation's accounts at American. In October, 1988, Fast & Co. received a check in the amount of $17,351.00 from American for the purchase of an insurance policy to be issued by Fidelity. In October, November, and December, 1988, Fast & Co. also received three checks from Sunniland Bank of Ft. Lauderdale, in the total amount of $19,478.75, also for the purchase of insurance policies from Fidelity. All these checks were endorsed and deposited into Fast & Co. `s business bank account. It was not shown who actually endorsed the checks or made the deposits. So much Of the payment as was not commission, however, was premium earned by Fidelity and under the terms of the agency agreement, should have been held for it in a fiduciary account kept separate and apart from Fast & Co. funds. It was not a Fast & Co. asset. The policy for American was issued by Fidelity effective October 1, 1988, and the Sunniland Bank policies were issued by Fidelity with an effective date of December 8, 1988. American's invoice was sent by Fidelity to Fast & Co. on November 9, 1988 and the invoice for the Sunniland Bank policies was forwarded by Fidelity on December 21, 1988. The net premium due on all policies, together, after deduction of commission due Fast & Co., was $30,012.40. The invoice forms were not, however, the account forms referred to by the agency agreement. The first account form on which the relevant policies appear was dated February 29, 1989. That statement referred to the policies effective in October, 1988 (American) and December, 1988, (Sunniland). Petitioner and Fidelity urge that the earlier notice as to each policy starts the 45 day period running. Respondent, of course, claims it is the later "statement of account." Since the "account statement" was sent by Fidelity, listing all outstanding balances due, consistent with the terms of the agency agreement which call for the submittal of an account by Fidelity in the event Fast & Co. does not do it, it is more reasonable to conclude that it is the latter. In late December, 1988, certain assets of Fast & Co. were sold by the Respondent to Loomis Management Company, (Loomis). The sale was consummated after an extended negotiation between Fast and Loomis during which time representatives of Loomis were given free access to Respondent's books and records. Included as an asset which was assigned to Loomis was the Fast & Co.'s agency agreement with Fidelity and according to the terms of the sales agreement, Loomis assumed "the duties and obligation of Fast & Co." Notwithstanding the provision of the agency agreement for notification of and obtaining consent to a transfer, no notice of the transfer was submitted to Fidelity by either Fast & Co. or Loomis, nor was Fidelity's consent to the transfer obtained prior to closing of the sale. The $30,012.40 premium held by Fast & Co. for Fidelity as a result of the sale of the American and Sunniland policies was not transferred to Loomis. It was not remitted to Fidelity, either, notwithstanding the provision of the agency agreement, which required Fast & Co. to remit earned premiums due the company in a timely fashion. The money in question was maintained by Fast & Co. and was not transferred to Loomis, and notwithstanding the fact that Fidelity contacted Respondent on several occasions throughout 1989 demanding remittance of the premium due, the money was not remitted. Finally, on December 30, 1989, after extended discussion with Fidelity regarding the delay in payment, Mr. Fast issued a check to Fidelity's agent in the amount of $30,012.40, drawn on the Fast & Co. corporate bank account, in full payment of the premium on the American and Sunniland policies. This check was dishonored by the bank upon presentation. To the date of hearing, the earned premium has not been remitted to Fidelity and as of the hearing date, those monies are unaccounted for. Respondent claims they are no longer in his custody and he disclaims any responsibility for their payment. He claims that because the agency agreement called for payment only at 45 days after the last day of the month for which the account was rendered, and since the accounting calling for payment was not sent by Fidelity until well after the policy effective date and the issuance of the preliminary invoices, the funds were not payable to Fidelity as of the date of the transfer of the corporate assets to Loomis and, therefore, the terms of the sale agreement between Fast and Loomis, calling for Fast to pay-only those obligations due and payable at the time of transfer, did not include that obligation. Respondent also shrugs off the issue of why, since the funds had been collected from the insured, they were not considered held in a fiduciary capacity to be transferred to Loomis by indicating Loomis representatives had ample opportunity to examine the books and the issue was not raised. His arguments are specious and without merit.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be issued in this case revoking all Respondent's licenses and eligibility for licensure. RECOMMENDED in Tallahassee, Florida this 21st day of November, 1991. ARNOLD H. POLLOCK 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 21st day of November, 1991. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-4320 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. FOR THE PETITIONER; Accepted and incorporated herein. & 3. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. - 8. Accepted and incorporated herein. 9. & 10. Accepted and incorporated herein. 11. - 14. Accepted and incorporated herein. 15. Rejected as not a proper Finding of Fact. FOR THE RESPONDENT; Accepted and incorporated herein. - 4. Accepted and incorporated herein Accepted and incorporated herein. Accepted in the sense that he worked at Fast & Co. & 8. Rejected as implying Ms. Rubin was acting for American. Ms. Rubin completed the form for American, but it is clear she did so as an employee of Fast & Co. at the request of American. 9. & 10. Accepted and incorporated herein. 11. & 12. Accepted and incorporated herein. Accepted, but see (7. & 8.). - 17. Accepted and incorporated herein. Accepted. Rejected as contra to the weight of the evidence. 20.- 22. Accepted. Accepted. Accepted. & 26. Rejected. 27. & 28. Rejected as not pertinent to the issues of fact herein. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance 412 Larson Building Tallahassee, Florida 32399-0300 Charles L. Curtis, Esquire 1177 Southeast Third Avenue Fort Lauderdale, Florida 33316 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neill Deputy General Counsel Department of Legal Affairs The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
Findings Of Fact At all pertinent times respondent was licensed by petitioner as an insurance agent, Petitioner's Exhibit No. 1, and the parties so stipulated. COUNT TWO After friends of Edward A. Dudek recommended respondent Jacobs, Mr. Dudek set up an appointment with him to discuss buying insurance, and Mr. and Mrs. Dudek met respondent at his office for that purpose on or about May 9 and 11, 1980. At this meeting, Mr. Dudek purchased two supplemental hospital insurance policies underwritten by Founders Life Assurance Company of Florida, Nos. 0A0616733 and 0A0616734. Petitioner's Exhibit Nos. 2 and 3. After these purchases, respondent Jacobs offered to sell and Mr. Dudek agreed to buy a membership in the American Benevolent Society, Inc., in order to obtain discounts on certain goods and services. Mr. Dudek drew check No. 389 in favor of American Benevolent Society, Inc., in the amount of $10 in payment of annual dues. Petitioner's Exhibit No. 4. At the time, Mr. Dudek did not believe that joining the American Benevolent Society had anything to do with purchasing insurance. When Mr. Dudek received the insurance policies, Petitioner's Exhibit Nos. 2 and 3, each was stamped "American Benevolent Society, Inc." and "LOCAL OFFICE Gulf Health Agency, Inc., 5736 Central Avenue, St. Pete., Fla. 33707." Founders Life Assurance Company of Florida has never had any arrangement to market group insurance through the American Benevolent Society nor was any company employee or agent authorized to stamp insurance policies "American Benevolent Society, Inc." This stamped legend did not affect the policies' validity or terms, in the company's view. COUNT THREE In response to Eleanore A. Hubble's telephone call, respondent Jacobs visited the real estate office where Ms. Hubble was employed, on or about August 14, 1979, and sold her two insurance policies. With respect to each (T. 28) of these policies, respondent informed Ms. Hubble that she would "get into the group rate," (T. 24) if she joined the American Benevolent Society. At respondent's request, Ms. Hubble drew two checks, one in the amount of $934.86 in favor of "C.N.A." and another in the amount of $20 in favor of "A.B.S." Petitioner's Exhibit No. 7. The check in favor of CNA was in payment of insurance premiums for policies Nos. 076104103 and 076104104 underwritten by Continental Casualty Company. Petitioner's Exhibit Nos. 5 and 6. Ms. Hubble gave respondent the check she had drawn in favor of the American Benevolent Society "[t]o join so [she could] get group insurance and a bunch of coupons and junk." (T. 25.) The CNA policies that respondent sold Ms. Hubble were a major hospital medical policy and a basic hospital policy. The major hospital medical policy premium was five dollars less because she joined the American Benevolent Society before she purchased the policy. There is also a five-dollar differential between annual renewal premiums for policyholders who are members of sponsoring organizations like the American Benevolent Society and annual premiums for policyholders who are not. These differentials notwithstanding, CNA's manager of individual health products testified without contradiction that the major hospital medical policy that Ms. Hubble bought from respondent was an individual product, an individual policy, "individually priced," (T. 38) and not group insurance. The other CNA policy respondent sold Ms. Hubble in August of 1979 was not even arguably a group policy. Her membership in the American Benevolent Society had no bearing on the price of that policy. She saved no money on the basic hospital policy premium by joining the American Benevolent Society.
Recommendation It is, accordingly, RECOMMENDED: That petitioner suspend respondent's license as an insurance agent for ninety (90) days. DONE AND ENTERED this 4th day of August, 1982, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of August, 1982. COPIES FURNISHED: Susan E. Koch, Esquire Curtis Billingsley, Esquire Franz Dorn, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301 William A. Patterson, Esquire The Legal Building, Suite 208 449 Third Avenue North St. Petersburg, Florida 33701 The Honorable Bill Gunter Insurance Commissioner and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32301
Findings Of Fact Petitioner was employed with the Collier County Health Department, Department of Health and Rehabilitative Services, on March 9, 1973. Petitioner's date of birth is November 26, 1916. On October 1, 1980, Petitioner's medical insurance coverage was entered into the payroll system under the Spouse Program, State of Florida plan. The proper amount of premiums under the Spouse Program were paid to Blue Cross Blue Shield from October 1, 1980, up to and including June, 1983. On November 26, 1981, Petitioner reached the age of 65. Under the State plan, coverage at age 65 is automatically reduced and changed to Medicare Supplement Coverage. In order to have remained fully covered, Petitioner would have had to apply for the Medicare insurance prior to reaching age 65, which he did not do. Due to both spouses being covered, there was no change in policy premium deductions even after Petitioner reached age 65 and his State coverage was reduced. The Blue Cross Blue Shield (State program) paid several claims of Petitioner subsequent to his 65th birthday and through December, 1982. On March 8, 1983, Petitioner was admitted to the hospital and on March 11, 1983, heart bypass surgery was performed. Respondent normally notifies the employee and employing agency of the coverage change prior to the employee's 65th birthday, as required by Rule 22K- 1.16, F.A.C. In this case, Respondent did not do so due to a failure in its computer program. Petitioner could have determined that he was required to apply for Medicare coverage had he read in detail a copy of the plan's benefit booklet furnished to all State employees in 1978.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent direct its insurer to pay Petitioner's claims arising from his March, 1983, hospitalization. DONE and ENTERED this 2nd day of September, 1983, in Tallahassee, Florida. R. T. CARPENTER, 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 2nd day of September, 1983. COPIES FURNISHED: Mr. John H. Adams 2596 Linwood Avenue Naples, Florida 33962 Daniel C. Brown, Esquire Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Nevin G. Smith, Secretary Department of Administration Carlton Building Tallahassee, Florida 32301
The Issue Whether Respondents committed the violations alleged in the Administrative Complaints, and, if so, what penalties should be imposed on either or both of them.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Respondent, Eduardo Enrique Mendez ("Mendez"), at all times material to this matter, was a licensed insurance agent subject to the regulatory jurisdiction of the Petitioner. Petitioner issued Mendez license number A176292. Mendez is licensed as a 2-18 life and health agent and a 2-20 general lines agent for the sale of property and casualty. Mendez first started in the insurance business in 1969 while in Panamá. He came to the United States in 1988. In South Florida, he has been known as "Mr. Panama" in the insurance industry for approximately 20 years. Respondent, Insurance Resources of the Americas, Inc. ("Insurance Resources"), is and was, at all times material in this matter, a corporation registered as a Florida insurance agent subject to the regulatory jurisdiction of Petitioner, having been issued license number R054007. Mendez is the corporation's owner and president. Insurance Resources typically handles all kinds of property and casualty insurance, but for approximately the last six years has specialized in the used car dealer business by providing bonds for the car dealers to open their operation. Bass Underwriters ("Bass") is a managing general agent which works with insurance agents who purchase insurance for their customers. Bass has no direct relationship with the customers only with the retail agent who is responsible for collecting the premium. On January 22, 2003, Insurance Resources, as producer, and Bass signed a producer agreement which allowed Insurance Resources to sell insurance through Bass or certain carriers that Bass obtains as a wholesaler. Insurance Resources received commissions as compensation under the agreement. The agreement contained a provision which guaranteed the collection of additional premiums that might arise as a result of an audit of the insurance customers. The provision provided in relevant part: Producer shall be liable to Bass Underwriters, Inc. for the full amount of premium, fees and applicable sum taxes, less commission, including additional and/or adjustable premiums developed under audits or applicable rating plan on every insurance contract placed by Producer through Bass Underwriters, Inc. Producer shall remit Twenty Five Percent (25%) of the premium upon binding. The full amount of premium, fees and applicable state taxes, less commission is due to Bass Underwriters, Inc. not later than the 15th day of the first (1st) month after the effective date of such contract, audit, rating plan, or other adjustment. During the term of the producer agreement, three policies were issued that Bass determined additional premiums were owed by Insurance Resources. On June 29, 2005, Bass notified Insurance Resources by invoice that an additional premium was owed for the insured, L. Boulevard Café, in the amount of $6,955.00. L. Boulevard Cafe, a restaurant, obtained a Century Surety policy through Insurance Resources effective November 15, 2004. In making the application, the restaurant declared a certain amount of projected sales. The premium was based upon the total sales recorded by the customer. Century Surety did a self audit and determined that the amount of sales was significantly more than the coverage. Subsequently, the carrier went back and assessed additional premiums to make up the difference between the amount of coverage represented and the self reported amount, which totaled $6,955.00. Around August 2005, after receiving the Bass invoice with the additional premiums, Insurance Resources notified L. Boulevard Café about the invoice and explained that the additional insurance premium of $6,955.00 was owed because of the difference in the amount calculated from the audit. Mendez notified Rafael Garcia, prior owner of L. Boulevard Café, about the additional insurance premium but L. Boulevard Cafe was having financial problems. L. Boulevard Café never made the additional premium payment. On July 1, 2005, Bass notified Insurance Resources by invoice that an additional premium was owed for the insured, Winner's Circle, in the amount of $418.00. Winner's Circle obtained a XL Specialty Insurance Company policy through Insurance Resources effective May 23, 2005. An inspection was performed after the policy quote was bound and issued. The subsequent inspection concluded that the construction code of the building was different from the construction code represented on the application. The difference triggered a premium increase of $418.00. When Insurance Resources found out about the additional premium for Winner's Circle, Mendez sent an invoice explaining the increase and requesting payment. Winner's Circle refused to pay the amount because the policy was issued under a lower premium. Winner's Circle decided not to keep the policy when Respondent requested that they make payment of the additional premium amount and the balance of the premium on the policy. Payment was never made. The policy was cancelled. The account was credited and the final total owed was $160.40, which Bass became responsible for with the carrier. On July 11, 2005, Bass notified Insurance Resources by invoice that an additional premium was owed for the insured, Venecar, Inc., in the amount of $1,298.00. Venecar, a small used car dealership, obtained a Century Surety policy through Insurance Resources effective July 18, 2004. The insurance inspectors did an inspection after the policy was issued and determined that one more employee and driver than had been represented in the application existed and that employee generated a change in the rating for the premium, which Bass ultimately decided was an additional premium of $1,298.00. After Insurance Resources learned about the results of the inspection, Mendez called Bass and told Ms. Rodriguez, the accountant, that the premium increase of $1,298.00 was too high and could not be the proper rate for one driver because one driver should be around $400.00. Bass ignored Mendez's proposition. Subsequently, Mendez told Venecar about the outstanding premium amount owed and they refused to pay. Insurance Resources followed up and contacted Venecar several more times requesting the additional premium payment to no avail. Soon thereafter, Venecar closed. Mendez reported his efforts to Bass while he tried to collect the three changed premium amounts. Insurance Resources never collected the additional premium from L. Boulevard Café, Winner's Circle, or Venecar even though Mendez repeatedly sought to get the outstanding premiums from all three insured customers. Despite Respondents best efforts, they never received any of the additional premiums that accrued. Bass still expected Insurance Resources to pay the additional premiums pursuant to the producer agreement. On May 1, 2006, Bass sent Insurance Resources a statement of account. The invoice statement informed Insurance Resources that the premium due for the three different accounts totaled $8,021.39. The statement outlined the amount owed from each insured. After Bass made several demands for the three accounts, Bass submitted the account to collections and the matter ultimately ended in litigation. On November 5, 2007, a final judgment was entered against Insurance Resources in favor of Bass for the principal of $8,021.39, costs of $275.00, and prejudgment interest of $1,298.14, for a total of $9,594.53. The judgment remains unsatisfied. On February 15, 2008, Insurance Resources paid $1,919.00 on the judgment. On February 29, 2008, Insurance Resources paid $640.00 on the judgment. There is a balance owed of $7,035.53. Insurance Resources also had a relationship with AAPCO, a premium finance company that financed the balance of what an insured could not pay. Respondent Insurance Resources was an authorized entity to accept premium finance contracts utilizing AAPCO premium finance. Insurance Resources had the authority to write check drafts on AAPCO's bank account for the entire premium amount owed on a customer's insurance policy and remit it to the insurer. Respondent would then submit the policy application together with the premium down payment received from the consumer to AAPCO, which would finance the rest of the policy premium. In 2009, Insurance Resources was having problems financially. Mendez approached Mrs. Blanco, AAPCO's office manager, and told her Insurance Resources sales had dropped fifty percent. Mendez, on behalf of Insurance Resources requested to make a payment arrangement.1 Blanco refused to make any type of arrangements. She insisted that Insurance Resources pay everything up front. Mendez approached her several more times but she would not negotiate. At one point, Mendez even requested that AAPCO place the $4,000.00 in producers fees owed to Insurance Resources against the monies owed and she refused to pay Respondent the $4,000.00 In 2009, Mendez submitted three checks to AAPCO's as down payments for insureds' accounts. Check number 1347 was for $10,228.47. The check was from account number 2000034377804 Mr. Panama Inc.'s account. Check number 1342 was from the same account in the amount of $2,828.15. However, check number 159 was for $3,368.44 from Insurance Resources account number 2000040742805. Checks 1347, 1342, and 159 totaled approximately $16,425.00. The funds were intended to be premium down payments on insurance policies purchased by Florida insurance consumers. Insurance policies were issued for each of the checks for down payments for insured's accounts Insurance Resources submitted. AAPCO deposited the three checks and they were submitted to the bank for negotiation. Each check was returned for insufficient funds. AAPCO attempted to collect the money for the three checks that were returned for non-sufficient funds. AAPCO demanded payment of the funds and even called Mendez in an effort to collect the funds. Mendez admitted at hearing that the three checks bounced because he had used the funds for his business operating account since the business was doing bad financially. Insurance Resources had not yet repaid AAPCO their monies owed for the three checks. AAPCO has suffered a financial loss due to nonpayment. After nonpayment, AAPCO turned the matter over to AAPCO's legal department. After an investigation, Petitioner charged Respondents with numerous violations by separate Administrative Complaints dated April 21, 2010. The Charges: In Count I of the Administrative complaint filed against Mendez, Petitioner charges Mendez with violations of sections 626.561(1), 626.611(7), (9), (10), and 626.621(4), Florida Statutes, for failing to remit all premiums due to Bass. In Count II, Petitioner charges Mendez with violations of sections 626.561(1),626.611(7), 626.611(9) and (10), and 626.621(4) for submitting the three checks to AAPCO in payment of the policy down payment premiums that were returned for insufficient funds and not repaid after demand. In Count I of the Administrative complaint filed against Insurance Resources, Petitioner charges Insurance Resources with violation of sections 626.561(1),626.6251(5)(a),(d),(f),(j), and (k) for failing to remit all premiums due to Bass.2 In Count II Petitioner charges Insurance Resources with violations of sections 626.561(1), and 626.6251(5)(a),(d), (f),(j), and (k) for remitting three checks to AAPCO in payment of the policy down payment premiums that were returned for insufficient funds and not repaid after demand.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order that: (a) finds Respondents not guilty as charged in Count I, of the Administrative Complaints; (b) finds Respondents guilty in Count II; (c) suspends Respondent Mendez's license for 12 months with reinstatement conditioned upon repayment to AAPCO; and (d) suspends Respondent Insurance Resources' license for three months with reinstatement conditioned upon repayment to AAPCO. DONE AND ENTERED this 28th day of February, 2011, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY 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 28th day of February, 2011.
The Issue Whether Respondent properly denied Petitioner's application for licensure as a Life and Variable Annuity and Health Insurance Agent.
Findings Of Fact Petitioner applied for licensure as a Life and Variable Annuity and Health Insurance Agent. Petitioner's application was signed and mailed to the Department of Insurance on or about January 27, 1998. Petitioner's application for licensure was denied by the Department on or about May 5, 1998. Two months later, on July 6, 1998, the Department issued an Amended Denial Letter that set forth the basis for the denial. According to the Amended Denial Letter, Petitioner's license was denied because she failed to meet the licensure requirements set forth in Sections 626.611(1) and (7) and 626.785(1), Florida Statutes. As a basis for the alleged violations, the Department stated: The Office of the Attorney General filed a civil action against you as vice-president and a director of the H.O.M.E. Program, and the H.O.M.E. Program along with other directors, alleging that the Program was formed as a not-for-profit corporation. . . to help people buy a house for themselves to live in. The complaint alleges that the Program offered a variety of services for a "Service Fee," has not provided any services, and that those fees were deposited into an account with NationsBank and the money was then misappropriated by one Jerome Ellington. The Attorney General still has a case pending against the H.O.M.E. Program and has stipulated to dismiss the cause of action against you with prejudice only at the conclusion of the lawsuit against the remaining defendants. You Charita Strode, were terminated from employment with NationsBank for wiring funds out of the H.O.M.E. Program's account in November 1997, after specifically being told by the Regional Service Support Manager that the funds needed to remain in the account until all items had cleared. The bank was placed in a loss situation of over $6,000 and due to your behavior you were terminated because you abused your authority in order to achieve the funds transfer, and did not follow supervisory instructions. That is evidence of lack fitness and trustworthiness. Further, it was determined by the Unemployment Compensation Appeals Bureau that you were discharged for misconduct and the Appeals referee resolved the conflicts in favor of your former employer. Petitioner was employed by NationsBank in January 1994, and, except for a six-month voluntary leave of absence, worked there continuously until she was terminated in January 1998. Prior to going on voluntary leave, Petitioner was manager of the NationsBank Gunn Highway Banking Center. During her first year with NationsBank, Petitioner was a management trainee associate. Thereafter, Petitioner became a manager, a position in which she served for the remainder of her tenure with NationsBank. As a manager, Petitioner was assigned to several NationsBank banking centers and was responsible for the operations, sales, and service of the centers to which she was assigned. Additionally, Petitioner's responsibilities included training and supervising more than fifty associates. In the spring of 1997, Petitioner was promoted from bank officer to an assistant or associate vice-president. While employed at NationsBank, Petitioner received at least two awards for her job performance. In 1997, Petitioner was recognized by NationsBank as a member of Florida Team One, a commendation that recognizes excellence in sales. One of the banking centers managed by Petitioner also received an award for service quality, an award received by only 20 to 30 percent of NationsBank banking centers. In May 1997, Petitioner first met and became acquainted with Jerome Ellington, the owner and founder of the H.O.M.E. Program. According to its literature, the H.O.M.E. Program was a "Christian Home Building Program" designed to assist individuals in building or remodeling their homes. Petitioner was particularly interested in the program because of her desire to become a homeowner. Based on her interest, Petitioner asked Mr. Ellington questions about the H.O.M.E. Program, how to become a member, and how to help other people who might be interested in the program. Petitioner became a client of the H.O.M.E. Program. As a client, Petitioner was required to pay to the program an initial fee of $1700 and a monthly maintenance fee of approximately $170 for three months. Based on her belief that the H.O.M.E. Program was a legitimate organization whose purpose was to assist individuals in purchasing homes, Petitioner told several family members and friends about the program. She told these individuals that the program would allow them to purchase homes for themselves and encouraged them to "look into it." Eventually, like Petitioner, between six and eight of these individuals paid the required fees and became clients of the H.O.M.E. Program. In late June or early July 1997, Petitioner became involved with the H.O.M.E. Program, serving on the program's Financial Advisory Board. The purpose of the Financial Advisory Board was to act as an agent to control the finances of the H.O.M.E. Program. During the time Petitioner was a named member of the advisory board, it met in July or August 1997, to organize that board. Other than this initial organizational meeting, the advisory board never met nor did it ever function in any official manner. In late July 1997, at about the time the H.O.M.E. Program was incorporated, Petitioner was selected by Mr. Ellington to serve as a member and elected as vice-president of the H.O.M.E. Program's Board of Directors (Board or Board of Directors). While Petitioner was on the Board, it seldom met. In July or August 1997, the H.O.M.E. Program set up three bank accounts at NationsBank. Each of the accounts had three signators, all of whom were officers of the H.O.M.E. Program: Bernadette Orsley, treasurer; Jerome Ellington, president; and Petitioner, vice-president. The address of record listed on the H.O.M.E. Program account was 7819 North Dale Mabry Highway, Suite 208, Tampa, Florida. From August 1997 through January 1998, Petitioner took a voluntary leave of absence from NationsBank to do work for the H.O.M.E. Program and to explore the possibility of going into business for herself. Petitioner's work with the H.O.M.E. Program involved setting up "outside services to clients once they got into their homes." Jerome Ellington was the chief executive officer and president of the H.O.M.E. Program. During the time that Petitioner was on the H.O.M.E. Program's Board and the Financial Advisory Board, Petitioner found that Mr. Ellington was not open about the expenditures he claimed to be making on behalf of the H.O.M.E. Program. Attempts were made by Petitioner and one other Board member to develop, initiate, and implement better accounting practices, operational procedures, and financial controls for the H.O.M.E. Program. For example, one recommendation was that two signatures be required on all checks written on the H.O.M.E. Program accounts. However, these efforts proved futile because Mr. Ellington was unwilling to implement any changes and relinquish financial control of the program's finances. By letter dated October 28, 1997, NationsBank advised the H.O.M.E. Program that due to the chargeback activity involving its three accounts, the bank was closing the accounts, effective ten days from the date of the letter. The letter acknowledged that the relationship between NationsBank and the H.O.M.E. Program was "a contractual one and under the terms of our Deposit Agreement either party can terminate the relationship at any time without cause." Chargeback activity occurs when items that are deposited or credited to the account are returned to the bank dishonored for a variety of reasons. NationsBank's concern with the H.O.M.E. Program accounts was that the excessive chargeback activity might possibly place the bank at risk of loss. In October 1997, Patricia McSweeney, then Regional Service Manager for NationsBank, spoke to Petitioner about the H.O.M.E. Program accounts and reiterated the contents of the October 28, 1997, letter from NationsBank. Upon learning from Ms. McSweeney that NationsBank was closing the H.O.M.E. Program's three accounts, Petitioner requested that the bank allow the three accounts to remain open to receive two electronic deposits that were scheduled to be made in November 1997. The electronic deposits were to be made on or about November 5 and 20, 1997. Ms. McSweeney agreed to leave the H.O.M.E. Program accounts open to receive the November electronic deposits and told Petitioner that there could be no check activity on the accounts. This agreement between Petitioner and Ms. McSweeney modified the terms of the October 28, 1997, letter and the accounts remained open beyond the time designated in that letter. However, the modification was not memorialized in writing and no date was established for closing the H.O.M.E. Program accounts once the November electronic deposits were made. With regard to the agreement between Petitioner and Ms. McSweeney, there was a material misunderstanding of how the H.O.M.E. Program accounts were to be handled during this extension. Ms. McSweeney's intent and understanding was that the account would remain open on a "credits-only" basis so that the credits could be received and posted to the account, and then allowed to age. Moreover, Ms. McSweeney believed there would be no check activity in the H.O.M.E. Program account, thereby eliminating or reducing the likelihood that the bank would be placed in a loss situation. On the other hand, Petitioner understood the agreement to mean that no checks could be written on the account or deposited into the H.O.M.E. Program account. However, Petitioner also believed that once the electronic deposits were made to the account, funds could be withdrawn from the account to cover the H.O.M.E. Program's expenses. The anticipated electronic deposits were made to the H.O.M.E. Program account as scheduled on or about November 5 and 20, 1997. After the November 5, 1997, electronic deposit of between $8,000 and $10,000, on November 10, 1997, Petitioner went to the NationsBank Carrollwood Banking Center and withdrew approximately $9,000 from one of the H.O.M.E. Program accounts to make a payment to the H.O.M.E. Program's line of credit. Petitioner believed that this withdrawal was permissible and not inconsistent with or in violation of the agreement with Ms. McSweeney. Furthermore, when Petitioner made the withdrawal, she was unaware of any flag on the account and no bank representative informed her that the account was so designated. At no time, either on November 10, 1997, or later, did any NationsBank representative notify Petitioner that the account was flagged and that the $9,000 withdrawal was improper and should not have been allowed. On or about November 20, 1998, the second electronic deposit was received and posted to the H.O.M.E. Program account. On the morning of November 20, 1997, Petitioner telephoned the NationsBank's Gunn Highway Banking Center and spoke with Michelle Shumate. Petitioner and Ms. Shumate knew each other because prior to Petitioner's going on leave, she was a bank officer and/or manager of the Gunn Highway Banking Center. During her telephone conversation with Ms. Shumate, Petitioner requested that two cashier's checks be drawn from the H.O.M.E. Program account and that the checks be made payable to the H.O.M.E. Program. The funds were to be used for operating expenses of the H.O.M.E. Program. When Petitioner requested the two cashier's checks, she did not perceive the requested transaction as being inconsistent with or in violation of the agreement she and Ms. McSweeney had made. Petitioner's interpretation of the agreement was that the H.O.M.E. Program was only precluded from writing checks to third parties on checks issued on the program's accounts. Because the cashier's checks were certified funds, Petitioner knew that there was no potential, at that time, for a loss situation. After Ms. Shumate's telephone conversation with Petitioner, Ms. Shumate immediately called Ms. McSweeney, her supervisor, and advised her of Petitioner's request for two cashier's checks. At hearing, in explaining her reason for calling Ms. McSweeney, Ms. Shumate made no mention of the account being flagged. Rather, Ms. Shumate stated, "I had knowledge of chargeback activity of the account, and I made it a policy for myself that before doing anything for any H.O.M.E. Program accounts, I would call a supervisor." Based on Ms. Shumate's testimony and written statement concerning Petitioner's request for two cashier's checks, it appears that Ms. Shumate's decision to call Ms. McSweeney was not because the accounts were flagged, but rather because of her personal knowledge of the problems with the H.O.M.E. Program accounts. In response to Ms. Shumate's call, Ms. McSweeney told her that the H.O.M.E. Program accounts were "credit only" accounts and withdrawals or debits were not to be made on the account. Thirty minutes after Petitioner requested the cashier's checks, she came to the drive-through window of the NationsBank Gunn Highway Banking Center to pick up the checks. Ms. Shumate then told Petitioner that Ms. McSweeney had advised her that the H.O.M.E. Program account was a "credit only" account and that there could be no check activity on the account. Pursuant to Ms. McSweeney's directive, Ms. Shumate told Petitioner that if she had any questions, she should call Ms. McSweeney. Petitioner then immediately called Ms. McSweeney from her cellular telephone. However, when Petitioner was unable to reach Ms. McSweeney, she left a voice mail message for her. After leaving the Gunn Highway Banking Center, Petitioner then went to pick up a Ms. Barnes for a 9:00 a.m. meeting. When the meeting concluded, Petitioner took Ms. Barnes back to the H.O.M.E. Program Office located at 7819 North Dale Mabry Highway. Petitioner then went to the NationsBank Carrollwood Banking Center, the banking center closest to the H.O.M.E. Program Office. Petitioner signed in as a representative of the H.O.M.E. Program to request customer service. Petitioner then met with a consumer banker regarding having a wire transfer made from one of the NationsBank H.O.M.E. Program accounts to the program's new account at First Union. Petitioner gave the consumer banker the H.O.M.E. Program account number and the Petitioner and the consumer banker filled out the required forms necessary to effectuate the wire transfer. When the form was completed, the consumer banker initiated the wire transfer in the system and Petitioner left the Carrollwood Banking Center. Immediately prior to the wire transfer, the H.O.M.E. Program account from which the funds were taken had a balance of approximately $23,000. The amount that Petitioner had wire transferred from the NationsBank's H.O.M.E. Program account was $19,800. The purpose of the transfer was to put funds into the H.O.M.E. Program's account at First Union to meet the program's expenses. Petitioner was aware there had been a history of minimal chargebacks on the account, in the form of drafts. Based on this knowledge, when Petitioner initiated the wire transfer, she left a balance in the account that she believed would be sufficient to cover any potential chargebacks from the electronic drafts. Petitioner based the estimate on the past experience of the chargebacks from electronic drafts. When Petitioner requested that funds be removed from the H.O.M.E. Program account, she never anticipated that it would result in or contribute to a loss by NationsBank. When Petitioner requested the wire transfer, neither the consumer banker nor anyone else at the bank told her that the account was flagged and that funds could not be wired from the H.O.M.E. Program account. The transfer went smoothly and in accordance with NationsBank's routine business practices. On the afternoon of November 20, 1997, after the wire transfer was made, Petitioner spoke to Ms. McSweeney, who asked her why she had made the wire transfer. During that conversation, it became clear that there was a misunderstanding between Petitioner and Ms. McSweeney regarding how the H.O.M.E. Program's NationsBank accounts were to be handled in November 1997. Ms. McSweeney told Petitioner that she had told Petitioner "not to do that," apparently referring to their October agreement regarding Petitioner's request to allow the H.O.M.E. Program accounts to remain open in November. Petitioner then told Ms. McSweeney that she had never said that to her. Petitioner indicated to Ms. McSweeney that the H.O.M.E. Program needed funds from the account for its operating expenses and that she never would have asked that the accounts be allowed to remain open to receive the electronic deposits if the organization were absolutely prohibited from accessing the funds. In the days or weeks after the funds were wired from one of H.O.M.E. Program accounts at NationsBank, the chargebacks on the accounts were in excess of any amount that they had ever been. Between November 20, 1998, the date the wire transfer was made, and January 30, 1998, the date Petitioner's termination, NationsBank sustained a loss of approximately $6,000. This loss has not yet been recovered by the bank. Had the wire transfer not been made, NationsBank may not have sustained this loss. However, the approximate $6,000 loss by NationsBank may not be attributable to the November 20, 1997, wire transfer. Two other individuals on the H.O.M.E. Program accounts, including Jerome Ellington, were authorized signators on the H.O.M.E. Program accounts and could have made withdrawals. At the hearing, personnel of NationsBank did not state unequivocally that the other authorized persons on the H.O.M.E. Program accounts had not made withdrawals from the accounts between November 1997 and January 1998. NationsBank personnel did not rule out that such withdrawals had been made, but stated only that to confirm whether such withdrawals had been made, the bank records, which were unavailable, would have to be reviewed. If, in fact, such withdrawals were made, those withdrawals could have contributed to or been responsible for the bank's financial loss. In November 1997, the previously existing problems and disputes within the H.O.M.E. Program organization exacerbated. Mr. Ellington, president and founder of the H.O.M.E. Program, who had previously encouraged Petitioner's involvement in the program, both as a client and officer, now would no longer allow Petitioner to transact business on the H.O.M.E. Program accounts. Consequently, once the excessive chargebanks in the H.O.M.E. Programs account surfaced, Petitioner was unable to move funds back to NationsBank. Her requests to Mr. Ellington that he move funds to NationsBank were disregarded. When Petitioner was on the H.O.M.E. Program's Board of Directors, the Board not only failed to meet on a regular basis, but was also prohibited by Mr. Ellington from functioning as a governing body. Mr. Ellington controlled the H.O.M.E. Program, including the "purse strings" of the organization. Petitioner lost approximately $2,000, the total amount of the funds she invested as a client in the H.O.M.E. Program. Moreover, Petitioner also lost a substantial part of approximately $3,000 to $4,000 of her personal funds that she had used for the H.O.M.E. Program to cover some of its operating expenses. In one instance, during her early involvement with the H.O.M.E. Program, Petitioner co-signed a loan agreement for the organization to have a phone telephone system installed in the program's office. After the H.O.M.E. Program failed to make the payments, Petitioner paid off the loan and received no reimbursements. In the first week of December 1997, Petitioner received a copy of minutes from Special Meeting of the Board held on November 18, 1997. Petitioner received no notice of that meeting and, consequently, was not in attendance. The minutes of the meeting reflect that the only three Board members and/or officers present at the meeting were: Jerome Ellington, president; Jacqueline Garcia Ellington, secretary; and Bernadette Orsley, treasurer. Pursuant to the minutes of the November 18, 1997, Special Meeting of the Board, under the category of "New and Urgent Agenda Items," Mr. Ellington initiated a discussion regarding his dissatisfaction with Petitioner, one other Board member, and two staff members. The minutes reported that Mr. Ellington stated that the organization was facing "certain and immanent (sic) insurrection" by Petitioner and the other three individuals. Moreover, the minutes indicated that the labor force was "being manipulated into a confused state of loyalty and that this along with a confrontation of gross insubordination" by Petitioner and the other three individuals was "usurpatous (sic) to the general operations of the Firm and extremely deleterious to Client confidence." According to the minutes, following the discussion, Mr. Ellington moved to vote on the removal or termination of Petitioner and the other three individuals "in view of their attempted take over of the business and a number of other possible infractions of the law." Following Mr. Ellington's motion, by a unanimous vote of the three Board members/officers attending the Special Meeting, Petitioner and the other absent Board member were removed from the Board and the two staff members were terminated, effective immediately. Prior to Petitioner's receiving the minutes of the Special Meeting, she was unaware of her removal from the Board. On January 30, 1998, near the end of her voluntary leave, Petitioner met with officials of NationsBank. Petitioner was advised that her employment with NationsBank was being terminated, effective immediately, because she had failed to follow and had directly violated instructions of the service support manager, Ms. McSweeney. These charges stemmed from the incident involving the transfer of funds on November 20, 1997. Petitioner explained to NationsBank officials that she did not understand that the agreement with Ms. McSweeney prevented the removal of funds from the H.O.M.E. Program accounts. Petitioner also told the NationsBank officials that her behavior with regard to the accounts was consistent with her understanding of the agreement. In this regard, Petitioner informed NationsBank staff that prior to the wire transfer, in November 1997, she had made a withdrawal from the account to pay on the program's line of credit with no problem. Petitioner also told the bank officials that when that withdrawal was made, no one at the bank advised her that the withdrawal was improper or that the account was flagged. Notwithstanding Petitioner's explanation, NationsBank terminated Petitioner's employment, effective immediately. After Petitioner was terminated from NationsBank, she applied for unemployment benefits. The application was denied and Petitioner appealed. In the Notice of Decision issued on the matter, the appeals referee concluded that the Petitioner, claimant in that proceeding, "intentionally violated direct orders from her supervisor." Petitioner had fiduciary duties with regard to her position as vice-president and member of the Board and member of the Financial Advisory Board of the H.O.M.E. Program. However, for the reasons stated above, Petitioner's efforts to perform these duties were thwarted by tactics employed by Mr. Ellington. On January 10, 1998, Petitioner first learned that the Florida Attorney General's Office had been investigating the H.O.M.E. Program, when she was served with a civil action brought by the Attorney General. The Complaint, filed on December 13, 1997, named the H.O.M.E. Program, Inc., Jerome Ellington, and Board members, including Petitioner, as defendants. Among the allegations contained in the Complaint were that the funds collected by the H.O.M.E. Program had not been placed in an escrow account as had been represented to members and that the program had not initiated construction on any residence for any of its 140 clients. The Complaint also alleged that Mr. Ellington withdrew or transferred approximately $31,000 from a H.O.M.E. Program account and of that amount, $23,000 was transferred by Mr. Ellington from a H.O.M.E. Program's account at NationsBank to First Union on November 27, 1997. Moreover, the Complaint alleged that a substantial amount of those funds were used by Mr. Ellington for his personal expenses and approximately $17,000 of the program funds, at one time in Mr. Ellington's possession, remained unaccounted for. The Complaint contained no allegations that Petitioner or any other Board member had misappropriated H.O.M.E Program funds or, at any time, had organization funds in their possession which could not be accounted for. Pursuant to a Stipulated Settlement Agreement (Agreement) entered into on May 18, 1998, the Complaint was dismissed without prejudice against Petitioner "until the conclusion of the lawsuit against each of the remaining Defendants at which time the cause of action against [Petitioner] shall be dismissed with prejudice, provided that [Petitioner] has complied with the terms of the Agreement." In this regard, the Agreement requires the Petitioner to cooperate and assist the Attorney General's Office in the investigation and litigation relating to the Complaint. The Agreement acknowledged and expressly stated that Petitioner's acceptance of the Agreement did not constitute an admission that she violated the laws of Florida as alleged in the Complaint. To determine fitness and trustworthiness of applicants for insurance licenses, the Department looks at the applicant's history and activities in which the applicant participated. Also, the Department considers other issues, such as whether there were victims of the applicant's activities; whether someone was financially harmed; whether money and/or fiduciary duties were involved; and whether the actions were willful. In evaluating Petitioner's application, the Department had several concerns. First, the Department determined that Petitioner had willfully violated or refused to obey a supervisor's direct orders by moving funds out of the H.O.M.E. Program account and that as a consequence thereof, the bank lost several thousand dollars. In the Amended Denial Letter, the Department alleged that Petitioner accomplished this by "abusing" her position with the bank. From this uncorroborated information the Department received from NationsBank, the Department concluded that Petitioner's conduct demonstrated a lack of fitness and trustworthiness. Second, in making the final decision to deny Petitioner's application, the Department considered the fact that Petitioner had been a named defendant in the aforementioned Complaint filed by the Attorney General. Prior to the Department's issuing the Amended Denial Letter, it was aware that the Complaint had been dismissed as to Petitioner. Nonetheless, the Department found it significant that the Complaint had been dismissed without prejudice and that the Agreement had been reached in exchange for Petitioner's cooperation and testimony. The Department believed that the Agreement did not suggest that the underlying events that gave rise to the allegation in the Complaint did not occur. Finally, as a basis for its decision with regard to Petitioner's application, the Department relied on an Unemployment Appeals Bureau decision denying Petitioner unemployment benefits. The Department apparently found it significant that the referee in that proceeding found Petitioner's account of the events less credible than that of NationsBank and concluded that Petitioner "intentionally violated direct orders from her superior." Based on these considerations, the Department then concluded that the allegations raised in the Complaint demonstrated that Petitioner lacked the fitness to fulfill the fiduciary responsibilities required of an insurance agent. When the Department issued the Amended Denial Letter, it was unaware that Petitioner had been removed from the H.O.M.E Program Board in November 1997, because of her efforts to have the program implement financial controls for the funds it was collecting and expending. The Department was also unaware or failed to consider the short period of time Petitioner was associated with the Board, that Petitioner was a client of the H.O.M.E. Program, and that she lost money as a result of her involvement with the program.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue to Petitioner, Charita Michelle Strode, a license as a Life and Variable Annuity and Health Issuance Agreement. DONE AND ENTERED this 16th day of February, 1999, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD 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 16th day of February, 1999. COPIES FURNISHED: Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Plaza Level 26 Tallahassee, Florida 32399-0300 Steve E. Baker, Esquire Delano Stewart, Esquire Stewart, Joyner, Jordan-Holmes, P.A. 1112 East Kennedy Boulevard Tampa, Florida 33672 Elenita Gomez, Esquire Mechelle R. McBride, Esquire Department of Insurance 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333
The Issue This is a license discipline proceeding in which the Petitioner seeks to take disciplinary action against the Respondent on the basis of allegations of misconduct set forth in an Administrative Complaint. The violations charged in the Administrative Complaint relate primarily to alleged mishandling of funds received on behalf of an insurer.
Findings Of Fact The Respondent, Louis Iannucci, is currently eligible for licensure and is licensed in this state as a life insurance agent, life and health insurance agent, and health insurance agent, and was so eligible and so licensed at all times relevant to these proceedings. At all times pertinent to these proceedings the Respondent was an officer and director of Certified Insurance Associates, Inc., an incorporated insurance agency doing business in Fort Lauderdale, Florida. At all times pertinent to these proceedings, the Respondent was a duly appointed agent in this state under contract with United American Insurance Company. At all times relevant to these proceedings, Respondent was the sole authorized signatory on his business bank account with Capital City Bank, now known as Union Planters Bank. On or about February 12, 1997, Respondent received a check from Gretchen Smith of Titusville, Pennsylvania, in the amount of $1,833.00 and made payable to United American Insurance Company. This sum was intended as the renewal premium payment of Mrs. Smith's United American Medicare supplement insurance policy. Respondent endorsed this check and deposited it into his business bank account on February 18, 1997. Even though the premium was due on or before March 1, 1997, the Respondent waited until April 14, 1997, to remit only $486.00 of the money received from Gretchen Smith to United American Insurance Company in payment of a quarterly premium on her policy. Respondent retained the remainder of the funds for his own use and benefit. A short while later it was brought to the attention of United American Insurance Company that Gretchen Smith had paid an annual, not quarterly, premium for the policy. United American Insurance Company wrote to Mrs. Smith and requested a copy of her cancelled check for $1,833.00 that she had given to the Respondent. Upon receiving Gretchen Smith's response and a copy of her premium check, the insurance company credited her account with payment of an annual premium and reversed out the quarterly payment that had been posted to her account. The Respondent was charged for the difference of $1,347.00. On or about September 6, 1996, Respondent received a check from Mr. and Mrs. Lew Kisver of Plantation, Florida, in the amount of $3,666.00 and made payable to United American Insurance Company. This sum was intended as the renewal premium payments of Mr. and Mrs. Kisvers' United American Medicare supplement insurance policies. Respondent endorsed this check and deposited it into his business account. The Respondent, on or about September 25, 1996, remitted only $1,894.00 of the money received from Mr. and Mrs. Kisver to United American Insurance Company in payment of a semi-annual premium on each Kisver policy. Respondent retained the remainder of the funds for his own use and benefit. On or about March 7, 1997, it was brought to the attention of United American Insurance Company by Mr. and Mrs. Kisver that they had paid an annual, not semi-annual, premium for each of their policies. United American requested Mr. and Mrs. Kisver to provide a copy of their cancelled check or receipt for their payment of the premium. In response, the Kisvers mailed to the insurance company a copy of their cancelled check for $3,666.00 that they had given to the Respondent to pay their policy premiums. Upon receiving the Kisvers' response and copy of their premium check, the insurance company credited their account with payment of annual premiums and reversed out the semi-annual payments that had been posted to their accounts. The Respondent was charged the difference of $1,894.00. By coincidence, at this same time in March 1997, Respondent remitted $1,894.00 to the insurance company in payment of the next semi-annual premium due on the Kisver policies. The insurance company subsequently credited the money to Mr. Iannucci's account as he had already been charged for the premiums. The Respondent's agency contract then in effect with United American Insurance Company provided in relevant part: The Agent shall immediately remit to the Company all premiums collected by the Agent or sub-agents in excess of the Agent's initial commission thereon. In addition, the contract limited the agent's authority to collect premiums by specifically providing that the Agent shall not "collect or receipt for premiums other than initial premiums with applications for insurance." At all times material, the United American Insurance Company had on file at the Capital Bank a letter of authorization. The letter of authorization read as follows, in pertinent part: This letter will authorize the captioned General Agent of United American Insurance Company [the Respondent] to endorse and deposit to the General Agent's account with your bank checks made payable to the United American Insurance Company for premiums collected at the time of application for insurance with this Company. The General Agent may also withdraw or disburse any such funds so deposited. Pursuant to both the agency contract and the letter of authorization on file with the bank, the Respondent lacked authority to deposit and cash checks received from customers in payment of their renewal premiums. Similarly, the Respondent lacked authority to hold premium funds in his bank account for lengthy periods of time. The Respondent was aware, or should have been aware, of these limitations on his authority. Between September 1996 and April 1997, the balance of Respondent's business bank account with Capital City Bank at the end of each month was less than the amount of the premium funds that Respondent had received from the Kisvers and Gretchen Smith but had not remitted to the insurance company. At the end of September and October 1996, Respondent's bank account had an ending balance of $1,659.91, and $1,589.82 respectively. At this time he should have been holding $1,894.00 of unremitted funds in trust on behalf of the Kisvers and the insurance company. In February 1997, the end of the month balance of the business account was only $71.19, even though Respondent should have been holding not only the $1,894.00 previously received from the Kisvers but also the $1,347.00 received from Gretchen Smith on February 12, 1997, but not remitted to the insurance company. Respondent had apparently applied the insurance premium payments received from the insureds for his own use and benefit, even though the funds were fiduciary in nature and were held in trust. At all times material to this case, it was the practice of United American Insurance Company to forward monthly statements to the Respondent. If the Respondent had a credit balance, the statement would be accompanied by a check in the amount of the credit balance. If the Respondent had a debit balance, the statement would request that the Respondent make "payment in full by return mail." Although the United American Insurance Company debited the Respondent's account for the portions of the Smith and Kisver funds that were not promptly forwarded to the insurance company, there is no clear and convincing evidence that the United American Insurance Company ever made demand on the Respondent to pay those specific amounts. There is no clear and convincing evidence that the Respondent had any fraudulent or dishonest intent in connection with his handling of the Smith and Kisver funds discussed above. The Respondent's handling of those funds does, however, demonstrate a lack of fitness to engage in the business of insurance as well as a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by his license.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order to the following effect: Concluding that the Respondent violated Sections 626.611(7), 626.611(8), and 626.611(10), Florida Statutes, as charged in Count One and in Count Two of the Administrative Complaint; Concluding that the allegations that the Respondent violated Sections 626.611(9) and 626.621(4), Florida Statutes, should be dismissed for lack of clear and convincing evidence to establish those violations; and Imposing a penalty consisting of a suspension of the Respondent's License for a period of six months. DONE AND ENTERED this 18th day of November, 1998, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1998.
