The Issue Whether Petitioner is entitled to a refund of state group life insurance premiums retroactive to the date she became disabled and continuing through the date of approval of a waiver of premium based on disability.
Findings Of Fact During her entire career with the State, Petitioner was employed by the Department of Corrections (DOC). At all times material, DOC, like all State governmental agencies, had its own personnel office. At all times material, the Division of Retirement (Retirement) handled all governmental agencies’ employees’ retirement issues. At all times material, the State has provided its employees, including Petitioner at DOC, with various types of insurance through Respondent Department of Management Services (DMS), Division of State Group Insurance (DSGI), the Respondent herein. For more than 20 years, ending January 1, 2007, the State of Florida provided state officials, employees and retirees basic life insurance coverage through Prudential Insurance Company of America (Prudential). Although Petitioner retired on full disability in mid- 2000, at all times relevant to these proceedings, Petitioner has continuously participated in the State Group Insurance Program’s (Program’s), life insurance plan (Plan). The Program is authorized by Section 110.123, Florida Statutes. Because of enhanced benefits, employees were required to complete a new life insurance enrollment form during “open enrollment,” conducted in 1999, for coverage beginning January 1, 2000. Petitioner completed the life insurance enrollment form and dated it "10/04/99." Directly below Petitioner's signature on this enrollment form, the following statement appears: Waiver of Premium for Disability If you are totally disabled for a continuous 9 months and are less than 60 years of age at the time disability begins, Prudential will continue your coverage with no premium due, provided you report your disability within 12 months of its start and submit any required proof to Prudential. The second page, last paragraph of the 1999, enrollment form provided an address and a toll-free telephone number for Prudential, and advised participants that the form was intended to provide a summary of benefits, as more completely set out in the certificate. Petitioner produced the enrollment form in response to Respondent's request for production of documents. She identified her signature thereon at hearing, and had the enrollment form admitted in evidence as Exhibit P-1. She also admits in her Proposed Recommended Order that she signed it. Although her testimony waffled in some respects, on the whole, she testified to the effect that she had retained a copy of this form where she had access to it at all times material. She is, therefore, found to have had knowledge of its contents since 1999. Petitioner testified that she never received either a life insurance policy nor a certificate of insurance, from Prudential or from any entity of Florida State Government, and that neither her DOC Personnel Office, Retirement, Florida First,1/ or DMS/DSGI advised her at the time of her retirement in mid-2000, that she could apply to Prudential for a life insurance premium waiver. However, Petitioner also had admitted in evidence as Exhibit P-2, a “Continuation/Termination Form” which she signed on “4-11-00,” stating a retirement date of “3- 10-00.” That form specifies that “. . . the amount of life insurance shall be $10,000 . . .” with a footnote reading, “This [referring to the $10,000, amount] would only apply if Waiver of Premium is not approved.” (Bracketed material supplied.) Also, the credible testimony of Respondent’s witnesses and of exhibits in evidence show that a complete certificate of life insurance was mailed to Petitioner in a timely manner. There is no proof that the insurance certificate varied the substance of the enrollment form as quoted in Finding of Fact 7. Indeed, the certificate provided, in pertinent part: The Policyholder will continue the full premium for continuance of insurance in accordance with item 8 above, [referring to “Total disability commencing before age 60— Unlimited for Employee Term Life Insurance”] provided the employee furnishes written proof of such total disability when and as required by the Policyholder. * * * Period of Extension Protection for a Disabled Employee— one year after receipt by Prudential’s Home Office of written proof that his total disability has existed continuously for at least nine months, provided the employee furnishes such proof no later than one year after the later of (1) the date premium payments for the employee’s insurance under the Group Policy are discontinued or (2) the cessation of any extended death benefit under the provisions for “Extended Death Benefit for Total Disability” above, and successive periods of one year each after the year of extension under (1), provided the employee furnishes written proof of the continuance of the employee’s total disability when and as required by Prudential once each year. Only employees disabled before retirement and under 60 years of age were eligible for the premium waiver. Employees who became disabled during retirement were not eligible for the waiver. By the terms of her enrollment form and certificate, if Petitioner did not notify Prudential before the twelfth month, she could not receive the waiver. When, precisely, Petitioner became “totally disabled” for purposes of her State life insurance certificate’s definition is debatable, because for some time prior to her actual retirement date, she was working off and on while pursuing a “permanent total disability” determination, pursuant to the definition of that term as expressed in Chapter 440, Florida Statutes, The Florida Workers’ Compensation Law. Petitioner ultimately received the workers’ compensation ruling she sought, possibly before March 10, 2000. Petitioner’s last day of work was March 10, 2000, when, she testified, a superior had her forcibly removed from DOC property. Despite her assertion that she was not approved for in-line-of-duty retirement until September 1, 2000, Petitioner also testified that the State granted her retirement upon disability, effective April 1, 2000, and April 1, 2000, is the date put forth by Respondent as Petitioner's disability retirement date, as well. Upon that concurrence, it is found that Petitioner qualified for total disability for State life insurance purposes before retirement and that she qualified for the waiver by age at retirement. When Petitioner retired on disability in 2000, employees of both DOC and of Retirement knew that she was retiring on disability. Retirement provided Petitioner with printed materials referring her to the insurance company and/or DMS/DSGI for insurance questions and stating that Retirement did not administer any insurance programs. There is no evidence Petitioner asked anyone about the waiver in 2000. From her retirement date in mid-2000, until Prudential ultimately granted her a premium waiver in 2007, Petitioner paid the full life insurance premiums to the State Life Trust, either via deduction from her retirement or directly by her own check. From the date of her retirement through December 2006, Petitioner paid $4.20, per month for life insurance, and beginning January 1, 2007, through November 2007, she paid $35.79, per month. According to Petitioner, she only became aware of the availability of the potential waiver of premiums when she received a booklet during open enrollment in October 2007, advising her that beginning January 1, 2008, the State life insurance coverage would be provided through Minnesota Life Insurance. The specific language that caught her eye was: No premium to pay if you become disabled --- If you become totally disabled or as defined in your policy, premiums are waived. Petitioner conceded that there is no substantive difference between the foregoing instruction and the statement on her 1999, enrollment form for Prudential. (See Finding of Fact 7.) Petitioner applied for the Minnesota life insurance, with premium waiver, triggering a series of bureaucratic decisions that maintained her continuous life insurance coverage by Prudential and permitted Petitioner to apply to Prudential for waiver of the life insurance premium as described in her 1999, enrollment form. Although bureaucratic delays occurred through DOC’s personnel office, Prudential accepted Petitioner’s proof of age, disability, etc., and granted the waiver of premiums based on disability. The monthly premiums of $35.79, that Petitioner paid in October and November 2007, were retroactively reimbursed to her by the State, based upon Prudential's receipt of Petitioner's waiver package on October 3, 2007. Beginning in December 2007, Prudential activated the waiver of premium, so that Petitioner has not had to pay any premium since. Adrienne Bowen, a DSGI manager of Prudential contracts for twenty years, testified that, in 1999-2000, Prudential’s waiver did not apply until after nine months of continuous disability and after the participant had reported the disability to Prudential, and after Prudential had approved the waiver of premiums. She further testified that she believed that there was no provision for the waiver to apply retroactively. For this testimony, Ms. Bowen relied upon Exhibit R-11, a “Group Life Administration Manual,” which had been devised so that the State life insurance plan would be consistently administered. On the foregoing issues, The Group Life Administration Manual states, in pertinent part: WAIVER OF PREMIUM When an employee becomes disabled and is unable to work because of a disability, the employee may be eligible to extend the group life coverage without premium payments. In order to extend coverage, the employee must submit proof of disability within the period shown on the Group Contract (generally at least 9 months but less than 12 months after the total disability starts). If the proof is accepted, you may stop the premium on behalf of the employee’s group coverage. We recommend that premium payments continue for that employee until a decision is made regarding the claim. (Emphasis in original.) However, Ms. Bowen also testified that DSGI and Prudential now allow an insured to request the waiver at any time after nine months of continuous disability, without automatic denial if the employee’s first request is not made within 12 months after she first becomes disabled. This was done in Petitioner's situation in 2007. Prudential did not refuse to waive premiums because Petitioner’s application was not made within 12 months of total disability. However, the premiums refunded related back only to the first day of the month in which she made application for waiver. Petitioner seeks a reimbursement for overpayment of premiums from April 1, 2000, to September 30, 2007. Her first request to Respondent for an administrative hearing appears to have been made on or about May 12, 2008. After several levels of internal agency “appeals,” the cause was referred to the Division of Administrative Hearings on or about August 28, 2008.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, enter a final order which calculates the State group life insurance premiums Petitioner paid between May 12, 2006, and October 1, 2007, and orders payment to Petitioner of that amount within 30 days of the final order. DONE AND ENTERED this 23rd day of December, 2008, in Tallahassee, Leon County, Florida. S ELLA JANE P. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December, 2008.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following facts are found: At all times relevant to this proceeding, the respondent Frank Cimino, Jr. was licensed as an ordinary life, ordinary life including disability and dental health plan insurance agent. Respondent was also the president and incorporator of National Consumer Investment Counselors, Inc., a Florida corporation doing business at Post Office Box 1520, Brandon, Florida. Charles R. Ritzi is an insurance salesman employed at National Consumer Investment Counselors, Inc., and respondent is his supervisor. On or about November 2, 1979, Mr. Ritzi went to the home of Edward Kimball for the purpose of discussing insurance with him. He received from Mr. Kimball his other existing insurance policies and took them back to his office to analyze and compare their benefits, costs and terms with a policy which could be provided by respondent's corporation. Among the policies taken was Mr. Kimball's State Farm Insurance Company "IRA" annuity policy number 4,664,836. Several days later, Mr. Ritzi and respondent returned to Mr. Kimball's residence. Mr. Kimball made a decision to purchase an insurance Policy from respondent and numerous forms were signed by Mr. Kimball. These forms were then taken back to respondent's office and processed. Mr. Kimball did not sign a cash surrender form for his State Farm "IRA" annuity policy and he did not intend for that policy to be cancelled. On December 6, 1979, the offices of State Farm Life Insurance Company received in the mail a cash surrender request form on Edward Kimball' s "IRA" annuity policy number 4,664,836. Mr. Kimball's name appeared on the signature line of the form. The form also contained a change of mailing address section in which had been written the respondent's business address. The form constitutes a request for a withdrawal of dividends and surrender of the policy. By the terms of the policy, only the owner of the policy may make such a request. The "IRA" annuity policy funds a retirement plan. If the request form had been processed, there would have been a penalty imposed by the Internal Revenue Service for a premature distribution of funds and the funds distributed would have been treated as ordinary income for tax purposes. State Farm sent a service agent to Mr. Kimball's residence and it was discovered that Mr. Kimball did not desire to give up his "IRA" policy number 4,664,836, and that he did not sign the cash surrender request form. A handwriting expert confirmed that the handwriting appearing on the line entitled "Signature of Policyowner" was not the signature of Mr. Kimball. It is concluded as an ultimate finding of fact that respondent or an employee acting under his supervision signed the name of Edward Kimball, Jr. appearing on the State Farm cash surrender form and transmitted sold form to State Farm without the knowledge or consent of Mr. Kimball, the policy owner. In February of 1980, respondent placed an advertisement in the East Hillsborough Edition of The Tampa Tribune, a newspaper with a circulation of approximately 36,000. The advertisement guaranteed the reader that: "...if you are insurable and own any personal, ordinary life insurance, regardless of the company, we can show you a method of rearranging your program in a way that will: Increase the amount of money which would be paid to your beneficiary in the event of your death. 2. Increase the amount of cash available for retirement [sic], 3. Retain all of your existing guarantees and benefits and 4. We can do all this with no increase in premium." The four guarantees mentioned in the advertisement may not be capable of performance in all life insurance policies. However, it is possible for a qualified agent to accomplish the four guarantees in personal ordinary cash value life insurance policies. The guarantees are made to those persons who are insurable and who own personal, ordinary life insurance.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT: The charges in the Administrative Complaint relating to a Penn Mutual Life Insurance Whole Life Policy be dismissed; Count II of the Administrative Complaint relating to an advertisement appearing in The Tampa Tribune be dismissed; Respondent be found guilty of violating Florida Statutes, Sections 626.611(4),(5),(7),(9), and (13) and 626.9541(1)(f); and Pursuant to Section 626.611, Florida Statutes, the insurance licenses presently held by the respondent be suspended for a period of one (1) year. Respectfully submitted and entered this 6th day of February, 1981, in Tallahassee, Florida. DIANE D. TERMOR Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of February, 1981. COPIES FURNISHED: Richard P. Harris, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301 Frank Cimino, Jr. Post Office Box 1520 Brandon, Florida 33511 Honorable Bill Gunter Office of Treasurer Insurance Commissioner The Capitol Tallahassee, Florida 32301
Findings Of Fact Edward Berk, Respondent, was at all times here relevant licensed as an ordinary life, including disability, insurance agent to represent Founders Life Assurance Company, Standard Security Life Insurance Company of New York, American Variable Annuity Life Assurance Company, Wisconsin Life Insurance Company, Columbian Mutual Life Insurance Company, and Lone Star Life Insurance Company. He is licensed as a disability insurance (2-40) agent to represent American Family Life Assurance Company of Columbus and an ordinary life (2-16) agent to represent Estate Life Insurance Company of America. (Exhibit 1). On April 12, 1979 Respondent pleaded guilty in the U. S. District Court for the Southern District of New York of violation of 18 USC 1341 and 1342 to wit: unlawfully, willfully and knowingly devising and intending to devise a scheme and artifice to defraud and to obtain money from The Travelers Insurance Company by means of false and fraudulent pretenses, representations , and promises. He was found guilty and sentenced to two years imprisonment on each of five counts, the sentences to run concurrently. The execution of the sentence was suspended and Respondent was placed on probation for a period of two years (Exhibits 2)
Findings Of Fact At all times pertinent to this proceeding Respondent, HOWARD P. HAUSER, was eligible for licensure and licensed in this state by the Florida Department of Insurance as a Life and Health Insurance Agent; General Lines Insurance Agent - Property, Casualty, Surety, and Miscellaneous Lines; and Legal Expense Insurance Agent. At all times pertinent hereto, Respondent was the registered agent and an officer or director of Hauser and Associates Insurance Agency, Incorporated of 7770 Davie Road Extension, Hollywood, Florida. Beginning on or about January 1, 1986, and continuing through August 31, 1987, Respondent represented to one of his clients that he had obtained insurance coverage for that client's three restaurants. This representation of coverage was false. Respondent received from the client insurance premium payments of $56,550.00, more or less, for the insurance of the client's three restaurants. These funds were obtained by Respondent under false pretenses. Respondent provided the mortgagee of one of the restaurants owned by his client with a document purporting to be a certificate of insurance on that restaurant from Scotsdale Insurance Company insuring the restaurant for the period December 11, 1985, to December 11, 1986. Respondent further provided the mortgagee with a declaration sheet stating that Protective Insurance Company would insure the restaurant from January 1, 1987, to January 1, 1990. Respondent falsified these declaration sheets. Respondent's client suffered no loss, other than the loss of his premium dollars, because of Respondent's misrepresentations as to coverage. Respondent was charged with one count of Grand Theft of the Second Degree, a second degree felony, based on the dealings with his client. Respondent entered a plea of nolo contendere to the charge of Grand Theft of the Second Degree. The Circuit Court, in and for Broward County, Florida, placed Respondent on probation for a period of three years and withheld adjudication of guilt. As a condition of the Order of Probation, the court required that Respondent make restitution to his client in the amount of $56,550.00 and further required that $15,000.00 be paid toward restitution on October 24, 1988, the date Respondent entered his plea of nolo contendere and the date the court entered the Order of Probation. Respondent made a restitution payment of $15,000.00 on October 24, 1988. Respondent has been licensed by Petitioner since April 1972. Although Petitioner has received other complaints about Respondent, no formal action has been previously taken against him. Respondent has been a good citizen, except for this misconduct, and a good family man. Respondent regrets his misconduct. Respondent timely requested a formal hearing after the Administrative Complaint was served upon him.
Recommendation Based on the foregoing findings of fact and conclusions of law it is RECOMMENDED that the Department of Insurance enter a final order which revokes all licenses issued by the Department of Insurance to Respondent, Howard Paul Hauser. DONE and ENTERED this 21st of July, 1989, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 July, 1989. APPENDIX The proposed findings addressed as follows: of fact submitted on behalf of Petitioner are 1. Addressed in paragraph 1. 2. Addressed in paragraph 2. 3. Addressed in paragraph 6. 4. Addressed in paragraph 3. 5. Addressed in paragraph 4. 6. Addressed in paragraphs 3-4. The proposed findings of fact submitted on behalf of Respondent are addressed as follows: Addressed in paragraph 9. Addressed in paragraph 6. Addressed in paragraph 6. Rejected as being unnecessary to the conclusions reached. Addressed in paragraph 7. Addressed in paragraph 5. Addressed in part in paragraph 7. Rejected in part as being speculative. Rejected as being a conclusion of law and not a finding of fact. COPIES FURNISHED: Robert G. Gough, Esquire, (at the hearing) and Charles Christopher Anderson, Esquire, (on the proposed recommended order) Office of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Gary D. Weiner, Esquire, Glendale Federal Building Suite 209 901 Southeast 17th Street Fort Lauderdale, Florida 33316 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Don Dowdell, General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300
The Issue The issue is whether the licenses of Frank Joseph Brennan should be disciplined for actions of Mr. Brennan or of agents associated with Frank J. Brennan, P.A. with respect to the sale of insurance products to three (3) clients: Rebecca Fisher, Celine M. Rompre, and Mr. and Mrs. Joseph T. Nolan.
Findings Of Fact Frank Brennan Frank Joseph Brennan holds licenses as an ordinary life agent, ordinary life including health, health agent, and ordinary-variable annuity agent. Brennan is the owner and president of Frank J. Brennan, P.A., which sells life and health insurance products, including tax sheltered annuities of the National Western Life Insurance Company. The firm has several thousand tax sheltered annuity clients. Brennan had been the president and the director of Lancer Securities Corporation. On March 22, 1979, he was enjoined by the U.S. District Court for the Middle District of Florida for acting as an officer or director of any registered investment company. That injunction states that it did not constitute evidence against or an admission by Brennan, and that the injunction did not "establish or prove any of the acts alleged or asserted in any pleadings." Brennan was suspended from associating with any investment advisor for 120 days, and barred from associating thereafter with an investment advisor other than as a supervised employee in an order entered by the Securities and Exchange Commission on March 26, 1979. Brennan was barred from associating with any member of the National Association of Securities Dealers, Inc. in the capacity of a principal in an order entered by that association on October 15, 1980. Brennan was barred by the Securities and Exchange Commission in October 1980 from associating with any member in the capacity of a principal and fined $1,000. In May 1983, United Equitable Insurance Company terminated Brennan as an agent based on an adverse Equifax report. That report was not placed in evidence. (The foregoing findings 3 through 7 are based upon the Department of Insurance's Second Request for Admissions and Fifth Request for Official Recognition.) The Relationship Of Gregory Langsett And Betty Jones To The Frank J. Brennan, P.A. Frank J. Brennan, P.A., has contracts with a number of licensed insurance agents, including Gregory Langsett and Betty Jones. Langsett has a producer agreement with National Western Life Insurance Company which describes him as an independent contractor, and an agent's agreement with the Brennan firm. Under the agent's agreement Langsett has with the Brennan professional association dated December 4, 1981, Langsett is deemed an independent contractor and nothing in this agreement shall be construed to create the relationship of employer and employee. You are free to exercise your own judgement as to the persons from whom you solicit applications and the time and place of such solicitation. (Petitioner's Exhibit 28, Paragraph 1.) Brennan had been involved in training of Langsett and Jones when they first were associated with the firm. Agents such as Langsett and Jones are not listed on the employer's quarterly wage report made by the Frank J. Brennan, P.A. to the State of Florida Division of Unemployment Compensation. Agents such as Langsett and Jones pay their own estimated income tax withholding and their own social security taxes. The Brennan firm does provide agents with business cards (although Jones had her own cards printed). It also provides sales kits, telephone answering, postal services, makes available space for meeting with clients at the firm office and provides accounting services incident to the payment of commissions on business submitted to carriers through the firm, all without charge to the agents. Educational meetings are held on Fridays, which the agents are encouraged, but not required, to attend which discuss the various insurance products available through insurance companies the Brennan firm is associated with. Agents benefit from advertising done by the Brennan firm. Brennan occasionally provides leads to agents. For example, January 1986 Brennan provided to Betty Jones and her husband (also a licensed insurance agent) a list of approximately 100 names of employees of the Boca Raton Academy so that they could be solicited for purchase of tax sheltered annuities, and an arrangement was worked out under which Brennan and the Joneses would divide commissions from any such sales. There is no evidence that Brennan controlled the time, place or manner of these solicitations, or of any other solicitations for the purchase of insurance products. Langsett and Jones were not subject to the direct supervision and control of Brennan in their activities of soliciting insurance clients. They are not employees of the Professional Association -- they are independent contractors. This arrangement of appointing soliciting agents who are independent contractors is used by other sellers of tax sheltered annuities, and is not unique to the Brennan firm. (Tr. 496, 579). Brennan does have the authority, based on his contracts with insurance carriers, to appoint licensed agents as agents of insurance carriers. Rebecca Fisher's Dealings With Frank J. Brennan, P.A. and Frank Brennan Rebecca Fisher is an employee of the Dade County School Board. She contacted Langsett concerning tax sheltered annuities offered by the National Western Life Insurance Company, after learning of Langsett from another employee. Under Section 403(b) of the Internal Revenue Code, employees of school boards may have a portion of their wages paid into a tax sheltered annuity. They pay no income tax on the amounts deposited in the annuity through payroll deduction and the interest paid on the amounts deposited is not taxed when earned. Such annuities are long term savings plans designed to supplement the participant's retirement income. Ms. Fisher already had a tax sheltered annuity with Northern Life Insurance Company which had a face value of over $90,000. She had bought it through an insurance agent, Mr. Paul Indianer, with whom she had dealt over a number of years. Langsett met with Mrs. Fisher at her home for about 15 to 20 minutes on a Saturday in June 1985. Mrs. Fisher was not able to spend much time with Mr. Langsett that day because she had to go to a funeral at about noon. Thereafter, Mrs. Fisher attempted to call Langsett at the Brennan insurance offices. She called after 5:00 p.m. and Langsett was not there. Respondent Brennan answered the phone call. They discussed the possibility of opening a tax sheltered annuity account through National Western by rolling over into a new account money she had in her current tax sheltered annuity. Mrs. Fisher knew if the money were rolled over she would incur a surrender charge. She also discussed with Brennan whether it would be possible to borrow money from a new National Western tax sheltered annuity for home improvements. She was told money borrowed from a National Western annuity could be used for home improvements, and taxes would not have to be paid on the money borrowed from the annuity until her death. Her current annuity did not have a provision that permitted borrowing. At the hearing the provision permitting borrowing was referred to as the TEFRA provision -- so known , because it had its genesis in a portion of the Tax Equity and Fiscal Responsibility Act (TEFRA). (Tr. 45, 46, 80) Reviewing the totality of Mrs. Fisher's testimony, the Hearing Officer is not persuaded that Mrs. Fisher is able to recall with clarity the conversation which she had with Mr. Brennan. For example, the Hearing Officer does not accept the testimony that Respondent or Langsett told Fisher that National Western would pay 20 percent interest the first year and 18 percent the second year on its annuities. Those figures represented the surrender charges on the Northern Life tax sheltered annuity she already had. Neither did Brennan tell Fisher that she would get $75,000 of free life insurance in connection with a new tax sheltered annuity. One of the possibilities Brennan mentioned to Fisher was a more involved transaction in which her money would be rolled over into a new tax sheltered annuity, and a $50,000 loan would be taken against that new annuity. The $50,000 might be used to purchase a single premium life insurance policy. Interest paid on the amount placed in that policy would accumulate without any income tax being owed on the interest as it was paid. National Western Life Insurance Company would provide $75,000 of life insurance in connection with such a policy, over and above its $50,000 face amount, for a $155,000 total life insurance benefit. The single premium life insurance policy does not make a specific charge for the $75,000 additional death benefit. There is, of course, a charge for this insurance in that the interest rate paid on the $50,000 deposited in the single premium life insurance policy is reduced by the mortality charge on the $75,000 additional death benefit. Mrs. Fisher confused these two different insurance products (the tax sheltered annuity and the single premium life insurance policy), and thought that the life insurance was part of the tax sheltered annuity, which is not what Brennan discussed. Mrs. Fisher's notes of her conversation indicate that there would be a rollover penalty assessed against the face amount of her Northern Life tax sheltered annuity if she moved it to a National Western tax sheltered annuity. She had incurred penalties when she had moved money from her first annuity with Franklin Life to Standard Life the second annuity from Standard Life to Northern Life, both at the suggestion of her insurance advisor/agent, Mr. Indianer. (Tr. 57). Those notes also appear to indicate that Brennan referred to her current Northern Life tax sheltered annuity as "antiquated," and described the method by which payments are made under the annuity as "suicide" from an income tax point-of-view. In view of the complexity of these insurance matters, and Mrs. Fisher's misunderstanding of what Brennan had said on other significant portions of the conversation, the Hearing Officer is not satisfied that the evidence is clear and convincing that Brennan used those terms to describe Mrs. Fisher's current insurance products in his conversation with Mrs. Fisher. Similarly, the testimony that Brennan referred to her old Franklin Life and Standard Life annuities (which Indianer had already persuaded her to replace) as "garbage" is not accepted. Under the Internal Revenue Code, if money were borrowed from the annuity for the purpose of home improvements, no tax would be due on the amount borrowed until the annuitant's death, or the surrender of the annuity for cash or annuitization. (Tr. 624, 781). Borrowings for other purposes must be paid back in five years or they are treated as a distribution from the shelter, and require that income tax be paid on that distribution. Neither the code nor case law requires a loan to be repaid when the annuitant reaches a certain age. In short, contrary to the allegations of Count I of the Amended Administrative Complaint, the evidence is not convincing that Brennan made improper or defamatory remarks about Fisher's prior annuities or existing annuity, that he misrepresented the actual tax implications of the plans or the interest rate offered by the plans, or falsely represented that Fisher would receive $75,000 of free life insurance with a National Western annuity contract. Celine Rompre's Dealings With Betty J. Jones Betty J. Jones is an insurance agent licensed by the State of Florida. She also worked as an independent contractor through the Frank J. Brennan, P.A., selling tax sheltered annuity products of the National Western Life Insurance Company. Unlike Langsett there is no evidence that she has a written contract with the Brennan firm, but she does have a producer agreement with National Western Life Insurance Company. On or about July 23, 1985, Ms. Jones solicited Celine M. Rompre for the purpose of selling her a National Western Life Insurance Company Section 403(b) tax sheltered annuity. Rompre was an employee of the Palm Beach County School Board who already had a Section 403(b) tax sheltered annuity payroll deduction handled through Voyager Life Insurance Company; the insurance agency which had sold that annuity to her was owned by Edward Parmele. Respondent Brennan personally had nothing to do with the solicitation which Betty J. Jones made of Celine Rompre. Betty J. Jones was not acting under the direct supervision and control of Frank J. Brennan in that transaction. Betty Jones met with Celine Rompre and discussed the National Western tax sheltered annuity. Mrs. Rompre's husband also works and the Rompres do not need Mrs. Rompre's salary for living expenses. At the time she spoke with Betty Jones, Mrs. Rompre's annual salary was $5,500. She believed that it would increase to $7,200 at the beginning of the next school year, which did happen. At the time Mrs. Rompre was putting $1,040 into her Voyager Insurance Company tax sheltered annuity each year. Betty Jones discussed with Mrs. Rompre increasing her tax sheltered annuity contribution to approximately $4,000 per year. Jones told her that the maximum amount she could contribute would have to be separately calculated for each year. (Tr. 752). Mrs. Rompre was interested in this because Mrs. Rompre's daughter was then in the 8th grade, and it would be possible to borrow against that money to help with her daughter's education. Mrs. Rompre knew she would incur a substantial surrender charge on her current annuity if she switched to National Western. She signed papers prepared by Jones to accomplish the transfer of her annuity to National Western. Rompre was not eligible to increase her Section 403(b) annuity contribution immediately because she had changed her contribution once that year and only one change in the payroll deduction can be made annually. (Tr. 751). When the paperwork went to the School Board to change the annuity from the Voyager annuity to the National Western annuity, Mrs. Rompre was contacted by Mr. Parmele about her Voyager annuity. He stated that Mrs. Rompre could not put $4,000 per year into a Section 403(b) tax sheltered annuity. This influenced Mrs. Rompre to cancel the transfer to National Western. In fact, Mrs. Rompre was in a situation where she qualified to put as much as $5,051 into a tax sheltered annuity (this amount is known as the maximum exclusion allowance) over the next year under a catch-up provision of the Internal Revenue Code because she had not been contributing to an annuity for all eight years she had been employed by the Palm Beach County School Board. (Tr. 780). There is no evidence that Ms. Rompre was contributing to any other qualified retirement plans that would have affected her maximum exclusion allowance. Betty Jones did not misrepresent to Celine Rompre the amount of her maximum exclusion allowance, the terms of the surrender charges for the Voyager life insurance policy or the National Western life insurance policy, or improperly affixed the signature of Celine Rompre to a letter to the Voyager Life Insurance Company requesting cancellation of her existing account. Dealings Of Frank J. Brennan With The Nolans In about March of 1985, Mr. and Mrs. Nolan went to Brennan for help preparing their tax return and for financial planning. Mr. Brennan had been highly recommended to them. Mr. Nolan is a loss prevention manager for Radio Shack, and Mrs. Nolan is employed by the School Board of Broward County. Mr. Nolan had recently received an inheritance of about $30,000 and was looking for a way to invest it. The Nolans emphasized that the investment vehicle be liquid so they could access the money if they needed it. They were concerned that they might need it for the care of their parents. When Mr. Nolan came to Brennan, he had whole life insurance policies with Prudential and Metropolitan Life which had some cash value. Brennan suggested those policies be cancelled so that the cash value could be invested, and this was done. Mrs. Nolan's Section 403(b) Tax Sheltered Annuity When the Nolans came to Brennan, Mrs. Nolan did not have a Section 403(b) tax sheltered annuity. Brennan suggested that she contribute to such an annuity program as a means of saving on income taxes. He also told them they could borrow against those funds, but this was of no interest to the Nolans. Mrs. Nolan purchased a tax sheltered annuity with Great American Life Insurance Company which currently paid 13.75 percent interest. One of the documents which is filled out to begin the payroll deduction with the Broward County School Board for Section 403(b) tax sheltered annuities is an amendment to the annuitant's employment contract to cause part of the salary to be paid directly into the annuity. On that form there are disclosures, including whether there is a sales charge, administration fee, or transfer fee, as well as whether there is a surrender charge. The amendment which she executed does not show any surrender charge in connection with the Great American Life Insurance Company Section 403(b) annuity she purchased. Later the Nolans received another copy of the amendment which had the surrender charge portion filled in. It stated there would be a surrender charge of one-fifth of the first year's deposits only, which is waived if all proceeds are withdrawn over 36 months or longer. When Mr. Nolan received this he immediately called Mr. Brennan to ask about the surrender charge. Brennan told him that the annuity document itself explained the surrender charge and it should have been on the amendment to the employment contract as well. Brennan negligently failed to explain the surrender charge to the Nolans when the annuity was first taken out. After receiving the altered amendment to employment contract, Mrs. Nolan instructed the School Board to stop the annuity deductions as of December She had contributed $7,234 to the annuity at that time. The Nolans then asked to cancel the annuity because they had not been made aware of the surrender charge. Mr. Brennan responded by stating that in order to get the refund, they would have to sign a release at the request of the insurance company, but the Nolans refused to sign any release. They prepared a short letter to the insurance company seeking the recision of the policy. Brennan also wrote to the company seeking the refund. The Nolans did receive their money back. In connection with the rescission, the Nolans demanded and received from Brennan assurances that if the amount deposited in the annuity were not received by March 3, 1986, that Brennan would pay 10 percent interest per year on the proceeds until the Nolans received the proceeds. The Nolans received the amount before the agreed date when Brennan would begin to pay interest. The amount they received was only the principal paid in, however, and did not include any interest for the period the money had been held by Great American Life Insurance Company. Repayment of the $7,234 rendered these funds subject to current income taxes, because that income had not been subject to tax when placed in the annuity. The Nolans' Other Insurance Purchases From Brennan When the Great American Section 403(b) annuity was purchased, the Nolans also purchased other insurance products. These included two $2,000 individual retirement accounts (IRAs) for Mr. and Mrs. Nolan with National Western in the form of annuity policies, a Kemper Life Insurance policy on Mr. Nolan with a face value of $100,000 to replace the existing policies he had cancelled, and a $30,000 single premium endowment policy on Mrs. Nolan from National Western Life Insurance Company, which included a life insurance benefit so that the face amount of the policy was $200,602. These purchases saved the Nolans about $3,000 in income taxes. The Nolan's had had IRA accounts at savings and loan institutions before they came to Brennan, which they would roll over when the instruments in which the money was deposited matured. Brennan explained that these National Western annuities were different than the accounts they had. These annuities were cancelled because the Nolans became dissatisfied with Brennan due to the non-disclosure of the surrender charge on the Section 403(b) annuity with Great American Life Insurance Company. Mr. Brennan arranged for those to be cancelled without penalty at the request of the Nolans. They received the principal paid in plus interest. After the cancellation of the prior whole life policies at Brennan's suggestion, see Finding of Fact 37, above, Mr. Nolan purchased a Kemper Life Insurance term life insurance policy. At first he considered rescinding it along with the IRAs, also due to dissatisfaction with Brennan because of the failure to disclose the surrender charge on the Section 403(b) annuity. Ultimately he kept the Kemper policy, which was a better policy than the ones that had been cancelled. The $30,000 inheritance Mr. Nolan received was used to purchase a $30,000 single premium life endowment policy on Mrs. Nolan, which then paid 11.12 percent interest on the amount deposited and permitted borrowing from the policy at 7.4 percent. The policy was placed on Mrs. Nolan's life because she was the better underwriting risk. The interest which accrued on that policy was not subject to current federal income taxation, so the purchase was consistent with the Nolan's goal of achieving a high yield on the money with minimum taxation. That $30,000 premium purchased over $200,000 worth of life insurance on Mrs. Nolan, which Brennan described as "a freebie" in connection with the tax sheltered investment of the $30,000. This policy was cancelled under a policy provision which gave the right to cancel the policy during the first year, in part due to dissatisfaction with Brennan over the non-disclosure of the surrender charge on the Section 403(b) tax sheltered annuity. Nolan was also dissatisfied with the endowment policy after he received it because (1) the interest guaranteed to be paid on the $30,000 was only 4 percent although he understood that the actual interest to be paid would fluctuate with economic conditions and be competitive and (2) to access the $30,000 he could not withdraw money, but had to borrow from the policy. Although a loan could be processed quickly, Mr. Nolan did not like the idea of having to borrow his own money. The record is not clear whether the Nolans did or did not receive interest on the $30,000 for the time it was on deposit with National Western Life Insurance Company before the cancellation. The policy itself provides that on cancellation the insured "will be refunded the greater of the premium you paid or the cash value at that time." (Respondent's Exhibit 25) Because Mrs. Nolan signed an application naming Mr. Nolan and beneficiary for the insurance purchased with the $30,000, because she had a physical examination to obtain the policy, and because the check to purchase it was made out to National Western Life Insurance, Mr. Nolan's testimony that he did not understand that the "investment" he was making with his $30,000 involved the purchase of an insurance policy is not accepted. Brennan did sell the $30,000 policy to the Nolans in part on the basis that they would receive approximately $200,000 in free life insurance. The Nolans were more interested in a tax shelter for the $30,000 that would pay high interest, not in the insurance benefit. In summary, Brennan failed to explain the surrender charge associated with the Great American Life Insurance Company Section 403(b) tax sheltered annuity to the Nolans when it was purchased. Brennan made no misrepresentations with respect to the sale of the two annuities from National Western Life Insurance which were to be used as the Nolans' individual retirement accounts. There were no misrepresentations made to Mr. Nolan with respect to the purchase of his Kemper Life Insurance policy, which he still has. Brennan told the Nolans that they would receive free life insurance associated with the deposit of $30,000 in the endowment policy on Mrs. Nolan's life, which had been purchased due to the tax free accumulation of interest on the $30,000 deposited.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Counts I and II of the Amended Administrative Complaint be DISMISSED. That on Count III, for offering free life insurance as an inducement for the deposit of $30,000 in the single premium endowment policy, Brennan be FINED $2,500.00 and his license SUSPENDED for a period of three (3) months. DONE AND ORDERED this 1st day of May, 1987, in Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-0707 The following constitute my specific rulings pursuant to Section 120.59(2), Florida Statutes (1985), on the proposed findings of fact submitted by the parties. See Rule 28-5.405(3), Florida Administrative Code. Rulings on Proposed Findings of Fact Submitted by Petitioner Before ruling on the individual proposals made by the Petitioner, it is appropriate to make some general comments. The proposals submitted by the Petitioner are exceptionally detailed, indeed unnecessarily so. Many are rejected as unnecessary or cumulative to the facts found in the Recommended Order. Others are irrelevant because they address issues not properly raised by the allegations of the First Amended Administrative Complaint. The testimony of the principal witnesses on counts one and two, Rebecca Fisher and Celine Rompre, was certainly sincere but generally unpersuasive. The testimony of the other expert witnesses who make their livings by selling tax sheltered annuities was also not convincing because their view of Mr. Brennan and his activities is so colored by their competition. Mr. Parmele's testimony left an abiding impression of hostility to Brennan for trying to persuade clients of Parmele to switch their annuities to companies represented by Brennan, and Parmele's testimony is discounted based upon his hostility. Mr. Indianer was not as hostile, but his financial interest in removing Brennan as a competitor also causes substantial discounting of his testimony. The opinions of Robert Storms are accorded little weight because he does not regard himself as an expert in tax sheltered annuities. To the extent necessary, covered in Finding of Fact 1. Covered in Findings of Fact 3-6. Covered in Finding of Fact 7. To the extent relevant, covered in Finding of Fact 2. Rejected as irrelevant. Rejected because it is not a finding of fact. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as a statement of law, not a finding of fact. Covered in Finding of Fact 8. Rejected as unnecessary. To the extent relevant, covered in Finding of Fact 2. Rejected as unnecessary. Rejected as a statement of law, not a finding of fact. Rejected as unsupported by the transcript citation given. To the extent necessary, covered in Finding of Fact 10. Rejected as irrelevant. Although true, rejected as unnecessary. Covered in Finding of Fact 8. Rejected as unnecessary, and unsupported by the transcript citation given. Covered in Finding of Fact 25. Rejected as unnecessary. Covered in Finding of Fact 13. Rejected as unsupported by transcript citation given which only reflects a division of commissions between the Jones' and Brennan with respect to sales to employees of the Boca Raton Academy. Rejected as irrelevant. Rejected as unnecessary and not supported by the exhibit citation given. PX 25 authorizes Langsett to procure applications; whether this is a license as a "writing agent" is unclear. Rejected as a statement of law. Rejected because Betty Jones had no written contract with the Brennan firm. Langsett's relationships are covered in Finding of Fact 8. Rejected because Jones had no written contract with the Brennan firm. With respect to Langsett's contract with the firm, rejected as irrelevant. To the extent relevant, covered in Finding of Fact 8. Jones had no written contract with the firm. Rejected because Langsett and Jones testified that being independent contractors included that they pay their own expenses, not meant that they pay their own expenses. Rejected as irrelevant. Covered in Finding of Fact 14. Rejected as unnecessary. Rejected as inconsistent with the transcript citations given. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. To the extent that the information was provided in the form of sales kits, covered in Finding of Fact 12. Covered in Finding of Fact 12. Rejected as not supported by the evidence. Rejected as unnecessary. Rejected as not constituting a finding of fact. Rejected as not constituting a finding of fact. Rejected as not constituting a finding of fact. Rejected as subordinate and cumulative to Finding of Fact 12. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary and inconsistent with the transcript citation given. Rejected as unnecessary and irrelevant. Rejected as unnecessary and irrelevant. Rejected as unnecessary and irrelevant. Rejected as unnecessary and irrelevant. Rejected as unnecessary and irrelevant. Rejected as unnecessary and irrelevant. Rejected as unnecessary and irrelevant. Rejected as unnecessary and irrelevant. Rejected as a recitation of testimony, not a finding of fact, also irrelevant. Rejected as irrelevant. Rejected as unnecessary and irrelevant. Rejected as unnecessary Rejected as unnecessary. The citation given supports only the statement made as to Betty Jones. Rejected as unnecessary. To the extent necessary, covered in Finding of Fact 9. Rejected as unnecessary. Covered in Finding of Fact 12. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 15. Covered in Finding of Fact 15. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. To the extent necessary, covered in Finding of Fact 12. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. To the extent necessary, covered in Finding of Fact 12. Covered in Finding of Fact 12. Rejected as unnecessary. To the extent necessary, covered in Finding of Fact 15. Rejected as unnecessary. Rejected as unnecessary. - Rejected as a statement of law, not a finding of fact, also unnecessary. Rejected as a statement of law, not a finding of fact, also unnecessary. Rejected as a statement of law, not a finding of fact. Rejected as a statement of law, not a finding of fact. Rejected as a statement of law, not a finding of fact. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 23. To the extent necessary, covered in Finding of Fact 23. Rejected as subordinate to Finding of Fact 23. Rejected as subordinate to Finding of Fact 23. Rejected as inconsistent with Finding of Fact 23. Rejected as unnecessary. Rejected as unnecessary. Subordinate to Finding of Fact 33. Subordinate to Finding of Fact 33. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 33. Subordinate to Finding of Fact 33. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected for the reasons stated for the rejection of proposed finding of fact 32. Rejected as unnecessary. Rejected as unnecessary. Rejected as cumulative to Finding of Fact 15. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as irrelevant and unnecessary. Further, Mr. Storm's testimony is not persuasive on the point. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected because the form, PX 9, is a creation of a committee which is advisory to the risk manager of the School Board of Broward County and has no legal status. Rejected because the form, PX 9, is a creation of a committee which is advisory to the risk manager of the School Board of Broward County and has no legal status. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Mr. Storm's testimony as to what would be misleading is unpersuasive. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Although true, rejected as unnecessary. The power to appoint sub-agents who become producers for insurance carriers does not mean that Brennan exercised direct supervision and control over such persons, or over Langsett and Jones in the situations at issue in this matter. Although true, rejected as unnecessary. Covered in Finding of Fact 14. Covered in Findings of Fact 8 and 25. Covered in Finding of Fact 2. Rejected as irrelevant. Covered in Finding of Fact 13. Rejected as irrelevant. Rejected as irrelevant. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as a recitation of testimony7 not a finding of fact. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 12. Rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 9. Subordinate to Finding of Fact 12. Rejected as Rejected as unnecessary. Rejected as irrelevant. Rejected as irrelevant. Rejected as irrelevant. Rejected as unnecessary. Rejected as irrelevant. Rejected as irrelevant. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected because the finding is taken out of context. Agents such as Langsett submit business through the Brennan firm and receive their commission through the accounting system at the Brennan firm. When the files are submitted to the carriers, this does not imply that the firm has the right not to pay Langsett, it is the medium through which his payments are processed. See Finding of Fact 12. Covered in Finding of Fact 12. Rejected as a misstatement of the testimony. That testimony occurred because Langsett was asked about commissions payable in a situation he never had experienced. Rejected as unnecessary. Rejected as irrelevant and unnecessary. Rejected as irrelevant. Rejected as irrelevant. Covered in Finding of Fact 12. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as a recitation of testimony, not a finding of fact. Rejected as a recitation of testimony, not a finding of fact. Rejected as unnecessary. Generally covered in Finding of Fact 12. Covered in Finding of Fact 12. Rejected as unnecessary. Rejected as cumulative to Finding of Fact 12 concerning education. Rejected as unnecessary. Covered in Finding of Fact 12. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 12. Covered in Findings of Fact 12 and 25. Rejected as unnecessary. Rejected as unnecessary. Rejected as cumulative to Finding of Fact 12. Rejected as unnecessary. Rejected as unnecessary. Rejected as irrelevant and unnecessary. Rejected as irrelevant and unnecessary. Rejected as unnecessary. Generally covered in Findings of Fact 15 and 16. As pointed out at the beginning of these rulings, Mrs. Fisher's version of her dealings with Langsett and Brennan were not found persuasive. For example, only one meeting occurred between Fisher and Langsett, not two. Rejected as irrelevant to the allegations in the Amended Administrative Complaint and unnecessary. Rejected as a recitation of testimony, not a finding of fact. Rejected because I do not accept Mrs. Fisher's version of the events, rendering Mr. Indianer's comments on that version irrelevant and unnecessary. See also the general comment about Indianer at the beginning of this section. The issue of free life insurance is covered in Finding of Fact 20. Rejected as unnecessary. Rejected as a recitation of testimony, not findings of fact. Covered in Findings of Fact 27, 29, 30 and 31. Many of the proposed findings are rejected as unnecessary. Covered in Findings of Fact 29, 30 and 31. The proposal that Jones told Rompre she could deposit $4,000 per year for five years is rejected and the contrary testimony of Ms. Jones, incorporated in Finding of Fact 31, has been accepted. Rejected because the testimony of Mr. Storms is not found persuasive. Rejected as a recitation of testimony, not findings of fact. Many of the proposals are unnecessary. Rejected as unnecessary. Generally rejected because Mr. Parmele's testimony is not found persuasive. Further, many of the proposals aggregated in the finding are unnecessary. That Jones told Rompre she could deposit $4,000 a year for five years has been rejected. Rulings on Proposed Findings of Fact Submitted by Respondent Covered in Finding of Fact 1. To the extent relevant, covered in Finding of Fact 2. To the extent necessary, covered in Finding of Fact 2. Rejected as unnecessary. Covered in Finding of Fact 8. To the extent necessary, covered in Finding of Fact 8. To the extent necessary, covered in Finding of Fact 25. The proposal that Jones had a written agent's agreement with the Brennan firm is rejected because no such document was offered in evidence. To the extent necessary, covered in Findings of Fact 9 and 12. Rejected as cumulative to Finding of Fact 9. Rejected as unnecessary but discussed in the introduction to the rulings on the Petitioner's proposed findings of fact as relates to the credibility of Indianer and Parmele. Rejected as unnecessary. Rejected as unnecessary but discussed in the introduction to the rulings on the Petitioner's proposed findings of fact. Rejected as unnecessary. Rejected as not constituting a finding of fact. Covered in Findings of Fact 8 and 14. Covered in Findings of Fact 15 and 16. Rejected as a recitation of testimony, not a finding of fact. Rejected as a recitation of testimony, not a finding of fact. Rejected as a recitation of testimony, not a finding of fact. Rejected as a recitation of testimony, not a finding of fact. Rejected as unnecessary. To the extent necessary, covered in Finding of Fact 21. Rejected as a recitation of testimony, not a finding of fact. Rejected as a recitation of testimony, not a finding of fact. Rejected as a recitation of testimony, not a finding of fact. Rejected as unnecessary. Rejected as unnecessary because Indianer's testimony has not been accepted. Rejected as unnecessary. Covered in Findings of Fact 14 and 25. Covered in Findings of Fact 26, 27 and 31. Covered in Finding of Fact 29. Covered in Finding of Fact 31. Covered in Finding of Fact 31. Rejected as cumulative to Findings of Fact 30 and 31. Rejected as unnecessary, and as a recitation of testimony, not a finding of fact. Rejected as unnecessary. Covered in Finding of Fact 32. Rejected because the testimony of Mr. Parmele has not been accepted for the reasons. stated in the introduction to the rulings on the Petitioner's proposed findings of fact. See also Finding of Fact 33. Generally rejected as a recitation of testimony. Rejected as unnecessary because it is based on income of $7,200 which was not Mrs. Rompre's income at the time of her meeting with Betty Jones. Accepted in Finding of Fact 33. To the extent not cumulative, covered in Finding of Fact 31. Covered in Findings of Fact 35 and 38. Covered in Finding of Fact 43. Rejected as unnecessary. Covered in Finding of Fact 43. Covered in Findings of Fact 39, 44 and 46. Rejected as a recitation of testimony and because the problem was not only that the form did not contain the surrender charge, but that Brennan had not explained the surrender charge to the Nolans when the Great American Section 403(b) tax sheltered annuity was first purchased. Generally rejected as unnecessary. The surrender value is explained in the altered amendment to the employment contract. See Finding of Fact 39. To the extent necessary, covered in Finding of Fact 41. To the extent necessary, covered in Finding of Fact 44. Covered in Finding of Fact 44. Covered in Finding of Fact 46 and 47. Rejected for the reasons stated in Finding of Fact 46. Covered in Finding of Fact 46. To the extent necessary, covered in Finding of Fact 46. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 23. Rejected as unnecessary and because the testimony of Mr. Indianer has not been found persuasive. Rejected because the testimony of Mr. Parmele has not been accepted. Covered in Finding of Fact 23. Sentences 1 and 2, covered in Finding of Fact 14. The remainder, rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 12. Covered in Findings of Fact 10 and 11. Generally covered in Finding of Fact 12. Covered in Findings of Fact 8 and 11. Rejected as unnecessary. COPIES FURNISHED: James F. Falco, Esquire Department of Insurance and Treasurer Room 413-B, Larson Building Tallahassee, Florida 32399-0300 Russell L. Forkey, Esquire Pamela M. Burdick, Esquire 400 Southeast 12th Street Fort Lauderdale, Florida 33316 Honorable William Gunter State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell, General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level 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
Findings Of Fact During 1977, while licensed as an insurance agent, Mr. Yesnes engaged in a scheme to fraudulently obtain sales commissions from various insurance companies. He submitted applications for insurance coverage without the prior consent of the purported applicants. He obtained the data to fill in their application forms from information contained in previous policy records. This scheme was admitted by Mr. Yesnes when he appeared before a Department of Insurance investigator, Eugene Petree, III, to explain consumer complaints against him related to the bogus applications. On February 24, 1977 Mr. Yesnes, while registered with the Department as a non-resident agent, sold a $50,000 decreasing term life insurance policy to a 65 year old widow, Mrs. Inez Cameron. This sale was made in Pensacola, Florida, where both Mr. Yesnes and Mrs. Cameron were living at the time. The beneficiary of the policy was designated as "the estate of Inez Cameron." When that designation was made, Mr. Yesnes was the legatee of Mrs. Cameron's will. Mr. Yesnes later requested the company issuing the policy, United Presidential Life Insurance Company, to change the beneficiary of the policy to himself by name, but the company refused to make the change. Under the foregoing circumstances it is contrary to the standards of the insurance industry for an agent to sell a policy in which he is made the beneficiary. Mrs. Cameron was a widow and had no known living close relatives. She had established a personal "mother-son" relationship with Mr. Yesnes and for a period of time they lived together. For the last year and a half Mr. Yesnes has been a pizza wholesaler in the Pensacola area. He contracts for a supplier to manufacture the pizzas which Mr. Yesnes then sells to bars and small restaurants who cannot economically produce their own pizzas. According to his present supplier Mr. Yesnes sells a product of a much higher quality than the purchasers should expect to get for their cost. His present supplier, Mr. Meehan, has known Mr. Yesnes for eight to nine months. In his opinion Mr. Yesnes is trustworthy and reliable. He pays his bills on time and keeps his obligations. Mr. Secchiari, the owner of Genos Pizza in Pensacola, is Mr. Yesnes' former supplier. He too believes him to be trustworthy and reliable. In his opinion as an insurance consumer he believes that if licensed, Mr. Yesnes would be better than some life insurance agents and not as good as others. Mr. Yesnes has always been prompt in paying his bills with Mr. Secchiari. Mr. Yesnes was initially licensed as an insurance agent in Florida in February 1965. Three years later he moved to Atlanta, Georgia. He later moved to Pensacola in 1976 where he was employed by the Franklin Life Insurance Company. During that employment he was supervised by Michael Howard, an area manager. Mr. Howard had contact with Mr. Yesnes for a period of eighteen months. On the basis of that experience Mr. Howard is of the opinion that Petitioner is ethically unfit to be in the insurance business. Respondent offered testimony from Ms. Dorothy Dale Godwin and Ms. Sarah Dawson in the form of their opinion of Petitioner's character. This testimony is not accepted as credible. It lacks an adequate foundation because the witnesses contact with Mr. Yesnes was fleeting. Due to their relationship with Mrs. Cameron they are also found to be biased against Mr. Yesnes. On his pending application for licensure Mr. Yesnes gave 804 Royce Street, Pensacola, Florida 32503 as his address for the past five years. In fact, during that time he lived in Atlanta, Georgia; Mobile, Alabama; and at different addresses in Pensacola. He gave the 804 Royce Street address because that is where his father lives. At times Petitioner has lived there and he considers it his permanent address. At no time during these proceedings has Petitioner expressed regret for any past unprofessional actions. He has also not expressed any commitment not to engage in unprofessional behavior in the future, if licensed to sell insurance in the State of Florida.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Respondent, Department of Insurance and Treasurer, enter a final order denying the application of Ivan Yesnes for a license as a life agent in the State of Florida. DONE and RECOMMENDED this 14th day of July, 1981, in Tallahassee, Florida MICHAEL PEARCE 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 14th day of July, 1981.
The Issue The issue in this case is whether the Department of Insurance should discipline the Respondent for alleged violations of provisions of the Insurance Code governing agents.
Findings Of Fact The Respondent, Frank Lefler, Jr., is licensed in the State of Florida as a life and variable annuity contracts salesman, as a life insurance agent, and as a general lines insurance agent. During 1991 and 1992, he was employed by Metropolitan Life Insurance Company (MetLife). In the summer of 1991, a woman named Theresa Novovesky, a registered professional nurse living in New Orleans, Louisiana, received a telephone solicitation regarding a "Nurses Insured Retirement Plan." At the time, she was engaged to be married later in the summer to an Air Force pilot named David Russell. Not wanting to deal with the matter over the telephone, she asked the caller to mail her the information. She later received in the mail a brochure advertising for a "Nurses Insured Retirement Plan" being offered by "Metropolitan Life and Affiliated Companies." The Plan was advertised as "a convenient way for you to accumulate cash for the future you deserve." The plan's five "important benefits" included: CONTROL If you should leave your present nursing position, your retirement benefits can stay with you. FLEXIBILITY Accessibility of cash. TAX BENEFITS Tax deferred accumulation while providing a life insurance benefit. SECURITY Can be used to provide life time income. DISABILITY Your monthly contribution can continue to be deposited by Metropolitan should you become disabled. Novovesky was interested in the program described in the brochure and telephoned the toll-free number on the brochure for more information. Her call was received at the Tampa, Florida, offices of MetLife, and she used the descriptions contained in the advertising brochure to attempt to describe the reason for her call and the area of her interest. She left her telephone number so that she could be contacted at her residence in New Orleans. Not long afterwards, the Respondent telephoned Novovesky in New Orleans. She again used the descriptions contained in the advertising brochure to attempt to describe the reason for her call and the area of her interest. The Respondent made an appointment to visit Novovesky at her apartment complex in New Orleans to show her the MetLife products that were consistent with her area of interest. He mentioned at the time that he was new and in training with the company and that he would have his supervisor, Rick Urso, with him to assist. Urso and the Respondent met with Novovesky on July 25, 1991. They discussed aspects of Novovesky's career, personal and financial goals and ascertained that she was interested in a retirement savings plan. The Respondent presented a MetLife product that actually was a whole life insurance policy. He described the tax-free accumulation of cash value from contributions of $100 a month, and he estimated the cash value at age 59 as in the neighborhood of $600,000. It is unclear whether the Respondent orally explained to Novovesky in so many words during the July 25, 1991, meeting that the product being presented was in fact a whole life insurance policy. She testified that he did not, and the product could have been explained in terms that did not clarify to her that it was in fact a life insurance policy. But Novovesky also testified that she did not understand life insurance or investment terminology and knew little about either. It is conceivable that the Respondent explained the true nature of insurance product in terms that she should have been able to understand but that she did not understand what he was telling her. In his testimony, her husband (then fiance) confirmed that possibility. In addition, by Novovesky's own testimony, the Respondent asked her to verify the accuracy of information the Respondent took from her during the meeting and wrote on a form entitled, "Application for Life Insurance." Among other things, the form included a section on "Medical Data" "TO BE COMPLETED FOR ALL PERSONS TO BE INSURED." Although Novovesky denies that she read or understood the form, she clearly signed it. Although she testified that she did not recall, Novovesky also apparently was required to undergo a physical examination, including blood sampling and testing, to qualify for the insurance for which she had applied. When applying for the insurance she ultimately bought, Novovesky post- dated the check for the initial premium until after her fiance's scheduled return to the United States in August, 1991, for a brief period of leave from active Air Force duty in England. She reasoned that, in addition to helping her make final arrangements for their imminent wedding, he could advise her on whether to go through with the application she had signed. During the hustle and bustle of the prenuptial arrangements, her fiance telephoned the Respondent to assure himself and his fiancee that she had made reasonable retirement plans. From what she had told him, he assumed that she had purchased an annuity-type of retirement investment. He previously had made it clear to her that he did not think it was smart for her to buy life insurance. For whatever reason--perhaps because she preoccupied with planning their imminent wedding, or perhaps because she was afraid to tell him that she had applied for life insurance against his advice, or perhaps because she truly did not comprehend that she had in fact applied for a life insurance policy--she apparently did not tell him that she had applied for life insurance. Working from the incorrect assumption that his fiancee had purchased annuity-type of retirement investment, he asked the Respondent certain questions regarding guaranteed and anticipated performance and was given certain answers that did not alert him that the Respondent was referring to a life insurance policy. Satisfied with the answers he had gotten, Novovesky's fiance told her that it looked "OK" to him, and they got on with their busy lives. It appears that, on or about August 30, 1991, someone with MetLife delivered to Novovesky her whole life insurance policy, as well as a typical written illustration of predicted performance of the whole life insurance policy, given certain assumptions. The illustration included references to: life paid up at 95; total, initial annual, and initial semi-annual premium; annual dividend; a guaranteed death benefit; additional insurance purchased by dividends; illustrative death benefit; guaranteed cash value; cash value of additional insurance; illustrative cash value; life insurance surrender cost index; and life insurance net payment cost index. It is difficult to understand how, but Novovesky testified that, even after receipt of the policy and illustration, she still did not understand that she had applied for and purchased life insurance. She testified that she did not read the material when she received it and that, after the wedding, Novovesky (now Mrs. Russell) moved with her husband to England. The policy and other papers she relating to her dealings with the Respondent were packed away in boxes and were relatively inaccessible until after their return to the United States. Notwithstanding her testimony at final hearing and her prior hearsay statements to Insurance Department regulators, not only were the words "life insurance" mentioned in written statements she received from MetLife, she herself wrote a letter to the Respondent on November 4, 1991, advising that, while she was living in England with her husband, she would be unable to utilize the "Check-O-Matic" payment plan the Respondent had set up for her and that personal checks would be "my only means of paying my life insurance monthly." When the Mrs. Russell did not receive monthly or even quarterly statements from MetLife, and MetLife responded to inquiries by saying that only an annual statement was due her, Mr. Russell especially became concerned about exactly what his wife had purchased. Still, the policies and information was inaccessible, and they decided it could wait until after their return to the United States. When they returned and Mrs. Russell received her first Anniversary Statement in the mail, Mr. Russell could tell that his wife had not purchased an annuity-type investment, and he decided it was time to find the policy and related MetLife information to determine just what was going on. When he located and inspected the documentation, an incredulous Mr. Russell realized for the first time that his wife had purchased a life insurance policy, which was precisely what he told her not to buy. His reaction was that he could not understand how she could have been so foolish, and he told her so. She blamed it on the Respondent and MetLife. Approximately a year later, in summer of 1993, the Russells read a newspaper article indicating that many MetLife policyholders were registering similar complaints and that state insurance regulators were investigating. Mr. Russell became persuaded that, after all, perhaps MetLife, and not his wife, was to blame for the mistake. They successfully pursued their desire to rescind the life insurance policy, get a full refund from MetLife, and reinvest the refund in another investment vehicle. (Initially, they invested in an annuity; they later changed to a stock mutual fund.)
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 Administrative Complaint in this case. RECOMMENDED this 11th day of October, 1994, 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 11th day of October, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-2210 To comply with the requirements of Section 120.59(2), Fla. Stat. (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1.-6. Accepted and incorporated to the extent not subordinate or unnecessary. 7. The visit was on July 25, 1991; otherwise, first sentence, accepted and incorporated. Second sentence, rejected as not proven exactly what the Respondent said. 8.-9. Accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that life insurance was not discussed. Otherwise, accepted and incorporated. Rejected as not proven that she did not read any of the application. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. 12.-13. Accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven: (1) that Russell formed any opinion about what the Respondent "was soliciting" (he was concerned only about what his fiancee was buying); or (2) that life insurance was discussed. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that the documents were "numerous" or that she did not "review" them. Accepted, but not proven that the Respondent knew about them or sent them, and unnecessary. Rejected as not proven that she did not know she had purchased a life insurance policy. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted, technically, but unnecessary. First sentence, rejected as not proven; second sentence, accepted and incorporated to the extent not subordinate or unnecessary. 20.-21. Accepted and incorporated to the extent not subordinate or unnecessary. (However, implication that they were informed for the first time is rejected as not proven.) First sentence, rejected as not proven; second sentence, accepted and incorporated. "Unknowingly" is rejected as not proven. Otherwise, accepted but subordinate and unnecessary. Second and third sentences, accepted but subordinate and unnecessary. The rest is rejected as not proven. "Understandingly unhappy" is rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and subordinate to facts found. Respondent's Proposed Findings of Fact. 1.-2. Accepted and incorporated. Rejected as being conclusion of law. Accepted and incorporated. The year 1990 is rejected as being contrary to facts found. (The meeting was in 1991.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. First sentence, not clear from the evidence. Otherwise, accepted but largely subordinate and unnecessary. Last sentence, rejected as being argument. Otherwise, accepted but subordinate to facts found, and unnecessary. Accepted but subordinate to facts found, and unnecessary. 9.-10. Accepted and incorporated. 11.-12. Accepted and incorporated to the extent not subordinate or unnecessary. 13.-14. Accepted but subordinate to facts found, and unnecessary. 15.-17. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate to facts found, and unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate to facts found, and unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate and unnecessary. 23.-24. Accepted but subordinate to facts found, and unnecessary. Accepted but subordinate and unnecessary. As to last sentence of the first paragraph, rejected as contrary to the evidence that "any misperception stemming from the brochure" "could not be due to" the Respondent (although not proven that it was). Otherwise, the first paragraph is accepted and incorporated. The second paragraph is argument and a transcript excerpt that is subordinate to facts found, and unnecessary. 27.-28. Accepted and incorporated to the extent not subordinate or unnecessary. 29. Accepted but argument, subordinate, and unnecessary. 30.-31. Cumulative. (Also, subordinate and argument.) Rejected as contrary to facts found that Lefler was not identified. Otherwise, largely accepted but subordinate to facts contrary to those found. Argument and subordinate. 34.-35. Accepted but subordinate and unnecessary. Argument, subordinate and unnecessary. Last sentence, rejected as being argument and as being subordinate to facts contrary to those found. Otherwise, accepted but subordinate to facts found, and unnecessary. 38.-40. Largely accepted but subordinate and unnecessary. 41. First sentence, accepted but subordinate to facts found, and unnecessary. Second sentence, rejected as argument, as subordinate and as unnecessary. 42.-44. Accepted and incorporated to the extent not subordinate or unnecessary. Argument, subordinate and unnecessary. Largely, accepted and incorporated to the extent not argument, subordinate or unnecessary. Cumulative. First sentence, accepted but subordinate to facts found. Second sentence, cumulative. COPIES FURNISHED: James B. Bossart, Esquire Daniel T. Gross, Esquire Department of Insurance and Treasurer 612 Larson Building Tallahassee, Florida 32399-0333 Jonathan L. Alpert, Esquire David Ferrentino, Esquire Alpert, Josey & Hughes First Union Center 100 S. Ashley Drive, Suite 2000 Tampa, Florida 33602 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
