The Issue The issue for consideration in this case is whether the Respondent's license as a viatical settlement provider in Florida should be disciplined because of the matters alleged in the Administrative Complaint dated June 29, 2000.
Findings Of Fact At all times relevant to the issues herein, the Petitioner, Department of Insurance (Department), was the state agency in Florida responsible for the licensing of viatical settlement providers and the regulation of the viatical settlement industry in this state. The Respondent, Accelerated Benefits Corporation (ABC), was licensed as a viatical settlement provider in Florida. Pursuant to an investigative subpoena issued by the Department, in November and December 1999, investigators of the Department examined the records of the Respondent, as well as other viatical settlement providers operating within the state, looking into the viatical settlement industry's practices in Florida. As a part of the investigation, Janice S. Davis, an examiner/analyst with the Department, copied records of the Respondent relating to at least six individual viatical settlement transactions in which the Respondent was involved. These files relate to Counts 5 through 7 and 9 through 11 of the Administrative complaint. Ms. Davis also obtained from the Respondent the information regarding the location of several other cases, the files for which had been confiscated by the Statewide Prosecutor as a part of an ongoing investigation into the viatical settlement industry, and subsequently obtained copies of those files from the office of the Statewide Prosecutor. Those files relate to Counts 1 through 4 and 8 of the Administrative Complaint. As outlined in Count Five of the Administrative Complaint, in May 1998, D.K. applied to The United States Life Insurance Company (US Life) for a $250,000 life insurance policy. As a part of the policy application, D.K. stated that he had not consulted with any physician or other practitioner within the five years prior to the application. On July 29, 1998, Life Benefit Services (LBS), a viatical settlement broker used by ABC, obtained a "Confidential Application Form" completed by D.K. which revealed that sometime in 1982, D.K. had been diagnosed as HIV positive. LBS prepared a "Policy Summary Sheet" regarding D.K.'s application on which it noted that D.K. had been diagnosed with HIV/AIDS. LBS also had records from D.K.'s physician reflecting that D.K. had been under a doctor's care during the preceding five years. The policy was issued to D.K. on or about August 1, 1998. Notwithstanding the information it had on hand, LBS brokered the sale of the instant policy to ABC. On or about August 25, 1998, D.K. and the Respondent entered into a contract which called for the Respondent to purchase D.K.'s $250,000 life insurance policy for $25,000. At that point, the policy was still contestable. As a part of the transaction, the Respondent gave D.K. written instructions not to contact his insurance company until advised to do so by ABC. The Respondent also had D.K. sign an addendum to the purchase contract in which he agreed to not advise US Life that he had sold his policy and acknowledged his recognition that his life insurance policy was still contestable. D.K. was also asked and agreed to sign an undated change of ownership form for use by ABC at the expiration of the period of contestability. While the policy was still contestable, an employee of the Respondent, Jennifer Grinstead, paid the annual premium on the policy out of her personal checking account. This served to conceal the fact that D.K. had sold the policy to the Respondent. Ms. Grinstead was reimbursed for the premium payment by American Title Company of Orlando. American Title was the Respondent's trustee. The Respondent did not report any of the information it had regarding D.K.'s actual health history to US Life or the Department. A review of the documentation related to this transaction reflected that the Respondent purchased the policy rights from D.K. after it knew, or with the exercise of reasonable diligence should have known, that D.K. had made material misrepresentations regarding his health to US Life, and nonetheless attempted to conceal those misrepresentation from US Life. With regard to Count Six, the evidence of record indicates that on May 4, 1997, W.E. applied for a $45,000 life insurance policy from Life USA Insurance Company (Life USA). On the application form he signed and submitted, W.E. specifically stated he had not received any medical or surgical advice or treatment within the preceding five years, had not been advised by a medical doctor that he had AIDS or ARC, and was not, at the time, taking any medication. Based on the representations made by W.E., the policy was issued on November 12, 1997. Notwithstanding the representations made by W.E. to Life USA, W.E. also advised United Viatical Settlements (UVS), the settlement broker used by the Respondent, on December 17, 1997, through a corollary application form, that he had been diagnosed with HIV "a few years ago," and several different other forms utilized by the Respondent reflect that the Respondent knew W.E. had AIDS or HIV, and was under a doctor's treatment for the condition during the preceding five years. Nonetheless, UVS brokered the sale of this policy to the Respondent. In late December 1997, at which time the policy was still contestable, the Respondent entered into a contract with W.E. for the purchase of the $45,000 policy for $4,914.25. As a part of the sales procedure, the Respondent issued to W.E. instructions not to contact his insurance company until instructed to do so by the Respondent's representative, and it also had W.E. sign an addendum to the purchase agreement in which W.E. acknowledged that the policy in issue was still contestable. W.E. was also asked to agree not to inform Life USA of the sale of the policy to the Respondent and to sign an undated change of ownership form for use by the Respondent to transfer ownership when the contestability period had expired. The arrangement between the Respondent and W.E. called for Jennifer Grinstead to pay the annual premium on the policy for W.E. from her personal account and to receive reimbursement for those payments from American Title Company, the Respondent's trustee. This arrangement served to conceal from Life USA the fact that W.E. had sold the policy to the Respondent. The Respondent did not report the fact that it had knowledge of W.E.'s medical condition to the Department. The evidence of record reflects that at the time of the purchase of W.E.'s policy, the Respondent knew or should have known that W.E. had made material misrepresentations regarding his medical state to Life USA on his application for life insurance from that company, and it thereafter took actions which served to conceal those material misrepresentations from the company. In the Case of Count Seven, on April 26, 1997, A.T. applied for a life insurance policy from Lincoln Benefit Life (Lincoln) in the amount of $48,000. On the application form, A.T. specifically stated that he had not been under medical observation or treatment within the preceding five years, and that he had not been diagnosed as having AIDS or ARC, or tested positively for HIV. The policy was issued by the company on or about June 2, 1997. Notwithstanding those representations, on January 14, 1998, Medical Escrow Society, a viatical broker used by the Respondent in its dealing with Lincoln, received an application form from A.T. on which A.T. indicated he had tested positive for HIV on August 8, 1989, had been diagnosed with AIDS ON August 10, 1994, and was under the care of a physician. Medical Escrow Society nonetheless brokered the sale of the policy to the Respondent. Shortly after the contestability period on this policy expired. On June 25, 1999, the owner of the policy, Ralph Cahall, entered into a contract with the Respondent whereby the Respondent bought Cahall's interest in the proceeds for $29,238.72. At the Respondent's request, ownership of the policy was changed from Cahall to American Title Company of Orlando, the Respondent's trustee without either Lincoln or the Department being informed of the transfer. The file relating to this policy indicates that the Respondent brought about the transfer from Cahall after it knew or, in the exercise of reasonable diligence should have known, that A.T. had made material misrepresentations regarding his health on the application to Lincoln, and that the Respondent, though it did not report what it knew to the Department, also thereafter undertook a course of action which was designed to conceal that information from Lincoln. With regard to Count Nine, the evidence indicates that on or about September 30, 1996, R.M. submitted an application for a $100,000 life insurance policy to Interstate Assurance Company (Interstate). On the application, R.M. indicated he had not been diagnosed with an immune system disorder within the preceding ten years, and the policy was issued on October 9, 1996. Notwithstanding that representation, on July 18, 1997, R.M. completed an application form for Benefits America, a broker used by the Respondent with regard to this policy, in which he stated he had been tested positive for HIV on February 11, 1994. A "Policy Acquisition Worksheet" utilized by the Respondent on or about July 22, 1997, when R.M. was dealing with Benefits America regarding the viatication of his life insurance policy, reflects that the company was aware at that time that R.M. had been diagnosed with HIV in 1994. Even with that knowledge, the Respondent went through with the viatication, and on July 31, 1997, while the policy was still within the contestability period, bought the policy for $15,430. On August 4, 1997, R.M. executed an addendum to the purchase agreement at the behest of the Respondent, wherein he recognized the policy was still contestable and agreed, among other things, not to contact his insurance company or tell them he had sold the policy to a viatical settlement provider. He also was asked to sign, and signed, an undated change of ownership agreement for use by the Respondent at the end of the contestability period. Jennifer Grinstead, an employee of the Respondent, paid R.M.'s annual premium on the policy during the contestibility period out of her personal checking account. This action, when done in conjunction with R.M.'s failure to advise the insurance company of the sale, served to conceal the transfer of ownership from R.M. to the Respondent. Ms. Grinstead was reimbursed for the premium payments by the Respondent's trustee. The Respondent did not report to Interstate or to the Department that R.M. had made material misrepresentations regarding his health in procuring the issuance of the policy even though it knew or, in the exercise of due diligence, should have known that the material misrepresentations had been made. As to Count Ten, on May 12, 1997, J.R. submitted an application to Interstate for a life insurance policy on his life in the amount of $980,000. On his application, J.R. indicated he had not been diagnosed with an immune system disorder within the preceding ten years, had not been treated by a member of the medical profession in the preceding five years, and was not, at the time, on medication or undergoing treatment or therapy. The policy was issued on May 19, 1997. Notwithstanding those representations, on July 9, 1997, J.R. filled out an application form for the Respondent's broker for this transaction, Life Benefit Services, on which he indicated he had been diagnosed as HIV positive in May 1996. A "Mortality Profile" provided to the Respondent by AVS indicated that J.R. was first diagnosed as being HIV positive in August 1995, nine months or so earlier than he admitted, and that he had been undergoing treatment by a doctor and receiving medications well within the five years preceding the application. On August 20, 1997, J.R. entered into a contract with the Respondent calling for the sale of this insurance policy to ABC for a net sum of $107,800. At this point, the policy was still contestable. At that time, the Respondent instructed J.R. in writing not to contact his insurance company until told to do so by the Respondent's representative. The Respondent also had J.R. sign an addendum to the purchase agreement in which he acknowledged the policy was still contestable, that he would not inform Interstate of the sale, and that he would sign an undated change of ownership form for use by ABC when the contestability period expired. Notwithstanding that the Respondent knew of the material misrepresentations made by J.R. as to his health when he procured the policy, it did not report what it knew to the Department, and took steps to insure Interstate was not informed of what was going on. With regard to Count Eleven, on May 16, 1996, the same J.R. applied to Massachusetts General Life Insurance Company, later, Conseco Life Insurance Company (Conseco), for a $99,900 life insurance policy. On his application, J.R. stated he had never had any medical tests or any known indication of diseases, conditions, or physical disorders which were not mentioned on the form. AIDS, ARC, and HIV positive were not mentioned on the form, and if known to have been present, should have been noted. About a year and three months later, on July 9, 1997, J.R. submitted an application form to Life Benefit Services, the broker used by ABC on this policy, on which he stated he had tested positive for HIV in May of 1996. By letter dated July 28, 1997, Life Benefit Services advised ABC that J.R. was terminally ill and had been on medication and undergoing treatment by a physician within the preceding five years. In addition to this information, the Respondent had available to it the information regarding J.R.'s condition discovered as a result of the purchase of the Interstate policy. Notwithstanding this knowledge, on September 17, 1997, while the policy was still contestable, ABC purchased the Conseco policy from J.R. for the net sum of $13,986. By letter dated September 17, 1997, the Respondent advised J.R. not to contact his insurance company until instructed to do so by Ms. Holman, the Respondent's Director of Contracts, and requested he execute an addendum acknowledging those instructions and that the Conseco policy was still contestable. He was also asked to agree to sign an undated change of ownership assignment for use by ABC after the contestability period had expired. While the policy remained contestable, the annual premiums due from J.R. were paid from her personal checking account by Ms. Grinstead, an ABC employee, who was reimbursed therefor by American Title, ABC's trustee. None of the above information was reported by the Respondent to Conseco or the Department even though it knew or, with the exercise of reasonable diligence should have known that J.R. had made material misrepresentations regarding his physical health in his application for life insurance to Massachusetts General Life Insurance company, and it appears the Respondent attempted to conceal those misrepresentations from Conseco.
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 Counts One through Four and Eight of the Administrative Complaint, but finding the Respondent guilty of Counts Five though Seven and Nine through Eleven of the Complaint, and both revoking its license and its eligibility for licensure as a viatical settlement provider in Florida. DONE AND ENTERED this 28th day of December, 2000, in Tallahassee, Leon County, Florida. ___________________________________ ARNOLD H. POLLOCK 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of December, 2000. COPIES FURNISHED: Michael H. Davidson, Esquire Department of Insurance 200 East Gaines Street 612 Larson Building Tallahassee, Florida 32399-0333 Mark K. Logan, Esquire Smith, Ballard & Logan, P.A. 403 East Park Avenue Tallahassee, Florida 32301 The Honorable Bill Nelson State Treasurer/Insurance Commissioner The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
Findings Of Fact At all times pertinent to the allegations contained herein, Respondents Richard Elliott Templin, Jr., was qualified for licensure as a general lines agent and as a life and health insurance agent in Florida and represented the Okeechobee Insurance Agency, (OIA), located at 1874 Okeechobee Boulevard, West Palm Beach, Florida. Respondent is currently eligible for licensure as a general lines agent and as a health and life insurance agent in Florida. RAVEN MILLER In March, 1984, Raven Miller applied for and was issued automobile insurance by OIA. She contacted that agency among others and found that it quoted her the cheapest price for the coverage she wanted, coverage sufficient to protect her and the finance company from loss. During the application process, she signed several forms provided to her by the agent who briefly discussed her coverage with her but did not advise her it would include life insurance or accidental death insurance. When she initially went into the office to renew the policy, she asked for coverage on the vehicle but did not desire anything else. The employee with whom she talked indicated understanding of her desires and filled out the required paperwork for her without asking any other questions of her. When the paperwork was completed, Ms. Miller was told that the premium cost would be $347.00 for which she gave a check and received a receipt, plus $110.00 for a term life insurance policy. She was not told that that this latter coverage was separate from the automobile coverage. Ms. Miller filled out nothing during the application process. All the documents were filled out by the clerk. The application form was completely filled out except for her signature when she signed it. It reflected that uninsured motorist coverage was rejected but Ms. Miller was not asked by anyone at the agency if she desired that coverage. When she inquired about deductibles, she was advised there was a mandatory $250.00 deductible and though she is reflected to have rejected bodily injury coverage, this was not discussed with her, either. The only form that Ms. Miller filled out personally was the pink application to Fortune Insurance Company, (Fortune), on which she identified her "beneficiary." This form was not explained to her, however, nor was there any discussion with her of life insurance coverage. Ms. Miller, who works with the Post Office, has $140,000 in life insurance coverage through her job and had she known she was being offered additional life insurance coverage, would have rejected it. When Ms. Miller signed the summary of coverage form, it was completely filled out. The lady with whom she was dealing briefly went over the various items on it but did not discuss them with her or explained anything to her. The confirmation form which she signed was filled out prior to being given to her for signature. The explanation regarding it was brief and she was not advised that life insurance coverage was optional. The life insurance premium was not forwarded by OIA to the company. She did not receive a policy from either Fortune Life or ATA. At no time during her dealings with OIA did she meet or deal with Respondent and she does not know him nor would she recognize him. When she sold her car in March, 1985, Ms. Miller cancelled the policy in person at the agency at which time she was advised that her refund would come in the mail. Even after numerous contacts with the agency to inquire where the refund was, it was not given to her. At no time during her dealings with OIA was she aware of the fact that she was applying for an accidental death policy. All she asked for, all she wanted, and all she thought she was getting was auto insurance sufficient to cover her, her bank, and others with whom she might have an accident in the event of loss. Notwithstanding the fact that Ms. Miller signed an acknowledgment of explanation both at the time of the original policy and and the time of renewal, the explanation in both cases was extremely brief. She asked no questions to speak of and no information was volunteered. In short, at the time of renewal the agency merely renewed the prior coverage. They did not show her what they were comparing with. She assumes that the figures were the same as for the original policy and she assumed that whatever she got was a standard coverage and charge to every applicant. Ms. Miller was satisfied with the coverage she received and the package she purchased. Her complaint to the Department of Insurance related to the failure to receive her refund not to the sale of the insurance to her. In fact, at the time she filed her complaint, she did not even know that she had a life insurance policy. DENNIS AND ALETA NELSON Dennis Nelson, who has worked for the Post Office for approximately 10 years, on or about March 21, 1985 went to the OIA because, having spoken with Respondent over the phone, and having gotten a quote for "full coverage" on his automobiles from him, he liked the price. Mr. Nelson dealt with Respondent who took down the particulars on the cars to be covered, then went to his rate books, and quoted a price to Mr. Nelson which was satisfactory. In doing so, he laid out the explanation of coverage form and indicated what coverage the Nelsons would have. In the course of the application process, there was no discussion of the limits of liability insurance, uninsured motorist Coverage, deductibles, or life insurance. When the paperwork was completed, Mr. Nelson signed the applications for insurance given to him and a premium finance agreement. Respondent explained to Mr. Nelson the application for life insurance and gave him the impression that it was mandatory. It was made mandatory by the company that a customer buy the whole package, but it was not mandatory under the state requirements. The failure to make this distinction is misleading and deceptive. Mr. Nelson never received any policies from any of the companies from whom he was supposed to have received coverage, though he made his premium payments. By the same token, the company did not receive Nelson's premiums from the agency and, therefore, did not issue a policy. Approximately three months after the coverage went into effect, OIA notified the Nelsons that the cost of coverage on their Blazer would be raised by more than $200 for the year. Mr. Nelson made the initial inquiry call to the company writing this coverage but he was poorly treated by company representatives and got no information. Thereafter, Mrs. Nelson went to OIA's Okeechobee Boulevard office and spoke with Respondent who indicated he could not understand it either. Nonetheless, she paid a part of the increase, ($110.00), at the time in cash. The Nelsons checked with other companies and were quoted lower prices. Because OIA could not explain the raise, they went to the Petitioner's local office where they were told that the life insurance coverage they had purchased was not mandatory. As a result, they decided to cancel their coverage with OIA which Mrs. Nelson did in person. When she attempted to fill out the cancellation form, she was told by an agency employee that she could not cancel the life insurance portion only her husband could do that. Mr. Nelson thereafter attempted to reach the Respondent to discuss this situation with him but could never seem to get in touch with him. Mr. Nelson felt he got repeated run arounds from the employees at OIA and was repeatedly referred to the Lake Worth office. When they ultimately received the refund from OIA, it was dishonored and thereafter, the Nelsons were reimbursed for it in cash. ROBERT M. ANDERSON Mr. Anderson, an employee of Pratt and Whitney Aircraft Corporation in West Palm Beach, purchased automobile insurance from OIA in July, 1985. He selected that agency because they offered him the best price for the coverage which he had told them he wanted, which was "the minimum necessary to satisfy state and bank requirements." During the course of his negotiations with the agency, he dealt with an individual known to him as "Rich" but though Respondent looks familiar to him, he cannot identify Respondent as that individual. He advised the individual with whom he dealt what kind of car he had, (a Porche 911), his age, and that he wanted the best deal he could get. In response, the individual gave him a quotation for a 12 month policy which was too high for his budget. He asked for a quote on the rate for 6 months which was quoted to him as $1,816.00, for which he wrote a check. Mr. Anderson thereafter filled out an application package for coverage. The summary of coverage form was not discussed with him in detail. For example, the $2,000 deductible of PIP coverage was not discussed nor were any details or deductibles on other coverages. Accidental death coverage was not discussed with him nor did he request it. He recognizes his signature on certain documents and does not dispute having signed them. However, he does not recall any discussion about them nor does he recall signing a power of attorney form or even discussing the need to have one signed. There was no discussion with Mr. Anderson regarding life insurance coverage and in fact, he would have declined it had it been discussed because he was fully covered through his company's group policy. Mr. Anderson was not prevented from asking questions but did not do so because he did not know what questions to ask. He was given the opportunity to read the forms but did not review them in detail because he did not understand them then and does not understand them now. He did not, however, indicate that he did not understand. Because he had 9 points on his driver's record, he did not ask many questions. He was grateful to get any coverage and did not feel it was appropriate to take the time, as busy as Respondent appeared to be, to ask questions. It was his understanding that everything he got was a part of the "total package" that he requested. Mr. Anderson had no complaint about the coverage that he received. His complaint to the Petitioner was based on his failure to secure a prompt refund from the agency at the time he desired to cancel the coverage, and it was at this time, in discussing the matter with the Commissioner's office, that he first learned he had life and other undesired coverages as a part of his auto insurance package. He has, however, subsequently received the refund requested. All of the individuals referenced above received and paid for as a part of their insurance coverage, membership in an automobile motor club. On policies of this nature, the selling agency retains 90 percent of the premium and remits only 10 percent to the insurer. The motor club membership included a life insurance policy issued by Fortune Life. None of the persons involved with Respondent here knew they were buying either life insurance, accidental death insurance, or motor club membership. All had asked for "total" coverage, desiring thereby only that coverage necessary to operator a motor vehicle legally in this state. Neither life insurance, accidental death insurance, nor motor club coverage is a requirement of the state for the operation of a motor vehicle. It is not unlawful for an insurance agency to make those coverages a necessary part of a package and condition the issuance of liability, property damage, and PIP coverage upon the purchase of a total package including the other. What is improper, however, is a failure on the part of the agency to disclose that the life, accidental death, and motor club coverages are not a part of the insurance requirements of the state and the failure to disclose this is the nexus of the offense alleged.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is, therefore: RECOMMENDED that the Respondent's licenses and eligibility for licensure be placed on probation for a period of two years and that he be ordered to pay an administrative fine of $2,500.00. RECOMMENDED this 27th day of July, 1987, at Tallahassee, Florida. ARNOLD H. POLLOCK, 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 27th day of July, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0093 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. For Petitioner 1-4 Accepted and incorporated herein. 5-7 Accepted and incorporated herein. 8 Accepted and incorporated herein. 9 Accepted and incorporated herein. 10-16 Accepted and incorporated herein. 17-18 Accepted and incorporated herein. 19 Accepted and incorporated herein. 20 Accepted but irrelevant. 21 Accepted and incorporated herein. 22 Accepted. 23-26 Accepted and incorporated herein. 27 Accepted and incorporated herein. 28 Accepted and incorporated herein. 29 Accepted but irrelevant. 30 Accepted and incorporated herein. 31&32 Accepted and incorporated herein. 33 Accepted and incorporated herein. 34 Rejected as unproven. Witness never identified Respondent as the individual with whom he dealt. In the remaining paragraph rulings, it is assumed only that Respondent was involved. 35&36 Accepted and incorporated herein. 37-39 Accepted and incorporated herein. 40&41 Accepted and incorporated herein. 42&43 Accepted. For Respondent Accepted and incorporated herein. Accepted not as a Finding of Fact but as a recitation of the evidence, Accepted in substance. Paragraph is long and involved. See 3 above. See 3 above. COPIES FURNISHED: William Gunter, Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 William W. Tharpe, Jr., Esquire Office of Legal Services Larson Bldg. Tallahassee, Florida 32399-0300 David W. Spicer, Esquire Tammy J. Kissell, Esquire NCNB Tower, Suite 910 1555 Palm Beach Lakes Boulevard West Palm Beach, Florida 33401-2363 =================================================================
The Issue Whether Respondent engaged in conduct proscribed by the Insurance Code as is particularly set forth in the Administrative Complaint filed December 7, 1993.
Findings Of Fact During times material, Respondent, Nelson Speer Benzing, was licensed with Petitioner, Department of Insurance and Treasurer, as a life insurance and as a life and health insurance agent. During times material, Respondent was an employee of U.S. Savings Trust Management (herein USSTM). During times material, Respondent was never appointed with Petitioner to represent Wisconsin National Life Insurance Company (herein Wisconsin). However, Respondent did attend a workshop sponsored by Wisconsin. At some time prior to March 5, 1992, Respondent met with George Cantonis, President of Mega Manufacturing, Inc. (herein Mega) in order to obtain Cantonis' permission to make a sales presentation to Mega's employees. Cantonis granted Respondent permission to make a sales presentation to Mega's employees. On March 5, 1992, Respondent made a sales presentation to Mega's employees. The purpose of said presentation was to enroll the employees of Mega in a "savings plan" offered by USSTM. The presentation lasted approximately 15- 30 minutes. Employees were told that the plan, as presented, incorporated an insurance savings plan which had a "liquid" component as well as a long term savings component. At no time during this sales presentation did Respondent explain to employees of Mega that he was a licensed life insurance agent. During the course of his presentation, Respondent described USSTM's product variously as an "insurance saving plan", as an "investment in insurance companies" and as a "retirement savings plan". At no time during the presentation did Respondent specifically state that he was selling life insurance. At the conclusion of the presentation, Respondent enrolled all interested employees in USSTM's plan. During the enrollment procedure, Respondent told the employees to complete portions of at least three documents which included a form entitled "Employee History", a Wisconsin's life insurance application, and an employee payroll deduction authorization. Cantonis enrolled through the above procedure and signed a blank Wisconsin National Life Insurance application. Subsequent to the group sales presentation, Respondent made a similar presentation to Tina Netherton, Mega's office manager, who was working in the office and answering the telephone. At the conclusion of the presentation to Netherton, she enrolled in the plan and also signed a blank Wisconsin National Life Insurance application pursuant to instructions from Respondent. Both Netherton and Cantonis believed that the "savings plan" consisted of both a short term "liquid cash element and a long term investment". Neither were aware that they had purchased life insurance. Both Netherton and Cantonis had, in their opinion, adequate life insurance at the time of Respondent's sales presentation, and would not have purchased additional life insurance if they had been told (by Respondent) that they were purchasing life insurance. Both Netherton and Cantonis executed beneficiary designations on their belief that such was needed so that disbursements, if any, could be made to their designee in the event of their death. Approximately three weeks after enrollment, Netherton and Cantonis received brochures from USSTM which acknowledged their enrollment and detailed the benefits of the "savings plan". The brochure advised that Netherton and Cantonis had enrolled in an insurance "savings plan" and failed to state that they had purchased life insurance. Cantonis and Netherton attempted to withdraw funds from the liquid portion of the plan and were unable to do so. Four to five months after their enrollment, Cantonis and Netherton received life insurance policies from Wisconsin. Pursuant to the insurance applications, Cantonis and Netherton were issued Wisconsin life insurance policy numbers L00566485 and L00566483, respectively. Cantonis and Netherton maintained their Wisconsin policies in order to realize some gain from their overall loss in dealing with Respondent and USSTM. At the time that Respondent made his presentation to Mega's employees and officials, he had never before made sales presentations in order to enroll employees in plans offered by USSTM. Respondent's general manager, Vincent Radcliff, was the agent of record of Wisconsin. The insurance application and policies issued to Cantonis and Netherton were signed by an agent other than Respondent. Respondent's supervisor, Vincent A. Radcliff, III, was disciplined by Petitioner and Respondent cooperated with the Petitioner in investigating the complaint allegations filed against his supervisor, Radcliff. Respondent was first licensed by Petitioner on November 15, 1989. Respondent has not been the subject of any prior disciplinary actions by Petitioner.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Petitioner enter a Final Order suspending Respondent's life and health insurance licenses for a period of three (3) months. It is further RECOMMENDED that Petitioner order that Respondent engage in continuing education respecting the manner and means of soliciting on behalf of insurance companies, and to the extent that he completes the required courses within an acceptable time frame, that the suspension be suspended pending the outcome of Respondent's satisfactory completion of such continuing education courses. 1/ RECOMMENDED this 1st day of July, 1994, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL 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 1st day of July, 1994.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that all charges in Counts I and II against Respondent be DISMISSED. DONE AND ENTERED this 24th day of September, 1981, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1981. COPIES FURNISHED: David A. Yon, Esquire 428-A Larson Building Tallahassee, Florida 32301 J. Charles Shores, Esquire 310 Southeast 13th Street Fort Lauderdale, Florida 33316 Mr. George Edison 2090 S.W. 29th Avenue Fort Lauderdale, Florida 33312
The Issue Whether Respondent's license as an insurance agent should be disciplined, pursuant to the charges of a seven-count Administrative Complaint. Counts I through VI, allege that Respondent willfully, fraudulently, and dishonestly misrepresented insurance policies and annuity contracts, contrary to the provisions of Sections 626.611(5), 626.611(7), 626.611(9), and 626.592(1)-(3), and (7), Florida Statutes. Count VII alleges that Respondent failed to designate a primary agent in the course of dealing under his license, thereby violating Sections 626.592(1) and 626.621(2), Florida Statutes.
Findings Of Fact Respondent has been licensed in Florida as a life, health, and variable annuity insurance agent since 1993, holding license number A254850. Pursuant to Florida law, the term "insurance business" includes the sale of annuities. Respondent began employment as a Knights of Columbus insurance agent in 1993, and renewed his "field agent" contract with the Knights of Columbus Fraternal Benefit Society (Order) on December 1, 1999. Joseph Spinelli, Jr., became his supervising general agent for the Knights of Columbus at that time. Mr. Spinelli and Respondent are very productive insurance sales producers, and both applied for the same Knights of Columbus general agent position that included the Pensacola sales territory. The selection of Mr. Spinelli over Respondent for the general agent position resulted in friction between them. The Order's insurance products are available only to Knights of Columbus, their wives, their children under the age of eighteen, and their legally dependent grandchildren. Prospective Knights may be sold insurance, provided they are Roman Catholic men, over the age of 18, who agree to join the Order within 90 days of the insurance policy application. One of the reasons Knights of Columbus insurance is attractive is because it is generally less expensive than commercially available insurance, due to the fraternal nature of the Order. Some men will join the Order merely to get the insurance. Knights of Columbus field agents are not permitted to sell any type of insurance except life, annuities, and long-term care for the Knights of Columbus. The Knights of Columbus field agent contract required Respondent to devote his full-time and energy to the Order's insurance business, prohibited him from soliciting insurance applications "or to assist another agent to solicit such applications from any member of the Order" for any other insurance company. Therefore, Knights of Columbus agents are referred-to as "captive agents." Respondent was also contractually required to "accurately record applicants' answers to all questions in the Order's application form." Notwithstanding the foregoing contract, Respondent owned and operated "The Stidham Agency" located at 111 N. Palafox Street, Pensacola, in addition to conducting Knights of Columbus insurance business out of his home. Among the insurance products sold from the Stidham Agency were those of AmerUs Life Insurance Company and Great American Insurance Company. Ameritus was a company "of" AmerUs. Respondent acted as the de facto primary agent for the Stidham Agency. He was in charge of the agency, acted as general agent, and did not share responsibilities with anyone else. He maintained that this did not affect his relationship with the Knights of Columbus because he avoided taking business away from that insurance entity. However, it is undisputed that he sold other companies' life insurance from the Stidham Agency for a commission. In his capacity as primary agent for the Stidham Agency, Respondent also received an override commission on any commissions his agents earned from their sales of annuities or policies for insurers other than the Knights of Columbus. Respondent acknowledged having as many as six other agents operating out of the Palafox Street address, including licensed insurance agents, Joseph McGovern and Albert Ban, Jr. Mr. Ban left Respondent's agency in December 2002. Mr. McGovern left Respondent's agency in April 2003. In July 2002, it came to Mr. Spinelli's attention that Respondent was appointed by other companies, and after giving Respondent a chance to divest himself of those appointments, which Respondent did not do, the Knights of Columbus terminated Respondent in October 2002. Mr. Spinelli replaced Respondent, first with agent Jeff Fischer, and later with agent Timothy Crooke, who is also a complaining insured in this case. Regardless of the insurance company involved, after a field agent completes an insurance application, the application is sent to the general agent of the respective insurance entity, where it is reviewed; it is then sent to the home office; and it is acted upon by underwriters at the home office. Either the general agent or the home office has the option of "kicking the application back to the agent" if it is incomplete or for any other reason. None of the problems raised by the Administrative Complaint herein were detected by any general agent prior to the applications being forwarded to the respective home offices. Regardless of the insurance company involved, at the home office, underwriters pursue the prospective insured's medical information on the basis of the disclosures on the application. They can decide, for medical reasons, to reject the application outright or to "rate" the policy at a higher premium than at the amount the prospective insured was quoted by the field agent for a "standard" premium. The applicant and the agent do not always know what the premium will be until the policy is issued from the home office. However, the applicant is "covered," that is, "insured," until such time as he is notified that his application has been rejected. If a straight life insurance policy is issued by the home office and the premium comes back at a different rate than that quoted by the agent, the insured has three options: (1) The insured can keep the policy and pay the more expensive "rated" premium; (2) The insured can make other arrangements with the agent to amend the policy, accepting a lower face value of the policy so as to pay the premium amount originally quoted; or (3) The insured can cancel the policy entirely. Similar options exist for income protection riders on such policies. Therefore, a policy, once issued, is sent by the home office to the agent of record, and that agent is expected to deliver the policy to the insured. Personal delivery by the field agent to the insured should result in the insured being fully advised as to what, exactly, his policy contains, and can result in additional sales to that insured or can result in the insured canceling the policy. Regardless of the insurance company involved, a field agent's commission for selling a whole life policy is greater than the commission he receives for selling a term life policy with the same death benefit. COUNT I: Margaret Rodak In this Count, it is charged that Respondent did not inform Margaret Rodak that he was representing AmerUs when, as that company's agent, he "facilitated," her purchase of AmerUs life insurance policy AB00956240 in the amount of $28,968.00 for an initial payment of $40.00, by means of willful misrepresentations or fraudulent or dishonest practices; that Respondent induced her to believe that she was purchasing from the Knights of Columbus and that she was making out her check to the Knights of Columbus; that the names "Joseph P. McGovern" and "Albert Ban" falsely appear as agents on the policy application and other pertinent forms related thereto; that Respondent did not leave Ms. Rodak a copy of the AmerUs application or copies of any other pertinent paper pertaining to the transaction; and that, unbeknownst to Ms. Rodak, Respondent arranged for automatic premium payments to be deducted from her checking account. Margaret Rose Rodak, nicknamed "Peggy", was 52 years old in 2002. She has been totally blind since 1986. She also suffers from hypothyroidism, for which she takes daily medication and is tested by a physician every three months. Ms. Rodak's deceased father, Walter Rodak, was an active member of the Knights of Columbus. He died at aged 80, on November 10, 2002. The events giving rise to this count of the administrative complaint occurred in August, September, and October 2002. During most of this period of time, Respondent was "mentoring" agents McGovern and Ban within the Stidham Agency. Ms. Rodak grew up in the company of her father's fellow members of the Knights of Columbus. Respondent had been her father's friend within the fraternal Order, and Ms. Rodak knew him on a first-name basis. Ms. Rodak knew Respondent by reason of his affiliation with the Knights of Columbus and therefore trusted him as a Knight and because of his presumed status as a "Roman Catholic in good standing." Ms. Rodak wanted to invest in an annuity which would pay her money later in life for retirement or living expenses. Because of her father's affiliation with the Knights of Columbus, she thought an annuity from the Knights of Columbus would be a good investment. It is probable that Mr. Rodak and Respondent understood that Margaret Rodak was not eligible to purchase Knights of Columbus insurance. On or about August 15, 2002, Respondent received a $50.00 check on Harvester's Credit Union from Walter Rodak for the initial premium to pay for a $50,000 AmerUs Flexible Premium Adjustable Life Policy, which the AmerUs home office issued on August 22, 2002, with the number AB00933310 (Policy 310). Also on August 15, 2002, Walter Rodak provided Respondent with a void deposit slip with which to begin automatic monthly deductions of premiums for Policy 310 from his credit union account. Policy 310, purchased by Walter Rodak, insured the life of Margaret Rodak and is clearly not an annuity. However, Mr. Ban, who considered himself Ms. Rodak's insurance agent because Respondent had him sign the application for this policy, testified that Policy 310 would have done what Margaret wanted, because it would have built cash value. Although he considered himself her agent, Mr. Ban never met Margaret Rodak. When AmerUs Policy 310 was issued, Mr. Ban did not deliver it to her, although his acknowledged signature and her purported signature appear on a Policy 310 delivery receipt dated August 30, 2002. Mr. Ban acknowledged filling out part of the Policy 310 application, but testified that Respondent filled out the "application information" and "medical information" sections. The medical information section on the AmerUs 310 application is clearly incorrect because it states Margaret took no medication regularly, when in fact, she regularly took medicine for hypothyroidism. On the other hand, other parts of the medical section of the application, such as the omission of one doctor's name and the statement, "three months checkup" are open to interpretation as to their falsity or incompleteness and are not clearly fraudulent. Mr. Ban could not remember with certainty where he got the remainder of the information he filled in for the AmerUs Policy 310 application but guessed he got it by copying over information from a Knights of Columbus insurance application or that the information was otherwise supplied by Respondent. Mr. Ban was not authorized to sell Knights of Columbus insurance. Mr. Ban told Respondent at the Stidham Agency that the AmerUs Policy 310 application did not have Ms. Rodak's signature on it. Mr. Ban then left for lunch for an hour or so. When he returned, there was a "Margaret Rose Rodak" signature on the application. Ms. Rodak testified that she never signed the Policy 310 application; a later amendment thereto, dated August 30, 2002; or an August 30, 2002, Policy 310 delivery receipt, all purportedly showing "Margaret Rose Rodak" as the "Policyholder Signature." On or about September 6, 2002, Joseph McGovern accompanied Respondent to the Rodak home. Mr. McGovern did not make out any papers for either of the Rodaks. He understood that he was there to learn from Respondent about selling long- term care insurance, but he spent most of his time discussing the Marine Corps with Walter Rodak. Respondent conceded that by this second meeting, he knew that Walter could not qualify for a Knights of Columbus long-term care policy. Mr. McGovern was not authorized to sell Knights of Columbus insurance, long-term care or otherwise, and when Respondent handed him a completed AmerUs application to sign, Mr. McGovern perceived this as being Respondent's way of making him (McGovern) the "agent of record" so he could receive a commission from AmerUs, a company for which Mr. McGovern was authorized to sell. Respondent handed Mr. McGovern a completed application for what eventually became AmerUs Flexible Premium Life Insurance Policy AB00956240 (Policy 240), issued September 12, 2002, by the AmerUs home office in the amount of $28,968.00 on the life of Margaret Rose Rodak. When Petitioner handed Mr. McGovern the application, Respondent said, "Here. Fill this out. It's done." Mr. McGovern signed. At the September meeting, Ms. Rodak thought she was transacting insurance business only with Respondent and the Knights of Columbus and not with Mr. McGovern or AmerUs Insurance Company. Specifically, the AmerUs Insurance Company was never mentioned. She gave Respondent a check on her account at SunTrust Bank for $40.00, which she believed covered an initial premium for a Knights of Columbus annuity. Ms. Rodak believed her $40.00 check had been made out to the Knights of Columbus. In fact, her check was made out to the Stidham Agency, an entity Ms. Rodak had never heard of. Respondent admits to converting this check to a money order to be applied to the AmerUs premium. Ms. Rodak does not remember if she authorized automatic deductions from her SunTrust checking account for future monthly premiums on Policy 240. Mr. Ban denied filling out the application for AmerUs Policy 240. Although his signature purports to show that he witnessed the signature of Ms. Rodak on an amendment to the 240 policy, in fact, she did not sign that document in Mr. Ban's presence. Ms. Rodak denied signing any application or any delivery receipt for any insurance policy or annuity. Her September 6, 2002, check, which she acknowledges was signed by her, and which Respondent acknowledges that he cashed, matches the signature exemplars she provided at the hearing. The signatures purporting to be hers on the documents related to Policies 310 and 240 are clearly dissimilar both to her acknowledged signature on her check and to her exemplars. Ms. Rodak denied receiving any paperwork for any insurance policy or annuity. By herself, she is not credible with regard to this information, due to her blindness and described procedures for handling her mail and other important papers, but given Mr. Ban's evidence that he never delivered any AmerUs papers to her, it is found that no paperwork was provided to Ms. Rodak. When Walter Rodak died in November 2002, Margaret Rodak complained to Respondent that she could not keep up her payments. Respondent understood her to be referring to both the AmerUs policies in her name. At her request, he returned $90.00 to her by a Stidham Agency check, even before any administrative charges were brought against him. He testified that he/the Stidham Agency lost money on the two Rodak transactions, because he refunded all the Rodaks' money and AmerUs recouped the commissions paid to himself and his agents. However, there is in evidence, correspondence from the AmerUs home office indicating that Policy 310 was charged $200.00 by automatic withdrawals and Policy 240 (or possibly Policy 310) was charged $120.00 by automatic withdrawals. It is not clear upon whose account (Walter's or Margaret's) these deductions were made. (See Defendant's [sic.] Exhibit 8.) Clearly, as to both policies, much opprobrium should attach to both Mr. Ban and Mr. McGovern for signing documents attesting to representations they knew were untrue or to representations of which they had no knowledge whatsoever, but Mr. Ban and Mr. McGovern are not charged herein. Likewise, Respondent is not charged herein with any irregularities concerning Policy 310. As to Policy 240, which is the only policy referred-to in the charges brought against Respondent, Mr. McGovern was not the agent Ms. Rodak dealt with, and therefore, his name should not appear on the application as the agent of record. (See Findings of Fact 28-29.) The medical section of the Policy 240 application contains a substantial error (the indication of no regular medication) for which no one but Respondent can be held responsible, because he made out the application (see Findings of Fact 28-29) and because the signature purporting to be Ms. Rodak's on that application clearly is not hers (see Finding of Fact 31). Ms. Rodak was deceived by Respondent, or, at a minimum, Respondent failed to correctly advise her, as to what she was purchasing (an AmerUs insurance policy instead of a Knights of Columbus annuity) when she gave him her $40.00 check. Respondent further deceived her, or deliberately failed to correctly advise her, as to which insurance company was involved. Also contrary to Respondent's representations, it appears that despite his $90.00 refund, Ms. Rodak lost more than that via automatic deductions. COUNT II: Charles Williams Charles Williams is married. He has two children (Charles David, Jr. and Victoria Jean) and three grandchildren (David Charles, Adam Brandon, and Raven Lindsey). At all times material, Adam and Raven were under the age of 18. Mr. Williams had a term life insurance policy with another company that was about to expire, and the agent for that policy thought the Knights of Columbus might give Mr. Williams, a Roman Catholic, a better deal than he could offer. That agent referred Mr. Williams to Respondent. In January 2001, Mr. Williams invited Respondent to his home to discuss insurance. Respondent told Mr. Williams that he was a Knight of Columbus insurance agent and offered to sell Mr. Williams a Knights of Columbus insurance policy. Mr. Williams explained to Respondent that he (Williams) was not a Knight of Columbus. Respondent answered, "No problem." Respondent claimed he explained that Mr. Williams did not have to be an active member of the Knights of Columbus or even go to their meetings, but that Mr. Williams had to join the Order to qualify for its insurance. Respondent claimed to have relied on Mr. Williams' representation that he (Williams) would apply for membership in the fraternal Order, although Respondent conceded that he also understood that Mr. Williams never intended to attend any Knights of Columbus meetings or events once he was admitted to the Order. Contrariwise, Mr. Williams claimed that at no time did he (Williams) indicate to Respondent that he would apply for membership in the Order, but Mr. Williams also admitted that he only discussed Knights of Columbus insurance with Respondent and that he knew he was only applying for Knights of Columbus insurance. Therefore, there is an equipoise of testimony as to what oral representations Mr. Williams made to Respondent with regard to Mr. Williams' intent, or lack of intent, to apply for membership in the Knights of Columbus. 1/ The written materials make things only a little clearer. A question on the first page of the Knights of Columbus whole life policy application form that Respondent filled out with Mr. Williams clearly asks, "Is the applicant a member of Knights of Columbus?" and Respondent checked, "Yes." This portion is followed by the instruction, "(If yes, indicate associate member or insurance member. If no, application for membership must be made and approved by council)."2/ Respondent checked the box for "associate member." A Knights of Columbus council number is filled in and "New 0101" (apparently referring to January 2001) appears for Mr. Williams' membership number. Likewise, immediately above what Mr. Williams recognized as his true signature is the language, "I agree that the insurance hereby applied for shall be cancelled if the applicant is a candidate for membership and has not been initiated into the First Degree of the Order within 90 days of the commencement of Temporary Insurance." Similar language appears on policy applications Mr. Williams requested from Respondent for his wife, Delia, and two of his three grandchildren, Adam and Raven, although on some items, "insurance member" instead of "associate member" was checked. There was no evidence that Respondent had any continuing obligation to verify that any insured followed-up on his signed pledge in an insurance application to obtain his first degree in the Knights of Columbus. Mr. Williams testified that, in all, he signed five applications, including one for his grandson David. Contrariwise, the evidence shows that his grandson David, aged 20, applied and signed for his own policy, paid for by his grandmother, Delia. (See Finding of Fact 58.) Mr. And Mrs. Williams received five policies (including one for David) from the Knights of Columbus, which they examined and were pleased with, because the policies were what Mr. Williams thought he had purchased. They had no questions about the policies until Mr. Williams received a letter from the Knights of Columbus in the wake of accusations against Respondent by others. All five of the policies are still in full force and effect, although by their terms they should have been considered null and void by the insurer (Knights of Columbus) because Mr. Williams did not join the Order and attain the first fraternal degree within 90 days of the applications' dates. This continuation of the policies occurred only because the two years' period to contest any anomaly in the applications passed without discovery of Mr. Williams' lack of membership in the Order. In response to inquiries from the Knights of Columbus in approximately November 2002, Mr. Williams re-examined his five policies. Since then, and at hearing, he has claimed that the signatures purporting to be his on all Internal Revenue Service W-9 forms, State 1080 forms, and Knights of Columbus confidential dependant grandchild forms associated with all of the five policies were falsified. He also testified that none of the "Charles D. Williams" signatures were placed on the documents by his wife, who had a power of attorney to sign his name, because she was present with him at all times material and he did not see her sign his name. However, Mr. Williams also denied as his, the "Charles D. Williams" signature appearing on a LabOne form, which showed that various medical questions had been put to him and tests had been administered to him by a registered nurse as part of the application process for his own Knights of Columbus whole life policy. The Department stipulated, after consultation with that registered nurse, that the signature in question on the LabOne document was, contrary to the testimony of Mr. Williams, Mr. Williams' true signature. Due to the foregoing misidentification by Mr. Williams of his own signature and his complete absence of memory of the medical tests and medical interview for his policy, and because the undersigned cannot independently discern any difference among the "Charles D. Williams" signatures, and there is neither testimony from Mrs. Williams or from a handwriting expert corroborating Mr. Williams' denial of the validity of all the signatures in his name, and some in his wife's name, Mr. Williams' denial of the validity of all the "Charles D. Williams" signatures is simply not credible. Additional reasons for his lack of credibility in identifying specific signatures are also given hereafter. Mr. Williams' social security numbers on some documents have been crossed-out and replaced with social security numbers for the respective grandchildren, but when, why, or by whom this interlineation occurred was not proven on this record. Indeed, the Department has proposed no findings of fact related to "clearly erroneous social security number(s)" being placed by Respondent on any document, as alleged in the administrative complaint. IRS Form W-9s are supposed to be given to the requester, in this case, to Respondent and the Knights of Columbus, not to the Internal Revenue Service (IRS) or Mr. Williams. The purpose of these forms is to assure the requester (here, the Knights of Columbus) that the signator/insured has given the correct social security number on the insurance application and that he is not subject to backup withholding by the IRS. Not only did Mr. Williams not credibly deny the validity of his purported signature on these forms for his, Raven's and Adam's policies, he also conceded that all the W-9 forms contained his correct social security number and that he was not subject to backup withholding tax, just as had been represented on these forms. Therefore, there clearly is no proof that any fraud or misrepresentation was committed with regard to Mr. Williams' own W-9 form for his policy. Mr. Williams also confirmed that he was the primary beneficiary on Raven's and Adam's policies, that his social security number appeared with his name on those applications, and that he intended to pay all the premiums. The policies specify that the insured is the "owner" of the policies, but in places, Mr. Williams signed as both "applicant" and as "owner if other than applicant." The evidence further shows that these grandchildren's respective social security numbers appeared on the policy applications beside their names. (See Findings of Fact 40-41, 44, and 48.) Therefore, if it was appropriate for Respondent to receive the W-9 Form information from the "applicant" (Mr. Williams), who was paying for the policies, instead of from the minor "insureds," Raven and Adam, no fraud was committed with regard to the content of Raven's or Adam's W-9 forms. Quite probably, the grandchildren's respective social security numbers should have been given initially on the W-9 forms associated with the insurance policy applications made for them by their grandparents, or interlineated in place of Mr. Williams' number on the W-9 forms, as was done on the policy applications. However, given Respondent's testimony that he did not interlineate the grandchildren's correct social security numbers on the applications and that those interlineations occurred later by a person or persons unknown, and since no one testified one way or the other as to whether the submission of Mr. Williams' tax information on the W-9 forms associated with Raven's and Adam's policies was legal or appropriate until such time as the minor grandchildren's social security numbers could be supplied, and because the forms themselves permit using another social security number when the grandchildren do not yet have social security numbers of their own, it must be found that no fraud or misrepresentation has been proven against Respondent with regard to these W-9 forms, either. According to Mr. Williams, Mrs. Williams also signed her own application. Her true and correct social security number and signature appear on the W-9 Form associated with her policy application. The 1080 forms are required by the State of Florida when an existing insurance policy is replaced by another policy with a different company. Two 1080 forms in evidence, one for Raven and one for Adam, purport to give notice to the insurance company which had issued their existing policies (State Farm) that Mr. Williams was replacing that current coverage with Knights of Columbus policies. These forms also warn Mr. Williams, as the owner and as a beneficiary of both the old and new policies, to consult with both State Farm and the Knights of Columbus before canceling the existing State Farm policies. Mr. Williams did not credibly deny the validity of all signatures purporting to be his on these forms. He conceded that all the remaining information on all the 1080 forms was accurate, true, and valid, thereby demonstrating that no fraud was committed with regard to the content of these documents. The "confidential dependent grandchild" forms, referencing grandchildren Raven and Adam, and required by the Knights of Columbus, attest, "Please be advised that the individual named above is, in fact, my grandchild. I attest herewith that I am responsible for and do take and claim him/her on my income tax as my lawful dependent." The respective child's correct social security number is filled in, and then appear the words, "I understand that you require this letter so as to allow me to purchase Knights of Columbus Insurance Protection for him." Mr. Williams denied the validity of what purported to be his signature on these forms, but his denial of the signatures was not credible for the reasons already stated. Mr. Williams was, however, credible that he has never claimed any of his grandchildren as a dependent on his income tax return. It is undisputed that children and grandchildren over the age of 18 are not eligible for Knights of Columbus insurance through a member grandfather. It is undisputed that grandchildren under the age of eighteen must also be entirely dependent upon their member grandfather in order to qualify for Knights of Columbus insurance through him. Mr. Williams testified that at least grandsons Adam and David lived with him and his wife at the time of the insurance applications. The application for Adam, offered by the Department, shows Adam to be 17 years old on the date of application. The application for David, offered by Respondent, shows that David was 20 years old on the date of the application. Therefore, David would have been ineligible for a Knights of Columbus policy based on his grandfather's membership in the Knights of Columbus, whether David were dependent on Mr. Williams or not. However, David's application contains the same language attesting to his own membership in the Knights of Columbus and council number as quoted in Finding of Fact 40, except that it states that his membership number is "New 2/13/01," the date the applications for the grandchildren were taken by Respondent on his second visit to the Williams' home. This application bears a signature for "David Williams," as does an accompanying W-9 form. No dependant grandchild form for David is in evidence, but there is a premium check on David's behalf purportedly signed by Delia, Mr. Williams' wife, who is David's grandmother. (See Defendant's [sic.] Exhibits 18-19.) Mr. Williams was not questioned concerning these items. Neither Mrs. Williams, nor Adam, nor David testified. No one clearly identified who, including David, might have signed David's name. From this evidence, there must arise at least the inference that the grandson, David, aged 20, applied for his own Knights of Columbus insurance, representing that he was, or would become, an associate member of the Order. One might also infer that Respondent solicited the 20-year-old David to join the Knights of Columbus and to sign his own policy application, knowing that David was already too old to qualify under his grandfather's membership in the Order. However, without more, it cannot be inferred that Respondent forged David's signature. More to the point, however, the Administrative Complaint herein does not charge Respondent with any misbehavior concerning David's policy, and therefore, whatever happened as to David's application is extraneous to the charges herein. In the absence of more than was proven by Mr. Williams' testimony and the documents in evidence, Respondent's explanations that he has to accept whatever a client tells him; that he got his information about the grandchildren from Mrs. Williams; and that he saw all the grandchildren in Mr. Williams' house each of the two times he visited there and assumed they were dependent on the basis of the information he was given, presumably including the signed dependency forms, sufficiently refute the charges with regard to the applications and other papers related to Raven and Adam.3/ The evidence as a whole is not clear and convincing that Respondent either falsified to the Knights of Columbus that Mr. Williams was going to apply for membership in the Order, that he falsified the dependency of Raven, Adam, or David, or that Respondent forged Mr. Williams' signature, or any signature, including that of David Williams, on any document so as to mislead the Knights of Columbus, the Order, or Mr. Williams (grandfather). COUNT III: Dawn Crooke In July, 2001, about three months after giving birth to her second child, Dawn Crooke and her husband, Timothy Crooke, invited Respondent to their home to explain Knights of Columbus insurance policies. Respondent subsequently mentored Mr. Crooke into becoming a Knights of Columbus agent. After Respondent's termination by Mr. Spinelli, Mr. Crooke was assigned half of the Knights of Columbus councils Respondent had been servicing, and Mrs. Crooke worked in Mr. Crooke's insurance business. However, in July 2001, neither Mr. nor Mrs. Crooke was knowledgeable about insurance. In July 2001, Mrs. Crooke decided to purchase a $125,000 ten-year term life Policy 2438358. While going over the application with Mrs. Crooke, Respondent asked her the many health questions on the form. He checked "no" to every health question. Mrs. Crooke testified, and Mr. Crooke corroborated, that she had told Respondent that she had suffered from an "epilepsy seizure disorder" since the age of nine. At hearing, Mrs. Crooke described her condition both forthrightly as "epilepsy" and in the ambiguous terms that "some people". . . "define the condition as 'epilepsy'." Mrs. Crooke and Respondent agree that he checked the "No" response on her application form with respect to Item 6.b., inquiring if the insured had a history of "dizziness, fainting spells, epilepsy. . ." However, Respondent maintained that he checked the "No" response because Mrs. Crooke did not reveal her epilepsy to him. Mrs. Crooke acknowledged that she signed the $125,000 policy 2438358 application, which omitted the seizure information, thereby agreeing that "the statements and answers contained in this application are complete and true to the best of my knowledge and belief." Also, Mrs. Crooke conceded that Respondent correctly recorded her doctor's name on the application, so Knights of Columbus underwriters would have had the opportunity to inquire in greater detail concerning her health status, and thereby should have discovered her seizure disorder. They did not discover it. (See Finding of Fact 73.) Due to Mrs. Crooke's acknowledged signature on the application testifying that the health answers on it are true, her representations at hearing that she did not mean what she agreed to then are subject to close scrutiny and skepticism. Mr. and Mrs. Crooke lodged complaints with the Knights of Columbus and the Department after he became a Knights of Columbus agent. A bar code appearing in the lower right-hand corner of Mrs. Crooke's application for the $125,000 term life policy is intended to show that a saliva test was administered to her. She testified herein that she did not sign a consent form for a saliva test, did not take a saliva test, and did not take an HIV/AIDS test in conjunction with her $125,000 policy application. Mr. Crooke corroborated Mrs. Crooke's testimony to the extent that he did not hear his wife agree to a saliva test, that Respondent did not administer a saliva test to his wife in his presence, and also that Respondent did not administer a saliva test to him, as Respondent testified he had done. In order for a saliva test to have occurred, the Crookes had to sign consent papers that matched the bar codes. Respondent had admitted, without objection, a December 13, 2002, memorandum from Dennis W. Hogan, FLMI, FIC, with the Knights of Columbus, stating, in pertinent part, A review of the signatures in the aforementioned files seems to indicate an inconsistency between Dawn's signatures in policies 2438358 and 2449888, the latter policy containing signatures which may not be authentic. Mr. Crooke's comments regarding the saliva consent forms may not be accurate, since both forms appear to bear authentic signatures. This memorandum is sufficient, as a business record, to show that consent forms and saliva tests were, in fact, received by the home office bearing what purported to be the Crookes' signatures. Also, at hearing, Respondent produced an HIV-AIDS test consent form with a signature which Mrs. Crooke acknowledged was her true signature. Respondent testified that, indeed, he had administered a saliva test to Mrs. Crooke which simultaneously tested for HIV-AIDS, a variety of other diseases, medications (such as anti-convulsives for epilepsy), and tobacco. Contrary to Mrs. Crooke's testimony that saliva tests for Knights of Columbus policies are never administered by agents, Mr. Crooke confirmed that, in his experience as a Knights of Columbus agent, the saliva test is administered by agents and covers HIV/AIDs, specific illicit and prescription drugs, and tobacco use. Knights of Columbus general agent Spinelli also confirmed that Knights of Columbus agents are required to obtain a saliva swab and a signed HIV/AIDS consent form from any prospective insured in his or her early thirties, like Mrs. Crooke, who wanted to purchase a term policy with a death benefit over $100,000. He further testified that saliva test kits with bar codes and related consent forms have always been provided to the agents, not to separate medical personnel, for this purpose. Although the designations after Mr. Hogan's name in the letter described in Finding of Fact 66, show that he has some expertise in insurance investigation and security matters, there is no assurance that he is a handwriting expert; he did not testify; and his conclusion as to who did, or did not, sign the saliva test consent forms or any other forms received by the home office does not constitute the type of hearsay admissible over objection. Therefore, Mr. Hogan's independent conclusion that the Crookes probably each validly signed saliva test consent forms does not serve to supplement or explain other evidence. His ambiguous opinion with regard to who signed the consent forms cannot be cross-examined and is no more reliable than that of any casual observer of the signatures. Therefore, Mr. Hogan's letter does not explain or supplement Respondent's testimony that Mr. and Mrs. Crooke signed their consent forms. (See Section 120.57(1)(c), Florida Statutes.) However, in light of all the evidence, most particularly Mrs. Crooke's acknowledgment of her signature on her HIV-AIDS consent form and the receipt by the home office of saliva consent forms, saliva tests, and HIV-AIDS consent forms for both Mr. and Mrs. Crooke, it is more probable than not that both Mr. and Mrs. Crooke consented to a saliva test as well as to an HIV-AIDS test. Therefore, it cannot be concluded that Respondent falsified the saliva consent forms submitted to the company. Respondent testified that his saliva would have shown his gender and his ingestion of high blood pressure medicine, so that a test of his saliva would have alerted underwriters that the saliva test submitted on behalf of Mrs. Crooke had been falsified or was otherwise compromised. His testimony on this issue was unrefuted. Therefore, no evidence was offered to clearly show that, as charged, Respondent used his own saliva to hide the fact that Mrs. Crooke had epilepsy. Nonetheless, it appears that the saliva test submitted to the Knights of Columbus by Respondent on behalf of Mrs. Crooke either did not alert anyone to her seizure disorder and her use of anti-convulsive medicines as Respondent testified it should have, or that her condition did not matter to the underwriters. Indeed, Mr. Crooke disclosed Mrs. Crooke's condition to the Knights of Columbus when he discovered it had not been included on her application, and the home office determined she would have been insurable from the beginning. Just because there is no clear reason that Mrs. Crooke's saliva test did not reveal her seizure disorder or her use of anticonvulsive medicine, it does not automatically follow that Respondent falsified her saliva sample. This allegation has not been clearly and convincingly proven against Respondent. Because the Knights of Columbus home office later determined that disclosure of Mrs. Crooke's epilepsy on the application would not have rendered her uninsurable; because, when Mr. Crooke reported her condition to the home office, the Knights of Columbus never even rated her for epilepsy; and because there was strong evidence that no significant amount of commission was to be gained by Respondent from not checking the correct box on Mrs. Crooke's $125,000 policy application or by falsifying her consent form and saliva test,3/ the Department has not established a motive for Respondent to falsify the medical part of Mrs. Crooke's policy application form or to submit falsified consent forms and a falsified saliva test. Without motive, Respondent's explanation that Mrs. Crooke did not fully inform him of her seizure disorder and that he did not know what happened with the saliva test is more credible than Mr. and Mrs. Crooke's testimony that Respondent intentionally checked the wrong box so as to falsify her application, failed to take saliva samples, and/or falsified the saliva test submitted. A second insurance application made on behalf of Mrs. Crooke for a $15,000.00 whole life Policy 2449888, also failed to disclose that Mrs. Crooke suffered from epilepsy in the same ways as described above. Mrs. Crooke testified that her purported signature on that application as "the insured" and on the health disclosure authorization form for this policy are not truly hers. Mr. Crooke corroborated that neither of these signatures was that of his wife. Mr. Hogan's letter opinion of the validity or lack of validity of Mrs. Crooke's denied signature on the second policy application is useless for the reasons given above. (See Findings of Fact 66 and 71.) Both Mr. and Mrs. Crooke agreed that Mr. Crooke's authentic signature appears on the application and disclosure form for this second policy as the "applicant." Mr. Spinelli verified that the Knights of Columbus will not insure an adult who does not sign a policy application as the "insured." He further verified that the Knights of Columbus will not insure an adult simply upon the request or signature of an "applicant," even where that applicant is the spouse of the proposed insured. Mr. Crooke testified credibly concerning the details surrounding Respondent having him sign this policy application in blank as "applicant," in Respondent's truck one night on the way home from a Knights of Columbus "degree." Mr. Crooke also related credibly that Respondent had told him that Mrs. Crooke's signature would not be needed on the application, due to the recent $125,000 policy. This careless attitude of Respondent toward the accuracy of applications and other insurance paperwork is a proven repeated theme throughout Counts I-VI herein. At the time, Respondent's representation made sense to Mr. Crooke, but after instruction to become an agent, he realized that a Knights of Columbus policy application is required to contain the "proposed insured's legal signature" as stated on the application, and he disclosed the situation to the Knights of Columbus. Mrs. Crooke's testimony that Respondent discussed the second policy with her but did not have her sign the application at that time is perplexing, but upon the evidence as a whole, her testimony that she did not sign the new application or medical release as the "insured" is credible. Because Mrs. Crooke did not sign these documents, the most reasonable inference is that Respondent copied the information from the first policy onto the second policy application, and signed Mrs. Crooke's name or caused her name to be signed by someone else. Signing the insured's name, even for expediency's sake, which is what apparently occurred with the second policy, was clearly fraudulent on Respondent's behalf, and likewise was deceptive to the insurer. Therefore, this much of Count III of the Administrative Complaint has been proven. However, Mr. and Mrs. Crooke admitted that they got the second policy they wanted, at the price quoted, covering the exposure they had bargained for, so they were not deceived, except as to who could sign, and did not suffer any real world harm. COUNT IV: Timothy Crooke In July 2001, in his home, Timothy Crooke also purchased a $125,000.00 ten-year term policy on his own life. Respondent filled out the application, which Mr. Crooke signed, stating that "the statements and answers contained in this application are complete and true to the best of my knowledge and belief." The application represented Mr. Crooke as eligible for the discounted low premium for those who have never used tobacco. While Mr. Crooke admitted that he signed the application, he denied that he initialed the non-use of tobacco clause or noticed the "non-tobacco" designation when he signed the application. Mr. Crooke originally contended to the Department that he had told Respondent that he used tobacco and snuff while making out the application, but at hearing, he admitted that in his prior statements he had relied on Respondent's having seen him use chewing tobacco and using snuff at other times prior to making out the insurance policy application. He could not recall if Respondent had asked him about the use of tobacco during the application process. He speculated at hearing that perhaps Respondent had put the question about tobacco to him incorrectly or in such a way that he answered incorrectly, but he could not say for certain that the question had been put by Respondent or that he had disclosed his tobacco use during the application process. He was not using tobacco in any form while the application was being made out and conceded there were no ashtrays or other tobacco paraphernalia in his home when Respondent was there making out the application. Respondent credibly denied that he had ever seen Mr. Crooke use tobacco products prior to making out his insurance application form and that he had seen no tobacco paraphernalia while in the Crookes' home. Mrs. Crooke corroborated Mr. Crooke's testimony that he had never given consent to a saliva test or taken one in conjunction with his policy application, but Respondent testified to the contrary that, indeed, he had administered the required saliva test to Mr. Crooke which simultaneously tested for HIV-AIDS, a variety of other diseases, medications, and tobacco. Once again, the home office had received an HIV-AIDS test consent purportedly signed by Mr. Crooke, a signed saliva test consent form for Mr. Crooke, and a saliva sample that did not reveal that Mr. Crooke used tobacco. Mr. Crooke's policy was issued with the "no tobacco" premium discount. He notified the home office that he used tobacco as soon as he understood that his application did not make a full disclosure of his tobacco use. His policy has remained in force, but he now pays the undiscounted premium. Mr. Crooke admitted that the commission Respondent would have earned for selling him his policy would have been greater if the initial application had disclosed his tobacco use, and that it would be absurd and not worth the risk to Respondent's insurance agent's license for Respondent to deliberately conceal Mr. Crooke's tobacco use. For the same reasons given in Count III, particularly in Findings of Fact 69-71, and 74, but applied to Mr. Crooke's testimony and situation, this count is not proven. Further, because, Respondent would have earned a higher commission if he had disclosed Mr. Crooke's tobacco use from the very beginning, no motive to falsify Mr. Crooke's application, testing consent, or saliva test was proven. The evidence is not clear and convincing that Respondent is guilty of the charges brought in this Count. COUNT V: Phillip Keane At all times material, Phillip Keane, born August 9, 1939, has been gainfully employed and a member of the Knights of Columbus. He trusted Respondent as a fraternal brother when he and his wife sought new life insurance policies. At all times material, Mrs. Keane (Virginia) was not gainfully employed. On July 10, 2001, Mr. Keane invited Respondent to his home and told Respondent he wanted to buy the maximum amount of life insurance on himself for which he was eligible and an "income protection rider" (IPR) on his policy that would pay an additional amount to Mrs. Keane after his death, as a replacement for the income he was currently earning. (TR-305) He claimed that Respondent did not mention any age restrictions on his eligibility for the IPR he had requested. Respondent testified more credibly that the only way he could quote any policy information to Mr. Keane was to plug the information Mr. Keane gave him into Respondent's laptop computer, which would immediately refuse an IPR on Mr. Keane's income because Mr. Keane was about to become 62, the cutoff age for a Knights of Columbus IPR, and that Respondent had, at Mr. and Mrs. Keane's request, filled out an insurance application for Knights of Columbus Policy 2439783 (P-35) for $30,000 whole life protection on Mr. Keane's life and an IPR to insure Mr. Keane's "spouse" (Mrs. Keane), who was eligible for an IPR at her age of 55. In addition to the $30,000 whole life coverage on Mr. Keane's life, such an IPR would provide a 15- year income stream to Mr. Keane, who was producing income, if Mrs. Keane, who was not producing income, predeceased Mr. Keane during the 15 years of the rider. Although Mr. and Mrs. Keane's testimony at hearing is both clear and credible that they never understood that the IPR applied for on Policy 2439783 (hereafter, "Mr. Keane's policy") was being written on Mrs. Keane's life, they both acknowledged signing the application, he as "applicant," and she as "spouse covered under rider." Mrs. Keane was required to sign the application because her life was also being insured. The fact that Mrs. Keane was unemployed and producing no income to be replaced was not required to be disclosed on the application form in Mr. Keane's name, although this fact, if disclosed, could have raised concern at the Knights of Columbus' home office. Mr. Keane gave Respondent a check for two months' premiums, calculated by Respondent's laptop computer for the type of policy/IPR Mr. Keane had signed the application for, assuming that a standard premium would be charged on Mr. Keane's life and that a standard premium would be charged on Mrs. Keane's life. This is a common way to sell insurance. If the standard premiums on both Mr. and Mrs. Keane were ultimately charged, then the total premium for Mr. Keane's policy would not exceed Mr. Keane's government allotment, but there was always a possibility that the underwriters would "rate" one or the other person's life for medical reasons. (See Findings of Fact 12 and 13.) Knights of Columbus general agent Spinelli explained that an IPR is a product that potential insureds, such as Mr. and Mrs. Keane, and often even field agents, such as Respondent and Mr. Crooke, have difficulty understanding. Respondent and Mr. Spinelli agreed that one reason a whole life policy in Mr. Keane's name with the IPR on it for Mrs. Keane's death was an attractive product was because the $1600 per month for 15 years, available under her IPR, would have cost Mr. Keane much less in premiums than he would have had to pay for a whole life policy on Mrs. Keane in the same amount. If a full 15 years were calculated for the IPR his application requested, an equivalent whole life policy on Mrs. Keane would have amounted to more than $200,000.00 face value. Another advantage of Mr. Keane's policy with its IPR as originally applied-for was that if Mr. Keane predeceased Mrs. Keane, the IPR on Mrs. Keane's life would not disappear when Mr. Keane died, and she would have the very valuable right to convert it to another form of benefit. No one testified that such a conversion could have provided Mrs. Keane with additional income after Mr. Keane's death, but this conversion benefit of the IPR could be very attractive for protecting their assets or providing for their children via other insurance on Mrs. Keane if she survived Mr. Keane. That said, the Keanes testified that they never really wanted to insure Mrs. Keane for more than $10,000.00. Also, the longer she lived, the less Mr. Keane could collect under Mrs. Keane's IPR, which was limited by 15 years from the date of the policy, not the date of his or Mrs. Keane's death. Still, it is clear the Keanes did not understand what they had agreed- to by their signatures on his policy application. Mr. Spinelli further testified that there would be a lower agent commission on the sale of IPRs than on straight whole life policies. For this reason and because no clear calculation was put forth as to the differences between what Respondent's commission would have been for the policy applied-for with the IPR, compared to a straight $30,000.00 whole life policy, compared to the higher value whole life policy that Mr. Keane ultimately received (see Finding of Fact 102), it appears that Respondent would not have been motivated by a commission differential to write a policy with an IPR, and would not have written one unless he thought the client were asking for one. Respondent's error here, if any, was that he did not clearly convey to the Keanes what they were getting for the application. Mr. Keane actually reached age 62 on August 9, 2001, and accordingly became clearly ineligible for an IPR on his own life to pay Mrs. Keane. This occurred during the period that Knights of Columbus underwriters were pursuing medical information about him with regard to his application 02439783, and about Mrs. Keane, who had simultaneously applied for a $10,000.00 whole life Policy 02439784 on her own life (hereafter "Mrs. Keane's policy"), payable to Mr. Keane. See infra., this Count and Count VI. Because of delays in obtaining medical information and filling-in some of Respondent's sloppy paperwork, which the Knights of Columbus home office has euphemistically called "additional requirements"5/ in correspondence to the Department, the home office had to refund Mr. Keane's initial premium checks on both Mr. and Mrs. Keane's policy applications, and Respondent requested a "replacement check" for the first two months' premiums for each policy. There is no credible evidence, however, to suggest that this was other than the Knights of Columbus' standard operating procedure of starting over, to avoid long periods of being liable under the State's "temporary insurance" requirements, when faced with similar lengthy delays; no evidence that the Keanes lost any money by this procedure; and no evidence that Respondent misbehaved in any way in connection with this procedure. Respondent eventually delivered two Knights of Columbus policies to Mr. Keane, who filed them away without thoroughly examining them.6/ Mr. Keane continued to incorrectly believe his policy provided $30,000.00 of whole life coverage for himself and that its IPR would protect Mrs. Keane at the rate of $1600.00 per month for 15 years if he died. What he had actually received was a straight whole life policy with a $40,813.03 face value in case of his death and no IPR of any kind. Many months later, Mr. Keane met with Timothy Crooke, Respondent's replacement. Only then did Mr. Keane comprehend that the face of his policy clearly showed that his life was insured for $40,813.03, which was much more than the $30,000.00 he had assumed he had. However, reading his policy containing the original application, Mr. Keane still believed that he should have received an IPR that covered Mrs. Keane's life as requested in the original application (see Findings of Fact 91- 92), but he told Mr. Crooke that he had never wanted an IPR on her life. Mr. Crooke informed Mr. Keane that Mr. Keane had been ineligible from the start for the IPR which Mr. Keane had originally wanted to cover his own income and pay to Mrs. Keane in the event of Mr. Keane's death. (See Finding of Fact 90.) Apparently, this further explanation by Mr. Crooke led Mr. Keane next to believe that Respondent had deceptively added an unrequested IPR on Mrs. Keane to his contract application. Mr. Keane therefore wrote to the Knights of Columbus home office, saying he had applied for an IPR on his life and that IPR had been removed from his policy. (P-32-34) At hearing, Mr. Keane denied executing a Knights of Columbus 515 amendment to application form, dated October 15, 2001, which reads, "Sell [to] premium of 172.40 Govt allotment. No Income protection rider." (P-42; Defendant's [sic.] 33) That amount was the amount of Mr. Keane's government allotment and the amount he had been paying for his $40,813.03 whole life/no IPR policy, which Respondent had delivered to him and which Mr. Keane had kept in his safe until showing it to Mr. Crooke. That 515 application amendment form, although denied by Mr. Keane, together with Mr. Keane's acknowledgment that he had never wanted to spend more on a premium for his policy than the amount that came from his government allotment and that he and his wife had also only bought Mrs. Keane insurance at the amount of the government allotment provided to her (see Findings of Fact 110-111), lead to the conclusion that, despite Mr. Keane's confusion and denial of certain signatures, he agreed on October 15, 2001, to drop the IPR he applied for to get the premium he could pay, and that he received from Respondent the type of Knights of Columbus policy he had finally agreed to accept. COUNT VI: Virginia Keane Virginia Keane was once employed by the Navy Exchange, but has not worked there since 1997 and has not held other employment in recent years. In July 2001, Mr. and Mrs. Keane only wanted to purchase enough insurance on Mrs. Keane to "bury her suitably in a nice fashion," and "without financial hardship to the family." After consultation with Respondent, Mrs. Keane applied for a $10,000.00 whole life Knights of Columbus policy. Mrs. Keane's initial application for what eventually became Knights of Columbus Policy 0243974, shows the desired face amount as being $10,000.00. Respondent filled-out the application. Mrs. Keane signed that application, attesting that all elements thereof were true, and submitted a check for two months' premiums for the standard rate quoted at $23.80 x two. Certain health history questions on Mrs. Keane's initial application were improperly answered so as to omit her history of stroke, blood clots in the lungs, high blood pressure, and diabetes. Her height and weight figures on the application also erroneously showed her taller and lighter than she really was. She maintained that Respondent filled-in the wrong information and omitted the correct information. However, it is undisputed that Respondent told the Keanes on July 10, 2001, the day of the application, that someone else would come to their home to weigh them, take samples, do blood pressure readings, and complete a detailed health questionnaire about them. This health examination, in fact, occurred within two weeks, and Mrs. Keane gave complete, correct information to the "health person" who came to her home. Accordingly, there would seem to be no motivation for Respondent to deliberately falsify Mrs. Keane's health information on her application, since he knew she would be interviewed and examined by a health care professional. After her application was forwarded to the insurance company, a long delay occurred while underwriters obtained further health information on Mr. and Mrs. Keane as related in Count V, supra. (See also Findings of Fact 12 and 13.) The policy on Mrs. Keane that was delivered by Respondent to her clearly stated, "Rated Class. See Endorsement,"7/ immediately under the $10,000 face value shown. The remainder of the explanation on the endorsement pages is a series of comparisons of rated premiums and benefits, and it is easy to see how the Keanes were confused thereby, but the endorsement does clearly show a monthly premium for $36.70 per month, which all testimony established exceeded Mrs. Keane's monthly government allotment. At hearing, Mr. and Mrs. Keane both denied signatures purported to be theirs on a number of 515 amendment of application forms.8/ However, Mrs. Keane ultimately acknowledged that she had signed Defendant's [sic.] Exhibit 39, which was an amendment of application form, dated October 31, 2001, for her Knights of Columbus Policy 02439784, providing "Sell [to] premium of 23.80. Check enclosed for 2 payments 23.80 X 2= 47.60." This amendment had the effect of being an election by Mrs. Keane to keep the premium initially quoted for a standard policy by reducing her policy's face value from $10,000.00 to $6,302.35, rather than canceling the policy or paying the additional premium necessary to retain the $10,000.00 face value. After examining this exhibit, Mr. Keane conceded that the couple had decided to keep Mrs. Keane's premium within her government allotment. It was Knights of Columbus' procedure to have Respondent deliver the straight $10,000.00 policy endorsement and get a signed receipt from Mrs. Keane, acknowledging that she was accepting the lower face value. No such receipt appears of record, but it is not disputed that Mrs. Keane signed the 515 amendment form and got a policy endorsement showing on its face that she was insured for only $6,302.35. Respondent's sloppy habits and lack of attention to detail clearly delayed her receiving her coverage, but it must be concluded that Mrs. Keane got the policy she requested, within her economic and health limits. COUNT VII: Primary Agent Findings of Fact 7-9 are here adopted by reference. While Respondent owned and operated the Stidham Agency, was the boss there, and the one who hired and fired other agents working for him, he operated under his appointment as an agent for the Knights of Columbus. As owner and operator of the Stidham Agency, Respondent was required to register as a primary agent with the Department. Although he never made a primary agent filing, Respondent acted as the de facto primary agent for the Stidham Agency and was responsible and accountable for all of the activities of the staff at the Stidham Agency. (See Findings of Fact 7-9) Although Respondent did not register as a primary agent, the Department has conceded that his failure to register, while volitional, may not have been "intentional and willful," as charged. He apparently confused the requirements of "the primary agent law" (Section 626.592(1), Florida Statutes) with the statutory requirement that he keep the Department advised of his current address (Section 626.551, Florida Statutes).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, enter a final order that: (1) finds the Respondent, Darrell E. Stidham, guilty of twice violating Subsections 626.611,(5)(7), and (9) in Counts I and III, herein, and once violating Section 626.592(1), Florida Statutes, and (2) revokes his license. DONE AND ENTERED this 9th day of August, 2005, 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 9th day of August, 2005.
