Findings Of Fact On or about May 19, 1989, Viola DePeugh filed a complaint with the Department of Insurance, Bureau of Consumer Services, stating that the Petitioner, a licensed health and accident insurance agent for National States Insurance Company, visited the DePeugh home on or about May 4, 1989, and: tried to intimidate her and her husband; stated that the insurance agent who had sold them their Old Southern policy was "a crook and a liar" and not licensed by the Department; and stated that Old Southern had gone bankrupt and was about to go bankrupt again. The Respondent investigated the DePeugh complaint to the extent of interviewing the DePeughs and obtaining sworn written statements from them. Viola DePeugh's sworn written statement reiterated her May 19, 1989, complaint to the Department. She stated that the Petitioner had reviewed the DePeughs' Old Southern insurance policy, had stated that Old Southern had been bankrupt once before and was going bankrupt again, and had stated that her Old Southern agent was a "crook." Her husband, Forrest DePeugh, gave a sworn written statement that he had been present at the time of the Petitioner's statements to his wife and that he could verify his wife's statements. Besides the interviews with the DePeughs and their sworn written statements, the Department did not further investigate the DePeugh complaint. On or about September 21, 1989, the Respondent filed an Administrative Complaint charging the Petitioner with violations of parts of Chapter 626, Florida Statutes, based on the DePeugh allegations. The Administrative Complaint charges essentially that, in order to induce the DePeughs to change from their Old Southern policy to a policy the Petitioner was selling, the Petitioner falsely represented to the DePeughs that Old Southern Insurance Company had been in bankruptcy and was about to go bankrupt again and that the DePeughs' insurance agent was "a crook." The Administrative Complaint was referred to the Division of Administrative Hearings for a formal administrative proceeding and was assigned Case No. 89-5712. The Petitioner's defense to the Administrative Complaint was that he did not make the statements attributed to him, not that the statements were true. The Recommended Order in Case No. 89-5712 found that the Department did not prove by clear and convincing evidence that the DePeugh allegations were true. A Final Order dismissing the Administrative Complaint was entered on or about June 21, 1990. At the time of its filing on or about September 21, 1989, the Administrative Complaint against the Petitioner had a reasonable basis in law and in fact. If the DePeughs testified in accordance with Viola DePeugh's written complaint and sworn written statement, their testimony would have been legally sufficient to sustain the charges in the Administrative Complaint notwithstanding the Petitioner's denial of the charges. It was simply a case of the DePeughs' word against the Petitioner's word. There were no other witnesses, and there was no reason for the Respondent to think that further investigation would have uncovered extrinsic evidence that would support the Petitioner's denial of the charges or impeach the credibility of the DePeughs. Under these circumstances, it was not unreasonable for the Respondent to file the Administrative Complaint against the Petitioner.
The Issue Whether Respondent violated Sections 627.832(1)(i) and 627.848, Florida Statutes, and if so, what penalty should be imposed.
Findings Of Fact Respondent, Alliant Premium Finance Corporation, is a Florida licensed premium finance company domiciled in Florida. Alliant has been licensed to sell premium finance agreements to the general public in Florida since December 16, 1993. William J. Villari has been the president of Alliant since its licensure. In 1995, Petitioner, Department of Insurance, performed a routine regulatory examination of Alliant. During the examination, 15 Alliant files, which had refunds due to insureds within 30 days, were reviewed. Out of the 15 files, 12 were late, ranging from 87 to 329 days late. The Department sent Alliant the Department's 1995 Report of Examination, which gave notice to Alliant that between December 16, 1993, and June 30, 1995, Alliant had violated the insurance code by failing to make refunds within 30 days. Mr. Villari advised the Department by letter dated December 18, 1995, that he was taking steps to ensure that in the future refunds would be made on a timely basis. No disciplinary action was taken by the Department as a result of the 1995 examination. During January 1998, the Department performed another routine regulatory examination of Alliant. The findings of the examination are contained in the Report of Examination for the period from July 1, 1995, to September 30, 1997. As was noted in the report, 11 Alliant accounts were reviewed which had refunds due to insureds within 30 days, and 8 of the 11 accounts were refunded late. The lateness ranged from 5 to 67 days. The report was mailed to Alliant on February 17, 1998. The 1998 examination also revealed that between July 1, 1995, and September 30, 1997, Alliant had failed to maintain certificates of mailing showing that notices of intent to cancel insurance contracts were mailed to insureds ten days before cancellation. The evidence did not show that Alliant had failed to mail the cancellation notices, only that Alliant had failed to maintain certificates showing that the notices had been mailed. Respondent does not dispute that Alliant was late in making refunds as noted in the 1998 Examination Report or that Alliant did not maintain certificates of mailing for the cancellation notices. Alliant disagrees with the penalty proposed by the Department.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered, finding that Alliant Premium Finance Corporation violated Sections 627.832(1)(i) and 627.848(1), Florida Statutes, and imposing a penalty of $2,500 for the violation of Subsection 627.832(1)(i), Florida Statutes, and $250 for the violation of Section 627.848(1), Florida Statutes. DONE AND ENTERED this 24th day of May, 2000, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of May, 2000. COPIES FURNISHED: Christopher R. Hunt, Esquire Department of Insurance Division of Legal Services 612 Larson Building 200 E. Gaines Street Tallahassee, Florida 32399-0333 William J. Villari, President Alliant Premium Finance Corporation 303 Gardenia Street West Palm Beach, Florida 33401 Honorable Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level 2 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300
The Issue Whether the Petitioner application for licensure as a resident life, variable annuity and health agent should be granted or denied.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department is the state agency responsible for issuing licenses "authorizing a person to be appointed to transact insurance or adjust claims for the kind, line, or class of insurance identified in the document." §§ 626.015(9) and 626.112(1)(a), Fla. Stat. Prior to December 4, 2002, Mr. Porras was licensed in Florida as an insurance agent. He was also part-owner of The Garpo Group, Inc. ("Garpo Group"), an insurance agency. On October 18, 2002, the Department (formerly the Department of Insurance) and Mr. Porras entered into a Settlement Stipulation for Consent Order ("Settlement Stipulation") as a result of an investigation by the Department that resulted in allegations of wrongdoing on the part of Mr. Porras. In the Settlement Stipulation, Mr. Porras agreed to surrender his agent's licenses to the Department. Mr. Porras did not admit in the Settlement Stipulation that he committed the acts alleged by the Department. A Consent Order was entered on December 4, 2002. The Consent Order incorporated the terms of the Settlement Stipulation and provided that the surrender of Mr. Porras's licenses "shall have the same force and effect as a revocation pursuant to Section 626.641, Florida Statutes"; that Mr. Porras "shall not engage or attempt or profess to engage in any transaction or business for which a license or appointment is required under the insurance code or directly or indirectly own, control, or be employed in any manner by any insurance agent or agency . . . ."; and that Mr. Porras "shall not have the right to apply to the Department for another license under the Insurance Code within two (2) years of the effective date of revocation." Neither the Settlement Stipulation nor the Consent Order included a deadline by which Mr. Porras was required to divest himself of his ownership interest in the Garpo Group. On April 24, 2003, a Purchase and Sale Agreement ("Agreement") was executed whereby Mr. Porras, Eduardo Garcia, Mayda Garcia, and Luis Garcia, who were identified as the principals of the Garpo Group, agreed to sell the Garpo Group to Jose Peña and Peter Rivero. The Agreement included a purchase price of $50,000.00, payable in an initial deposit of $20,000.00, with the remaining balance to be paid "in monthly installments of no less than $500.00 (Five Hundred Dollars), and no more than $2,500.00 (Two Thousand Five Hundred Dollars)." A Special Condition of the Agreement provided that Mayda Garcia, "Shareholder/Registered Agent/General Agent/Director," and Luis Garcia, "Shareholder/Director," would "remain in Corporation in their current capacity until final payment for sale of business is paid." Mr. Porras retained an interest in the monthly payments to be made by Mr. Peña and Mr. Rivero for the purchase of the business. In accordance with the terms of the Consent Order, Mr. Porras surrendered his license and did not subsequently engage in the transaction or solicitation of insurance. Mr. Porras did not exercise any control over the Garpo Group after entry of the Consent Order. Mr. Porras worked for the Garpo Group as a bookkeeper from May 2004 through October 2004.3 He was paid $175.00 per week, and his duties included reconciling the Garpo Group's bank accounts, entering deposits in the system, and cutting checks on the Garpo Group accounts.4 It can be reasonably inferred from the evidence presented by Mr. Porras regarding his understanding of the terms of the Consent Order that Mr. Porras was aware when he accepted employment with the Garpo Group that the terms of the Settlement Stipulation and of the Consent Order prohibited him from any involvement in the business of the Garpo Group, including employment "in any manner."
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED the Department of Financial Services enter a final order finding that Lorenzo Alejandro Porras violated the terms of a Consent Order entered by the Department of Financial Services and denying his application for licensure as a resident life, variable annuity, and health agent, pursuant to Section 626.611(13), Florida Statutes. DONE AND ENTERED this 29th day of March, 2006, in Tallahassee, Leon County, Florida. S PATRICIA M. HART 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 29th day of March, 2006.
Findings Of Fact By letter dated December 27, 1977, VIRGINIA E. BELL, of VIRGINIA BELL REALTY, INC., forwarded to Mr. and Mrs. George Kuruzovich a contract for sale and purchase of real estate which had been executed by Robert and Patricia Gaudet. The cover letter from this respondent to Mr. and Mrs. Kuruzovich, stated that the contract provided for ". . . a net cash to you of not less than $7,500. This contract provided in paragraph twenty-two, "It is agreed that the seller shall net not less than $7,500 cash from sale herein upon closing." By letter dated January 3, 1978, Mr. George Kuruzovich informed Virginia E. Bell that the sellers approved the terms of the contract, with the understanding that they would receive net cash not less than $7,500. The contract dated December 27, 1977, was not consummated. However, a new contract, dated February 18, 1978, was executed by the sellers, George and Loretta Kuruzovich, with purchaser Patricia A. Gaudet. This contract likewise provided in paragraph twenty-two, ". . . sell [sic] shall net no less than $7,500 cash from sale herein payable upon closing." The contract dated February 18, 1978, was executed by all parties. The matter proceeded to closing, with the sellers authorizing Virginia E. Bell, to act as their agent. On May 4, 1978, Virginia E. Bell signed a letter to American Title Insurance Company stating that: "I, Virginia Bell, hereby certify that the proceeds of sale regarding the above captioned property is $7,053.34 and not $7,500.00 as required under the special provisions of the Sales Contract and that Virginia Bell Realty will assume any liability as far as payment concerning the net proceeds to Mr. and Mrs. George Kuruzovich, and furthermore, I will not hold American Title Insurance Company responsible for same." On May 4, 1978, the closing on the February 18, 1978, contract was consummated. Mr. and Mrs. George Kuruzovich, the sellers, received $7,053.34 in cash for the sale of their home. By letter dated May 5, 1978, to Mr. and Mrs. Kuruzovich the Respondent, Virginia Bell, explained that the cash discrepancy was due to prorations of $155 for taxes, $219.60 for interest in addition to the mortgage balance, and $94.22 for an FHA insurance premium paid by Respondent. In mitigation, Virginia E. Bell contends that she informed the sellers that the net cash required by the contract did not include tax, interest and insurance prorations, but this self-serving oral representation must be disregarded as contrary to the expressed terms of the contract and against the weight of the evidence. This respondent admits that the transaction which is the subject of this proceeding was not handled properly, and she asserts that it will not happen again.
Recommendation Upon Consideration of the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Virginia E. Bell be fined the sum of $500.00. It is further RECOMMENDED that the administrative Complaint against Virginia Bell Realty, Inc., be dismissed. THIS RECOMMENDED ORDER entered on this 16th day of September, 1980. WILLIAM B. THOMAS Hearing Officer Division of Administrative Hearings Room 101 Collins Building Tallahassee, Florida 32301 (904)488-1779 Filed with the Clerk of the Division of Administrative Hearings this 16thday of September, 1980. COPIES FURNISHED: S. Ralph Fetner, Esquire 2009 Apalachee Parkway Tallahassee, Florida 32301 Virginia E. Bell 1927 U.S. Highway 17 Orange Park, Florida 32073 George E. Marcellus 64 Sleepy Hollow Road Middleburg, Florida 32068
The Issue The issue presented is whether the Department's Rule 12B-8.001(5), Florida Administrative Code, is an invalid exercise of delegated legislative authority.
The Issue The issue in this case is whether Respondents have violated provisions of Section 627.837, Florida Statutes, through payment of alleged monetary inducements to insurance agents for the purpose of securing contracts which finance insurance premiums.
Findings Of Fact Petitioner is the Department of Insurance and Treasurer (Department). Respondents are Puritan Budget Plan, Inc., and Gibraltar Budget Plan, Inc., (Respondents). Findings contained in paragraphs 3- 23, were stipulated to by the parties. Stipulated Facts Common shares in Respondents' corporations were sold to insurance agent/shareholders for between $500.00 and $2,500.00 per share, depending on date purchased. Presently, and for the purposes of this litigation, marketing and/or administrative fees paid by Respondents to agent/shareholders range from $1.00 to $13.00 per contract produced, depending on the number of payments made, and the amount of the down payment. Each per contract marketing and/or administrative fee paid by Respondents to agent/shareholders is completely unrelated to the number of contracts produced by that agent/shareholder, and is based upon the characteristics of each contract, pursuant to the terms of the shareholder purchase agreement. Perry & Co., pursuant to a written agreement, manages the day to day activities of Respondents, including solicitation of new shareholder/agents. Alex Campos is currently President of Perry & Co. Perry & Co., Dick Perry or Alex Campos have no equity ownership, either direct or indirect, in Respondents corporations. No shareholder of Perry & Co. is also a shareholder in either Respondent, and no shareholder of the Respondents is a shareholder in Perry & Co. No officer or director of Perry & Co. is an officer or director of either Respondent, and no officer or director of either Respondent is an officer or director of Perry & Co. The individual management agreements between Perry & Co. and Respondents are terminable with proper notice by either party. Respondent Puritan Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Puritans' principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Respondent Gibraltar Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Gibraltar's principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Customers of Respondents are typically financing automobile insurance premiums. There is little if any variation among licensed premium finance companies in the State of Florida as to the interest rate charged to customers. In 1988, the Department inquired of Respondents' activities in relation to agent/shareholder compensation arrangements. After several meetings with representatives from Respondents, the Department closed the matter without taking any action. Also in 1988, the Department proposed the adoption of Rule 4-18.009, which in part would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes, but later withdrew the proposed rule. Again in 1994, the Department proposed a rule which would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes. After a hearing and adverse ruling by the hearing officer, the Department withdrew proposed Rule 4-196.030(8). Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in the unnecessary financing of contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in insurance agents adding or sliding unnecessary products to make the total cost of insurance more expensive and induce the financing of additional contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. An "inducement" is presently defined as "an incentive which motivates an insurance purchaser to finance the premium payment or which motivates any person to lead or influence an insured into financing the insurance coverage being purchased; or any compensation or consideration presented to a person based upon specific business performance whether under written agreement or otherwise." Rule 4-196.030(4), Florida Administrative Code (July 27, 1995). This rule is currently effective but presently on appeal. There is no evidence that Respondents unnecessarily financed any premium finance contracts or engaged in any "sliding" of unnecessary products to induce the unnecessary financing of contracts. Section 627.837, Florida Statutes, does not prohibit the payment of corporate dividends based on stock ownership to shareholders who are also insurance agents. According to the Final Bill Analysis for H.B. 2471, in 1995 the Legislature amended Section 627.837, Florida Statutes, relating to rebates and inducements. This section was amended to clarify that this statute does not prohibit an insurance agent or agents from owning a premium finance company. The statute, as amended, is silent on the issue of how owner-agents may be compensated. Other Facts Approximately 80 percent of Respondents' insureds will turn to the shareholder/agent to handle premium mailing and collection. When a shareholder/agent provides these valuable services and labor to Respondents through the servicing of the premium finance contract with an insured, payment for those services and/or recoupment of the expenses involved with their provision is made, at least in part, in the form of the marketing and administrative fees paid by Respondents to the shareholder/agent. The marketing and administrative fee payment by Respondents to shareholder/agents is made from the net profit of the corporation and represents payment of ownership interest (dividends) to shareholder/agents in addition to payment for shareholder/agent services or expenses. Respondents generally finance "non-standard" private passenger automobile insurance. Such insurance generally covers younger drivers and drivers with infraction points against their license. The average non-standard premium is $500 per year. Thirty percent of non-standard insureds will cancel their insurance prior to the renewal date. Cancellation of policies and financing arrangements by non-standard insurers require the agent to return unearned commissions, about $30 generally. In contrast, payment of an insurance premium in cash guarantees an agent his/her entire commission, an average of $90 per non-standard policy. Consequently, the financial interest of most agents is best served by cash sale of auto insurance as opposed to financing the insurance. The average amount generated by 95 percent of all premium finance contracts executed in Florida would yield an agent/shareholder approximately six dollars per contract.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered dismissing the Administrative Complaints. DONE and ENTERED in Tallahassee, Florida, this 28th day of November, 1995. DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of November, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings 1.-11. Accepted to extent included within stipulated facts, otherwise rejected for lack of citation to the record. 12. First sentence is rejected as not substantially dispositive of the issues presented. Remainder rejected for lack of record citation if not included within stipulated facts. 13.-15. Rejected to extent not included within stipulation, no citation to record. Incorporated by reference. Rejected, no record citation, legal conclusion. 18.-19. Rejected, not materially dispositive. 20. Rejected, no record citation. 21.-23. Rejected, not materially dispositive. Rejected, record citation and relevancy. Rejected, weight of the evidence. Incorporated by reference. Respondent's Proposed Findings 1. Rejected, unnecessary to result. 2.-3. Accepted, not verbatim. 4. Rejected, unnecessary. 5.-7. Accepted, not verbatim. 8.-9. Rejected, unnecessary. 10. Accepted per stipulation. 11.-12. Rejected, unnecessary. 13. Accepted per stipulation. 14.-16. Accepted, not verbatim. Rejected, hearsay. Rejected, relevance. Rejected, unnecessary. 20.-22. Accepted per stipulation. 23. Rejected, unnecessary. 24.-57. Incorporated by reference. 58.-60. Rejected, unnecessary. 61.-62. Rejected, subordinate and not materially dispositive. 63.-67. Rejected as unnecessary to extent not included in stipulated facts. Accepted per stipulation. Rejected, unnecessary. Accepted per stipulation. 72.-76. Rejected, unnecessary. 77. Accepted per stipulation. 78.-79. Incorporated by reference. 80.-87. Accepted per stipulation. 88. Incorporated by reference. 89.-90. Accepted per stipulation. 91.-95. Rejected, subordinate. 96. Accepted. 97.-101. Rejected, unnecessary. 102. Incorporated by reference. COPIES FURNISHED: Alan Liefer, Esquire Division of Legal Services 612 Larson Building Tallahassee, FL 32399-0333 Steven M. Malono, Esquire Cobb, Cole & Bell 131 N. Gadsden St. Tallahassee, FL 32301 Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Dan Sumner Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300
The Issue Whether Petitioner realized unlawful excess profits, and if so, in what amount.
Findings Of Fact Sentry is currently licensed and holds a Certificate of Authority to do business in the State of Florida as a foreign property and casualty insurer, and was so licensed at all times material. Sentry Select Insurance Company was known as John Deere Insurance Company until it was purchased by Sentry Insurance Group in October of 1999. On or about June 24, 1998, Sentry submitted Form D14-15 to the Department as required by Section 627.215, Florida Statutes. Form D14-15 is also known as Reporting Form F. The form provides insurance company data which is used by the Department to calculate workers' compensation excess profits. The Department did calculate the excess profits in the case of Sentry and on January 6, 1999, filed a Notice of Excessive Profits finding that Sentry had realized excess profits in the amount of $191,094.00 for calendar/accident years 1994-1996. In response to the Notice of Excessive Profits, Sentry provided to the Department, on or about May 26, 1999, commercial property and casualty experience data on a Form DI4-358. This was not a certified submission, nor was any evidence submitted which indicated that it should have been certified. Sentry asserted that this data could be used to offset the excess profits determined by the Department. Patricia Ferguson authenticated and made competent the commercial property and casualty experience data submitted by Sentry in May of 1999. The raw data presented is a business record of the company and therefore is admitted as an exception to the hearsay rule. Ms. Ferguson asserted that if the commercial property and casualty experience data was combined with the workers' compensation experience, Sentry would not have realized excess profits in the years 1994, 1995, and 1996. However, the material provided, including a completed Form DI4-358, is insufficient to permit the Department to make that determination. The excess profits statute, Section 627.215, Florida Statutes, was originally enacted into law in 1979. This statute only addressed excess profits in the case of workers' compensation insurance and employer's liability insurance for business written in Florida. In 1988, the Florida Legislature added commercial property and commercial casualty insurance written in Florida to the excess profits law and provided for a combination of these types of insurance in the case of insurers who wrote these types of coverage. Because the calculation of excess profits requires information from three years' experience, the statute was drafted so that only workers' compensation and employer's liability insurance was considered until 1991. Thereafter the different lines were to be combined. During the three-year period leading to 1991, data was reported, but no excess profits were required to be calculated. Between 1991 and 1997, companies reported their profit or loss underwriting experience for the latest three calendar/accident years valued at the end of the following year. Reports to the Department were due prior to the first day of July. For example, if the calendar accident years were 1994, 1995, and 1996, the profit or loss underwriting experience would be valued on December 31, 1997, and reported to the Department on Form F prior to July 1, 1998. Form F must be certified by a corporate officer. Excess profit has been realized if an insurer's underwriting gain exceeds the anticipated underwriting profit from the insurer's rate filings plus a five percent earned premium which the insurer may retain. Stated another way, if an insurer's profit is greater than that anticipated in its rate filing plus five percent then that amount is deemed excess profit. The Form F submitted by Sentry on June 24, 1998, was certified by the Assistant Secretary of Sentry as being a full and true statement. The Department correctly determined the amount of excess profit to be $191,094.00. This is the amount which must be returned to Sentry's premium payers as a cash payment or credit toward future premiums. The Department correctly declined to consider the commercial property and casualty experience submitted by Sentry, on May 26, 1999, on Form DI4-358, because the Department believed it could not consider that data in light of a change in the law made in 1995 which was effective January 1, 1997.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered which finds that Sentry realized $191,094.00 in excess profits for workers' compensation business covering calendar/accident years 1994, 1995, and 1996. DONE AND ENTERED this 30th day of October, 2001, in Tallahassee, Leon County, Florida. HARRY L. HOOPER 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 30th day of October, 2001. COPIES FURNISHED: Elenita Gomez, Esquire Richard M. Ellis, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street 612 Larson Building Tallahassee, Florida 32399-0333 Frank J. Santry, Esquire Granger, Santry & Heath, P.A. 2833 Remington Green Circle Post Office Box 14129 Tallahassee, Florida 32317 Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
Findings Of Fact At all times material herein, the Respondent was a licensed Health and Legal Expense Insurance agent in the State of Florida. By criminal indictment filed October 4, 1984, Respondent was charged with the crimes of conspiracy to commit fraud, use of the mails to defraud and the use of a fictitious name or address to defraud. After a jury trial, Respondent was convicted of the offenses of conspiracy to commit fraud, in violation of Title 18, USC, Section 1341, Title 29, USC, Section 501(c), all in violation of Title 18, USC, Section 371, as charged in Count One of the Indictment and mail fraud, all in violation of Title 18, USC, Sections 1341 and 1342, as charged in Counts Two through Five of the Indictment. The American Federation of State, County and Municipal Employees (AFSCME) was at all times material herein a labor union affiliated with the AFL- CIO, a labor organization as defined in Section 402 of Title 29, United States Code. Florida Public Employees Council 79 (Council 79) was at all times material herein a labor union affiliated with AFSCME and the AFL-CIO, a labor organization as defined in Section 402 of Title 29, United States Code. The scheme upon which the Respondent's conviction rests, was directed toward both AFSCME and Council 79. At all times herein, Respondent was employed by either AFSCME or Council 79. Upon Council 79 being chartered, Respondent became its Tallahassee Regional Director. The record does not reflect any persons as victims of the scheme upon which the Respondent's conviction rests other than AFSCME and Council 79. Respondent's participation in the schemes upon which his conviction rests was as follows: (a) at the directions of William Van Zandt, Assistant to Jerry Wurf, President of AFSCME, and Thomas J. Fitzpatrick, President of Council 79, Respondent enrolled David J. Michalski as an employee of Council 79 and met with David J. Michalski in November 1979 to set up an address where payments on expense account vouchers and salaries would be delivered, and assisted David J. Michalski in opening an account at the bank for this purpose, and; (b) contacted George Albert Cuneo, Jr., President and owner of Cuneo Advertising, Inc., and requested that Cuneo mail bills for printing a Council 79 newspaper directly to G.A.D., Inc. G.A.D., Inc. was a corporation used by defendants other than Respondent to funnel inflated bills for advertising and public relations for payment by AFSCME or Council 79. The record is clear that Respondent had no knowledge of the schemes, was following orders of his superiors, and received no money, property, or other consideration for his participation in the schemes. The only evidence in the record concerning the Respondent's participation in the mail fraud is that the Respondent did apparently mail some matters concerning David R. Michalski's expense vouchers. Whether he mailed anything concerning the "kick-back scheme" or the inflated bills for advertising and public relations is not clear from the record. Respondent had never been convicted of a crime before this conviction. Respondent was sentenced to three (3) years on Count One but served only eight (8) months. The sentences in Count Two through Five were suspended and Respondent was placed on probation. Respondent was placed on probation for six (6) months on Counts Two through Four which began immediately and was placed on three (3) years probation on Count Five which was to run consecutively with the sentence imposed in Count One. After serving the eight (8) months of his sentence, Respondent returned to Tallahassee and enrolled in, and completed, a course in insurance at Tallahassee Community College hoping to further expand his existing insurance license. The record is clear that Respondent's reputation for truth and veracity in the community is good despite his conviction, and the Respondent enjoys a good reputation as far as his integrity in dealing with others in concerned.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that Petitioner, Department of Insurance, enter a Final Order dismissing all counts of the Administrative Complaint filed herein. Respectfully submitted and entered this 31st day of March, 1987, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 31st day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-4404 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 in this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner Adopted in Finding of Fact 1. Adopted in Finding of Fact 2. Adopted in Finding of Fact 3 as clarified. Adopted in Finding of Fact 5 with the exception of the phrase "with in excess of ten numbers" which is rejected as immaterial since there was no substantial competent evidence in the record to show that any individual member had been defrauded or that any conspiracy to defraud was directed at any individual member. Rulings on Proposed Findings of Fact Submitted by the Respondent 1. Adopted in Finding of Fact 3. 2-7. Rejected as immaterial and irrelevant. Adopted in Finding of Fact 9. Adopted in Finding of Fact 7. Adopted in Findings of Fact 9 and 11. Adopted in Findings of Fact 9 and 11. Adopted in Findings of Fact 9 and 11. Adopted in Finding of Fact 9. Adopted in Findings of Facts 9 and 11. Rejected as immaterial and irrelevant. Adopted in Finding of Fact 15. Rejected as immaterial and irrelevant. Adopted in Finding of Fact 13. 19.-20. Adopted in Finding of Fact 16. COPIES FURNISHED: Robert V. Ellias, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32399-0300 Ben R. Patterson, Esquire PATTERSON and TRAYNHAM 1215 Thomasville Road Post Office Box 4289 Tallahassee, Florida 32315 Honorable William Gunter State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
The Issue The issue in this case is whether Respondent, Margaret Louise Herget, committed the offenses alleged in an Amended Administrative Complaint issued by Petitioner, the Department of Financial Services, on December 9, 2005, and, if so, what penalty should be imposed.
Findings Of Fact The Parties. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat.1 Respondent Margaret Louise Herget was, at the times relevant, licensed in Florida as a general lines (property and casualty) insurance agent. Ms. Herget's license number is A117083. At the times relevant to this matter, the Department has had jurisdiction over Ms. Herget's insurance licenses and appointments. At the times relevant to this matter, Ms. Herget was the president and a director of A & M Insurance, Inc. (hereinafter referred to as "A&M"). A&M was incorporated in 1991 and has been operating as an insurance agency in Broward County, Florida. At the times relevant to this matter, A&M had a business bank account with Bank Atlantic of Ft. Lauderdale. Ms. Herget has been an authorized signatory on the account since 1998. At the times relevant to this matter, Ms. Herget maintained a contractual relationship with Citizens Insurance Company (hereinafter referred to as "Citizens"), an insurer. Pursuant to this contractual relationship, all applications and premiums for Citizens's products received by Ms. Herget were to be submitted to Citizens within five business days. Albert Herget. Albert Herget,2 Ms. Herget's husband until their marriage was dissolved in September 2003, also maintained a contractual relationship with Citizens. Mr. Herget, who was licensed as a general lines agent by the Department, was appointed by Citizens to write Citizens' property and casualty insurance. Mr. and Ms. Herget were both authorized signatories on A&M's bank account from 1998 until June 2003. Ms. Herget continued as the sole authorized signatory on the account after June 2003. Mr. Herget was also an officer of A&M until October 6, 2003, when he resigned. A&M was named after "Albert" & "Margaret" Herget. The evidence failed to prove that Mr. Herget was under the direct supervision and control of Ms. Herget. The evidence also failed to prove that Ms. Herget knew or should have known of any act by Mr. Herget in violation of Chapter 626, Florida Statutes. Count I: The Camp Transaction. In June 2002 Michael Camp and Rosemary Mackay-Camp went to A&M to purchase hazard, windstorm, and flood insurance. The Camps met with and discussed their needs with Mr. Herget. On or about June 11, 2002, the Camps paid $2,273.97 by check number 365 made out to "A & M Insurance" for "Flood, Wind & Home Insurance." The premium for the windstorm insurance amounted to $1,026.00. The check was given to Mr. Herget and was deposited in A&M's bank account on or about June 12, 2002. On or about June 11, 2002, the Camps were given a document titled "Evidence of Property Insurance," which indicated that they had purchased insurance on their home for the period June 14, 2002, through June 14, 2003. The windstorm insurance was to be issued by Citizens. Initials purporting to be those of Ms. Herget and a stamp of Ms. Herget's name and insurance license number appear in a box on the Evidence of Property Insurance form titled "Authorized Representative." Ms. Herget testified credibly that the initials were not placed there by her.3 There is also a notation, "Paid in Full Ck # 365" and "Albert," written in Mr. Herget's handwriting on the Evidence of Property of Insurance form. Mr. Herget also gave the Camps the note evidencing the receipt of their payment. The Camps, merchant marines, left the country after paying for the insurance they desired on their home and did not return until sometime in 2003. Upon their return they inquired about why their windstorm insurance had not been renewed and discovered that they had never been issued the windstorm insurance coverage they had paid A&M for in 2002. The Camps attempted several times to contact Ms. Herget by telephone. Their attempts were unsuccessful. They wrote a letter of inquiry to Ms. Herget on October 29, 2003. Ms. Herget did not respond to their inquiry. Having received no response to their inquiry of October 29, 2003, Mr. Camp wrote to Ms. Herget on or about December 5, 2003, and demanded that she either provide proof of the windstorm policy the Camps had paid for or refund the premium paid therefor. By letter dated December 11, 2003, Ms. Herget informed Mr. Camp of the following: We have determined that your policy was submitted to Citizen's (Formerly FWUA) and was never issued due to a request for additional information which was not received. Ultimately the application and funds were returned to our agency. Enclosed please find our agency check for 1026.00 representing total refund of premium paid. Please advise if we can be of further assistance. Enclosed with the letter was a full refund of the premium which the Camps had paid for the windstorm insurance they never received. The Camps accepted the refund. While the hazard and flood insurance purchased by the Camps had been placed by A&M, the windstorm insurance had not been placed, as acknowledged by Ms. Herget in her letter of December 11, 2003. A&M's bank records indicate that a check for the windstorm insurance in the amount of $1,026.00 was written to Citizens on or about June 14, 2002, but that the check had never been cashed. Although this explanation appears contrary to the explanation given by Ms. Herget to the Camps in her letter of December 11, 2003, neither explanation was refuted by the Department. More importantly, regardless of why the windstorm insurance purchased by the Camps was not obtained by A&M, the weight of the evidence suggests that the fault lies not with Ms. Herget, but with Mr. Herget, who actually dealt with the Camps. The evidence also proved that it was not until sometime in late 2003 that Ms. Herget learned of the error and, upon investigating the matter, ultimately refunded in-full the amount paid by the Camps. The evidence failed to prove that any demand was made by Citizens for the premium for windstorm paid by the Camps or that she willfully withheld their premium. Count II: The Cipully Transaction. Carol Cipully began purchasing homeowner's insurance from A&M in 1999. In July 2003 Ms. Cipully refinanced her home. She believed that her homeowner's insurance would continue after the refinancing with her current insurance carrier, Citizens, through A&M. First American Title Insurance Company (hereinafter referred to as "First American") handled the closing of the refinancing. First American was responsible for issuing a check to A&M after closing in payment for the homeowner's insurance policy. Closing took place July 23, 2003. By check dated July 30, 2003, First American paid $1,658.00 to A&M for Ms. Cipully's insurance coverage.4 Of this amount, $1,435.00 was for hazard insurance with Citizens and $223.00 was for flood insurance from Omaha Property and Casualty Insurance Company (hereinafter referred to as "Omaha Insurance"). The check was received and deposited in the bank account of A&M on August 4, 2003. An Evidence of Property Insurance form was issued by A&M for Ms. Cipully's insurance on or about July 25, 2003. The form was initialed by Ms. Herget. A month or so after the closing, a water leak, which had caused property damage, was discovered in Ms. Cipully's home. When she attempted to contact her homeowner's insurer she ultimately discovered that the premium payment made by First American had not been remitted to Citizens or Omaha Insurance by A&M and, therefore, she had no homeowner's insurance. Ms. Cipully contacted Ms. Herget by telephone and was assured by Ms. Herget that she had insurance.5 Ms. Cipully's daughter, Tina Cipully, attempted to resolve the problem with Ms. Herget on behalf of her mother. In response to Tina Cipully's inquiries, Ms. Herget, rather than look into the matter herself, informed Tina Cipully that proof need to be provided to her by or on behalf of Ms. Cipully that would prove that a premium check had been sent to A&M from First American. Tina Cipully attempted to comply with Ms. Herget's request, contacting First American. An employee of First American faxed a copy of the cancelled check for $1,658.00 to Tina Cipully.6 A copy of the Evidence of Property Insurance dated July 25, 2003, from A&M was also faxed by First American to Tina Cipully. Tina Cipully sent a copy of the check she received from First American to Ms. Herget. She also sent a copy of a HUD-1 statement. When she later spoke to Ms. Herget, however, Ms. Herget told her she could not read the documents. The evidence failed to prove that Ms. Herget received a legible copy of the check. The copy of the HUD-1 form, while not totally legible, did evidence that $1,658.00 was to be withheld for payment of insurance premiums. Despite the fact that the check in the amount shown on the HUD-1 statement had been deposited in A&M's bank account, Ms. Herget continued to insist that Ms. Cipully prove her entitlement to redress. Had she made any effort, Ms. Herget should have discovered that a check in the amount of $1,658.00 had been deposited in A&M's bank account on August 4, 2003. Three and a-half months after having received the First American check, Citizens, after verifying that First American had paid for hazard insurance on behalf of Ms. Cipully, contacted Ms. Herget and requested payment of Ms. Cipully's insurance premium. Six months after being notified by Citizens, Ms. Herget paid Citizens the $1,435.00 insurance premium A&M had received in August 2003. The payment was made by check dated May 28, 2004. Ms. Herget did not explain why it took six months after being notified that Ms. Cipully had indeed paid her insurance premium to pay Citizens. Omaha Insurance had not been paid the $223.00 premium received by A&M in August 2003 at the time of the final hearing of this matter. Ms. Herget failed to explain why. Count IV: The Parker Transaction. On March 20, 2004, Elric Parker, who previously purchased homeowner's insurance from Citizens through A&M, went to A&M to renew his policy. He gave Ms. Herget a check dated March 20, 2004, for $1,064.00 in payment of six months of coverage.7 Ms. Herget gave Mr. Parker a receipt dated March 20, 2004, for the payment. The check was endorsed by Ms. Herget and deposited into the banking account of A&M on or about March 22, 2004. After waiting approximately three months for the arrival of a renewal policy which Ms. Herget told Mr. Parker he would receive, Mr. Parker became concerned and decided to contact A&M. He was repeatedly assured, at least on one occasion by Ms. Herget, that the renewal policy would be received. Mr. Parker subsequently contacted representatives of Citizens directly and was informed by letter dated January 8, 2005, that his insurance with Citizens had been cancelled in April 2004 for non-payment of the $1,064.00 premium Mr. Parker had paid to A&M. Rather than attempt to resolve the problem with Ms. Herget and A&M, Mr. Parker continued to deal directly with Citizens. After providing proof to Citizens of his payment of the premium to A&M, Citizens offered to issue a new policy effective April 2004 upon payment by Mr. Parker of the second six-month premium or, in the alternative, to apply his payment in March 2004 to a new policy for 2005. Mr. Parker opted to have his payment applied toward the issuance of a new policy providing coverage in 2005. This meant that he had no coverage for most of 2004 and part of 2005. Citizens notified Ms. Herget that the payment she had received from Mr. Parker should be remitted to Citizens. Ms. Herget investigated the matter and, when she confirmed that she had received his payment, paid Citizens $1,064.00 on or about February 10, 2005. Ms. Herget and A&M failed to remit Mr. Parker's insurance premium payment received in March 2004 until payment was made to Citizens in February 2005. That payment was made only after inquires from Mr. Parker and, ultimately, Citizens. While Ms. Herget speculated that Mr. Parker's file was misfiled and not properly processed, the failure to remit Mr. Parker's premium payment for almost a year was not explained by either party. The evidence failed to prove, however, that Ms. Herget failed to remit the premium to Citizens willfully or that she failed to remit the premium once it was determined that A&M had failed to so and demand was made by Citizens.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Margaret L. Herget violated the provision of Chapter 626, Florida Statutes (2003), described, supra, and suspending her license for six months. DONE AND ENTERED this 29th day of June, 2006, in Tallahassee, Leon County, Florida. S LARRY J. SARTIN 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 29th day of June, 2006.
