Findings Of Fact At all times material to this case, and at the time of the hearing, Gary Lee Baker ("Respondent") was licensed in Florida as a life and variable annuity agent, health and variable annuity agent, life agent, life and health agent, general lines agent, and health agent. The Respondent was a stockholder and officer in the "Murdock Insurance Agency, Inc.". Pete and Debi Valencia are the owners of the "Growing Concern," a floral shop. In 1991, the Growing Concern had obtained workers compensation (WC) coverage through Allstate Insurance. According to the Allstate policy, the coverage was effective from July 18, 1991 to July 18, 1992. The premium for the policy was $1,235.00. As of November, 1991, Mr. Valencia believed that Allstate Insurance was going to terminate his WC insurance coverage. The belief apparently was based on local gossip. There is no evidence that, absent payment of premium, Allstate intended to cancel the Valencia's WC insurance coverage prior to the expiration date set forth in the policy. Mr. Valencia contacted the Respondent, who was a business acquaintance of Mrs. Valencia, to discuss WC coverage. At the time of the initial meeting, Mr. Valencia offered to place all his insurance business with the Respondent if the Respondent could obtain satisfactory WC insurance rates for the Valencia's business. Mr. Valencia provided a copy of the then-current Allstate policy to the Respondent. Based on information provided by Mr. Valencia, the Respondent completed portions of a WC insurance application on behalf of Growing Concern on November 21, 1991. The application was to be submitted to the National Council of Compensation Insurance (NCCI) Atlantic Division upon receipt of additional information from Mr. Valencia and upon the lapse of the Allstate coverage. Among the information required by the NCCI was a copy of a Growing Concern quarterly tax filing (Form 941) from Mr. Valencia. The form is used by NCCI to verify the Growing Concern payroll, the basis of calculation of the WC premium. Pursuant to this meeting, Mrs. Valencia provided a check dated November 21, 1991, numbered 3737, for $360.00 as an initial payment on the WC premium. The Respondent deposited the check into his trust account and awaited receipt of the additional documentation. By January, 1992, the Respondent had not received the additional information. He contacted Mr. Valencia to obtain the copy of Form 941 and to obtain an additional premium payment of $121.00. On several occasions during January and February, 1992, the Respondent and his assistant attempted to contact Mr. Valencia to obtain the premium payment and information. Neither the information nor the payment was forthcoming. On March 8, 1992, Mrs. Valencia submitted a check numbered 3948 for $121.00 as payment of the additional premium. However, the Valencia's still failed to submit a signed copy of the Growing Concern's most recent Form 941. Although the Respondent assumed that the application would be rejected for the failure to include all the required information, the Respondent submitted the application on March 31, 1992 (without the required Form 941) to NCCI. A check on the account of Murdock Insurance Agency dated March 31, 1992, numbered 144, for $962.00 accompanied the application as payment of the premium due at that time. Although he had yet to collect such an amount from the Valencias, he believed their relationship was such that he could "front" the premium payment on their behalf. By letter dated April 24, 1992, NCCI informed the Respondent that the application would not be processed without the form which would permit verification of the payroll. On May 20, 1992, Mr. Valencia provided a signed copy of the Form 941 to the Respondent. By letter dated May 26, 1992, NCCI informed the Respondent that an additional premium payment of $423.00 was required. The total premium for the Growing Concern WC policy was $1,385.00 The Respondent contacted Mr. Valencia and requested the additional premium payment. Mr. Valencia directed the Respondent to void the transaction and to return the premium paid by the Growing Concern. The premium was returned by NCCI to the Respondent. Immediately upon receipt of the premium, the Respondent refunded $481.00, the amount paid by the Growing Concern, to Mr. Valencia on June 4, 1992. At all times, Mr. Valencia's premium funds were maintained in the Respondent's trust account until such time as they were submitted to NCCI. At no time did Mr. Valencia inform the Respondent that the Growing Concern's Allstate WC coverage had lapsed.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Insurance enter a Final Order dismissing the administrative complaint filed against Gary Lee Baker. DONE and RECOMMENDED this 4th day of January, 1994, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of January, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4569 The following constitute rulings on proposed findings of facts submitted by the parties. Petitioner The Petitioner's proposed findings of fact are accepted as modified and incorporated in the Recommended Order, except as follows: Rejected, contrary to the greater weight of the evidence which establishes that the delay in submission of the application was based on the insured's failure to provide the requested information. The premium was refunded to the insured on June 4, 1992, (not January 4, 1992) immediately upon the receipt by the Respondent. Rejected, immaterial. The Allstate policy lapsed through no act by the Respondent, who was never informed of such lapse. Respondent The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 9. Rejected, hearsay uncorroborated by other competent evidence. COPIES FURNISHED: Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, General Counsel Office of State Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300 Joseph D. Mandt, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Carl Joseph Coleman, Esquire Smith, Geraghty & Coleman Post Office Drawer 8 Fort Myers, Florida 33901
Findings Of Fact The Respondent, Teresa Jean Watson, at all times material to this proceeding was licensed as an ordinary life agent, a disability insurance agent and a general lines insurance agent. She was the only general lines agent licensed to sell insurance at the T. J. Watson Insurance Agency, Inc. and all insurance sold by that firm at times pertinent hereto was sold and issued under authority of her license. During times material to this proceeding, Teresa Jean Watson sold insurance coverage under authority of her general lines license either as direct agent for various insurance companies for whom she was general agent or, on behalf of MacNeill and Son, Inc. (MacNeill), her managing agency, which represented various insurance companies for whom the Respondent wrote coverage. Between February 1st and February 15, 1982, a homeowner's insurance policy was sold to Tony and Martha Williams by the Respondent's agency under the authority of the Respondent's general lines insurance agent's license. That homeowner's policy required a premium of $211.00. The policyholder, Tony Williams, wrote two checks to the T. J. Watson Agency dated January 22, 1982 and February 12, 1982. Those two checks totalled $174.00. The checks were cashed by the Respondent's agency on January 26, 1982 and on February 6, 1982. The Independent Fire Insurance Company issued the policy to Tony and Martha Williams and on August 4, 1982 a representative of the Independent Fire Insurance Company wrote the Respondent to advise her that she owed that company a balance of $179.35, as of May 1982. Petitioner asserts that the $179.35 represents the amount of Tony Williams' premium owed to the insurer, less the Respondent's commission, which if added together would equal the $211.00 premium on the Williams' policy. Although it was established that $179.35 was owed by the Respondent to the Independent Fire Insurance Company, and never paid, it was not established that it represented the premium due specifically for the Williams' policy as was charged in count 1 of the Administrative Complaint. For instance, the checks paid by the Williamses to the Watson Agency total $174.00 and therefore there is a discrepancy between the total of those checks and the $179.35 amount Independent Fire Insurance company was owed by the Respondent. This fact coupled with the fact that the dates on the checks from the Williamses (January and February) substantially predate the May 1982 billing date to Respondent from Independent Fire, renders it unproven that the checks written to the Watson Agency which Respondent negotiated and retained the benefit of, related to the amount of unremitted premium owed by Respondent to the Independent Fire Insurance Company. In short, it was established that $174.00 was paid the Respondent and her agency by the Williamses. But, it was not established that the premium paid by the Williamses became misappropriated fiduciary funds converted by the Respondent to her own use and benefit. It was merely established that as of May 1982 the Respondent owed the Independent Fire Insurance Company $179.35 as a past-due account It was not established that the Williamses ever suffered a lapse of insurance coverage or were otherwise harmed by the Respondent's failure to pay Independent Fire the $179.35. Indeed, the $179.35 figure was not proven to be more than a mere debt owed by Respondent to Independent Fire Insurance Company. The figure was not shown to have been related to any particular policy. The Respondent and her insurance agency in the regular course of business wrote insurance coverage for companies represented by MacNeill and Son, Inc., the Respondent's managing agency. The regular business practice between the Respondent and MacNeill was for the Respondent to write coverage on behalf of insurers represented by MacNeill and to remit on a regular open account" basis insurance premiums due MacNeill on behalf of its insurance company principals on a monthly basis. The Respondent became delinquent in submitting premiums to MacNeill and Son in November 1981. After unsuccessful efforts to collect the delinquent premium funds from the Respondent, MacNeill and Son, Inc. suspended T. J. Watson Insurance Agency and the Respondent from writing further coverage for companies they represented in January 1982. The Respondent purportedly sold her agency to one Thomas Zinnbauer in December 1981, but had already fallen into a pattern of failing to remit insurance premiums over to MacNeill before that time. In any event, the purported sale to Thomas Zinnbauer was a subterfuge to avoid collection of delinquent premiums inasmuch as the Respondent held herself out, in correspondence with MacNeill, (See Petitioner's Exhibit 4) to be the president of the agency at least as late as April 1982 and, at that time and thereafter, the agency continued to sell insurance under the aegis of the Respondent's license. After the Respondent made up the delinquency in premium remissions to the MacNeill Agency that agency restored her underwriting authority in January 1982. Shortly thereafter however, the Respondent and the T. J. Watson Agency again became delinquent in remitting insurance premiums to the MacNeill Agency and followed a quite consistent pattern of failing to forward these fiduciary funds to MacNeill for some months. Ultimately the Respondent and her agency failed to forward more than $6500.00 in premium payment funds to MacNeill and Son, Inc. as was required in the regular course of business. MacNeill and Son, Inc. made repeated futile attempts to secure the misappropriated premium payments from the Respondent and her agency. MacNeill made several accountings of the amount of the acknowledged debt to the Respondent. The Respondent communicated with MacNeill concerning the delinquent premium payments and acknowledged the fact of the debt, but sought to reach an amicable arrangement for a repayment schedule. Re- payment was never made, however, and ultimately the Petitioner agency was informed of the deficiencies and prosecution resulted. The Respondent knew that the premiums had been collected by herself and her agency and had not been forwarded to those entitled to them. She knew of and actively participated in the improper withholding of the premium payments. This withholding and diversion of premium payments from the agency and companies entitled to them was a continuing pattern of conduct and Respondent failed to take action to halt the misappropriation of the premium payments. Further, it is established by the testimony of Matthew Brewer, who investigated the delinquent premium accounts for MacNeill, that Ms. Watson failed to advise MacNeill of the purported sale of her agency until November of 1982, almost a year after it is supposed to have occurred and then only in response to Brewer's investigation. When confronted by Mr. Brewer concerning the ownership of her agency Ms. Watson refused to tell him to whom she had sold the agency. When Mr. Brewer learned that Thomas Zinnbauer had apparently bought the agency from the Respondent Mr. Brewer conferred with him and he refused to release the agency records unless Ms. Watson gave her permission. This fact, together with the fact that Ms. Watson held herself out as president of the agency some four months after she had purportedly sold the agency to Zinnbauer, establishes that Respondent, by representing to Brewer and other personnel of MacNeill and Sons, Inc. that she had sold her agency, was attempting to evade liability for failure to forward the fiduciary premium funds obtained under the authority of her agent's license. As a result of the failure to forward the above- mentioned premium payments some of the insureds who had paid those premiums suffered lapses in coverage and cancellations of policies because MacNeill and Company and the insurers they represented believed that no premiums had ever been paid. Ultimately, MacNeill and Company learned that the premiums had been paid by the policyholders, but not remitted by the Respondent and her agency and undertook steps to reinstate coverage, but those policyholders in some instances had substantial periods of time when their coverage was lapsed due to the Respondent's failure to remit the premium funds to the managing agency and the insurance companies involved. MacNeill and Company ultimately reimbursed the appropriate insurers and insureds at its own expense, incurring substantial financial detriment as a result of the Respondent's failure to have premium payments obtained under her licensed authority properly forwarded. Had the insureds who had their policies cancelled suffered losses for which claims could have been filed during the period of the lapses of coverage, they could have encountered substantial financial difficulty.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is therefore recommended that the General Lines Insurance Agent's license of Respondent Teresa Jean Watson be revoked. DONE and ORDERED this 27th day of December, 1985, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 FILED with the Clerk of the Division of Administrative Hearings this 27th day of December, 1985. APPENDIX RULING OF PETITIONER'S PROPOSED FINDINGS OF FACT: Accepted. Accepted, although the amount represented by the two subject checks totalled $174.00 instead of $175.00. Accepted. Rejected as not comporting with the competent, substantial credible evidence adduced. Rejected inasmuch as it was not established that the amount of $179.35 owed the Independent Fire Insurance Company represented the premium on the Williamses' insurance policy. Accepted. Accepted. Accepted. Accepted, although the last sentence in that Proposed Finding constitutes, in reality, mere argument of counsel. Accepted. Rejected as not comporting with the competent, substantial credible testimony and evidence actually before the Hearing Officer. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. RULINGS ON RESPONDENT'S PROPOSED FINDINGS OF FACT: Respondent submitted a post-hearing document entitled "Proposed Findings of Fact." There are few actual Proposed Facts in that one-and-a-half page pleading which is interlaced throughout with argument of counsel. However, to the extent the six paragraphs of that document contain Proposed Findings of Fact they are ruled on as follows: This Proposed Finding is rejected, but for reasons delineated in the above Conclusions of Law, Count 1 has been recommended to be dismissed anyway. This Finding is accepted but is immaterial and irrelevant to, and not necessary to, the Findings of Fact reached herein and the Conclusions of Law based thereon. Paragraph Number 3 does not really constitute a Proposed Finding of Fact or even multiple Proposed Findings of Fact in the same paragraph. In reality, it constitutes argument of Respondent's counsel concerning admissibility of certain documents into evidence which have already been ruled to be admissible by the Hearing Officer during the course of the hearing. To the extent that the last two sentences in the third paragraph of the Respondent's Proposed Findings of Fact are proposed findings of fact, they are accepted, but are immaterial, irrelevant and unnecessary to the findings of fact made herein and the conclusions predicated thereon and recommendation made herein. Rejected as not being in accordance with the competent, substantial credible testimony and evidence adduced. Rejected as constituting mere argument of counsel and not being in accordance with the competent, substantial, credible evidence adduced. Rejected as not in accordance with the competent, substantial, credible evidence presented as to Count 2. In reality, counsel obviously intended to refer to the two checks referenced in Count 1 of the complaint which has been recommended to be dismissed anyway. COPIES FURNISHED: Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Mark A. Steinberg, Esquire Post Office Box 2366 Ft. Myers, Florida 33902 Bill Gunter Insurance Commissioner and Treasurer The Capitol Tallahassee, Florida 32301
The Issue Whether the Respondent's insurance licenses should be disciplined on the basis of the alleged multiple violations of Chapter 626, Florida Statutes, as set forth in the Administrative Complaint.
Findings Of Fact Petitioner is the state agency charged with licensing insurance agents of all types, regulating licensure status, and enforcing the practice standards of licensed agents within the powers granted by the Legislature in Chapter 626, Florida Statutes. At all times material to these proceedings, Respondent Wolfe was licensed as an insurance agent in the following areas: Ordinary Life, Ordinary Life including Disability Insurance, General Lines, and Disability. Respondent was also registered with the Department as an Automobile Inspection and Warranty Salesperson. Respondent Wolfe conducted his insurance business through Edison Insurance Agency, Inc. (hereinafter Edison), which is located in Fort Myers, Florida. The Respondent is the President, the Director, and sole shareholder of the insurance agency. All of Edison's personnel who collected funds in a fiduciary capacity, on behalf of the insured named in the Administrative Complaint, acted through the supervision and control of Respondent Wolfe, the licensed general lines agent of record at Edison. One of the services provided to customers who sought insurance through Edison was the agency's processing of premium financing applications. If an insurance customer decided to finance premium payments, the Respondent or agency personnel, would arrange premium financing for the customer through Regency Premium Finance Company (hereinafter Regency). Once the insurance customer's application to Regency was processed, Regency would issue a check for the financed portion of the premium. The check would name Edison as the payee, and would be sent to the agency's offices. The Respondent or agency personnel acting through his licenses, were then required to remit the money to the insurance company to obtain the insurance coverage selected by the proposed insured. Count I On October 7, 1986, Regency issued a check in the amount of eleven thousand eighty four dollars and twenty five cents to Edison. Upon receipt of the check, Edison paid the outstanding balance of the premiums owed to Canal Insurance Company by Shirley Turlington, who became insured with the company through Edison on July 16, 1986, under policies numbered P02 31 71, and 14 43 39. On November 7, 1986, a Notice of Cancellation was sent by Regency to the insurer as the insured did not pay an installment payment, as agreed, by October 16, 1986. The insurance policies were cancelled by the insurer, and an unearned premium of ten thousand one hundred and twenty four dollars was credited to Edison's account with Dana Roehrig & Associates, an authorized representative of Canal Insurance Company. Pursuant to the Premium Finance Agreement signed by the insured Shirley Turlington, Regency was assigned all unearned premiums returned by the insurance company on these specific policies. Shirley Turlington was not entitled to the unearned premiums credited to Edison's account by Canal Insurance Company through Dana Roehrig & Associates. A determination of Regency's entitlement to the unearned premium refund is currently pending in a civil action. Count II On March 16, 1987, Regency issued a check in the amount of nine thousand four hundred and forty one dollars to Edison. The purpose of the check was to have Edison pay the outstanding balance of the premium owed to Canal Insurance Company by Guillermo Rodriguez for a commercial automobile liability policy numbered 152 656. In reality, the amount of money necessary for payment to Canal Insurance Company had already been earmarked in the account maintained by Dana Roehrig & Associates which shows the credits and debits placed on Edison's business transactions with Dana Roehrig & Associates. The premium was paid, and the policy was issued by Canal Insurance Company with an effective date of February 2, 1987. In the premium finance agreement completed on behalf of Mr. Rodriguez in Edison's Offices, the inception date of the policy was projected for March 29, 1987. Respondent Wolfe and Edison personnel were unable to bind Canal Insurance Company so that an actual policy number and policy inception date were unknown by Edison at the time the finance agreement with Regency was completed at the agency. As the commercial automobile liability market was very active at Dana Roehrig & Associates during this time period, it is unknown what basis was used for the projected inception date of the policy. On May 27, 1987, a Notice of Cancellation was sent by Regency to the insurer as the insured did not pay an installment payment, as agreed, on April 29, 1987. The policy was cancelled September 25, 1987. No evidence was presented at hearing to demonstrate what happened to the unearned premium refund. Count III On March 24, 1987, Regency issued a check in the amount of twenty one thousand four hundred thirty five dollars to Edison. The purpose of the check was to pay the outstanding balance of the premium on a commercial automobile liability policy from Lumbermans Mutual Insurance Company which had been applied for by Thomas Gleason through Edison. Edison did not purchase an insurance policy for Mr. Gleason with the funds sent to Edison by Regency for that purpose. The check from Regency was cashed, and the funds were commingled with other funds in the agency's account number 632717. Count IV On April 21, 1987, Regency issued a check in the amount of twenty five thousand one hundred and fifty eight dollar and seventy five cents to Edison. The agency was to apply these funds against the outstanding balances on premiums for Clayton Olding, Inc., a trucking firm. The proposed insured had applied for insurance coverage from Canal Insurance Company and Cadillac Insurance Company. Edison paid for policy number 155941 with Canal Insurance Company with check number 7120. The premium amount and the inception date listed on the Regency premium finance agreement were correct. A notice of cancellation was sent to Canal Insurance Company on July 1, 1987, as Clayton Olding had failed to pay the installment due Regency on June 13, 1987. However, the policy had already been cancelled by the insured on June 1, 1987. A credit of nineteen thousand one hundred seventeen dollars and eighty cents was placed against Edison's account with Dana Roehrig & Associates, the authorized representative for Canal Insurance Company. Paperwork given to Clayton Olding, Inc. represented that the company was insured by Cadillac Insurance Company through Edison. Edison was the authorized agent of Cadillac Insurance Company and was able to temporarily bind the company. However, the money which was to be given to Cadillac Insurance Company as the down payment on the insurance premium was never sent to the insurer. Instead, Rose Delaney, an employee of Edison, created interagency documents which reflected that the money had been sent, and took the money for her own personal use. When Clayton Olding, Inc. notified Ms. Delaney to cancel the policy on June 1, 1987, this customer believed that Edison had acquired the insurance policy requested with Cadillac Insurance Company. Clayton Olding, Inc. received a refund from Edison after the cancellation of the two policies in the amount of approximately one thousand dollars. It was not revealed at hearing whether the refund related to the Canal Insurance Company policy or the Cadillac Insurance Company policy, or both transactions. Count V On April 28, 1987, Regency issued a check in the amount of four thousand five hundred and sixteen dollars to Edison for payment of the outstanding balance of the premium purportedly owed by Arthur Farquharson to Canal Insurance Company through Edison. Edison did not purchase an insurance policy for Mr. Farquharson with the funds sent to Edison by Regency for that purpose. The check from Regency was cashed, and the funds were commingled with the funds in the agency's checking account numbered 632717. The policy requested by Mr. Farquharson was never obtained by Edison on his behalf. Counts VI through VIII Count VI through Count VIII of the Administrative Complaint involve requests from proposed insured to purchase insurance through Edison. The proposed insured were Clinton Roole, Bertel Alexander Prince, and A & E Young Trucking, Inc, respectively. In each application for insurance, the proposed insured requested premium financing through Regency. Regency issued checks on behalf of these proposed insured to Edison. The agency was to pay the outstanding balances on insurance premiums in the policies purportedly obtained by Edison on behalf of these customers. Edison did not properly apply the funds sent to the agency by Regency because the requested policies were never purchased by Edison on behalf of these customers. The checks from Regency were cashed by the agency, and commingled with other funds in the agency's checking account numbered 632717. The customers did not receive the benefits requested from Edison, their insurance agency. Count IX On May 7, 1987, Regency issued a check in the amount of thirty two thousand one hundred and nine dollars to Edison. The agency was to apply the funds against the outstanding balances on three policies which were purportedly applied for from the following companies through Edison: Canal Insurance Company, Cadillac Insurance Company, and South Atlantic Council. The proposed insured was Charles Bernardo d/b/a ABX, Inc. A binder of insurance was issued by Canal Insurance Company to Mr. Bernardo for a fifteen day period which expired on April 28, 1987. A full policy was never purchased by Edison on behalf of Mr. Bernardo with the funds sent to Edison by Regency for that purpose. No information was provided at hearing regarding the purported application for insurance from South Atlantic Council on behalf of Mr. Bernardo through Edison. The check from Regency to Edison was cashed, and the funds were commingled with other funds in the agency's checking account numbered 632717. Mitigation All of the insurance transactions involved in the Administrative Complaint were conducted by Rose Delaney, an employee of Edison. During the months of March 1987 through May 1987, this employee was involved in a complex embezzlement and document falsification scheme in which she embezzled funds from the insurance agency and created phoney insurance policies and premium financing agreements, as well as false agency control documents, to cover her misdeeds. Respondent Wolfe was unable to discover this embezzlement scheme until May 23, 1987. His inability to detect the scheme was based upon a number of extraordinary factors, in spite of his reasonable attempts to supervise his insurance business and the employees with the high degree of care commensurate with his responsibilities as an insurance agent. These extraordinary factors were: the rapid and intense growth of Respondent's business during this time period; the redesign of the computerized accounting program by the agency's accountant, who failed to recognize that he had disabled an account reconciliation function within the program; the sophistication of Ms. Delaney's embezzlement scheme, and her ability to generate false documents within the agency setting which hid her crimes from the supervisory reviews conducted by Respondent Wolfe over a two and one half month period. Rose Delaney, the perpetrator of the embezzlement and documentation falsification scheme, is currently being treated in a mental health institution for mental illness. She has been diagnosed as having major depression with psychotic features as well as suffering from latent schizophrenia, paranoid type. Based upon the professional opinions of the two psychiatrists who examined Ms. Delaney, she was insane during the time she handled the insurance transactions set forth in the Administrative Complaint. The McNaughton standard was applied by both of the experts, and no evidence to the contrary was presented during the administrative hearing.
Recommendation Based upon the foregoing, it is RECOMMENDED: That the Respondent, Gary Stephen Wolfe, be found not guilty of all nine counts set forth in the Administrative Complaint. DONE and ENTERED this 5th day of September, 1989, at Tallahassee, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of September, 1989. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-4927 Petitioner's proposed findings of fact are addressed as follows: Accepted. See HO# 2. Accepted. See HO# 2. Accepted. See HO# 3. Accepted. See HO# 3. Petitioner's findings do not contain a number 5. Accepted. See HO# 3. Accepted. Accepted. See HO# 4. Accepted. Accepted. See HO# 5. Rejected. See HO# 27. Accepted. See HO# 5. Accepted, but for further exposition of the facts, see HO# 7. Accepted. See HO# 5. Accepted. See HO# 6 and # 7. Accepted. Accepted. Rejected. See HO# 27. Accepted. See HO# 8. Rejected. Irrelevant. See HO# 8. Rejected. See HO# 10. Accepted. Accepted. Rejected. See HO# 27. Accepted. See HO# 11. Accepted. See HO# 12. Accepted. See HO# 12. Accepted. Accepted. Rejected. See HOC 27. Accepted. See HO# 13. Rejected. Irrelevant. See HO# 13. Rejected. Irrelevant to pleadings. See HO# 13. Rejected. Irrelevant to pleadings. See HO# 13. Accepted. See HO# 14. Accepted. See HO# 14. Accepted. See HO# 14. Accepted. Accepted. Rejected. See HO# 27. Accepted. See HO# 17. Accepted. See HO# 18. Accepted. See 1O# 18. 43.-48. Not provided to the Hearing Officer. Accepted. See HO# 18. Accepted. Accepted. Rejected. See HO# 27. Accepted. See HO# 19. Accepted. See HO# 20. Accepted. See HO# 20. Accepted. Accepted. Accepted. See HO# 19. Accepted. See HO# 20. Accepted. See HO# 20. Accepted. Accepted. Rejected. See HO# 27. Accepted. See HO# 19. Accepted. See HO# 20. Rejected. Cumulative. Rejected. Improper summary. Rejected. Cumulative. Rejected. See HO# 25 and #27. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant and immaterial. Rejected. Irrelevant. Accepted. See HO# 25. Rejected. See HO# 27. Rejected. Irrelevant. Improper shifting of burdens of proof. Not an ultimate issue in these proceedings. Rejected. Immaterial. Outside the scope of the pleadings. Rejected. Contrary to fact. A co-signer was required on any checks signed by Ms. Delaney. Rejected. Outside the scope of the pleadings. Accepted that Respondent Wolfe was not personally involved in the wrongdoings committed by Ms. Delaney. See HO# 25. The rest of paragraph 84 is rejected as argumentative. Rejected. Irrelevant - Argumentative. Rejected. Improper summary. Rejected. Argument as opposed to proposed finding of fact. Improper summary. Respondent's proposed findings of fact are addressed as follows: Accepted. See HO# 2. Accepted. See HO# 3. Rejected. Irrelevant. Accepted the first statement in paragraph 4. See HO# 9. The rest is rejected a- irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Accepted. Rejected. Irrelevant. Rejected. Irrelevant. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. See HO# 26. Accepted. Rejected. Irrelevant. Rejected. Not established by competent evidence. Accepted. Rejected. Improper summary with many factual conclusions that are immaterial to the allegationS in the Administrative Complaint. Rejected. Irrelevant to these proceedings. Rejected. Irrelevant. Accepted. Accepted. Accepted. Rejected. Not established by competent evidence. Rejected. Irrelevant to these proceedings. Accepted. Accepted. See HO# 27. Accepted. Accepted. See HO# 25. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Improper summary. For rulings on each transaction, refer to Findings of Fact in the Recommended Order. Accepted. See HO# 25. COPIES FURNISHED: S. Marc Herskovitz, Esquire Office of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Joseph D. Stewart, Esquire Hardt & Stewart 801 Laurel Oak Drive Suite 705, Sun Bank Building Naples, Florida 33963 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32399-0300 Don Dowdell, Esquire General Counsel Department of Insurance The Capitol Tallahassee, Florida 32399-0300 =================================================================
The Issue The issues in this case are whether Respondent is guilty of violating provisions of the Florida Insurance Code as charged in Petitioner's Amended Administrative Complaint, and, if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency with the statutory authority and duty to license and regulate insurance agents. Respondent holds License No. A003228 as a General Lines (Property & Casualty 2-20) insurance agent in Florida. He first received the license in 1998. Respondent's license has not previously been the subject of disciplinary action by Petitioner. Since receiving his license, Respondent has continuously worked as an insurance agent and as a salaried employee of Insurance Depot of Charlotte County (Insurance Depot), which is located in Port Charlotte, Florida. Insurance Depot is solely owned and operated by Respondent's father, Jack Alexander, Sr. Respondent is not a co-owner, officer, or director of Insurance Depot. Among the types of insurance sold by Respondent at Insurance Depot is homeowners insurance. The normal procedure followed by Respondent when selling homeowners insurance is to first obtain some basic information from the customer about his or her home, either over the telephone or in person; determine what insurance company or companies represented by Insurance Depot were likely to have the lowest rates for the particular type of home; check the rate schedules of the selected companies; and give the customer a rate quote. If the quoted rate is acceptable to the customer, an application form is either filled out by hand or, for some insurance companies that provided software application forms, the application form is word-processed on a computer and then printed out. The application form is then signed by Respondent and the customer. The insurance companies represented by Insurance Depot require a premium payment, as well as certain additional documentation, in order to issue a homeowners' insurance policy. The insurance companies involved in this case require photographs of the home to be insured. The agents at Insurance Depot ask customers to provide the photographs, and Insurance Depot has two or three Polaroid cameras to lend to customers who do not have cameras. Petitioner elicited testimony from two insurance company representatives that they prefer the photographs to be taken by the agents, rather than by the homeowners. Despite this preference, the insurance companies routinely accept photographs taken by homeowners. Respondent testified that he always tells the prospective customers when he is preparing the insurance application form that photographs are needed. That testimony was disputed by three witnesses who said they were not asked to provide photographs when they met with Respondent at Insurance Depot to apply for insurance. Respondent's testimony is more persuasive, because it is unlikely that he would fail to ask for photographs when they are always needed. Respondent testified that if a customer applied for insurance and paid a premium, it was his usual practice to turn the customer's file over to the clerks in the office for further processing, which would include sending the signed application form, other documentation, and the premium payment to the insurance company. In the case of customers who had not yet provided photographs or other required information, the application was sometimes held until the information was submitted by the customer so that the application was complete when it was sent to the insurance company. The clerks would follow up with the customers to make sure the photographs or other information was submitted. Respondent is not the supervisor of the clerks. How soon coverage is "bound" depends on the requirements or policies of the various insurance companies. In some cases, coverage is bound immediately, but will be cancelled by the insurance company if it does not receive all of the information it requires within a specified time period, such as 30 days. When the insurance is cancelled because the application is incomplete, it is sometimes "flat cancelled," which means the insurance company does not recognize coverage to ever have been bound. Annette and Anthony Wiley2 The Wileys live in Arcadia. They went to Insurance Depot on February 6, 2004, to obtain automobile insurance. While they were there, they inquired about insuring their mobile home and were directed to Respondent for assistance. The Wileys asked Respondent for a rate quote to insure their mobile home for $42,000. The Wileys were satisfied with the rate Respondent quoted for American Reliable Insurance Company (American Reliable). The Wileys gave Respondent $189 as a down payment on the annual premium of $533, and Respondent and Anthony Wiley signed a contract to finance the balance with Duval Premium Budget, Inc. Insurance Depot acts as agent for the financing company. Counsel for Respondent points out that no insurance application form for the Wileys was offered into evidence, but Respondent testified that there "absolutely" was an application prepared for the Wileys, and they did not dispute that there was an application. When the contract with the financing company was signed, Respondent created a document which contained a check ("draft") in the amount of $533 made out to American Reliable and Irvin B. Green & Associates (I.B. Green). I.B. Green is the managing agent for a number of insurance companies, including American Reliable. The document indicates that the policy number is "Pending." The document is perforated so that it can be divided into three parts: the check and two identical receipts, one for Insurance Depot and the other for the Wileys, showing the draft number, down payment, and policy premium balance. The document was never divided. The draft was never sent to American Reliable or I.B. Green. Respondent told the Wileys he needed photographs of their home to send to the insurance company. Respondent testified that when the Wileys left his office, he put their file "in the pending status on my dad's desk" to await the photographs. There is a "Producer Agreement" between I.B. Green and Insurance Depot, which includes a statement that Insurance Depot will "transmit promptly to [I.B. Green] complete applications and binders for all insurance made along with all premiums, taxes, and applicable expenses or fees required." Petitioner alleged in its Amended Administrative Complaint that Respondent did not forward the Wileys' application and premium to I.B. Green in accordance with the Producer Agreement. However, Petitioner's witness, Howard Johnston, Jr., the executive vice president of I.B. Green, was not asked whether he believed Insurance Depot had violated the requirement in the Producer Agreement for prompt transmission of the complete application in the matter of the Wileys. Mr. Johnston might have considered it to be acceptable under the Producer Agreement for the agents at Insurance Depot to wait until applications were complete before transmitting them to I.B. Green. Mr. Johnston testified that I.B. Green never received the insurance application or other paperwork for the Wileys. The Wileys thought their mobile home was insured when they left Insurance Depot on February 6, 2004. They continued to believe they were insured, even though months went by without their ever receiving an insurance policy in the mail or a coupon book to make monthly payments to the financing company. They never made another premium payment after their down payment. Mr. Wiley testified that the Wileys did not make another premium payment because "they said not to make a payment right now."3 Mr. Wiley hand-delivered his car insurance payments to Insurance Depot each month, but when doing so, he never inquired about the status of his home insurance policy. Mr. Wiley testified that some time in July 2004, five months after the Wileys applied for homeowner insurance, a woman called to ask for photographs of the Wileys' home. A reasonable inference from the record evidence is that the person who called was one of the clerks at Insurance Depot.4 The Wileys testified that they took photographs of their home soon after the telephone call, and they took the photographs to Insurance Depot. Mrs. Riley said Respondent was not in, and she gave the photographs to Robert Schmidt, another insurance agent employed by Insurance Depot, who placed the photographs on Respondent's desk. Mr. Schmidt does not remember seeing Ms. Riley or accepting photographs from anyone to give to Respondent. Hurricane Charley hit Florida on August 13, 2004. It destroyed the Wileys' mobile home. Mr. Wiley testified that they still owed about $45,000 on the mobile home that was destroyed. After the hurricane, the Wileys' went to Insurance Depot to make a claim for the loss of their mobile home. They were informed by Jack Alexander, Sr., that they had no insurance coverage. They did not speak to Respondent. A Federal Emergency Management Agency (FEMA) representative advised the Wileys to get a written statement from Insurance Depot about their lack of insurance coverage, which FEMA would use to determine whether the Wileys qualified for federal disaster assistance. Mr. Wiley received a written statement from Jack Alexander, Sr., that states in part: Due to a mix up or miss communication [sic] due to the insurance company never receiving pictures of her home the policy was never bound by the company. The Wileys received a FEMA grant of $19,000, which they used as a down payment to purchase a new mobile home. Jack Alexander, Sr., repaid the Wileys the $189 premium down payment they had given Respondent in February 2004. Cecilia Hembree Cecilia Hembree resides in Port Charlotte and owns her single-family residence. Ms. Hembree testified that she visited Insurance Depot in December 2003, and Respondent assisted her in applying for homeowners insurance. Before she left Insurance Depot that day, she paid the annual premium in full with a check in the amount of $728. Ms. Hembree testified that sometime in January 2004, she became concerned when she had not received an insurance policy for her home. She testified that she spoke to Respondent, and he informed her that the policy had been mailed to her, but he would mail it again. She never got a copy of the policy in the mail. Respondent was not questioned about the alleged January 2004 conversation with Ms. Hembree. Neither Respondent nor Ms. Hembree was asked to explain how a Federated National Insurance Company (Federated) application form signed by Respondent and Ms. Hembree on February 10, 2004 (Petitioner' Exhibit 23), came into existence. No earlier application was presented. Without an explanation in the record, it is found that Ms. Hembree was mistaken about the date she applied for insurance. She did not apply in December 2003, but on February 10, 2004. Similarly, it is found that Ms. Hembree was mistaken about calling Respondent in January 2004 to inquire about her policy. If she made such an inquiry, it must have been after February 10, 2004. Ms. Hembree testified that Respondent did not ask for photographs of her home on the day she applied for insurance, but she got a call from Respondent "a couple of days later" in which he told her that he needed photographs "by the end of the week." Respondent testified that it is his regular practice to ask customers for photographs when he first meets with them, because photographs are always required by the insurance companies and that he asked Ms. Hembree for photographs on the first day he met with her. To the extent that it is material, it is found that Respondent asked for photographs at their first meeting. Ms. Hembree testified that she went to Insurance Depot the same day she was asked for the photographs and gave the photographs to Respondent after waiting for him to finish with another customer. Respondent testified that he remembered Ms. Hembree coming into Insurance Depot, waiting for a while, and then leaving without seeing him. He claims she never gave him photographs. Respondent's testimony on this point is problematic because he saw and recognized Ms. Hembree and should have understood that she was there to give him the photographs he had requested. Yet, he did not describe any effort on his part to get the photographs from Ms. Hembree before she left. Furthermore, it is difficult to believe that Ms. Hembree made a trip to Insurance Depot to give Respondent the photographs, but left without giving the photographs to Respondent or asking someone in the office to give them to Respondent or ever returning thereafter with the photographs. Finally, Respondent did not mention the issue of missing photographs in his subsequent discussions with Ms. Hembree that are discussed below. Therefore, it is found that Ms. Hembree provided photographs to Respondent, probably in February 2004. Unlike American Reliable, Federated had an internet website that its authorized agents could use to prepare applications and generate a declaration page showing the basic terms of coverage. Insurance coverage was bound for Ms. Hembree on February 10, 2004, subject to later cancellation by Federated. Federated never received the signed application form or Ms. Hembree's check for $728. Ms. Hembree did not reconcile her bank statements during this period and did not notice that the check had never come to her bank for payment, and the amount was not deducted from her checking account. Vicki Ruggiano, an underwriting supervisor at Federated, testified that when the webpage interface with Federated is used by an agent to generate an application and declaration page, the software system automatically triggers a cancellation notice in 30 days if all required documentation has not been received by Federated. Federated issued a Notice of Cancellation of Ms. Hembree's policy on March 9, 2004. The notice indicated "No application/premium received." Respondent testified that he was never informed about Federated's cancellation of Ms. Hembree's policy. Ms. Hembree testified that on or about March 23, 2004, she noticed that her bank had made a large withdrawal from her checking account to purchase insurance coverage. Ms. Hembree inquired about the withdrawal, and she was told that the bank purchased insurance for her home because they had no evidence that she had obtained insurance coverage.5 Ms. Hembree then called Respondent to tell him what the bank told her, and Respondent said he had mailed the bank proof of coverage, but he would do it again. Ms. Hembree told Respondent she had never received an insurance policy and asked Respondent to "fax" proof of insurance to her and to the bank. Respondent sent her the declaration page for Ms. Hembree's Federated policy that he downloaded from the Federated website. On the same date, Respondent told Ms. Hembree she would have to sign a "no loss statement." Respondent provided Ms. Hembree with a no loss statement form on Insurance Depot letterhead, which contained a Federated policy number, and the following statement: I, [space provided for insured's name], as a condition precedent to the reinstatement of my policy, state that no losses have occurred for which coverage might be claimed under my policy between the date of [space provided for a date] and the date and time indicated above. The no loss statement signed by Ms. Hembree was dated March 23, 2004. However, there was no beginning date filled in on the form. Without a beginning date, the no loss statement would seem to be meaningless, unless the absence of a date would be deemed by Federated to cover all possible dates. When asked why he requested that Ms. Hembree sign a no loss statement, Respondent testified that Federated would reinstate a policy if the customer stated that no losses had occurred in the interim. That testimony contradicts Respondent's testimony that on March 23, 2004, he thought Ms. Hembree's policy was still "pending" for lack of photographs. He did not explain why a pending policy would need to be reinstated or why the need for reinstatement was not an indication that the policy had been cancelled. He did not describe any effort he made to inform Ms. Hembree about the continued need for photographs or to solve that alleged problem. After Hurricane Charley hit on August 13, 2004, Ms. Hembree went to Insurance Depot to ask for an insurance adjuster to view the damage to her home. Ms. Hembree said she talked to a female employee who, after looking at Ms. Hembree's file, told Ms. Hembree her insurance company was Federated and gave Ms. Hembree Federated's telephone number. When Ms. Hembree called Federated, she was told she had no insurance coverage. In August or September 2004, Ms. Hembree called Insurance Depot and spoke to Jack Alexander, Sr. On September 24, 2004, Mr. Alexander prepared an application for Ms. Hembree for coverage by Universal Property and Casualty Insurance Company (Universal). The application indicates that the annual premium was $1,149. Mr. Alexander paid the premium, although it was about $400 more than the premium Ms. Hembree had paid for the Federated policy.6 Neither Mr. Alexander nor Ms. Hembree said whether Ms. Hembree had to provide new photographs of her home to send to Universal. Mr. Alexander testified that when he was confronted by Ms. Hembree about her Federated insurance, he discussed it with Respondent, who told Mr. Alexander that "it was taken care of and should have been in force." Respondent testified that he was unaware of his father's conversations with Ms. Hembree and that his father had purchased a Universal policy for her. Ms. Hembree presented invoices showing that she paid $9,576 to repair damage to her home she claimed was caused by Hurricane Charley. The Palmers William and Terese Palmer went to Insurance Depot on February 23, 2004, to purchase homeowner insurance for their residence in Port Charlotte. They were assisted at Insurance Depot by Respondent. Most insurance companies charge a higher premium for insurance on a seasonal residence, because the risk of loss is greater. Mr. Palmer testified that the Port Charlotte residence is now his primary residence, but when he applied for insurance in 2004, he was living in McHenry, Illinois, and he told Respondent that the Port Charlotte property was for seasonal use. Respondent denies that he was told that the Port Charlotte residence was only used seasonally by the Palmers. The Federated application form prepared by Respondent and signed by Terese Palmer and Respondent indicates that the insurance was for a primary residence. One of the documents provided to Respondent at the time the Palmers were applying for insurance was a settlement statement used in conjunction with the Palmer's loan from the U.S. Department of Housing and Urban Development to purchase the Port Charlotte residence. It shows the address of Mr. Palmer, the "borrower," as McHenry, Illinois. Petitioner argues that this is proof that Respondent knew that the Palmers' primary residence was in Illinois and the Port Charlotte residence had to be seasonal. However, the address on the loan form was also consistent with Respondent's belief that the Palmers had purchased the Port Charlotte residence to make it their primary residence. There was no motive for Respondent to falsify the application form by indicating the Palmers' residence was primary, rather than seasonal. The application form was signed by Mrs. Palmer, attesting to the accuracy of the information on the form. It is found that Respondent either was not told by the Palmers or did not hear them say that the Port Charlotte residence was seasonal. On the same day they met with Respondent, February 23, 2004, the Palmers paid the premium of $1,014 by credit card. Admitted into evidence was an Insurance Depot check to Federated, signed by Respondent and dated February 24, 2004, in the amount of $1,014. The Palmers' next credit card statement showed the premium was paid. On March 29, 2004, Federated issued a notice of cancellation of the Palmers' insurance policy. The notice showed the reason for cancellation as "No application/premium received." Mr. Palmer said he received Federated's notice of cancellation in the mail. He called and informed Respondent, who told Mr. Palmer that "it occasionally happens" and Respondent would "reapply" and the problem would be corrected. The record evidence shows that Federated received a check for the Palmers' insurance premium from Insurance Depot by mail on April 5, 2004, but Federated did not accept the payment because the policy had been cancelled. The Palmers were not informed that Federated had not reinstated their insurance policy. Subsequently, Mr. Palmer visited Insurance Depot to inquire about occupational insurance and asked about the deductible provision on his homeowner policy while he was there. The woman he spoke to informed him that she could not find a file on him. Mr. Palmer then complained to Petitioner about the handling of his insurance by Respondent. Following his complaint, Mr. Palmer got a postcard from Insurance Depot requesting that he come in to discuss the problem. When Mr. Palmer went in, Respondent gave him a check to reimburse him for the unused premium payment.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order suspending Respondent's license for six months. DONE AND ENTERED this 22nd day of June, 2007, in Tallahassee, Leon County, Florida. S BRAM D. E. CANTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of June, 2007.
The Issue Whether Respondent's insurance agent's license and eligibility of licensure should be disciplined for alleged violations, set forth hereinafter in detail, as contained in the Administrative Complaint.
Findings Of Fact Based on my observation of the witnesses and their demeanor while testifying, documentary evidence received and the entire record compiled herein, I hereby make the following relevant factual findings: Respondent, Robert Phillip Wolf, is currently licensed and has been eligible for licensure in Florida as a life and health insurance agent and as a general lines insurance agent during times relevant to these proceedings. On or about January 17, 1989, Church Insurance Program (CIP), an incorporated general lines insurance agency, was organized under the laws of Florida. Respondent was vice president of CIP at all times relevant. During times material, an agency agreement was in effect between CIP (herein Respondent or CIP) and North Atlantic Speciality Insurance Company (NAS) whereby CIP agreed to solicit insurance products on behalf of NAS. Respondent executed the agency agreement on behalf of CIP. That agreement provides, in relevant part: SECTION I. AGENT'S AUTHORITY. 3. Agent shall have authority to collect and receive premiums on insurance contracts placed with the company by or through the agent and to retain out of the premiums so collected commissions as provided in Section III of this Agreement on all contracts of insurance, except those subject to procedures specified in Section IV of this Agreement. SECTION II. PREMIUM COLLECTION AND REMITTANCE. 2. Agency billed policies. a. Agent assumes full responsibility for prompt payment to the company of all premiums, less commissions, on all contracts of insurance placed with the company, by or through the agent, whether or not such premiums are collected from the insured. However, the agent shall be relieved of responsibility to pay premiums with respect to an insurance contract which is legally terminated and agent furnishes the company proper evidence of such termination along with a written statement that the agency cannot collect the premium. The evidence and statement must be received within 30 days following the original inception date of the contract. Policies so termin- ated shall not be subject to commission. Failure of the agent to give the company such written notice of his inability to collect such premium shall constitute acceptance by the agent of responsibility to pay such premiums. c. The agent agrees to remit any premium balance to the company so as to reach the company's office no later than 45 days after the end of the month for which the account or statement is rendered. All premiums collected or received by the agent shall be held by him as a fiduciary in trust for the company until paid to the company, and the privilege of retaining commissions as authorized else- where in this agreement shall not be construed as changing such fiduciary relationship. III. COMMISSION 1. The agent is authorized to retain commissions out of premiums collected on agency billed policies as full compen- sation on business placed with the company. Pursuant to the agency agreement, CIP and Respondent were due twenty percent (20 percent)of net written premiums (NWP) as commission. Respondent was agent of record for NAS at CIP during times material. During 1993, NAS became increasingly aware of and concerned about (1) Respondent's failure to notify the company of coverages it had solicited and bound and to timely remit premiums due NAS on policies issued, and (2) the subsequently increasing debt balances on the agency's account current. Demands by NAS for payment of premiums were unheeded by Respondent. On or about March 31, 1993, NAS terminated its agency agreement with CIP for, inter alia, CIP's failure to remit premiums. After several communications and two termination letters, CIP accepted NAS's termination as of April 30, 1993. Thereafter, NAS demanded that CIP provide an accounting which was done. As of April 30, 1993, Respondent owed NAS total premiums of $130,966.03. This sum represented premiums received by CIP and due NAS after retention of the 20 percent commission on approximately 140 policies previously issued but which premiums remained unremitted (by CIP). NAS demanded that CIP remit the premiums that were due. Respondent failed to remit the premium funds as demanded by NAS. In an attempt to recover the premium funds, NAS filed a civil suit in Pinellas County against Respondent. CIP admitted to NAS at the time that it was withholding at least $109,661.91 in premium funds but would not make any payment to NAS in light of a counter-claim that it filed. During the pendency of the civil suit and following settlement negotiations, a settlement was reached between Respondent and NAS. Pursuant to the settlement, Respondent agreed to pay to NAS $130,931.25. This amount constituted the total amount of premiums billed and collected by Respondent for NAS policies or binders of coverage less commissions which represented 20 percent of the premiums billed ($273,579.50) as per an accounting attached to the stipulation less any amount previously paid. In return, NAS agreed to pay Respondent $42,000 in consideration for Respondent withdrawing any counter-claim it may have had against NAS. The upshot of the settlement was that Respondent would pay, and in fact paid, an approximate amount of $88,431, to NAS. During times material, an agency agreement was in effect between Respondent and Atlantic Mutual Insurance Company (herein AMI) whereby Respondent agreed to solicit insurance products on behalf of AMI. That agency agreement provided in relevant part: The agency agrees: To render monthly accounts of money due to the company on business placed by the agent with the company, other than customer-billed business so as to reach the company's office no later than the 15th day of the following month and to pay to the company the balance therein shown to be due to the company not later than the 15th day of the second month following the month for which the account is rendered. To be responsible for any additional premiums developed by audit or by report of values, or any renewal premiums on non- cancelable bonds unless the agent notifies the company within sixty (60) days of company billing date of such additional premiums that such item has not been collected and cannot be collected by the agent. The company agrees: b. On commissions: The agent shall receive or retain commissions on net paid premiums at the rate set forth in the company's commission schedule. It is mutually agreed that: a. This agreement supersedes all previous agreements, whether oral or written, between the company and the agent, and shall continue until terminated by ninety (90) days written notice of cancellation by either party to the other. Pursuant to the agency agreement with AMI, Respondent was due, as commission, seventeen and one-half percent (17-1/2 percent) of net paid premiums. During times material, Respondent was agent of record for AMI. On August 1, 1992, the agency agreement between AMI and CIP was terminated by mutual agreement. After the termination of the agency agreement, AMI became aware of and became increasingly concerned about Respondent's failure to notify it of coverages Respondent had previously solicited and bound and to timely remit premiums due on policies issued by Respondent and the subsequently increasing debit balance on the company's account current. Demands by AMI for payment of premiums due were unheeded by Respondent. As of October, 1992, the amount owed to AMI totalled $92,781.61. This sum represented insurance premiums, after retention of commission, due on insurance policies previously issued by Respondent and for which it had received $120,486 in premiums, and not remitted to AMI. As noted, despite AMI's demand that Respondent remit the premiums, they were not remitted either in whole or in part. However, Respondent admitted to AMI that it had received, as of September 4, 1992, $103,421.33 in premium funds. After termination of the agreement with AMI, Respondent claimed that it was entitled to retain $86,111.86 from premium funds received from the AMI policies, as annualized commissions or as commissions received in advance on premiums that had not been paid by the insured. Prior to the termination, CIP had attempted to gain authorization from AMI to withhold commissions, on an annualized basis. AMI refused to authorize these deductions and was steadfast in keeping consistent with its policy of allowing deduction of commissions when premiums were actually received. AMI does not allow agents to retain annualized commissions or to take advance commissions on policies. Despite Respondent's contention to the contrary, this has always been AMI's policy and that policy was communicated to Respondent in writing when Respondent attempted to initiate the policy of annualizing or deducting commissions in advance. Additionally, the agency agreement clearly provides that commissions were to be retained from paid premiums. Countersignature fees, if required, were paid by the insurance company and were thereafter deducted from the agent's commission. Respondent expended a great deal of money and time in start-up costs on items such as office equipment, supplies, preparation of forms, institution of office policies and procedures, to commence writing insurance business on behalf of AMI. Respondent knew, or should have known, that certain start-up costs were expected in order to commence writing insurance on behalf of AMI. Respondent was not authorized to deduct up-front expenditures or related start-up costs from premiums which were not collected. As of the date of hearing, the funds which represented premiums due AMI remain unaccounted for and were not paid (to AMI) by Respondent. When Respondent collected premiums for companies, those funds were fiduciary funds. Respondent's policy of spending "operating expenses" as a set off or charge against uncollected premiums was not permissible pursuant to the agency agreement in effect between the parties. The Am South Bank account which Respondent utilized to maintain his banking account for AMI had a balance, as of August 30, 1992, of $74,894.58; as of March 31, 1993, of $12,702.05; and as of April 30, 1993, of $8,561.13. The account was closed on December 2, 1993.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is RECOMMENDED that: Petitioner enter a final order finding that the Respondent, ROBERT PHILIP WOLF, be found guilty of violations set forth in the Conclusions of Law portion of this Order, and that his licenses and eligibility for licensure be SUSPENDED for a period of eighteen (18) months pursuant to Rule 4-231.080, Florida Administrative Code, and that, pursuant to Section 626.641(1), Florida Statutes, the Respondent be required to pay satisfactory restitution to Atlantic Mutual Insurance Company prior to the reinstatement of any insurance license. DONE and ORDERED this 2nd day of June, 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 2nd day of June, 1994. APPENDIX Rulings on Petitioner's Proposed Findings of Fact: Paragraph 27 - rejected - argument and conclusions. Rulings on Respondent's Proposed Findings of Fact: Paragraph 1 - adopted as relevant, paragraph 5, recommended order. The remainder is rejected as contrary to the greater weight of evidence, paragraph 4, section III entitled commission is dispositive. Paragraphs 2 and 3 - rejected as argument. Paragraph 4 - rejected, irrelevant and subordinate. Paragraph 5 - rejected, contrary to the greater weight of evidence. Paragraph 6 - adopted as modified, paragraph 30 recommended order. Paragraph 7 - rejected, irrelevant. Paragraphs 8-10 - rejected, argument. Paragraph 11 - rejected, irrelevant. COPIES FURNISHED: Commissioner Tom Gallagher Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300 James A. Bossart, Esquire Department of Insurance and Treasurer 612 Larson Building Tallahassee, Florida 32399-0333 Elihu H. Berman, Esquire Post Office Box 6801 Clearwater, Florida 32618-6801
The Issue The issue for consideration is whether Respondent's licenses and eligibility for licensure as a life agent, a life and health agent, a general lines agent, a health agent and a dental health care contract salesman in Florida should be disciplined because of the matters set forth in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the matters in issue herein, the Department of Insurance and Treasurer was the state agency in Florida responsible for the licensing of insurance agents and regulation of the insurance industry in this state. Respondent, Michael Charles Peppe was and is currently licensed and eligible for licensure in Florida as a life insurance agent, a life and health insurance agent, a general lines agent and a health insurance agent. He was an officer and director of M. Peppe Agency, Inc., a Florida corporation. During the period in issue herein, Respondent's agency had a brokerage agreement with William Sanner and Mary Lou Sanner who were employed as sub- agents. Constance Abraham, an 85 year old widow first met William Sanner when she moved to Ft. Lauderdale, some 20 or so year ago. They were neighbors in the same apartment building. At that time she was insured with Mutual of Omaha and her policy was transferred to him, an agent for that company, for service. Over the years she purchased quite a bit of other insurance from him. They were all different kinds of health insurance policies and over time, she estimates, she purchased somewhere around 50 policies. During the period between 1985 and 1991, Mrs. Abraham purchased numerous health policies for both herself and her son through Mr. and Mrs. Sanner, though she does not recall ever having dealt with Mrs. Sanner. Records disclose that her coverage was placed with nine different companies and provided coverage in such areas as Medicare Supplement, nursing home insurance, cancer insurance, and hospital expense - indemnity insurance. Over the years approximately 60 policies were issued through Respondent's agency to either Mrs. Abraham or her son. The applications were taken by Sanner who would collect the initial premiums and forward both to Respondent's agency for processing to the various insurers. Some policies were signed by Sanner as agent of record and some were signed by Respondent in that capacity. Only a few were signed by Mrs. Sanner. Mrs. Abraham claims she didn't realize how much health insurance she had. Mr. Sanner would come to her apartment and talk to her about a new policy and she would abide by his advice. Her purchases amounted to approximately $20,000.00 per year in premiums which she would pay by check to Mr. Sanner. At no time did she ever deal with or meet the Respondent, Mr. Peppe. She did not question Sanner deeply about why he was selling her so much insurance. Whenever she asked about a new policy, he would usually have what appeared to he to be a good reason for it such as something was lacking in her coverage. Even when she recognized he was selling her duplicate coverage, he told her it was a good idea to have more. At no time did he or anyone else tell her she had too much insurance. Mrs. Abraham claims to know nothing about insurance herself. However, she was cognizant of the nature of the policies she had, utilizing without prompting the terms, "indemnity", "supplemental", and "accident." Mr. Sanner would come to her home at least once a month She trusted him to help her with her health insurance and would talk with him whenever a policy came up for renewal. On some occasions he would recommend she renew and on others would recommend she drop that policy in favor of another. At no time was she aware, however, of the fact that she was duplicating policies. She also claims she never had to tell Mr. Sanner what she wanted from her coverage. He always seemed to know and would handle not only the purchase of her policies but also the filing of her claims. She can recall no instance where she asked for any coverage and he tried to talk her out of it. Mrs. Abraham denies she was the person who complained to the Department. It was her daughter who noticed what was going on and took matters into her own hands. At no time did either Sanner or the Respondent attempt to contact her after the complaint was filed. Mrs. Abraham and her husband had four children. Her son, Lewis, who is somewhat retarded, lives with her and she also purchased some policies for him. Over the years she has had many occasions to file claims under her policies. It is important to her that she have protection to provide full time care if necessary because she has no family locally to provide that care for her. She had coverage that provided nursing care, a private room in the hospital, and some policies which provided for extended or nursing home care. She recognizes that such care is expensive and wanted enough policies to give her total coverage without out of pocket expense if the care was needed. She keeps track of the policies she has on her personal computer and has been doing so for some six or seven years. She apparently is sufficiently computer literate that she knows what she has and what she is doing. Mrs. Abraham owns a condominium at the Galt Ocean Mile apartment in Ft. Lauderdale. The $20,000.00 figure in policy premiums she mentioned were for her policies only. Those for her son were extra. She has sufficient income from stocks and bonds to pay her premiums, pay her mortgage, and still live comfortably. Her son has his own income from a trust fund and his own investments. At one point in time, when Mrs. Abraham had some recurring health problems and was in and out of hospitals regularly, she received in benefits far more than her actual expenses and made a tidy profit. Nonetheless, she adamantly disclaims she purchased the policies she had for that purpose claiming instead that she wanted merely that both she and her son be able to pay for the best medical care possible in the event it is needed. To that end, Lewis Abraham has filed very few claims against his carriers. Most, if not all, of the companies which provided the coverage for Mrs. Abraham and her son have limits on the amount of total coverage any one policy holder can have in any line of insurance. The limit is cumulative and not limited to policies with a specific company. Taken together, the policies in force for Mrs. Abraham in some cases exceeded that limit and had the insurers been made aware of the totality of her coverage, their policies would not have been issued. This information was not furnished to the companies, however, by either Sanner or Respondent. In addition, on many of the policies the mental condition of a policy holder must be disclosed if that person is retarded or not fully competent. Respondent did not know of Lewis' condition though Mr. Sanner was fully aware of it both as it related to his retardation and his drop foot. On none of the policy applications relating to him, however, was either ever mentioned. Some companies indicated that if Lewis's mental and physical condition had been properly disclosed on the application, they either would not have issued the coverage or, at least, would have referred the matter to the underwriter for further evaluation and a determination as to whether to issue the policy and if so, at what premium. Even more, Lewis' physical and mental condition may have caused the company to decline payment of a claim within two years of issuance of any policy actually written. Respondent received monthly statements from the various insurers with whom his agency did business detailing the transactions for that month. Commissions on each sale were paid by the insurers to Respondent's agency and thereafter, pursuant to an agreement between Respondent and Sanner, the commissions were divided. The commissions paid to Respondent's company by the insurers on all these policies amount to in excess of $18,000.00. Respondent asserts that Mrs. Abraham knew exactly what she was doing and was, in effect, conducting if not a scam, at least an improper business activity through the knowing purchase of duplicative policies and redundant coverage. This well may be true, but even if it is, Mr. Sanner was a knowing accomplice and participant. In addition, while it is accepted that Respondent might not know the status of every policy purchased through his agency or the total activity with any particular client, when his name appears as signatory on policy applications forwarded to a company for whom he accepts or solicits business, as here, it is hard to find he did not have at least a working familiarity with the business written by his sub-agents . This finding is supported by the analysis done of Respondent's pertinent activities here by Milton O. Bedingfield, a 39 year insurance agent and broker for 10 companies, a Certified Life Underwriter, and an expert in life and health insurance. Mr. Bedingfield concluded, after a review of all the policies written for the Abrahams through Respondent's agency, there was a gross oversale of policies and repeated omissions of pertinent information on policy applications. He found a duplication of benefits and overlapping coverage, all without legitimate purpose, especially for an 85 year old woman. Since the average hospital stay is less than 2 weeks, she would not likely benefit from her insurance for the stay. He could not see where Mrs. Abraham would get back in benefits what she has paid in premiums. In Mr. Bedingfield's opinion, this is the worst case of oversale he has seen in his 39 years in the insurance business. He contends the agent stands in almost a fiduciary capacity to his clients - especially the aged who rely on their agent to properly advise them on adequate coverage. There is often an element of fear involved that the unscrupulous agent can profit from. Here, he feels, Respondent's practice falls far short of the state's standard of acceptability on the sale of Medicare Supplemental insurance. On balance, however, Mr. Bedingfield does not know if all the policies he saw stayed in force throughout the period of the policy. Many could have lapsed or been cancelled. In all fairness, as well, where insurance is brokered, as here, the ultimate placing agent normally does not meet the client but must rely on what he is told by the offering agent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Administrative Complaint filed against the Respondent in this case, Michael C. Peppe, be dismissed. RECOMMENDED this 11th day of December, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of December, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-2708 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: 1. & 2. Accepted and incorporated herein. Accepted and incorporated herein. - 9. Accepted and incorporated herein. Accepted and incorporated herein. & 12. Accepted and incorporated herein. 13. & 14. Accepted and incorporated herein. 15. - 18. Accepted and incorporated herein. Accepted. Accepted. & 22. Accepted. Rejected as not supported by evidence or record except for the fact that Respondent sign and processed applications and premium payments and received a financial benefit from the sales. Accepted. FOR THE RESPONDENT: Accepted so far as it relates Ms. Abraham was well informed and aware of her coverage. Not established, but insufficient evidence of actionable misconduct. Accepted. - 6. Not proper Findings of Fact but more Conclusions of Law. Accepted. Not a proper Findings of Fact. COPIES FURNISHED: James A. Bossart, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Thomas F. Woods, Esquire Gatlin, Woods, Carlson & Cowdrey 1709-D Mahan Drive Tallahassee, Florida 32308 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
