The Issue The central issue in this case is whether the Respondent is guilty of the violations alleged in the Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact: At all times material to allegations of the Administrative Complaint, Respondent, William John Harnett, has been licensed or been qualified for licensure as an insurance agent in the State of Florida. Respondent currently holds licenses for service lines insurance, debit insurance, ordinary life and health insurance, and general lines insurance (which is property, casualty, or surety). The Department is charged with the administration of Chapter 626, Florida Statutes. On December 15, 1975, the Department was appointed to serve as Receiver of Southern American Fire Insurance Company (Southern) . The purpose of this receivership was to seek the rehabilitation of the insurance company. On February 10, 1976, Southern was determined to be insolvent pursuant to Section 631.011(3), Florida Statutes and the Department, as Receiver, obtained an Order of Liquidation. The Department was charged with the responsibility of marshalling the company's assets in order to settle the outstanding claims against it. To this end, the Department filed civil suits against insurance agents and agencies which had allegedly failed to remit premium monies owed to Southern. One such suit was against Harnett, Inc., Respondent, and other individuals associated with Harnett, Inc. From April 9, 1947 until November 14, 1986, Harnett, Inc. was a corporation organized under the laws of the State of Florida whose general business was insurance. Respondent served as the treasurer and a director for Harnett, Inc. Respondent was authorized to and did sign checks and correspondence on behalf of Harnett, Inc. The Department's civil suit against Harnett, Inc. (Case No. 76-23143) was filed in Dade County on July 26, 1976. This suit claimed Harnett, Inc. had failed to remit premium monies owed to Southern and that Respondent, as an officer and director of Harnett, Inc. having direct supervision or control over individuals acting on behalf of Harnett, Inc., was personally liable for the amounts owed. On March 6, 1981, a final judgment (Case No. 76-23143) was entered in favor of the Department as Receiver of Southern. This judgment found against Respondent and Harnett, Inc., jointly and severally, in the sum of $78,617.85. This judgment was affirmed on appeal. 1/ The Department has attempted to collect the funds awarded in this judgment. From October 26, 1962 until November 14, 1986, Franklin Insurance Agency of Miami, Inc. (Franklin) was a corporation organized under the laws of the State of Florida. At all times material to this cause, Respondent was president and a director of Franklin. On October 20, 1976, the Department as Receiver of Southern filed a civil suit against Respondent and Franklin. This suit (Case No. 76-32799) claimed monies were owed to Southern for premiums Franklin had failed td remit. Further, the suit alleged that Respondent, as Franklin's president and director, was personally liable for the refusal and continued refusal of Franklin to pay the premiums. A final judgment was entered for the Department as Receiver of Southern in the Franklin suit on December 9, 1980. This judgment (case No. 76- 32799) provided for recovery against Franklin and Respondent, jointly and severally, in the sum of $35,983.39. The Department has attempted to collect the funds awarded in this judgment. Gables Insurance Agency, Inc. (Gables), organized on November 28, 1967, continues as an active corporation in this state. At all times material to the allegations in the Administrative Complaint, Respondent was the sole officer and director for Gables. Norfolk & Dedham Mutual Fire Insurance Company, Inc. (Norfolk) entered into Agency Agreements with Gables and Harnett, Inc. on February 1, 1976. Subsequently, Norfolk sued Harnett, Inc. (Case No. 84-03815) and Gables (Case No. 84-03816) for premium monies it was claimed to be owed. These suits resulted in final judgments in favor of Norfolk. The suit against Harnett, Inc. (Case No. 84-02815) found the sum of $54,556.00 was owed to Norfolk. The suit against Gables (Case No. 84-03816) found the sum of $18,843.20 was owed to Norfolk. The four judgments identified herein (paragraphs 8, 11, 14 and 15) total $188,000.44 and remain unsatisfied. These judgments represent money damages owed for unpaid insurance premiums. An applicant for licensure with outstanding judgments incurred during the course of doing the business of insurance would not be approved by the Department without a showing of restitution or rehabilitation. The Department deems such an applicant to be untrustworthy, incompetent, and not fit to become qualified and licensed in Florida. Respondent offered no evidence of restitution or rehabilitation. Respondent maintained that no monies were owed by the respective debtor companies or Respondent individually.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That Department of Insurance and Treasurer enter a Final Order revoking the licenses held by Respondent, William John Harnett. DONE and RECOMMENDED this 5th day of July, 1988, in Tallahassee, Florida. JOYOUS D. PARRISH 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 5th day of July, 1988.
The Issue This is a license discipline case in which the Petitioner seeks to take disciplinary action against a licensee on the basis of alleged violations set forth in a one-count Administrative Complaint. It is alleged that the Respondent has violated numerous specified provisions of Chapters 626 and 631, Florida Statutes, by failing to satisfy a judgment entered against him in favor of the Department in its capacity as receiver for an insurance company.
Findings Of Fact At all times material to this case, the Respondent, Steven Peter Alicino, has been licensed to engage in the insurance business in the State of Florida. On or about December 21, 1993, a Consent Order was entered by the Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida, appointing the Florida Department of Insurance as Receiver for General Insurance Company. On or about August 12, 1996, a Final Judgment was entered by the Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida, in the amount of $2,377.40 in favor of the Department of Insurance as Receiver for General Insurance Company, and against Stephen Peter Alicino and Budget Insurance, jointly and severally. The judgment was for unearned insurance commissions retained by the Respondent and owed to General Insurance Company. On or about May 12, 1997, the Department of Insurance sent a certified letter to the Respondent demanding payment of the judgment described above. The Respondent received the letter on or about May 15, 1997. The judgment remains outstanding and unpaid.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that a Final Order be issued revoking the Respondent's license. DONE AND ENTERED this 22nd day of December, 1998, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1998. COPIES FURNISHED: Patrick Creehan, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Stephen Peter Alicino 634 Castilla Lane Boynton Beach, Florida 33435 Honorable Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Insurance and Treasurer The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300
The Issue Whether or not Petitioner's application for examination as a general lines agent should be approved.
Findings Of Fact Based upon 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: On or about September 2, 1989, Petitioner, Kimberly L. Strayer, formerly known as Kimberly Lindsay, filed an application for examination as a general lines agent with Respondent, Department of Insurance. Since January 1988, Petitioner has been the sole owner and president of Central Florida Insurance Agency (Central). On or about December 28, 1989, Respondent informed Petitioner, by letter, that her application for examination as a general lines agent was denied for the following reasons: Petitioner operated Central Florida Insurance Agency without a licensed general lines agent in the full-time active charge of that agency from January 1, 1988 through August 31, 1988. During January 1988 Petitioner accepted applications and down payments from the following insureds: Robert Smallwood, Annelle Jones, Mickey Lawson, Donald Johnson, Thomas Jones, Manning O'Callahan and Christopher Stevens. Petitioner issued a binder and an automobile identification card for each insured indicating that coverage was bound with State Farm Mutual Insurance Company, as servicing carrier for the Florida Joint Underwriting Association (FJUA). At the time Petitioner had no authority to accept either applications or premiums on behalf of State Farm. Petitioner failed to forward such applications and premiums to the insurer until April 12, 1988. During January 1988, Petitioner accepted an application and premium payment of $274.00 from Tammy Clay. Petitioner issued a binder indicating that coverage was bound with State Farm and Union American Insurance Companies. Petitioner failed to forward either the application or the premium payment to any insurer. Petitioner issued a fictitious policy number to Ms. Clay and after nearly four months, submitted a money order to State Farm payable to Tammy Clay, on or about May 1989. At the hearing, Petitioner admitted that she did not have a licensed general lines agent in full-time active charge of her agency; that she accepted applications and premium payments from the above-named insureds for auto insurance to be bound with State Farm Mutual Insurance Company and that she accepted an application for premium payment for automobile insurance from Tammy Clay in the amount of $274.00 for coverage to be bound by State Farm Mutual Insurance Company. Petitioner was first employed in the insurance sales industry during the summer of 1987. At the time, she was only seventeen years old and had completed the eleventh grade. Petitioner's first employment in the insurance industry was with Friendly Auto Insurance (Friendly) which had several offices throughout Polk County, Florida. Friendly was owned by Petitioner's now husband, Larry Lindsay when she was hired. Petitioner formed Central during late 1987 and began operating Central on or about January 1, 1988. Petitioner received her supervision and training while employed with Friendly, primarily through on the job experiences. During late 1987, Petitioner's husband encountered problems with one of his business partners which resulted in strained relations. The resultant strained relations prompted Petitioner to organize Central. Central purchased several of Friendly's agencies of which her now husband had an interest, with Petitioner paying a nominal amount for the "book of business" that Friendly had generated. When Central commenced operations during January of 1988, Bob Seese was the licensed insurance agent who was authorized under the rules of the FJUA to accept applications and bind coverage through one of the FJUA servicing carriers, State Farm. Friendly and its successor, Central, generated a substantial volume of so-called high risk auto insurance business for drivers who could not obtain insurance through the regular market. Bob Seese had been associated with and served as the licensed agent for the Friendly agency in Lakes Wales which Central purchased in January 1988. At the time Petitioner commenced operating Central, she hired Bob Seese as the licensed general lines agent. She considered that Central was authorized to accept applications and continue to bind FJUA insurance coverage through State Farm. Petitioner forwarded all of the FJUA insurance applications which were bound by Bob Seese to State Farm within a period ranging from one week to approximately one month. State Farm refused to accept the applications submitted by Petitioner based on its contention that initially, Bob Seese was not authorized to bind coverage through Central, as he had not transferred his license to Central and Seese could only operate out of the Friendly agency of Lake Wales. 1/ Bob Seese was formally authorized by State Farm to conduct business through Central during February 1988. As a result of that authorization, all of the above-named insureds obtained insurance and none of the insureds suffered any monetary loss as a result of Seese's belated authorization. All of the premium payments that Petitioner received were, in time, forwarded to the respective carriers. Petitioner properly gave new insureds binder numbers which were serially dispensed in the order that premium payments were received. During January 1988, Petitioner accepted an application and premium payment for auto insurance from Tammy Clay for coverage to be bound by State Farm. Petitioner submitted Clay's application and premium payment to State Farm and it was returned on one occasion based on the fact that a facsimile stamp was used by the purported licensed agent (Seese). Petitioner resubmitted it and State Farm again returned it based on State Farm's contention that Seese was not authorized to conduct business through Central. Petitioner has now completed the required formal educational courses to demonstrate her eligibility to sit for the general lines agent's examination. Petitioner is now knowledgeable about insurance matters and is aware of the proper procedures for operating as a general lines agent. When Petitioner formed Central, she had less than one year's experience in the insurance business and was ineligible to sit for the general lines agent exam as she was not of majority age.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Respondent enter a Final Order granting Petitioner's application for examination as a general lines insurance agent. DONE and ENTERED this 31st day of October, 1990, 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 31st day of October, 1990.
Findings Of Fact Respondent holds a property and casualty insurance license, life and health insurance license, and life insurance license for the State of Florida. She has held her property and casualty license for about 20 years. In 1976, she was employed as an agent for the Orlando office of Commonwealth insurance agency, which she purchased in 1977 or 1978. She continues to own the Commonwealth agency, which is the agency involved in this case. Respondent has never previously been disciplined. In 1979 or 1980, Respondent was appointed to the board of directors of the Local Independent Agents Association, Central Florida chapter. She has continuously served on the board of directors of the organization ever since. She served as president of the association until September, 1991, when her term expired. During her tenure as president, the local association won the Walter H. Bennett award as the best local association in the country. Since May, 1986, Commonwealth had carried the insurance for the owner of the subject premises, which is a 12,000 square foot commercial block building located at 923 West Church Street in Orlando. In July, 1987, the insurer refused to renew the policy on the grounds of the age of the building. Ruth Blint of Commonwealth assured the owner that she would place the insurance with another insurer. Mrs. Blint is a longtime employee of the agency and is in charge of commercial accounts of this type. Mrs. Blint was a dependable, competent employee on whom Respondent reasonably relied. Mrs. Blint contacted Dana Roehrig and Associates Inc. (Dana Roehrig), which is an insurance wholesaler. Commonwealth had done considerable business with Dana Roehrig in the past. Dealing with a number of property and casualty agents, Dana Roehrig secures insurers for the business solicited by the agents. Dana Roehrig itself is not an insurance agent. In this case, Dana Roehrig served as the issuing agent and agreed to issue the policy on behalf of American Empire Surplus Lines. The annual premium would be $5027, excluding taxes and fees. This premium was for the above- described premises, as well as another building located next door. The policy was issued effective July 21, 1987. It shows that the producing agency is Commonwealth and the producer is Dana Roehrig. The policy was countersigned on August 12, 1987, by a representative of the insurer. On July 21, 1987, the insured gave Mrs. Blint a check in the amount of $1000 payable to Commonwealth. This represented a downpayment on the premium for the American Empire policy. The check was deposited in Commonwealth's checking account and evidently forwarded to Dana Roehrig. On July 31, 1987, Dana Roehrig issued its monthly statement to Commonwealth. The statement, which involves only the subject policy, reflects a balance due of $3700.86. The gross premium is $5027. The commission amount of $502.70 is shown beside the gross commission. Below the gross premium is a $25 policy fee, $151.56 in state tax, and a deduction entered July 31, 1987, for $1000, which represents the premium downpayment. When the commission is deducted from the other entries, the balance is, as indicated, $3700.86. The bottom of the statement reads: "Payment is due in our office by August 14, 1987." No further payments were made by the insured or Commonwealth in August. The August 31, 1987, statement is identical to the July statement except that the bottom reads: "Payment is due in our office by September 14, 1987." On September 2, 1987, the insured gave Commonwealth a check for $2885.16. This payment appears to have been in connection with the insured's decision to delete the coverage on the adjoining building, which is not otherwise related to this case. An endorsement to the policy reflects that, in consideration of a returned premium of $1126 and sales tax of $33.78, all coverages are deleted for the adjoining building. The September 30 statement shows the $3700.86 balance brought forward from the preceding statement and deductions for the returned premium and sales tax totalling $1159.78. After reducing the credit to adjust for the unearned commission of $112.60 (which was part of the original commission of $502.70 for which Commonwealth had already received credit), the net deduction arising from the deleted coverage was $1047.18. Thus, the remaining balance for the subject property was $2653.68. In addition to showing the net sum due of $944.59 on an unrelated policy, the September 30 statement contained the usual notation that payment was due by the 12th of the following month. However, the statement contained a new line showing the aging of the receivable and showing, incorrectly, that $3700.86 was due for more than 90 days. As noted above, the remaining balance was $2653.68, which was first invoiced 90 days previously. Because it has not been paid the remaining balance on the subject policy, Dana Roehrig issued a notice of cancellation sometime during the period of October 16-19, 1987. The notice, which was sent to the insured and Commonwealth, advised that the policy "is hereby cancelled" effective 12:01 a.m. October 29, 1987. It was the policy of Dana Roehrig to send such notices about ten days in advance with two or three days added for mailing. One purpose of the notice is to allow the insured and agency to make the payment before the deadline and avoid cancellation of the policy. However, the policy of Dana Roehrig is not to reinstate policies if payments are received after the effective date of cancellation. Upon receiving the notice of cancellation, the insured immediately contacted Mrs. Blint. She assured him not to be concerned and that all would be taken care of. She told him that the property was still insured. The insured reasonably relied upon this information. The next time that the insured became involved was when the building's ceiling collapsed in June, 1988. He called Mrs. Blint to report the loss. After an adjuster investigated the claim, the insured heard nothing for months. He tried to reach Respondent, but she did not return his calls. Only after hiring an attorney did the insured learn that the cancellation in October, 1987, had taken effect and the property was uninsured. Notwithstanding the cancellation of the policy, the October 31 statement was identical to the September 30 statement except that payment was due by November 12, rather than October 12, and the aging information had been deleted. By check dated November 12, 1987, Commonwealth remitted to Dana Roehrig $3598.27, which was the total amount due on the October 30 statement. Dana Roehrig deposited the check and it cleared. The November 30 statement reflected zero balances due on the subject policy, as well as on the unrelated policy. However, the last entry shows the name of the subject insured and a credit to Commonwealth of $2717 plus sales tax of $81.51 minus a commission readjustment of $271.70 for a net credit of $2526.81. The record does not explain why the net credit does not equal $2653.68, which was the net amount due. It would appear that Dana Roehrig retained the difference of $125.87 plus the downpayment of $1000 for a total of $1125.87. It is possible that this amount is intended to represent the earned premium. Endorsement #1 on the policy states that the minimum earned premium, in the event of cancellation, was $1257. By check dated December 23, 1987, Dana Roehrig issued Commonwealth a check in the amount of $2526.81. The December 31 statement reflected the payment and showed a zero balance due. The record is otherwise silent as to what transpired following the issuance of the notice of cancellation. Neither Mrs. Blint nor Dana Roehrig representatives from Orlando testified. The only direct evidence pertaining to the period between December 31, 1987, and the claim the following summer is a memorandum from a Dana Roehrig representative to Mrs. Blint dated March 24, 1988. The memorandum references the insured and states in its entirety: Per our conversation of today, attached please find the copy of the cancellation notice & also a copy of the cancellation endorsement on the above captioned, which was cancelled effective 10/29/87. If you should have any questions, please call. Regardless of the ambiguity created by the monthly statements, which were not well coordinated with the cancellation procedure, Mrs. Blint was aware in late March, 1988, that there was a problem with the policy. She should have advised the insured, who presumably could have procured other insurance. Regardless whether the June, 1988, claim would have been covered, the ensuing litigation would not have involved coverage questions arising out of the cancellation of the policy if Mrs. Blint had communicated the problem to the insured when she received the March memorandum. Following the discovery that the policy had in fact been cancelled, the insured demanded that Respondent return the previously paid premiums. Based on advice of counsel, Respondent refused to do so until a representative of Petitioner demanded that she return the premiums. At that time, she obtained a cashiers check payable to the insured, dated June 1, 1990, and in the amount of $2526.81. Although this equals the check that Dana Roehrig returned to Commonwealth in December, 1987, the insured actually paid Commonwealth $1000 down and $2885.16 for a total of $3885.16. This discrepancy appears not to have been noticed as neither Petitioner nor the insured has evidently made further demands upon Respondent for return of premiums paid. The insured ultimately commenced a legal action against Commonwealth, Dana Roehrig, and American Empire. At the time of the hearing, the litigation remains pending.
Recommendation Based on the foregoing, it is hereby recommended that the Department of Insurance and Treasurer enter a final order finding Respondent guilty of violating Sections 626.561(1) and, thus, 626.621(2), Florida Statutes, and, pursuant to Sections 626.681(1) and 626.691, Florida Statutes, imposing an administrative fine of $1002.70, and placing her insurance licenses on probation for a period of one year from the date of the final order. If Respondent fails to pay the entire fine within 30 days of the date of the final order, the final order should provide, pursuant to Section 626.681(3), Florida Statutes, that the probation is automatically replaced by a one-year suspension. RECOMMENDED this 5th day of February, 1992, in Tallahassee, Florida. ROBERT E. MEALE 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 February, 1992. COPIES FURNISHED: Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil, General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 James A. Bossart Division of Legal Affairs Department of Insurance 412 Larson Building Tallahassee, FL 32399-0300 Thomas F. Woods Gatlin, Woods, et al. 1709-D Mahan Drive Tallahassee, FL 32308
Findings Of Fact The Respondent, Robert Charles Anderson, currently is eligible for licensure and is licensed in this state as a life and health (debit) agent, life, health and variable annuity contracts agent, general lines property, casualty, surety and miscellaneous agent, and health insurance agent. The Respondent moved to Florida from Michigan in September, 1983. In January, 1984, the Respondent and a partner bought Guaranteed Underwriters, Incorporated, a corporate general lines insurance agency doing business as Security Insurance Agency (Security) in New Port Richey, Florida. The Respondent's background was primarily in the life and health insurance business; his partner's background was primarily in property and casualty insurance. They planned to divide responsibilities for Security's operations along the lines of their respective areas of expertise. However, the partnership dissolved, leaving to the Respondent responsibility for all of the operations of the agency. After the dissolution of the partnership, the Respondent delegated to unlicensed employees most of the day-to-day responsibilities for the property and casualty and workmen's compensation side of the agency's business. The Respondent was personally involved primarily in the day-to-day operations of the health and life insurance side of the business, as well as in selected large commercial accounts. The conduct of Security's business, as described above, went smoothly (there were no charges of any license violations) until two disruptive factors entered into the picture. One was financial in nature; the other was personal. In 1986, Security bought an existing insurance agency (Sunland Insurance Agency) in Holiday, merged it into Security, and attempted to operate it as part of Security's overall business. In 1987, Security bought another, large agency (Village Insurance Agency) and also merged it into Security and attempted to operate it as part of Security's overall business. At this point, the Respondent essentially was attempting to operate three insurance agencies, something he never attempted before. With the purchase of Sunland and Village, in addition to Security, the Respondent incurred significant debt which had to be met for his business to just break even. By approximately 1988, the Respondent owed approximately $150,000 still outstanding on the purchase of Security, $100,000 borrowed to finance the purchase of Village, $43,000 to three different relatives and $3,500 to the NCNB bank on loans made in connection with the business. Payments on these debts, together with payroll, rent and other business expense left Security with a monthly operating budget of almost $12,000. At this expense level, the business was losing money. In calendar year 1989, the business lost between approximately $12,600 and (counting unpaid bills outstanding at the end of the year) $17,900. At the end of 1988, severe personal problems added to the Respondent's financial woes. In December, 1988, the Respondent's wife had to be hospitalized in Tampa for eight weeks for treatment for symptoms of mental illness. During this time, in addition to trying to supervise the operations of Security, the Respondent was required to travel back and forth to Tampa (about an hour drive by car, each way) to visit his wife and also make arrangements for the care of his eighteen month old son (either by himself or by a baby-sitter). As if the Respondent's personal problems were not enough, when his wife was discharged from the hospital (with a diagnosis of a chemical imbalance), she informed him that she wanted a divorce. She took up a separate residence in Tampa where she lived pending the dissolution of the marriage. As a result of the his personal problems, the Respondent delegated more and more responsibility to his unlicensed employees. He would go to the office only for an hour or two a day. Sometimes he was not able to get into the office at all. Judy Nelson (Count V). Judy Nelson, who is self-employed doing business as Pedals 'N' Presents, used Security for her insurance needs since 1986. In January, 1989, she applied through Security for renewal of a special multi-peril (SMP) insurance policy with American Professional Insurance for another year beginning January 21, 1989. On January 10, 1989, she gave Security her check for $485 as partial payment for the coverage. The $485 was deposited into Security's general operating account which Security used to pay the operating expenses of the business. Security never processed Nelson's application or secured the coverage. On or about March 10, 1989, Nelson received notice from American Professional that no application for renewal of coverage or premium had been received and that coverage was being cancelled. Nelson immediately contacted Security regarding the notification, and one of the Respondent's unlicensed employees acknowledged an error on Security's part but assured Nelson that Security would correct the situation and have Nelson's coverage reinstated. Security never got the policy reinstated, and the policy was cancelled on March 21, 1989. On or about April 8, 1989, Nelson's business was burglarized, and Nelson made a claim on her MPS policy. At this point, in handling the claim, the Respondent realized that the policy had been cancelled and that Nelson had no coverage. But, instead of telling her the facts, the Respondent paid the claim himself. Nelson thought the claim was paid under the terms of her SMP policy and still thought she had coverage. Later, Nelson had a question about a signature on her policy and telephoned the Professional American to get her question answered. Professional American told her that she had no coverage. At about the same time, Nelson was contacted by a Department investigator, who asked her not to contact the Respondent yet as he would make arrangements for a refund for her. On or about December 6, 1989, after the Department investigator cleared it, Nelson telephoned the Respondent and asked for a refund. This time, the Respondent acknowledged that Nelson had no coverage and agreed to a refund. The Respondent paid Nelson the refund at the end of December, 1989, or the beginning of January, 1990. Nelson still does business with Security. She has in force workmen's compensation insurance through Security. Fred J. Miller (Count VI). On or about February 24, 1989, Fred J. Miller came into the Security offices to get commercial automobile insurance for the vehicles he uses in his recycling business. He dealt with one of the Respondent's unlicensed employees. Several application and other papers for coverage with Progressive American Insurance Companies were prepared and were signed by Miller. Miller also made a partial payment for the coverage in cash in the amount of $296, for which the employee gave Miller a receipt. As he left the office, the Security employee assured him that he had coverage. A few days later, on or about February 28, 1989, Security contacted Miller and told him an additional $606 was needed to obtain the coverage for which he had applied. Miller returned to Security and gave the employee he was dealing with an additional $606 cash, for which he was given another receipt. It was not proven, and is not clear, whether the cash received from Miller was placed in the Security operating account. Security never submitted Miller's application for insurance. Contrary to Miller's understanding, Miller had no insurance on his vehicles. As of April 6, 1989, Miller had neither a policy (or copy of one) nor an insurance identification card. On or about April 6, 1989, Miller bought a new vehicle and had to contact Security to get an insurance policy number in order to have the vehicle registered in his name. The Security employee speaking to Miller discovered that Miller's undated application still was in the "pending matters" file and told Miller he could not get the policy number at that time. Miller said he had to have the policy number immediately. At that point, the employee brought the problem to the Respondent's attention. The Respondent had the employee tell Miller they would call right back. Security then dated Miller's application April 6, 1989, telephoned Progressive American to secure coverage effective April 6, 1989, and called Miller back with the policy number he needed. Security then processed Miller's application to secure the coverage for a year, through April 6, 1990. Miller has renewed the Progress American coverage through Security and still has his vehicles insured under the policy. Donald E. Wilkins (Count IV). Donald E. Wilkins, President of Apple Paradise Landscaping, Inc., used Security for his general liability and automobile insurance needs. He has no complaint about, and no issue is raised in this proceeding, as to Security's handling of those coverages. (The evidence is that the coverages Wilkins applied for were placed in the normal course of business.) On or about March 9, 1989, Wilkins decided he wanted a workmen's compensation insurance certificate. He went to Security's office, and one of the Respondent's unlicensed employees completed an application for the insurance and for premium financing. Wilkins gave her a $250 check "just for the certificate." The check was deposited into Security's general operating account which Security used to pay the operating expenses of the business. On March 9, 1989, Wilkins also specifically requested that Security furnish to Hawkins Construction of Tarpon Springs, Florida, a certificate of insurance. In response to the request, Security furnished to Hawkins Construction a certificate that Apple Paradise with the "S. Atlantic Council on Workers Compensation." A policy number appears on the certificate, and the certificate states that coverage was effective March 13, 1989, to expire on March 13, 1990. There is no evidence that the Respondent personally was involved in providing this certificate of insurance. The evidence did not prove whether Wilkins ever got any workmen's compensation insurance. The Department proved that Security never processed the premium financing application, and Wilkins testified that he never got a payment book or other request for payment from any premium financing company. But the representative of the National Council on Compensation Insurance gave no testimony on Wilkins or Apple Paradise. Wilkins himself did not appear to have any complaint against the Respondent or Security. Theoharis Tsioukanaras (Count III). Theoharis (Harry) Tsioukanaras owned and operated Harry's Painting and Enterprises, Inc. He had been doing business with the Respondent to meet his business and personal insurance needs since the Respondent first bought Security (and did business with the prior owner for a year before that). He had his business and personal automobile insurance, as well as his workmen's compensation insurance through Security. In the normal course of their business relationship, either Harry would telephone Security when he had insurance needs or Security would telephone Harry when it was time to renew insurance. Harry would then drop by the office to complete the necessary paperwork and pay the premium. When Harry did not have the necessary premium money when it was time to buy or renew insurance, the Respondent regularly loaned Harry premium money and Harry would pay the Respondent back later. Harry usually dealt with the Respondent's unlicensed employees, not with the Respondent directly. On or sometime after July 7, 1989, Harry telephoned Security for proof of insurance on a 1987 Subaru so that he could avoid having to pay for lender insurance on the vehicle at a bank where he was seeking to obtain financing. One of the Respondent's unlicensed employees gave Harry a purported insurance identification card for "Progressive American," listing a purported insurance policy number and purported policy effective dates of July 7, 1989, to January 7, 1990. The lending institution did not accept the card. In fact, no Progressive American policy had issued on the vehicle. At some point, Harry came by the Security office and told the Respondent that he (Harry) was due a $640 refund for automobile insurance renewal premium money on a policy that never issued. By the Respondent's own admission, he checked with his records and his unlicensed employees and confirmed that Harry was owed the money. On September 28, 1989, he gave Harry a check for $640. 1/ Despite the circumstances that resulted in the false Progressive American insurance identification card, in Harry's need to buy Allstate insurance on a vehicle he thought was insured through Security, and in Harry's need for a $640 refund from Security, Harry continues to do his insurance business with the Respondent and Security and also refers friends to the Respondent for insurance needs. John Stuiso (Count I). On or about June 7, 1989, John Stuiso, a self-employed building contractor, applied for both general liability and workmen's compensation insurance through Security. (Stuiso had been insured through Security for the preceding four years with no apparent problems.) Stuiso paid Security $3,250 as partial payment of the premiums on the policies and also applied for premium financing through Security. At least $3,000 was paid by check; the evidence is not clear how the other $250 was paid. The $3,000 check was deposited into Security's general operating account which Security used to pay the operating expenses of the business. It is not clear what happened to the other $250. It was understood between Stuiso and Security that Security would have the applications processed and would inform Stuiso if there was any problem with coverage. Not having heard anything to the contrary, Stuiso believed he had the general liability and workmen's compensation insurance for which he had applied. In fact, Security never processed either application for insurance or either application for premium financing. In late July or early August, 1989, Stuiso requested that Security furnish a certificate of insurance for him to provide to a customer, APCO Building Systems of Oldsmar, Florida. On August 4, 1989, Security issued to APCO a certificate that Stuiso had both general liability insurance with American Professional Insurance Company and workmen's compensation insurance with "South Atlantic Council on Work Comp." Purported policy numbers also appeared on the certificate. When Stuiso never received a payment book for his premium financing, he became concerned about his coverage and was about to approach the Department for assistance when he received a telephone call from a Department investigator who had been investigating the Respondent (unbeknownst to the Respondent.) The investigator told Stuiso that he had no coverage. Stuiso then approached the Respondent and asked for a refund. The Respondent checked his records and asked his unlicensed employees about Stuiso's claim that he had paid for and applied for insurance that never issued. He learned for the first time the facts about Stuiso and immediately wrote Stuiso two refund checks, one for $3,000 and one for $250. Due to the financial problems the Respondent was having, his $3,00 check was returned for insufficient funds. The Respondent tried to borrow the money to cover the $3,000 check from a friend who declined on advice of counsel. Stuiso then went to the police and had the Respondent charged with writing a worthless check. The Respondent was advised of this and turned himself in to the police. He was given a week to make good on the check. The Respondent was able to borrow the money from another friend and paid Stuiso in full. However, his encounter with the police brought home to him the depths to which he had sunk. He decided to commit suicide by monoxide poisoning but changed his mind before it was too late. He telephoned his wife in Tampa to report what he had just done, and she initiated steps to have him committed involuntarily for treatment for mental illness under Florida's Baker Act. He spent four days in the Community Hospital in New Port Richey, Florida, where he was diagnosed as having "adjustment reaction." He was released to the custody of his wife and spent the next week to ten days with her in Tampa. After the Respondent recovered, he decided to do whatever was necessary to save his business and pay off his debts. He laid off office staff and, to take up the slack, himself assumed the responsibilities he had been delegating to his unlicensed employees. He also decided, in light of the Harry's and Stuiso matters, to himself investigate to see if there were any other Security customers who did not have insurance coverage for which they had paid. He found Wanda Mae Riley (Custom Plumbing of Pasco, Inc.). Wanda Mae Riley (Count II). In about August, 1988, the Respondent himself called on Wanda Mae Riley of Custom Plumbing of Pasco County to advise her that the company's general liability and automobile insurance policies for its fleet of four trucks were up for annual renewal on August 24, 1988. The Respondent filled out applications for renewal of the policies and for premium financing and accepted Riley's check in the amount of $3,244 as down payment for the renewal policies. The $3,244 was deposited into Security's general operating account which Security used to pay the operating expenses of the business. The Respondent telephoned American Professional Insurance Company to bind the coverage. He or his office also issued proof of insurance identification cards for Custom Plumbing. But, for reasons he cannot explain (having no recollection), he never processed the applications and the binders expired when the applications were not processed and policies were not issued in the normal course of business. Having had a lapse of memory as to the matter and as to Security's responsibilities to Custom Plumbing, the Respondent did not know and never told Riley or Custom Plumbing that the insurance policies were not renewed and that Custom Plumbing did not have the coverage it thought it did. Later in 1988, Security also arranged for workmen's compensation insurance for Custom Plumbing. The evidence did not prove that there were problems in the way Security obtained this coverage for Custom Plumbing. In approximately April, 1989, Custom Plumbing requested that Security furnish a certificate of insurance for him to provide to the Barnett Bank of Hernando County. On April 21, 1989, Security issued to the bank a certificate that Custom Plumbing had automobile insurance with American Professional Insurance Company. The expired binder number (which perhaps was the same as the policy number of the prior year's policy) appeared on the certificate as the purported policy number. There is no evidence that the Respondent personally was involved in providing this certificate of insurance. When, in approximately late October or early November of 1989, the Respondent discovered that Security had not obtained the coverages for which Custom Plumbing had made down payments in August, 1988, he telephoned Riley to inform her 2/ and tell her that he would refund the down payments Custom Plumbing had made in August, 1988. When the refund was not made promptly, Riley went to a lawyer to have a promissory note drawn for the Respondent's signature. The promissory note reflected the $3,244 the Respondent owed to Custom Plumbing, payable $500 a month. On or about December 9, 1989, the Respondent signed the note, which was paid in full in accordance with the terms of the note. (As previously found in Finding 14, by this time the Respondent also had heard from Nelson.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner, the Department of Insurance and Treasurer, enter a final order: (1) finding the Respondent, Robert Charles Anderson, guilty of the charges contained in Counts I, II, III, V and VI of the Administrative Complaint, as set forth in the Conclusions of Law, above; and (2) suspending the Respondent's licenses and eligibility for licensure for six months. RECOMMENDED this 28th day of May, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of May, 1991.
Findings Of Fact At all times material hereto, Respondent was an Ordinary Life, including Disability Agent, and a Disability Agent licensed by the State of Florida. During this period, Respondent was licensed to sell life and health insurance policies for National States Insurance Company, American Guaranty Life Insurance Company, and Old Southern Life Insurance Company. Respondent was employed as an agent by Diversified Health Services, an insurance agency whose office is located in St. Petersburg, Florida. At no time material hereto was Respondent employed by any agency of the State of Florida. As indicated above, there remain viable in the Administrative Complaint ten counts charging Respondent with various violations of provisions of the Florida Insurance Code. For purposes of clarity, the findings of fact with regard to each of those remaining counts will be set forth separately. COUNT I On February 12, 1983, Respondent visited Lucille Shock at her home in Bradenton, Florida. Mrs. Shock had earlier purchased a Medicare supplement policy from National States Insurance Company through another agent, but had decided to cancel that policy. Respondent visited Mrs. Shock's home in response to her notice of cancellation in hopes of persuading her to reinstate coverage. In paragraph three of Count I of the Administrative Complaint, Respondent is charged with having told Mrs. Shock that he was ". . . authorized by the Florida Department of Insurance to investigate the Diversified Health Agency" when, in fact, he was not employed by any state agency. While it is true that Respondent was not at the time of his visit to Mrs. Shock employed by any state agency, the record in this cause is insufficient to establish the foregoing allegation of the Administrative Complaint. Respondent denies having made any c representation to Mrs. Shock that he was employed by the State of Florida. Further, Mrs. Shock's testimony in this regard is inconsistent and conflicting. In a February 21, 1983, letter to a representative of the Florida Department of Insurance, Mrs. Shock stated that at the time of his visit to her home the Respondent represented that he ". . . was an investigator for the Diversified Health Agency. . . . At final hearing, Mrs. Shock testified that Respondent told her that he was an investigator for the "insurance department," but also, on cross-examination, testified that Respondent told her that he was an investigator for Diversified Health. Despite these inconsistencies, it is clear from the record in this proceeding that before the end of Respondent's visit with Mrs. Shock on February 12, 1983, she knew that Respondent was an insurance agent for National States Insurance Company. Because of the inconsistencies in Mrs. Shock's testimony, it is specifically concluded that her testimony concerning Respondent's representation about his employment is unreliable. Other than Mrs. Shock's testimony, there is no other record basis to establish that Respondent represented himself to be an employee of the Department of Insurance as alleged in Count I. Respondent is also charged in paragraph five of Count I of the Administrative Complaint with having "falsely represented the financial condition of several insurance companies licensed to do business in Florida as part of your sales presentation to induce Mrs. Shock to buy insurance policies from you." The record in this cause establishes that Respondent and Mrs. Shock discussed several insurance companies, including Vulcan Insurance Company, Tara Life Insurance Company, and Bankers Life during their visit on February 12, 1983. Respondent reviewed with Mrs. Shock data contained in certain A. M. Best Company reports concerning these insurance companies.Respondent advised Mrs. Shock that Vulcan Insurance Company was "a rather shaky company" and that Tara Life Insurance Company had been experiencing "financial problems." There is, however, nothing of record in this proceeding to establish either that these companies are licensed in Florida or that the representations made by Respondent to Mrs. Shock concerning these insurance companies were false. Accordingly, the allegations contained in paragraph five of Count I have not been established. COUNT II On or about February 10, 1983, Respondent visited Koy B. Cook at his home in Port Orange, Florida. The purpose of Respondent's visit to Mr. Cook was to dissuade Mr. Cook from cancelling a policy with National States Insurance Company whichir. Cook had previously bought from another agent. After buying the National States policy initially, Mr. Cook had attempted to cancel a preexisting policy with Bankers Life Insurance Company, but had been advised by that company that the policy could not be cancelled. Mr. Cook determined that he could not afford duplicated coverage, so he contacted National States Insurance Company and advised them of his desire to cancel his National States policy. Be was advised, in writing, by National States, that his policy had been cancelled and that his premium had been returned to the insurance agency which had sold him the policy for refund. Sometime prior to January 12, 1983, Respondent contacted Mr. Cook by telephone, identified himself by name, and arranged an appointment to visit with Mr. Cook in his home. Mr. Cook understood from the conversation with Respondent that the purpose of their appointment was to return Mr. Cook's refund check from his cancelled National States policy. Immediately prior to Respondent's arrival at Mr. Cook's home, Mr. Cook had been asleep. When Respondent arrived at Mr. Cook's door, Mr. Cook was still in a "daze," having just awakened. This fact is of significance, because at various times in his testimony Mr. Cook testified that Respondent identified himself as . . . an adjuster with Bill Gunter out of Tallahassee, or . . . an adjuster for the insurance company out of Tallahassee." Mr. Cook also testified that Respondent showed him some identification which bore a photograph of Insurance Commissioner Bill Gunter. This photograph was apparently attached to a document, the contents of which were unknown to Mr. Cook. Respondent denies having represented that he was an employee of the Department of Insurance. During the course of their conversation, Mr. Cook advised Respondent that he preferred the coverage offered under the National States policy to that of the Bankers Life policy, but simply could not afford duplicate coverage. Respondent and Mr. Cook discussed the amount of unearned premium outstanding on the Bankers Life policy as compared to the cost of reinstating the National States policy. Mr. Cook had originally paid $630 for the issuance of the National States policy. Respondent returned to Mr. Cook a check in that amount during the course of their visit. Further, by offering to reinstate the National States policy for a $526 annual premium, Respondent demonstrated to Mr. Cook that he would save approximately the amount that remained in unearned premiums on the Bankers Life policy. Mr. Cook agreed to this proposal, Respondent completed an application form, and Mr. Cook gave Respondent a check for approximately $526 to reinstate the National States policy, with the understand- ing that the National States and Bankers Life policies would overlap for some period of time. Upon leaving Mr. Cook's house, Respondent gave Mr. Cook one of his business cards, which identi- fied Respondent as an agent of National States Insurance Company. In Count II of the Administrative Complaint, Respondent is charged with having told Mr. Cook that he was an "insurance adjuster working out of Tallahassee" and that he "worked for the Florida Department of Insurance. Respondent is further charged with having told Mr. Cook that he "had a refund check for a cancelled Bankers Life policy when in fact the] had no such check." The testimony of Mr. Cook and Respondent on the issues alleged in Count II are diametrically oooosed. Viewing the transaction between Mr. Cook and Respondent in its totality, it is concluded that Respondent's version of the transaction is the more credible. Mr. Cook's testimony concerning Respondent's representations about his employment status contained several contradictions and inconsistencies. In addition, it is clear that Mr. Cook expected to receive a refund check from National States Insurance Comoany, that Mr. Palesky contacted him by telephone prior to his February 10 visit to advise him that he had his refund check, and that Respondent conducted himself during the entire transaction in a manner which clearly identified him as an insurance salesman. Finally, Respondent furnished Mr. Cook with a business card during the course of their meeting which clearly showed Respondent to be an agent of National States Insurance Company. It is also clear that Mr. Cook was aware during this entire transaction that his Bankers Life policy had not been cancelled, and that as a result of his transaction with Respondent he would be carrying policies with National States and Bankers Life which afforded duclicate coverage, and that he was advised of this fact by Respondent. These facts are clearly inconsistent with Mr. Cook's testimony that Respondent advised him that he had a refund for a cancelled Bankers Life policy in his possession. COUNT IV On or about March 2, 1982, Respondent visited Marjorie Brubaker in her home in Bradenton, Florida. The purpose of Respondent's visit to Mrs. Brubaker was to dissuade her from cancelling an insurance policy with National States Insurance Company which she had previously purchased through another agent and had subsequently cancelled. Mrs. Brubaker testified that, upon arrival at her home, Respondent represented to her that he was an "investigator for the state" or a "state investigator," looking into her cancellation of her policy with National States Insurance Company. Respondent denies having made that representation. The record is clear, however, that shortly after entering Mrs. Brubaker's home, Respondent showed Mrs. Brubaker materials which clearly identified him as an agent of National States Insurance Company, and that Mrs. Brubaker clearly understood within minutes after his entering her home that he was, in fact, a salesman for National States Insurance Company. Under these circumstances, it is specifically found that Respondent's testimony concerning his employment status is more credible. If, as is clear from the record, Respondent intended to sell insurance to Mrs. Brubaker, there is little logic to his having represented himself as a state employee at the door to her home, and within minutes clearly divulging to her that that was indeed not the case. Petitioner also alleges in the Administrative Complaint that Respondent displayed a photograph of Insurance Commissioner Bill Gunter to Mrs. Brubaker to establish his position as an investigator for the state. Mrs. Brubaker, however, was unable to identify the person in the photograph displayed to her by Respondent, other than to assert that the person in the photograph was not the Respondent, but instead a clean-shaven person with light hair and fair, reddish complexion. Those facts, standing alone, are insufficient to establish that the person in the photograph was, in fact, Mr. Gunter. Respondent is alleged in paragraph twenty of Count IV of the Administrative Complaint of having ". . . . falsely represented the status of Medicare coverage in this state in order to induce Mrs. Brubaker to purchase' new insurance policies from you." The only evidence in the record on this issue is Mrs. Brubaker's testimony that Respondent told her that Blue Cross-Blue Shield would soon cease to be the Medicare carrier in Florida, and that there existed a substantial possibility that National States Insurance Company would be designated as the new Medicare carrier in Florida. The record in this cause is absolutely devoid of any evidence that that representation, even if it had been made, was false. Accordingly, Petitioner has failed to establish facts to support the allegations that Respondent has falsely represented the status of Medicare coverage in Florida. Finally, paragraph twenty-one of Count IV of the Administrative Complaint alleges that Respondent falsely told Mrs. Brubaker that her present insurer, Orange State Life Insurance Company, was cancelling its Medicare Supplement policies. . . . It is undisputed that Mrs. Brubaker, at the time she was visited by Respondent, had insurance coverage through Orange State Life Insurance Company. Mrs. Brubaker, it is clear from the record, was under the impression that her policy with Orange State Life Insurance Company was a Medicare supplement policy. Respondent testified that her policy was not a Medicare supplement policy, and, in fact, bore a statement across the top of the policy to the effect that the policy was not a Medicare supplement policy. Petitioner offered no evidence to rebut Respondent's testimony in this regard, and neither party sought to introduce the policy into evidence. The only evidence offered by Petitioner to support the allegation that Respondent's representation that Orange State Life Insurance Company was cancelling its Medicare supplement policv was the fact that Mrs. Brubaker had continued to pay premiums on her policy after the representation was made by Respondent without receiving notice of any cancellation. However, any inference that might be drawn from continued payment of premiums fails if, in fact, the policy held by Mrs. Brubaker was not a Medicare supplement policy. Neither party having offered competent evidence to establish that Mrs. Brubaker's Orange State Life Insurance Company policy was in fact a Medicare supplement policy, the allegations contained in paragraph twenty-one of Count IV of the Administrative Complaint are deemed to be without factual support. COUNT VI In Count VI f the Administrative Complaint, it is alleged that Respondent visited the home of Leila Mueller on October 18, 1979. It is further alleged that at that time Respondent told Mrs. Mueller that he was ". . . from Medicare and that [Respondent] had called at one of [Mrs. Mueller's] neighbor's homes to explain the changes in Medicare coverage." It is further alleged that Respondent ". . . misrepresented [his] actual employment in order to induce Mrs. Mueller to buy insurance policies. The record in this cause establishes that on or about October 18, 1979, Mrs. Mueller was visited in her home by two insurance salesmen whom she believed to be in some way affiliated with Medicare. Mrs. Mueller did not recall the names of either of the two men, was not asked to physically identify the Respondent, and could not recall which of the two men led her to believe that they were affiliated with "Medicare." Mrs. Mueller inquired about whether there existed any written material that she could review to decide whether to purchase insurance coverage. One of the men furnished her a brochure which had the name "Palesky" on it. There is no evidence of record in this proceeding to establish that Respondent was ever in the home of Mrs. Mueller or that he in any fashion ever represented to her or to anyone else that he was a representative of Medicare. The only testi- mony in this record that in any way connects Respondent with Mrs. Mueller was her testimony that she was given a brochure, which was not introduced into evidence, containing Respondent's name. This fact, standing alone, is insufficient to establish the factual allegations contained in Count VI of the Adminis- trative Complaint. COUNT XI On or about March 21, 1982, Respondent visited William F. and Winifred M. Bell in their home in Sarasota, Florida. The purpose of Respondent's visit to the Bells was to sell them a Medicare supplement policy. The Bells had previously purchased a policy from Union Fidelity Insurance Company. During the course of Respondent's visit with the Bells, Respondent advised them that Union Fidelity was "not a good company" and that the policy they had with Union Fidelity was "not a good policy." In addition, Respondent advised the Bells that if anything happened to Mr. Bell that Mrs. Bell would not be insured within two months after Mr. Bell's death. Paragraph fifty-five of Count XI of the Administrative Complaint alleges that Respondent told the Bells ". . . that their present insurance coverage was no good" and that if Mr. Bell died, Mrs. Bell would not be insured when in fact [Respondent] knew that both of those statements were false." The record in this cause contains no evidence that the representations set forth above made by Respondent to the Bells were false. The Bells' insurance policy was not received into evidence because Petitioner failed to respond fully to Respondent's Request for Production of Documents, and had further failed to fully exchange exhibits with Respondent, including a copy of the Bells' policy, as required by the Pre-hearing Order entered by the Hearing Officer approximately two months prior to the date set for final hearing in this cause. Accordingly, there are no facts to substantiate the allegations contained in Count XI of the Administrative Complaint. COUNT XII On or about February 4, 1983, Respondent visited Louise S. Donovan at her home in Daytona Beach, Florida. Respondent visited Mrs. Donovan in response to her cancellation of a previous policy purchased from National States Insurance Company from another agent on or about November 17, 1982. Soon thereafter, she cancelled that policy but on December 22, 1982, reinstated the policy after having available coverages explained to her by the other agent. Sometime thereafter she again can- called the National States policy. By letter dated January 17, 1983, from the home office of National States Insurance Company, Mrs. Donovan was advised that her refund-check had been returned to her agency for refund to her. On February 4, 1983, Respondent visited Mrs. Donovan in her home. Under direct examination, Mrs. Donovan testified as follows concerning that visit: Q So, you showed [the January 27, 1983] letter to Mr. Palesky; and, how did he respond to the letter? A He said sort of -- it's a little vague now after all these months -- that, oh, well, they didn't pay any attention to those things, or some- thing like that, and that the company would not refund any money on the policy. Q Be made the statement to you that the company was not going to refund? A The company would not -- now, I believe his interpretation of that, but it wasn t clear to me, was that there was a certain clause in that policy that I was not satisfied with and that he would not reissue the same policy under the same conditions. Well, I'm a lay person. I don't know all these fine points. And, I under- stood that he meant that the company would not refund any money to me at all... During the course of their discussions, Mrs. Donovan advised Respondent that she had cancel led the policy because she did not have nursing home coverage. Respondent explained to her that, under those circumstances she would have to either add nursing home coverage to the policy she had cancelled, which he was not sure that he could do for her because the so-called "RS 100 feature" was in the process of being discontinued, or she could take out a separate nursing home policy. Resnondent advised her that in order to keep the RS 100 feature she would have to reinstate the policy which she had cancelled, and take out a separate nursing home policy at a later date. This is the option which Respondent recommended to Mrs. Donovan, and the option that she ultimately chose. Accordingly, Mrs. Donovan opted to fill out an application reinstating the cancelled policy. She had originally paid $659 for the policy she took out on December 22, 982, but premium rates had increased since that time. The application filled out by Mrs. Donovan on February 4, 1983, reflects the premium rate increased to $691. Mrs. Donovan testified that she did not recall endorsing a refund check in the amount of $659 from National States Insurance Company and allowing Respondent to submit the endorsed check to National States along with the application dated February 4, 1983. Respondent testified that she did, in fact, endorse that check, which he forwarded to National States Insurance Company with the February 4, 1983, application. According to Respondent's testimony, which is uncontradicted, he submitted the $659 check to National States, notwithstanding the fact that the premium rate had increased to $691, with the understanding that the company had the option of either reinstating the policy for $659 or insisting upon the increased premium rate. Thereafter, Mrs. Donovan again decided to cancel the coverage she received as a result of the February 4, 1983, application submitted through Respondent. Mrs. Donovan signed a sworn statement on March 30, 1983, which provided, in part, as follows: Mr. Palesky has shown me the com- plaint filed against him by the Department of Insurance. I totally disagree with the accusa- tions in the complaint. My only problem with Mr. Pale sky was a misunderstanding concerning the fact that the RS 100 rider could not be refunded and reissued (as it was being discontinued) [sic] I thought he meant the entire policy could not be refunded. . . . Count XII of the Administrative Complaint alleges that Respondent ". . . refused to return [premium] money to Mrs. Donovan. . ., and that ". . . as a result of your refusal Mrs. Donovan felt pressured into applying for a new policy at a higher premium." Further, Count XII alleges that ". . . the new policy was written for a higher premium, that [Resoondent] signed a receipt acknowledging receipt of the higher premium, and that Mrs. Donovan gave [Respondent] no money during [the] visit [of] February 4, 1983." The evidence in this cause does not establish that Respondent refused to return premium money to Mrs. Donovan, nor does the evidence establish that Mrs. Donovan was pressured into applying for a new policy at a higher premium. Finally, the evidence in this cause establishes that Respondent attempted to have National States Insurance Company reinstate Mrs. Donovan's coverage at the premium originally paid in December of 1982, notwithstanding a premium increase that had occurred in the interim, a procedure which has not been shown by the record in this cause to be in any way improper. COUNT XV On or about January 24, 1983, Kenneth E. Fritz bought a National States Insurance Company policy from an agent other than Respondent. On or about February 12, 1983, Mr. Fritz cancelled that policy and asked for a full refund. Mr. Fritz subsequently received a letter dated March 11, 1983, from National States Insurance Company acknowledging his request for cancellation, and advising him that a full refund of his premium was being sent to the agency office which had sold the policy to him, with instructions to deliver the refund to him. On or about March 24, 1983, Respondent visited Mr. Fritz in his home in Largo, Florida, with Mr. Fritz' refund check. In paragraph eighty-eight of Count XV of the Administrative Complaint, Respondent is charged with having ". told Mr. Fritz that [Respondent was] an `investigator with Florida' and that [Respondent] pointed to an emblem on [Respondent's] jacket which gave [Mr. Fritz] the idea [Respondent was] employed by the State of Florida' when in fact [Respondent was] not and are not employed by the Florida Deoartment of Insurance in any capacity." It is further alleged that Resoondent made this representation to influence Mr. Fritz to buy insurance policies, and that Mr. Fritz did not realize that Respondent was not a government employee until reading a newspaper article on or about April 2, 1983, concerning the emergency suspension of Respondent's licensed. Respondent denies ever having represented to Mr. Fritz that he was an employee of the State of Florida. Indeed, Mr. Fritz testified on this issue only that: Mr. Palesky came here, and he had a thing on his coat, and he says[sic] you bought some policies from the -- and he mentioned the name of the company in St. Louis, and he says[sic] I'm here to check on that, and he rattles this thing and give [sic] me the impression that he was the--was from the State of Florida checking this. . . . As mentioned above, Respondent is charged with representing to Mr. Fritz that Respondent was an "investigator with Florida." Nothing contained in the record in this cause establishes that Respondent ever made such a representation to Mr. Fritz. Indeed, Mr. Fritz clearly testified that he could not remember exactly what Respondent said to him to give him the "impression" that he was an employee of the State of Florida. It is, however, clear from the record in this cause that the allegation of the Administrative Complaint that Mr. Fritz did not know that Respondent was not a state employee until reading of Respondent's emergency suspension in a newspaper article on or about April 2, 1983, is false. What is clear is that Respondent made a sales presentation to Mr. Fritz which resulted not only in Mr. Fritz' reinstating the policy he had earlier purchased from another agent and cancelled, but in fact buying another policy from Respondent at the same time. It is also clear that Respondent gave Mr. Fritz a business card during the course of their conversation which clearly identified Respondent as a salesman for National States Insurance Company. In short, this record does not establish that Respondent ever represented himself as an employee of the State of Florida during the course of his sales presentation to Mr. Fritz, nor did Mr. Fritz reinstate his cancelled policy and purchase a second policy based upon any such representation. COUNT XVII On April 15, 1981, Esther Huddleson purchased two Medicare supplement policies issued by National States Insurance Company from agent Michael Frye. On April 16, 1901, she requested a refund on the National States policies. On June 1, 1981, she was visited in her home by Respondent. Count XVII alleges that Respondent falsely advised Mrs. Huddleson that he was an "insurance investigator" and an "investigator for the State." It is also alleged that Respondent was not an "investigator" for National States Insurance Company and that his status with the company had always been that of a sales representative. Further, it is alleged that Respondent ". . . falsely told Mrs. Huddleson her statutory `free look' had expired and so persuaded her to sign a conservation notice." It is clear from the record in this proceeding that Respondent never advised Mrs. Huddleson that he was an "investigator for the State" or in any other manner employed by the State of Florida or the Department of Insurance. A sworn statement signed by Mrs. Huddleson upon which she was closely interrogated by counsel and the Bearing Officer during the course of this proceeding clearly reflects that Respondent identified himself either as "an investigator from National States Insurance Company" or "States Insurance Company." Fur ther, there is no evidence in the record in this cause from which it can be concluded that this representation by Respondent was in any way false. Finally, the only testimony in the record in this cause concerning Mrs. Huddleson's statutory "free look" period occurred on the direct examination of Mrs. Buddleson as follows: Q Did [Respondent] lead you to believe that your 30-day period had passed? A yes. At least, that was in my mind. Mrs. Buddleson's testimony in this regard is, at best, equivocal, and does not persuasively establish that Respondent did, in fact, advise her that her "free look" period had expired as alleged in the Administrative Complaint. There is, accordingly, insufficient evidence of record in this proceeding to establish the allegations against Respondent contained in Count XVII of the Administrative Complaint. The Bearing Officer feels constrained, further, to note with concern the failure of Petitioner's counsel to deal with both Mrs. Huddleson's sworn statement and direct testimony concerning the fact that Respondent never represented himself to her to be an employee of the State of Florida. In fact, to say that Petitioner's counsel failed to deal with those issues is most charitable. It would perhaps be more accurate to say that the proposed findings submitted by Petitioner's counsel on this particular issue have absolutely no factual basis in this record, despite citations to a portion of the transcript purportedly supporting the allegations of the Administrative Complaint. COUNT XXI In December of 1982 Mary Ellen Stapleton purchased a Medicare supplement policy from an agent, other than Respon- dent, representing National States Insurance Company. After reviewing the policy and deciding that she did not want to retain it, Mrs. Stapleton returned the policy on or about February 8, 1983, to National States Insurance Company, and requested a refund of her premium. Through a series of correspondence with National States Insurance Company, Mrs. Stapleton's cancellation request was acknowledged, and she was advised that her premium refund had been returned to the office of the agency selling the policy, with instructions to make immediate delivery to her. On or about March 8, 1983, Respondent telephoned Mrs. Stapleton at her home and advised her that he was an investigator for National States Insurance Company and that he was investigating a Mr. Buffer, who had sold Mrs. Stapleton her National States policy. Count XXI, in pertinent part, alleges: That on or about March 8, 1983, you, JOSEPH MICHAEL PALESKY, telephoned Mrs. Stapleton at her home in Lakeland, Florida, and told her you were "an investigator for National States and [that you were] investi- gating Mr. Buffer" when in fact you were not and are not an investigator for National States Insurance Company but were and are only a salesman. That at no time did you tell Mrs. Stapleton that you represented Diversified Health Services of St. Petersburg, Florida. That you, JOSEPH MICHAEL PALESKY, created the false impression of your employ- ment status in order to induce Mrs. Stapleton to keep the [cancelled] policy. . Respondent did not tell Mrs. Stapleton that he represented Diversified Health Services of St. Petersburg, Florida. It is undisputed that Respondent was, on March 8, 1983, a salesman for National States Insurance Company. Petitioner has not established by any evidence whatsoever that Respondent was not an investigator for National States Insurance Company with authority to investigate Mr. Buffer. Neither has it been shown in this record that Respondent was under any obligation to identify the insurance agency by whom he was employed after having first clearly identified himself as being affiliated with National States Insurance Company. It is, therefore, specifically concluded that there are no facts of record to establish the violations alleged in Count XXI of the Administrative Complaint. COUNT XXII On September 24, 1980, Respondent visited John Capers Smith and Lillian H. Smith in their home in Bradenton, Florida. Respondent went to the Smiths' home in response to the Smiths having sent a card to National States Insurance Company requesting information concerning Medicare supplement policies. Upon his arrival at the Smiths' home, Respondent was advised by Mrs. Smith initially that she did not wish to speak with him further on that day because her husband had recently undergone surgery and was still recuperating. However, uoon Respondent's insistence, he was admitted to the Smiths' home at approximately 1:00 p.m. Respondent remained in the Smiths' home until approximately 8:00 p.m. on September 24, 1980. When he first arrived in the Smiths' home, Respondent told the Smiths that he worked for the State of Florida and that Bill Gunter was his boss. In the course of discussing National States Insurance Company policies, Respondent advised the Smiths that this type of policy was something that Mr. Gunter was attempting to do to assist elderly Floridians. During the course of his conversation with the Smiths, Respondent displayed a photograph of Mr. Gunter to the Smiths as proof of his affiliation with the State of Florida, and offered to call Mr. Gunter on the telephone to verify his credentials. After a long period of discussion, the Smiths purchased an insurance policy from Respondent, and gave him a check for $694. The Smiths' purchase of the policy was due in large part to Respondent's representation that he was an employee of the State of Florida, and that Mr. Gunter approved of the policy. Respondent denies having made any representation to the Smiths concerning his employment by the State of Florida, but, under the circumstances here present, it is specifically concluded that the Smiths' versions of the transaction occurring on September 24, 1980, are more credible.
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 Whether Petitioner is entitled to an award of attorney's fees and costs, associated with defending DOAH Case No. 13- 3820PL, pursuant to section 57.111, Florida Statutes (2014), as a small business and a prevailing party.
Findings Of Fact DFS is the state agency charged with the licensing and regulation of insurance agents in Florida and is responsible for administrating the disciplinary provisions of chapter 626, pursuant to sections 20.121(2)(g) and (h), Florida Statutes. At all times material to this case, de la Paz was a licensed general lines insurance agent in Florida. De la Paz also is a director and officer of the MDLPA, which she has co- owned with her daughter, Jenny Mondaca Toledo (Mondaca), since 2000. On October 15, 2003, the Office of Insurance Regulation issued a cease and desist order (Order) against IWSF and NAM from conducting insurance-related activities in Florida, including but not limited to, "transacting any new or renewal insurance business in this state, and from collecting any premiums from Florida insureds." The sale of insurance products by unauthorized entities (UEs) poses a danger to Florida consumers, because UEs are not vetted by the Office of Insurance Regulation, their financial stability is questionable, they may not have sufficient reserves to pay claims for consumers, and they do not participate in the Guarantee Fund which protects consumers should a company become insolvent. DFS has undertaken a variety of media campaigns in an effort to warn licensed agents about the dangers and consequences of providing insurance products through UEs. DFS regularly conducts investigations against agents for selling UE products. Generally, consumers will not know the quality of alleged insurance providers until the consumer makes a claim against their policy. For this reason, DFS cautions agents to verify the status of insurance providers prior to selling a policy. Agents can access the website for the Office of Insurance Regulation or call to inquire about the status of a particular company. The website has been available for approximately 17 years. DFS tried to warn Florida insurance agents that IWSF was an UE; however, IWSF was the most prevalent UE selling in Florida, and approximately 584 consumers were provided with IWSF policies sold by various agents. In an effort to stop the sale of insurance products through IWSF and NAM, DFS obtained a list of Florida customers from the Canadian bankruptcy receiver of IWSF. DFS' Bureau of Investigations sent a survey to these consumers and through the survey, it was determined that Carlos Guzman (Guzman) and Jorge Saez (Saez) purchased IWSF watercraft insurance from MDLPA in April 2009. Field Insurance Regional Administrator Lidia Azcue (Azcue) and Investigator Marlene Suarez (Suarez) opened an investigation regarding this transaction. Azcue and Suarez went to MDLPA on December 4 and 5, 2012. The alleged violation being investigated was that the agency sold unauthorized products, and the purpose was to see if any others were being sold. They did not inform the staff at MDLPA of the reason for the investigation. De la Paz was not present nor was she interviewed during these visits. Azcue and Suarez asked for and received the binder book of MDLPA on a thumb drive. Mondaca was present on the first day of the investigation and was described by Azcue as cooperative. Azcue also requested and received files for other consumers who purchased marine insurance products from MDLPA. As a result of the investigation, and prior to the filing of the Administrative Complaint, DFS obtained the following information and documentation regarding MDLPA and the transaction between MDLPA, Saez, and Guzman: De la Paz and her daughter, Mondaca (referred to on the Bank of America signature card as "Jenny M. Toledo, President") had signature authority for the MDLPA corporate bank account at Bank of America; An IWSF quote printed April 14, 2009, for the vessel owned by Saenz (sic) and Guzman, which was faxed to MDLPA by IWSF to "Odalis" (referring to Odaylis Chiullan (Chiullan), an employee of MDLPA) which references de la Paz and MDLPA as the contact; A fax dated May 6, 2009, from Chiullan to IWSF asking IWSF to bind coverage for Guzman and Saez effective May 6, 2009; Undated handwritten notes on a "File Action Log" form regarding "Jorge Sahel Saez" in the handwriting of Chiullan; A fax dated May 6, 2009, from IWSF to "Odaylis" at MDLPA; An unsigned and undated "Insurance Premium Financing Disclosure Form" to be signed by Guzman and Saez, which was obtained by Chiullan from the premium financing company. In correspondence prior to the issuance of the Administrative Complaint, de la Paz advised DFS that it was Chiullan who had the form signed by Guzman and Saez and transmitted the signed forms and check for the down payment to the finance company; A receipt prepared by Chiullan dated May 6, 2009, acknowledging delivery of $280.00 as a "down payment" by Guzman and Saez for financing of a policy with NAM; The premium finance agreement between the finance company and Guzman and Saez prepared by the finance company and sent to Chiullan. The agreement is signed by Guzman and by de la Paz on behalf of MDLPA as "broker or agent"; Check number 1138 dated May 6, 2009, and drawn on the bank account of Guzman payable to the finance company in the amount of $370.00. This check was delivered to Chiullan and forwarded by her to the finance company along with the signed, original documents for the financing of the balance of the insurance premiums; A fax dated May 12, 2009, from NAM to Odaylis at MDLPA, requesting confirmation of the payment plan arranged with Saez and Guzman; IWSF declaration page for Guzman and Saez; IWSF renewal certificate for Guzman and Saez for the period of May 6, 2010, through May 5, 2011, signed by Guzman on May 4, 2010; and Correspondence from IWSF to de la Paz at MDLPA dated May 13, 2010, returning two checks, one signed by Mondaca and one signed by de la Paz, for reissuance in the name of IWSF. No interviews were conducted as part of the investigation by DFS of de la Paz, Mondaca, Chiullan, Guzman, or Saez. After the field investigation was concluded, the investigative file was forwarded on January 16, 2013, to Veronica Jackson, Government Analyst I, who reviewed the file for legal sufficiency. On May 24, 2013, a letter from Kathy Spencer, Stipulation Program Coordinator with the Office of the Chief Financial Officer, Jeff Atwater (Atwater), was sent to de la Paz alleging that she "aided and abetted an unauthorized entity in the sale of insurance." No further details were provided, nor were any Florida Statutes cited. Attached to the correspondence was a proposed settlement stipulation for consent order which offered de la Paz a $5,000.00 penalty and a one-year period of probation in lieu of having a formal administrative complaint filed against her. On June 13, 2013, de la Paz responded with a letter to Atwater explaining that at no time had de la Paz or anyone at MDLPA received notification that IWSF and NAM were not authorized to sell insurance products in Florida. De la Paz asserted that Chiullan, who held a 220 license and only worked for MDLPA for a few weeks, was the individual who handled the transaction with Guzman and Saez. De la Paz pointed out that to be charged with violation of section 626.734, de la Paz, as the licensed agent and owner of the insurance agency, cannot be subject to disciplinary proceedings due to Chiullan's placing this one policy with IWSF, because she was not aware of such act and the facts constituting a violation of the insurance code. Additionally, de la Paz pointed out that section 626.910 provides a person "aiding an unauthorized insurer" shall pay a civil penalty of not more than $1000.00 for each non-willful violation. De la Paz emphasized that she personally "did absolutely nothing to violate the code, let alone commit a willful violation of the code." For this reason, she could not sign the stipulation admitting that she committed a willful violation. De la Paz's letter was forwarded to Jackson who asked de la Paz for documentation supporting de la Paz's position. De la Paz corresponded with Jackson on June 29 and July 2, 2013. In this correspondence, in addition to once again supplying the requested documentation, de la Paz reiterated her lack of knowledge of IWSF as a UE and her lack of involvement in the Guzman/Saez transaction. On July 2, 2013, Azcue contacted de la Paz to invite her to come to DFS' office and review the investigative file. This meeting was not mandatory. According to de la Paz's credible testimony, she asked to bring her attorney and was told she could not. De la Paz declined to attend the meeting. On August 26, 2013, after negotiations with de la Paz were unsuccessful, DFS filed a one-count Administrative Complaint against de la Paz, alleging that on May 6, 2009, Guzman and Saez purchased a policy for watercraft insurance from MDLPA. De la Paz was charged with a violation of section 626.611, "Knowingly aiding, assisting, procuring, advising, or abetting any person in violation of or to violate a provision of the insurance code or any order or rule of the department, commission, or office." De la Paz was also charged with a violation of section 626.734, which provides that any general lines agent who is an officer, director, or stockholder of an incorporated general lines insurance agency shall remain personally and fully liable and accountable for any wrongful acts, misconduct, or violations of any provision of the code committed by such licensee by any person under his or her direct supervision and control while acting on behalf of the corporation. A final hearing on the Administrative Complaint was held on December 4, 2013, and January 7, 2014. A Recommended Order was entered by the undersigned on March 28, 2014, which found that DFS failed to prove, by clear and convincing evidence, that de la Paz knowingly aided, assisted, procured, advised, or abetted two UEs when Chiullan sold what was purported to be watercraft insurance in the spring of 2009 to Saez and Guzman. DFS admits that de la Paz is a "small business party" and was a "prevailing party" for purposes of the Florida Equal Access to Justice Act, section 57.111. There is no dispute that de la Paz's attorney's fees for defending the underlying action in the amount of $29,700.00 and costs in the amount of $1,265.39 are reasonable. De la Paz's additional cost for the final hearing Transcript in the amount of $831.75 is also reasonable.
