Findings Of Fact The Petitioner takes exception to the findings of fact contained in the Recommended Order at paragraphs 12, 19, and 27, wherein the Hearing Officer found that the evidence did not prove that the Respondent had committed the violations charged as referenced in each finding. This conclusion is not supported by competent and substantial evidence as required by section 120.57(1)(a) 10., Florida Statutes. The Hearing Officer was convinced that the multitude of forms utilized by the Respondent in selling the non-insurance products (motor clubs) to Hulan Mitchell, Jenna Chester and Michele Humose demonstrated that they had given their informed consent. However, the Hearing Officer overlooked the blatant misrepresentation and false statement contained in the "premium" receipts issued to each of the insureds. Although the Hearing Officer is free to determine the credibility of the witness' testimony, the Hearing Officer cannot ignore or reject unrefuted competent and substantial evidence in the record that clearly and convincingly demonstrates that the premium receipts are a misrepresentation of fact or false statement. No witness testimony is necessary to make this finding. The documents speak for themselves and were not otherwise questioned or refuted. The record unequivocally established the following: Hulan Mitchell - The "premium" receipt (Pet. Ex. "1") issued to Mr. Mitchell indicates a total premium of $378. The actual cost of the "insurance" was $328 with a downpayment of $98 required. See Premium Finance Agreement (Pet. Ex. "1") This is absolutely unrefuted on the record. The premium receipt includes $50 for the cost of the motor club, which is not a policy of insurance and accordingly is not "premium". Also the downpayment required, purportedly for insurance, included $50 for the motor club ($98 + $50 = $148). Furthermore, based on clear documentary evidence in the record, Mr. Mitchell was again subject to a misrepresentation of fact (undisputed) wherein on July 9, 1993 he received a letter (Pet. Ex. "1") threatening to cancel his "insurance" policy because he did not pay a $48 balance due on the motor club. Accordingly the record clearly indicates that the Respondent has made a false or misleading statement with reference to the insurance transaction for Mr. Mitchell. The fact that the Hearing Officer held that Mr. Mitchell knew (despite his testimony otherwise) that he had purchased a motor club, does not negate the fact that the Respondent made a false or misleading statement. JENNA CHESTER - The deceptive premium receipt practice was visited upon Ms. Chester on two occasions. First on February 1, 1994 a "premium" receipt (Pet. Ex. "2") was issued in an amount of $670 for "total premium" due and a required downpayment of $261. The actual cost of the "insurance" was $585 with a required downpayment of $176. See Premium Finance Agreement (Pet. Ex. "2") The "premium" receipt and downpayment included a non-insurance fee for a motor club in the amount of $85. On May 23, 1994 Ms. Chester went to the Respondent to repurchase coverage which had been cancelled. At that time, another "premium" receipt was issued to her in the amount of a "total premium" of $719 and a required downpayment of $286 (Pet. Ex. "2") The actual cost of the insurance was $619 and a required downpayment of $186. See Premium Finance Agreement (Pet. Ex. "2") The additional $100 was for the non-insurance motor club which was sold to Ms. Chester. Although the Hearing Officer held that Ms. Chester knew she was purchasing this motor club (despite Ms. Chester' s testimony otherwise) this does not negate the fact that the Respondent has made false or misleading statement in this insurance transaction with Ms. Chester. Michelle Humose - The unrefuted documentary evidence indicates that on May 5, 1994, Ms. Humose was issued a "premium" receipt (Pet. Ex. "3") indicating a "total premium" in the amount of $926 and a required downpayment of $348. The actual cost of the "insurance" was $826 with a required downpayment of $248 See Premium Finance Agreement (Pet. Ex. "3") The additional $100 included in the "premium" receipt was for the non-insurance motor club sold to Ms. Humose. Again despite the Hearing Officer's finding contrary to Ms. Humose's direct testimony that she did not know she was purchasing a motor club, the Respondent has clearly and convincingly made a false or misleading statement with respect to this insurance transaction with Ms. Humose. It is implicit in the Findings of Fact by the Hearing Officer that each referenced transaction took place as described herein. The Hearing Officer merely failed to explicitly state in the Recommended Order that the unrefuted documentary evidence establishes a prima facie misrepresentation of fact. Indeed, the exact factual scenario established herein was determined to constitute a misrepresentation in In the Matter of: Kenneth Michael Whitaker, Case Number 93-L-432DDH (Final Order dated July 3, 1995). It was specifically determined "that the Respondent's standard business practice of combining the costs of insurance coverages with the costs of the auto club memberships and then calling such costs "total premium" on receipts issued to customers constituted a misrepresentation and was deceptive." Also, it was further determined "that the Respondent's standard business practice of deducting all or part of the ancillary product fee up front resulted in false statements on other documents that the full downpayment for premium or financing of premium had been made, when in actuality it had not." Whitaker Final Order at pp's 9-10. The Department determined that this activity was a violation of section 626.611(9), Florida Statutes. This finding was also affirmed on appeal in Whitaker v. Department of Insurance and Treasurer, Case No. 95-2702, (21 FLW 1353, Slip Opinion dated June 13, 1996). The court upheld this violation when it summarized the practice in the opinion as follows: Appellant took all or part of the ancillary product from the required premium downpayment and gave the consumer a receipt which listed the full downpayment as "Total Premium". The receipt did not reveal that part of the "premium" went to purchase an ancillary product. Whitaker Slip Opinion at pp's 3-4. This type of fraudulent and deceptive practice also constitutes a violation of section 626.9541(1)(b), Florida Statutes, by placing before the public a representation or statement which is untrue, deceptive or misleading. The Hearing Officer has already considered the unrefuted facts on the record and was clearly in error to make a finding otherwise. Accordingly, pursuant to section 120.57(a)(a) 10., Florida Statutes, which reads in part: The agency may not reject or modify the findings of fact, including findings of fact that form the basis for an agency statement, unless the agency first determines from a review of the complete record, and states with particularity in the order, that findings of fact were not based upon competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law. the Department may modify the findings of fact. In this case there was no competent and substantial evidence to make a finding that the Respondent did not make a false or misleading statement with the premium receipts issued in this cause. A review of the entire record demonstrates unrefuted documentary evidence which supports the modified findings of fact contained herein. Therefore, Petitioner's exceptions to findings of fact 12, 19 and 27 are hereby GRANTED. RULINGS ON EXCEPTIONS TO CONCLUSIONS OF LAW The Petitioner takes exception to conclusions of law at paragraphs 30 and 31, based on the Hearing Officer's rejection of unrefuted facts established on the record, i.e., deceptive and misleading premium receipts. Conclusions of Law 30 and 31 are revised to reflect that the premium receipts issued to insureds constitute fraudulent and deceptive practices as well as placing before the public a representation or statement which is untrue, deceptive, or misleading. Conclusion of Law 30 is modified as follows: In this case, the Respondent was charged with violating sections 626.611(4), 626.611(5), 626.611(7), 626.611(9), 626.611(13), 626.621(2), 626.621(6), 626.9541(1)(b), 626.9541(1)(e), 626.9541(1)(k)1., and 626.9541(1)(z), Florida Statutes. Boiled down to the essentials the Department alleged that Respondent violated the provisions listed above by unlawfully selling insureds motor club memberships without their informed consent, made false and misleading statements regarding the coverage provided and falsely represented and illegally required insureds to purchase motor club membership as part of their purchase of automobile insurance and that Respondent engaged in the prohibited practice of "sliding" additional coverages or products into the purchase of the insured without the informed consent of the insured. This revision is necessary because the Hearing Officer failed to include sections 626.9541(1)(b) and 62.9541(1)(e), Florida Statutes, as alleged violations. Conclusion of Law 31 is likewise revised as follows: The Department failed to establish by clear and convincing evidence that Respondent attempted to "slide" coverage or ancillary products involved in this case. Likewise, the evidence did not clearly or convincingly demonstrate that Respondent did not obtain the informed consent of her customers prior to selling them the auto club memberships involved here. However, based on the unrefuted evidence in the record, the Respondent has violated sections 626.611(9) and 626.9541(1)(b), Florida Statutes, by issuing "premium receipts" which falsely and deceptively represented "total premium" which included a fee for a non-insurance product, ie. motor club membership. Accordingly, the Respondent is guilty of three counts of violating sections 626.611(9) and 626.9541(1)(b), Florida Statutes. The Petitioner's exceptions to conclusions of law 30 and 31 are hereby GRANTED. RULING ON EXCEPTIONS TO RECOMMENDATION The Petitioner takes exception to the recommendation that the Administrative Complaint be dismissed. The Penalty Guidelines contained in Chapter 4-231, Florida Administrative Code, should be applied in this case. There are three documented violations (one for each count) of engaging in fraudulent and dishonest practices as prohibited in section 626.611 (9), Florida Statutes, and placing before the public a representation or statement which is untrue, deceptive or misleading in violation of section 626.9541(1)(b), Florida Statutes. Under the penalty guidelines, a violation of section 626.611(9), Florida Statutes, requires a suspension of 9 months per count. Under the penalty guidelines, a violation of section 626.9541(1)(b), Florida Statutes, requires a suspension of 6 months per count. Based on Rule 4-231.040, Florida Administrative Code, the highest penalty per count should be assessed, therefore the appropriate penalty is three counts at 9 months for a total suspension period of 27 months. Since the total required suspension exceeds 2 years, the appropriate sanction is the revocation of the Respondent's licenses in accordance with section 626.641(1), Florida Statutes. The violation of section 626.9541(1)(b), Florida Statutes, permits the assessment of an additional fine on top of any other administrative sanction, pursuant to section 626.9521, Florida Statutes. This section permits fines for wilful violations of up to $10,000 per violation not to exceed $100,000. The Petitioner recommends that a fine of $3,000 be assessed against the Respondent. However, insufficient grounds have been demonstrated to justify the assessment of a $3,000 administrative fine. Therefore, Petitioner's exceptions to the recommendation are hereby GRANTED, except for the Petitioner's argument for an additional sanction in the form of a $3,000 administrative fine which is hereby DENIED. PENALTY Rule 4-231.160, Florida Administrative Code, prescribes the aggravating and mitigating factors which the Department shall consider and, if warranted, apply to the total penalty in reaching the final penalty. Aggravating factors in this matter, as delineated in Rule 4-231.160, Florida Administrative Code, are the willfulness of the Respondent's conduct and the existence of secondary violations established in Counts I-III of the Administrative Complaint. Only minimal mitigating factors exist which are outweighed by the aggravating factors. The existence of these aggravating factors would increase the Respondent`s total penalty, thereby resulting in a higher final penalty. Increasing the Respondent's total penalty would be pointless, however, for section 626.641(1), Florida Statutes, limits a licensee's period of suspension to a maximum of 2 years. The Respondent's 27-month total penalty already exceeds the two-year statutory limit. Consequently, the Department has determined that a revocation of the Respondent's insurance agent license is warranted and appropriate in this matter, and is necessary to adequately protect the insurance-buying pubic. IT IS THEREBY ORDERED: All licenses and eligibility for licensure held by TARA JEANNE SMITH, are hereby REVOKED, pursuant to the provisions of sections 626.611, 626.621, 626.641(2) and 626.651(1), Florida Statutes, effective the date of this Final Order. As of the date of this Final Order, the Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or permit is required under the Florida Insurance Code, or directly or indirectly own, control or be employed in any manner by an insurance agent or agency. Any party to these proceedings adversely affected by this Final Order is entitled to seek review of this Final Order pursuant to section 120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a Notice of Appeal with the General Counsel, acting as the agency clerk, at 612 Larson Building, Tallahassee, Florida 32399-0333, and a copy of the same and the filing fee with the appropriate District Court of Appeal within thirty (30) days of rendition of this Order. DONE and ORDERED this 4th day of September, 1996, in Tallahassee, Florida. BILL NELSON Treasurer and Insurance Commissioner COPIES FURNISHED: Tara Jeanne Smith 2588 Panther Creek Road, Apt. A Tallahassee, Florida 32308-5628 Charles J. Grimsley, Esquire Charles J. Grimsley and Associates, P.A. 1880 Brickell Avenue Miami, Florida 33129 Diane Cleavinger, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Stephen C. Fredrickson, Esquire Division of Legal Services 200 E. Gaines Street Tallahassee, Florida 32399-0333
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That the Department of Insurance enter a Final Order finding Respondent not guilty of violating Chapter 626, Florida Statues and dismissing the Administrative Complaint. DONE and ENTERED this 12th day of July, 1996, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SunCom 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of July, 1996. APPENDIX The facts contained in paragraphs 1, 2, 3, 4, 7, 8 and 16 of Petitioner's Proposed Findings of Fact are adopted. The facts contained in paragraphs 5, 6 and 9 of Petitioner's Proposed Findings of Fact are subordinate. The facts contained in paragraphs 10, 11, 12, 13, 14, 15, 17, 18, 19, 20, 21, 22 and 23 of Petitioners' Proposed Findings of Fact were not shown by the evidence. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 24, 25 and 26 of Respondent's Proposed Findings of Fact are adopted. The facts contained in paragraph 23 of Respondent's Proposed Findings of Fact are subordinate. COPIES FURNISHED: Stephen C. Frederickson, Esquire Division of Legal Services 645A Larson Building Tallahassee, Florida 32399-0333 Charles J. Grimsley, Esquire Charles J. Grimsley and Associates 1880 Brickell Avenue Miami, Florida 33129 Bill Nelson Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue Whether the Petitioner committed the violations alleged in the Amended Administrative Complaint filed October 14, 2003, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department is the state agency responsible for issuing licenses for insurance agents in the State of Florida, and for regulating and disciplining licensed insurance agents. Sections 626.016, 626.611, and 626.281, Florida Statutes (2004). At all times material to this proceeding, Mr. Pomerantz was licensed in Florida as a property and casualty general lines insurance agent, which is referred to as a "2-20 license." At all times material to this proceeding, Mr. Pomerantz did business as A Able insurance agency, an unincorporated entity located at 124 South Federal Highway, Pompano Beach, Florida. Mr. Pomerantz owned the A Able insurance agency, worked in the office in Pompano Beach, and was the agent in charge of the office. Automobile insurance was the primary product sold at the Pompano Beach office of the A Able insurance agency. No primary agent for the A Able insurance agency office in Pompano Beach was registered with the Department, but Mr. Pomerantz functioned as its de facto primary agent at that location. An insurance agency known as the Wide World of Insurance was, and perhaps still is, located in Margate, Florida. Mr. Pomerantz's brother, Randy Pomerantz, operated this agency. In the summer of 2000, the two offices merged, but the merger dissolved in the early spring of 2002. During the time that the two agencies operated as a single entity, they continued to maintain the two office locations. Applications and other paperwork generated in the Pompano office were, as a rule, sent to the Margate office for processing. Prior to May 2003, however, when he began working in a general administrative capacity at the Margate office, Mr. Pomerantz did not work in the Margate office and had no personal knowledge of the operations of the Margate office or the applications for automobile insurance handled by that office. At the times material to this proceeding, Mr. Pomerantz was the appointed agent for Ocean Harbor Insurance Company ("Ocean Harbor"), Southern Group Indemnity, Inc. ("Southern Group"), and U.S. Security Insurance Company ("U.S. Security"). As an appointed agent, Mr. Pomerantz, as well as agents working in the Pompano Beach office of the A Able insurance agency, acted on behalf of these companies, and the agents could bind coverage with the companies and accept premium payments on behalf of these companies. An insurance agent can "bind" automobile insurance coverage with an insurance company that has appointed or registered the agent as its representative by calling the insurance company and getting a binder number and time of day. A binder obligates the insurance company to provide the coverage specified until the binder is converted into an insurance policy or the binder is cancelled. Southern Group's agreement with Mr. Pomerantz required him to send the signed application for a new automobile insurance policy, for a renewal of an existing policy, or an amendment to an existing policy, together with a check or draft for the premium net commissions, postmarked within 72 hours of the time at which the coverage was bound. Although not reduced to writing, the standard policy of U.S. Security requires its appointed agents to mail the application and payment to the company immediately upon coverage being bound. Ocean Harbor's general rules applicable to its appointed agents require that a completed application and the required premium, together with other documentation, be received by the company within five working days of the date on which coverage is bound. Within 20 to 30 days after coverage is bound on an application, each of these three companies sends a notice to the agent listing the binders for which the company has not received the application, premium, and other required paperwork. The notice advises the agent that the binder is cancelled. This means that the insurance company no longer provides automobile insurance coverage under the binder. If the application, premium, and other required paperwork is subsequently forwarded to the insurance company, the company, after review by its underwriters, can accept the application and issue a policy with an effective date retroactive to the effective date stated on the application for the policy. In some circumstances, the underwriting review will result in an additional premium being charged on the policy. In this circumstance, a notice is sent to the insured advising them of the additional premium due. At the time the application for automobile insurance coverage is completed and the coverage is bound by an agent appointed or registered by the company, the customer pays the insurance agent either the full amount of the premium determined by the agent to be due or a down payment on the premium when the premium is financed by a premium finance company. Insurance companies using appointed or registered agents do not, as a rule, accept payment directly from the customer; rather, the payment received from a customer is deposited in the agency's account, and the agency, after deducting its commission, sends an agency check to the insurance company. When the premium is financed, the down payment is deposited in the agency account, and the agency, after deducting its commission, sends an agency check to the premium finance company. When a customer finances his or her insurance premium through a premium finance company, the customer signs a premium finance agreement in which he or she agrees to pay monthly installments to the premium finance company for the total owed under the agreement; the premium finance company, in turn, pays the full premium to the insurance company at the time the application is submitted to the insurance company. Premium finance companies provide agents with whom they do business company drafts, which are prepared by the insurance agent on behalf of the premium finance company. Mr. Pomerantz and the A Able insurance agency did business with the premium finance company ETI Finance Corporation ("ETI Finance"), and A Able insurance agency was supplied with ETI Finance premium finance agreements and ETI Finance drafts. In ETI Finance's premium finance agreement, the customer agrees to assign to ETI Finance a security interest in any unearned return premiums that may become due upon the cancellation of the insurance policy. The insurance company sends this unearned return premium directly to ETI Finance if the insurance policy is cancelled. ETI Finance deducts any amounts owed under the premium finance agreement; if the amount of unearned return premium exceeds the amount the customer owes ETI Finance under the premium finance agreement, ETI Finance remits the balance owed to the customer to the insurance agent; if the amount of unearned return premium is insufficient to cover the amount the customer owes ETI Finance, ETI Finance bills the insurance agent for the balance owed under the premium finance agreement. ETI Finance handles unearned return premium credits and debits on an account current basis whereby a bi-monthly statement is prepared for each of the agents with whom it does business. The statement lists customers and all debits and credits to the agent's account for each of the customers listed. When an insurance policy is cancelled, the agent statement includes the amount of unearned return premium received by ETI Finance from the insurance company, and shows whether the customer is owed money, which is shown as a credit to the agent's account, or whether the agent owes ETI Finance money, which is shown as a debit to the agent's account. All of the debits and credits are totalled on the bi-monthly statement; if a total credit is shown, an ETI Finance check is included with the statement; if a total debit is shown, the agent is required to send ETI Finance a check to cover the amount owed. ETI Finance's agent statement advises the agent to review the statement carefully because the agent might owe a customer a refund. If a customer pays the agent the full premium and the agent then pays the premium with an agency check, the insurance company sends the agent an unearned return premium. It is the agent's responsibility to refund the unearned return premium to the customer. In addition to paying a customer any unearned return premium received upon cancellation of a policy, the agent is responsible for refunding any unearned commissions the agent was paid on the policy. Either the insurance company or the agent calculates the amount of the unearned commission, and this is included in the payment to the customer. At all times material to this proceeding, Alida High, nee Watson, held a "2-20 license" allowing her to sell property and casualty insurance in Florida. She was employed by the A Able insurance agency and worked in the office located at 124 South Federal Highway, Pompano Beach, Florida. She began working for the A Able insurance agency in July 1999, and was paid a weekly salary plus commissions Mr. Pomerantz and Ms. High were authorized signatories on the A Able insurance agency's Bank of America checking account number 91895073. Ms. High and Mr. Pomerantz signed the signature card on February 18, 2000. Ms. High functioned as a licensed insurance agent in the Pompano Beach office of the A Able insurance agency, and her responsibilities included working with customers to prepare applications for automobile insurance coverage, binding coverage with the insurance companies, receiving payment for the premiums on the policies or for the down payment on a premium finance agreement if the premium was financed, preparing the application package to be sent out to the insurance company, and issuing temporary identification cards. If a customer of the A Able insurance agency paid his or her premium for a policy in full, the cash or check was deposited in the agency's account, and the insurance agency issued a check payable to the insurance company for the premium minus the agency's commission. In this circumstance, Ms. High prepared the application package and placed it on Mr. Pomerantz's desk so that he could write the agency's check and send the application package and check to the appropriate insurance company. Ms. High followed this procedure throughout her employment at the A Able insurance agency, in accordance with the directions Mr. Pomerantz gave her when she began working for the A Able insurance agency. If one of Ms. High's customers financed part of the premium with a premium financing company, Ms. High routinely issued the drafts of the premium finance company for the premium owed for an insurance policy, and she mailed the draft and the application package to the insurance company. Ms. High also occasionally prepared and signed checks on the A Able insurance agency's Bank of America checking account payable to "BCRC"2 to pay for automobile tags and titles issued by Broward County and other, minor, miscellaneous items. During the summer and early fall of 2002, Ms. High prepared checks at Mr. Pomerantz's request and signed his name. Most of these checks were to "BCRC", but several were to pay for office expenses, and one was written to U.S. Security Insurance Company to pay a customer's additional insurance premium. Ms. High wrote checks on the A Able insurance agency account only when she had Mr. Pomerantz's permission to do so. Writing checks was not among her normal responsibilities at the A Able insurance agency, and Ms. High would not write checks on the agency's account without Mr. Pomerantz's express permission because she did not know anything about the account balance. Beginning in the summer of 2002, Mr. Pomerantz's interest in the business of the A Able insurance agency waned, according to Ms. High, and his visits to the office became more and more infrequent. Initially during this period Mr. Pomerantz came in every few days and wrote checks and sent application packages out to insurance companies, but eventually applications for insurance prepared and bound by Ms. High began to accumulate on Mr. Pomerantz's desk. When Ms. High reminded Mr. Pomerantz that the applications on his desk had been bound and needed agency checks cut so they could be sent to the insurance companies, Mr. Pomerantz told her to leave them, that he would take care of it. Ms. High became more and more concerned about the backlog of applications on Mr. Pomerantz's desk, and, when he was in the office, she constantly reminded him of the need to send the applications to the insurance companies. Count I: John Thierwechter In February 2002, John Thierwechter went to the A Able insurance agency to purchase the minimum amount of automobile insurance required by law for a 1993 Nissan Sentra. The total premium quoted was $1,550.00 for personal injury protection/physical damage/comprehensive/collision coverage with Ocean Harbor and for a policy covering reimbursement of the $500.00 deductible on the Ocean Harbor policy. Mr. Thierwechter decided to finance the premium, and Ms. High completed an ETI Finance premium finance agreement, which Mr. Thierwechter signed on February 21, 2002. The first installment on the Premium Finance Agreement signed by Mr. Thierwechter was due on March 23, 2002. Mr. Thierwechter owed a down payment of $289.00 under the Premium Finance Agreement. On February 22, 2002, he paid $200.00 of the down payment in cash, and he received a receipt signed by Mr. Pomerantz. Mr. Thierwechter returned to the agency on February 25, 2002, to pay the remaining $89.00, and he received a receipt signed by Ms. High. Mr. Thierwechter had previously had a bad experience with Ocean Harbor, and, within a few weeks, he purchased automobile insurance coverage from GEICO Casualty Company. This coverage was effective March 16, 2002. In a letter dated March 15, 2002, that he hand-delivered to the A Able insurance agency, Mr. Thierwechter requested that his Ocean Harbor policy be cancelled and that he receive a refund of "the unearned premium" . . . within the next 30 days." On March 16, 2002, Ms. High completed an All Purpose Endorsement requesting that Ocean Harbor cancel Mr. Thierwechter's insurance coverage effective March 16, 2002. This request was received by Ocean Harbor on March 23, 2002. Because Mr. Thierwechter had financed the premium for his Ocean Harbor policy with ETI Finance, Ocean Harbor sent the unearned return premium to ETI Finance, pursuant to the Premium Finance Agreement signed by Mr. Thierwechter. ETI Finance received the cancellation notice and check for the unearned return premium from Ocean Harbor on April 9, 2002. The amount of the unearned return premium was included on the agent's statement for the A Able insurance agency dated May 1, 2002. That statement reflected return premium in the amount of $757.35. This amount was less than the amount Mr. Thierwechter owed ETI Finance because Mr. Thierwechter had not made any of the monthly installments required by the Premium Finance Agreement. As a result, the May 1, 2002, agent's statement recorded a $63.47 debit against the account of the A Able insurance agency. The A Able insurance agency was responsible for paying Mr. Thierwechter the amount of unearned commission, if any, that exceeded the $63.47 it owed to ETI Finance. Pursuant to Mr. Pomerantz's calculations, Mr. Thierwechter was owed $70.16 in unearned commission retained by the A Able insurance agency, and Mr. Pomerantz wrote Mr. Thierwechter a check for that amount on the A Able insurance agency account on July 1, 2002. Mr. Thierwechter picked up the check on or about July 22, 2002. Count III: Shirley Shaffer On or about June 11, 2001, Shirley Shaffer purchased a 1996 Kia Sephia from the Coral Springs Auto Mall. Before Ms. Shaffer could drive the car off of the car lot, the car dealer required her to secure automobile insurance. The dealer called a person to assist Ms. Shaffer, and a man arrived at the dealership within a short period of time. This man presented Ms. Shaffer with a card on which was printed "Wide World of Insurance"; there was no individual's name on the card, but the card showed a Margate, Florida, address. Ms. Shaffer wanted to purchase only the basic coverage, and a U.S. Security application for a "physical damage only" policy was prepared specifying comprehensive and collision coverage only. The application identified the insurance agency as the A Able insurance agency, located in Pompano Beach. According to a notation on the application, the comprehensive and collision insurance coverage was bound with U.S. Security at 3:00 p.m. on June 12, 2001.3 In addition, Ms. Shaffer signed a Summary of Coverages and Cost Breakdown form carrying the name "Wide World of Insurance" and an address in Margate, Florida. This form was also dated June 12, 2001. At some point during the application process at the Coral Springs Auto Mall, the person representing the insurance agency went outside the dealership offices, telling Ms. Shaffer that he was going to take photographs of her car to attach to the application for insurance coverage. Ms. Shaffer financed the premium for her automobile insurance policy, and she paid a deposit of $200.00, which she charged on her credit card. U.S. Security received Ms. Shaffer's application for comprehensive and collision coverage on June 18, 2001, and a Physical Damage Policy was issued to Ms. Shaffer on June 26, 2001, with a policy term of June 13, 2001, to June 13, 2002. Ms. Shaffer received a copy of this policy. The agent identified on the policy was the A Able insurance agency in Pompano Beach. A Notice of Cancellation dated July 18, 2001, was sent to Ms. Shaffer by U.S. Security. In the notice, Ms. Shaffer was advised that her insurance policy would be cancelled effective September 2, 2001, because her application was incomplete. After she received the cancellation notice, Ms. Shaffer called the Margate office of the Wide World of Insurance insurance agency because that was the office whose address was on the card she was given when she applied for the U.S. Security insurance policy. Someone at the Margate office told her that, because she lived in Pompano Beach, her account was handled by the agency's Pompano Beach office and that she should call that office. Ms. Shaffer contacted the Pompano Beach office and spoke to a man who told her that everything about her policy looked fine in the computer and that she should not worry about the letter from U.S. Security. After this conversation, she contacted the Margate office again and was told that they knew nothing about the problem with the policy at that office. Ms. Shaffer then telephoned U.S. Security and was told that her insurance agent needed to take care of the problem, which she was led to believe was minor. Finally, Ms. Shaffer received a letter dated August 7, 2001, from a person named Gary. The letter carried the name "Wide World of Insurance" and the Margate address. In the letter, Gary requested that Ms. Shaffer "PLEASE STOP BY OUR OFFICE SO WE MAY TAKE PICTURES OF THE KIA. ORIGINAL ONES DID NOT COME OUT. ALSO NEED REGISTRATION. IMPT!!!!!" Gary stated in the letter that Ms. Shaffer needed to provide the requested information by August 21, 2001, "to avoid any further delays or cancellation requests from the insurance company." When she received the August 7, 2001, letter, which she recalled was on a Friday, Ms. Shaffer called the Margate office and arranged to bring her car in for photographs at 8:00 a.m. the following Monday.4 Ms. Shaffer arrived at the Margate office slightly before 8:00 a.m., and a few minutes later the man who had taken her application at the Coral Springs Auto Mall arrived at the office and took pictures of her car. Ms. Shaffer also provided a copy of her automobile registration, as requested in the August 7, 2001, letter. Ms. Shaffer also purchased personal liability insurance coverage from the Pompano Beach office of the A Able insurance agency, and she charged the $659.00 premium on her Visa credit card. Ms. Shaffer handled the entire transaction during a telephone conversation with a person in the Pompano Beach office, but she does not know the name of the person with whom she spoke. When Ms. Shaffer went to the Margate office in response to Gary's letter of August 7, 2001, she was given a receipt dated August 6, 2001, for the $659.00 premium she had paid for "addl liability coverage"; it was stated on the receipt that the coverage would be effective from September 1, 2001, to June 12, 2001. The person who signed the receipt was not identified, and the signature is indecipherable. The transaction date shown on Ms. Shaffer's credit card statement was August 7, 2001, and the statement showed that the charge was credited to "A ABLE WIDE WORLD OF I POMPANO BEACH FL." Ms. Shaffer also received a Florida Automobile Insurance Card confirming that she had personal injury protection benefits, property damage liability, and bodily injury liability coverage with U.S. Security; the agent identified on the card was "A Able Wide World of Insurance," with a post office box address in Margate, Florida. U.S. Security cancelled Ms. Shaffer's physical damage policy effective September 2, 2001, because her application was incomplete. U.S. Security sent a check dated September 26, 2001, to ETI Finance for $323.85, which was the unearned return premium owing on Ms. Shaffer's policy. U.S. Security never received an application for the "additional liability coverage" Ms. Shaffer requested and paid for on August 7, 2001. On October 22, 2001, Ms. Shaffer was caught in a flash flood, and she drove her Kia automobile into an area of water that was so deep her automobile floated. At one point, a bus drove through the water near the Kia, and the wake caused the Kia to wash into railroad ties that were used in the yard of a nearby home for landscaping. The railroad ties tore off the front of the car. The damage to the Kia was so extensive that it was considered a total loss. Ms. Shaffer filed a claim with U.S. Security, and received a letter dated October 25, 2001, from Corporate Claim Services, Inc., acknowledging receipt of her claim on behalf of U.S. Security. Ms. Shaffer then received a letter from Corporate Claim Services, Inc., dated October 26, 2001, advising her that her insurance policy with U.S. Security was cancelled effective September 2, 2001. Because Ms. Shaffer had no automobile insurance at the time her car was damaged, she had the Kia repaired at her own expense and incurred substantial expense and inconvenience because she had to arrange for alternative transportation during the year-and-a-half it took to have her car repaired. Ms. Shaffer did not receive any unearned premium or unearned commission refund after the cancellation of her policy. Ms. Shaffer never did business in person with Mr. Pomerantz. In fact, she met him for the first time the week before the final hearing, when her deposition was taken. Count IV: Terensinha Honczarenko On or about March 30, 2001, Terensinha Honczarenko went to the Margate office of the Wide World of Insurance insurance agency to purchase automobile insurance for a newly- purchased Toyota Corolla.5 Ms. Honczarenko had done business with the insurance agency located in Margate for a number of years. A man working at the Margate office named Greg completed Ms. Honczarenko's application for automobile insurance coverage with Southern Group, which she signed.6 The A Able insurance agency in Pompano Beach was identified in the application as the agent producing the application. Coverage on Ms. Honczarenko's policy was bound on the policy on March 30, 2001, and Southern Group received the application on April 4, 2001. The underwriting review of Ms. Honczarenko's application was completed on May 29, 2001, and Southern Group issued a policy to Ms. Honczarenko on June 26, 2001, with an effective date of March 31, 2001, through March 31, 2002. The A Able insurance agency in Pompano Beach was identified on the policy as the insurance agent. Ms. Honczarenko paid a $275.00 down payment on the total policy premium of $1098.00, and financed the remainder of the premium with ETI Finance.7 The Premium Finance Agreement was dated March 30, 2001, and was processed by ETI Finance on April 18, 2001. Ms. Honczarenko made payments pursuant to the Premium Finance Agreement from April 30, 2001, until August 2001. Ms. Honczarenko regularly made these payments at the Margate office, sometimes paying in cash and sometimes paying by check. When she took her August 2001 payment to the Margate office, Greg told her that there was a problem with her insurance policy and that she should come back in two days. When she returned to the Margate office, she was told that her automobile insurance policy had been cancelled. When she asked for her money back, Greg refused. At some point in June 2001, Southern Group sent Ms. Honczarenko a notice at her correct address advising her that she owed $263.00 in additional premium on Southern Group automobile insurance policy. She was given three options: To pay the additional premium by June 28, 2001, and keep the policy in force; to request by July 18, 2001, that Southern Group cancel the policy and refund any unearned premium; or to do nothing, in which case the policy would be cancelled effective July 18, 2001, and the unearned premium refunded. Ms. Honczarenko claims she never received this notice. Southern Group also sent Ms. Honczarenko a notice dated June 21, 2001, to her correct address, advising her that the vehicle identification number on her insurance application did not correspond to the vehicle identification number in their records. Southern Group asked Ms. Honczarenko to check her registration and return the letter to Southern Group with the correct information set forth on the bottom of the letter. Ms. Honczarenko claims she never received this notice. Southern Group also sent a copy of the notice to the "Wide World of Ins Pompano Bch." In a letter dated June 29, 2001, "Gary" advised Ms. Honczarenko that she needed to supply the Margate office with a copy of the registration for her 1985 Toyota. This letter was sent to the same address as the notices sent Ms. Honczarenko by Southern Group. Ms. Honczarenko received the June 29, 2001, letter from the Margate office of the Wide World of Insurance insurance agency.8 Because Southern Group received no response from Ms. Honczarenko to its notice that she owed additional premium on her automobile insurance policy, it cancelled her policy effective July 18, 2001, and sent her a notice of cancellation dated June 29, 2001. The notice was sent to the same address as was the notice of additional premium and the notice that there was a discrepancy in her automobile identification number. Ms. Honczarenko received the notice of cancellation. On August 10, 2001, Southern Group sent a check to ETI Finance for unearned return premium on Ms. Honczarenko's automobile insurance policy in the amount of $572.90. ETI Finance received the check on August 16, 2001, and included Ms. Honczarenko's unearned return premium in the statement it sent to the A Able insurance agency in Pompano Beach on or about August 31, 2001. The statement showed that ETI Finance had received $572.90 in unearned return premium on Ms. Honczarenko's account, and it included a credit to the A Able insurance agency of $71.95. Ms. Honczarenko did not receive any refund of unearned return premium or unearned commission from A Able insurance agency. Count V: Cecil Worrall On June 10, 2002, Cecil Worrall went to the A Able insurance agency in Pompano Beach to renew his automobile insurance within Southern Group. At that time, he had done business with A Able insurance agency in Pompano Beach for eight-to-ten years. Mr. Pomerantz completed Mr. Worrall's application, which Mr. Worrall signed. Mr. Worrall gave Mr. Pomerantz a check in the amount of $570.00 as payment of the full amount of the renewal premium. Mr. Pomerantz gave the application to Ms. High and expected her to bind the coverage and process the application. According to a notation of the application, coverage was bound on June 19, 2002, at 3:46 p.m., and, as was her custom, Ms. High put the application package on Mr. Pomerantz's desk for him to review, prepare an agency check for the premium net commission, and mail the application package and payment to Southern Group. Mr. Worrall's June 10, 2002, check was deposited into the account of "A Able Wide World of Insurance." Southern Group did not receive the application and agency check for the premium net commission on Mr. Worrall's renewal within the 72 hours required by Southern Group's agreement with Mr. Pomerantz. On July 12, 2002, a notice was sent to "Wide World of Insurance Pomp" at the A Able insurance agency address in Pompano Beach advising that Mr. Worrall's binder coverage had expired because Southern Group had not received the application.9 Southern Group advised the A Able insurance agency to check its records to make sure that the application package was not misplaced and further advised that a claim against the binder might result in a claim against its "Errors & Omissions Insurance." The Department of Insurance10 made an inquiry of Southern Group on October 16, 2002, regarding the status of Mr. Worrall's insurance policy, and Southern Group replied in a letter dated October 28, 2002, that, although coverage had been bound for Mr. Worrall, it had no record of having received Mr. Worrall's application and the premium payment or a response to its July 12, 2002, notice to the A Able insurance agency that the binder had expired. After Southern Group received the inquiry from the Department of Insurance, it sent a representative to the A Able insurance agency Pompano Beach office, where the Southern Group application for Mr. Worrall was retrieved. On December 10, 2002, Southern Group issued an automobile insurance policy to Mr. Worrall, with an effective date retroactive to June 26, 2002, the date the policy would have been effective had the application and premium payment been transmitted to Southern Group timely. Count VI: Cynthia Mousel Cynthia Mousel was a client of the A Able insurance agency Pompano office, and primarily Ms. High handled her business. On or about September 18, 2002, Ms. High completed an application within U.S. Security for automobile insurance coverage on behalf of Ms. Mousel. Ms. Mousel signed the application, and coverage was bound on September 18, 2002. Ms. Mousel paid the full premium of $524.00. As was her custom, Ms. High put the application package on Mr. Pomerantz's desk for him to review, prepare an agency check for the premium net commission, and mail the application package and payment to U.S. Security. In October 2002, the Department of Insurance sent an inquiry to U.S. Security regarding the status of Ms. Mousel's automobile insurance policy. In a letter dated October 30, 2002, U.S. Security advised the Department of Insurance that it had no record that, as of that date, it had received an application for automobile insurance coverage under Ms. Mousel's name.11 Count VII: Fred Hublitz Fred Hublitz was a long-time customer of the A Able insurance agency in Pompano Beach. On September 13, 2002, Mr. Hublitz visited the office, and Ms. High completed an Endorsement Request Form on his behalf to add coverage to his automobile insurance policy with Ocean Harbor for a 2000 Mercury Sable automobile. Mr. Hublitz signed the endorsement and wrote a check for $260.00, which was the full amount of the premium to add this coverage. The coverage was bound on September 13, 2002. As was her custom, Ms. High put the endorsement package on Mr. Pomerantz's desk for him to review, prepare an agency check for the premium net commission, and mail the endorsement and payment to Ocean Harbor. The check written by Mr. Hublitz on September 13, 2002, was deposited into the account of "A Able Wide World of Insurance." In a letter dated October 16, 2002, the Department of Insurance inquired of Ocean Harbor regarding the status of Mr. Hublitz's automobile insurance policy. Ocean Harbor responded in a letter dated November 7, 2002, that it had no record of having received the endorsement or premium payment for Mr. Hublitz's 2000 Mercury Sable. An Ocean Harbor representative went to the A Able insurance agency office in Pompano Beach on November 15, 2002, and picked up applications and endorsements for automobile insurance coverage. Among these documents was Mr. Hublitz's endorsement, and Ocean Harbor added the 2000 Mercury Sable to Mr. Hublitz's existing Ocean Harbor automobile insurance policy, effective retroactively.12 Count VIII: Lori O'Connell Lori O'Connell had obtained automobile insurance coverage from the A Able insurance agency in Pompano Beach. She had received a notice that her policy with Southern Group was to expire on August 14, 2002, and a friend, Joseph Balsamo, went to the A Able insurance agency office on July 9, 2002, and gave Ms. High a check for $364.00, which was full payment for the policy renewal. Ms. High bound the renewal on July 12, 2002. As was her custom, Ms. High put the application package on Mr. Pomerantz's desk for him to review, prepare an agency check for the premium net commission, and mail the renewal application package and payment to Southern Group. A month later, Ms. O'Connell had not received an insurance card or renewal policy, and Mr. Balsamo telephoned the A Able insurance agency Pompano Beach office and inquired about the policy. Ms. High told him that the insurance company was slow in processing the renewals and that Ms. O'Connell should receive the materials shortly. Ms. High knew, at the time, that the renewal application was sitting on Mr. Pomerantz's desk, waiting for him to write a check and mail the application and payment to Southern Group. Southern Group did not receive the renewal application and agency check for the premium net commission on Ms. O'Connell's renewal within the 72 hours required by Southern Group's agreement with Mr. Pomerantz. On August 2, 2002, a notice was sent to "Wide World of Insurance Pomp" at the A Able insurance agency address in Pompano Beach advising that Ms. O'Connell's binder coverage had expired because Southern Group had not received the renewal application.13 Southern Group advised the A Able insurance agency to check its records to make sure that the application package was not misplaced and further advised that a claim against the binder might result in a claim against its "Errors & Omissions Insurance." The Department of Insurance made an inquiry of Southern Group on October 16, 2002, regarding the status of Ms. O'Connell's renewal policy, and Southern Group replied in a letter dated October 28, 2002, that, although coverage had been bound for Ms. O'Connell on July 12, 2002, it had no record of having received Ms. O'Connell's renewal application and the premium payment or a response to its August 2, 2002, notice to the A Able insurance agency that the binder on Ms. O'Connell's renewal had expired. After Southern Group received the inquiry from the Department of Insurance, it sent a representative to the A Able insurance agency Pompano Beach office, where the Southern Group renewal application for Ms. O'Connell was retrieved. On November 26, 2002, Southern Group issued an automobile insurance policy renewal to Ms. O'Connell, with an effective date retroactive to August 14, 2002, the date the renewal would have been effective had the application and premium payment been transmitted to Southern Group timely. Count IX: Carol Scott On July 10, 2002, Ms. High prepared an application for automobile insurance coverage with Southern Group on behalf of Carol Scott. The premium for the coverage specified in the application was $655.00. Ms. High bound the coverage on July 10, 2002. Southern Group did not receive Ms. Scott's application and the agency check for the premium net commission within the 72 hours required by Southern Group's agreement with Mr. Pomerantz. On August 2, 2002, a notice was sent to "Wide World of Insurance Pomp" at the A Able insurance agency address in Pompano Beach advising that Ms. Scott's binder coverage had expired because Southern Group had not received the application. Southern Group advised the A Able insurance agency to check its records to make sure that the application package was not misplaced and further advised that a claim against the binder might result in a claim against its "Errors & Omissions Insurance." The Department of Insurance made an inquiry of Southern Group on October 16, 2002, regarding the status of Ms. Scott's automobile insurance policy, and Southern Group replied in a letter dated October 28, 2002, that, although coverage had been bound for Ms. Scott on July 10, 2002, it had no record of having received Ms. Scott's application and the premium payment or a response to its August 2, 2002, notice to the A Able insurance agency that the binder on Ms. Scott's application had expired. After Southern Group received the inquiry from the Department of Insurance, it sent a representative to the A Able insurance agency Pompano Beach office, where the Southern Group application for Ms. Scott was retrieved. On November 26, 2002, Southern Group issued an automobile insurance policy renewal to Ms. Scott, with an effective date retroactive to July 11, 2002, the date the renewal would have been effective had the application and premium payment been transmitted to Southern Group timely. Count X: Janice Misconis On or about June 25, 2003, Janice Misconis visited the A Able insurance agency office in Pompano Beach to renew her Ocean Harbor automobile insurance policy. Ms. High prepared a Summary of Coverages and Premium covering a 1990 Buick Skylark. Ms. High bound the coverage on June 24, 2002, for a renewal with a policy period commencing July 8, 2002. The premium shown on the summary totalled $570.00, and Ms. High prepared a receipt affirming that Ms. Misconis had paid the $570.00 renewal premium in full on June 25, 2002. In a letter dated October 16, 2002, the Department of Insurance inquired of Ocean Harbor regarding the status of Ms. Misconis's automobile insurance policy. Ocean Harbor responded in a letter dated November 7, 2002, that it had no record of having received an application or premium payment for Ms. Misconis's policy renewal. An Ocean Harbor representative went to the A Able insurance agency office in Pompano Beach on November 15, 2002, and picked up applications and endorsements for automobile insurance coverage. Among these documents was Ms. Misconis's renewal application, and Ocean Harbor issued a policy of automobile insurance coverage, effective retroactively to the date it would have been effective had the application and premium payment been forwarded to Ocean Harbor timely.14 Count IX: Diane Carroll In October 2001, Diane Carroll, a/k/a Diane Heinen, purchased an automobile insurance policy with the Aires Insurance Company ("Aires") from the Wide World of Insurance insurance agency in Margate. After she had an accident and her car was sitting in a repair shop, she cancelled this policy. In late January 2002, Ms. Carroll went again to the Wide World of Insurance office in Margate, and a person working in that office took her application for another automobile insurance policy. The policy was placed with Aires, and the total premium was $2,637.00. The effective date of the policy was February 1, 2002, for the term of one year. Ms. Carroll made a down payment of $660.00, and financed the balance of the premium with Assured Premium Finance Corporation, a company that is serviced by ETI Finance. Ms. Carroll made all of the payments required under the Premium Finance Agreement she signed in January 2002. Ms. Carroll took each of the payments to the Wide World of Insurance insurance agency office in Margate. On January 8, 2003, Ms. Carroll had an automobile accident. She called the Wide World of Insurance insurance agency in Margate to report a claim, and she was told that she did not have an insurance policy, that Aires "went under." The person at the Margate office of the Wide World of Insurance insurance agency told Ms. Carroll that she had been sent notification by mail. Ms. Carroll requested a copy of the letter, which she claims she did not receive. The letter is dated November 27, 2002, and bears the letterhead of "Wide World of Insurance," with a Margate post office address. The letter is addressed to Ms. Carroll at her then-correct address and provides notice that Aires has been "PLACED IN LIQUIDATION ON NOVEMBER 14, 2002, BY THE STATE OF FLORIDA. ALL INSURANCE POLICIES WITH THE ABOVE- CAPTIONED INSURANCE COMPANY SHALL CEASE AS OF 12:01 AM, DECEMBER 14, 2002. PLEASE CONTACT OUR OFFICE IMMEDIATELY TO REPLACE THIS INSURANCE COVERAGE." The name "A Able Wide World of Insurance" is included on the letter. There is no indication on the letter that it was sent by certified mail.15 Summary Count I: Mr. Thierwechter The evidence presented by the Department is sufficient to establish that the refund of unearned commission on Mr. Thierwechter's cancelled Ocean Harbor automobile insurance policy was not made timely by the A Able insurance agency, but was held by the A Able insurance agency from early May 2002, when the A Able insurance agency received the agent statement from ETI Finance showing the debit to the A Able insurance agency's account, until July 1, 2002, when Mr. Pomerantz issued a check for the amount of unearned commission the A Able insurance agency owed to Mr. Thierwechter. Count III: Ms. Shaffer The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that either Mr. Pomerantz or the Pompano Beach office of the A Able insurance agency was involved in any meaningful way in any transactions relating to Ms. Shaffer's physical damage automobile insurance policy. Although, during the summer and fall of 2001, the A Able insurance agency located in Pompano Beach and the Wide World of Insurance agency located in Margate had merged and were doing business as a single entity, Mr. Pomerantz was the agent in charge of the Pompano Beach office. There was no evidence presented to establish that Mr. Pomerantz ever operated in the Margate office or supervised the agents in that office. Even though the Pompano Beach office of the A Able insurance agency is identified as the agent on Ms. Shaffer's U.S. Security policy, there was no creditable evidence presented to establish that anyone in the Pompano Beach office prepared the application for Ms. Shaffer's physical damage insurance policy or was responsible for servicing the policy. The evidence presented by the Department regarding the "additional liability coverage" purchased by Ms. Shaffer is scanty. Although Ms. Shaffer handled the transaction over the telephone with a man in the Pompano Beach office of the insurance agency and the charge on Ms. Shaffer's credit card was credited to the A Able insurance agency in Pompano Beach, there is no evidence identifying the person who prepared the receipt for the premium payment. The totality of the evidence presented by the Department is not sufficient to support an inference that Mr. Pomerantz was personally involved in the transaction or that he knew or should have known of the transaction. Count IV: Terensinha Honczarenko The evidence presented by the Department is not sufficient to establish that Mr. Pomerantz caused Ms. Honczarenko's automobile insurance policy to be cancelled, either directly or through his negligence or the negligence of any of the agents working in the A Able insurance agency Pompano Beach office. All of her dealings were with the Margate office, and there was no evidence that a copy of the notice from Southern Group advising Ms. Honczarenko that she owed additional premium on her policy was sent to the A Able insurance agency at the Pompano Beach address or that it was the practice of Southern Group to send such notices to agents as well as to its insureds.16 The evidence presented by the Department is, however, sufficient to establish that A Able insurance agency received notice from ETI Finance that it owed Ms. Honczarenko a refund of unearned return premium in the amount of $71.95 and that Ms. Honczarenko did not receive this refund. Counts V, VI, VII, VIII, IX, and X: Mr. Worrall, Ms. Mousel, Mr. Hublitz, Ms. O'Connell, Ms. Scott, and Ms. Misconis The evidence presented by the Department is sufficient to establish that Mr. Pomerantz was personally responsible for writing agency checks for premium net commission and for sending applications for automobile insurance coverage generated in the A Able insurance agency Pompano Beach office and premium checks received in that office to the various insurance companies. During the summer and early fall of 2002, Ms. High constantly reminded Mr. Pomerantz that the applications accumulating on his desk needed attention, and Mr. Pomerantz assumed the responsibility for handling the applications when he told her that he would handle them. The evidence presented by the Department is also sufficient to establish that Mr. Pomerantz failed to forward the applications and premiums for Mr. Worrall, Ms. Mousel, Mr. Hublitz, Ms. O'Connell, Ms. Scott, and Ms. Misconis and that the A Able insurance agency had the benefit of the premium payments made by these individuals from the time the coverage binders expired until such time as the policy applications and payments were received by the various insurance companies who issued policies with coverage retroactive to the date of the applications and premium payments. Count XI: Ms. Carroll The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that either Mr. Pomerantz or any employee of the Pompano Beach office of the A Able insurance agency was involved in the transactions with respect to Ms. Carroll's automobile insurance policy with Aires. All of Ms. Carroll's business dealings with regard to this policy were at the Margate office of the Wide World of Insurance insurance agency. Even though the name "A Able Wide World of Insurance" appears on the letter dated November 27, 2002, notifying Ms. Carroll that Aires was in liquidation and that she needed to replace her automobile insurance policy, there was no evidence presented to establish that anyone in the Pompano Beach office prepared the application for Ms. Carroll's policy or had any dealings with her on this or any other automobile insurance policy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order finding that Jay Lawrence Pomerantz 1. Violated Sections 626.561(1), 626.611(4), (7), and (10), and 626.621(2) and (6), Florida Statutes (2002) with respect to Counts I, IV, V, VI, VII, VIII, IX, and X of the Amended Administrative Complaint filed October 14, 2003; Dismissing Counts II, III, and XI of the Amended Administrative Complaint20; and Revoking the property and casualty insurance agent's license of Jay Lawrence Pomerantz. DONE AND ENTERED this 30th day of April, 2004, in Tallahassee, Leon County, Florida. S PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2004.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times relevant to this proceeding, respondent William J. Hartnett, Sr. was licensed as an ordinary life including disability, general lines, surplus lines and disability insurance agent. He has been in the insurance business since 1942 and was first licensed in 1947. Respondent originally organized the Southern American Fire Insurance Company. For the first year or so, he was its sole employee on a nonsalary basis and was nonsalaried for the first ten years of the company's operation. From 1965 on, respondent did not hold a 220 lines license with Southern American, as he did with other insurance entities. Respondent did not sign policies as agent for Southern American. With Southern American, respondent acted as a general agent and was authorized by the board of directors to receive a five percent override commission on the total volume of business. On or about October 27, 1975, a seizure order was entered by the Circuit Court of Leon County which directed the Florida Department of Insurance to take over the business and financial affairs of Southern American. This company has since gone into liquidation pursuant to Chapter 631, Florida Statutes. The Southern American March 31 and June 30, 1975, quarterly statements were prepared by Mr. R.L. Huard, the then assistant treasurer of Southern American, were signed by the respondent, and were filed with the Department of Insurance. The work papers for those statements had been approved by the respondent. Mr. Huard had been instructed by respondent when he was first hired in 1972 not to show on the quarterly statements the over 90-day old balances because they would all be "cleaned up" at the end of the year. Such balances had, in fact, been paid at the end of each of the two years that Mr. Huard was with the company up until the time the Department took over in 1975. It was the respondent's testimony that had the seizure order not been entered, the agencies' lines of credit would still have been open and that all balances could have been collected through September of 1975. The March 31, 1975, and June 30, 1975, quarterly statements of Southern American filed with the Department of Insurance reflected a substantial amount of agents' balances that at the time of reporting were over 90 days old. The elimination of such balances from those two statements would have left Southern American impaired under usual insurance accounting practices as reflected in the Florida Statutes. The over-90 day old agents' balances were due from agencies in which respondent had an interest as an officer, director or stockholder. In 1969, various officials of the Department of Insurance had discussions with the respondent regarding agents' balances which were over ninety days old. On or about December 28, 1973, respondent did deposit the proceeds of certain reinsurance treaties in the amount of $13,218.98 into the account of Southern American. This findings is determined from the testimony of respondent and from a copy of the check and a deposit slip received into evidence as Exhibit M. The deposit slip illustrates that the $13,218.96 check was one of two checks comprising a total deposit of $30,857.12. As a result of information made available to the parties shortly before the hearing, it was stipulated that there never was a direct reinsurance treaty between Southern American and Cottonbelt Insurance Company. It was further stipulated that Southern American did submit single risk policies on a facultative basis through General Aviation Insurance Brokers for Southern American to D.O. Howell and Company, Ltd., in London, England, which in turn placed policies so submitted with Cottonbelt through other brokers. The Department offered no other evidence concerning the checks amounting to $16,600.00 referred to in Count V. As noted above, respondent was authorized by the board of directors to receive as general agent for Southern American a five percent override on all premiums. He was also authorized to receive an annual salary and certain bonuses. For the years 1974 and 1975, respondent did not receive his total annual salaries. The total premium written in Southern American through North Star Insurance Agency from 1968 through 1975 was approximately $700,000.00. Monies owed Southern American by North Star were paid by checks made payable to the respondent, as agent. In his capacity as general agent of Southern American, respondent did receive funds in the approximate amount of $45,000.00 from subagent North Star in payment of premiums due Southern American on policies of insurance issued by Southern American through North Star. Such funds were not deposited into the account of Southern American by respondent, but were instead retained by respondent as an offset against commissions end salary due him from Southern American. This occurred in 1975. When the seizure order was entered in October of 1975, the monies due Southern American from North Star were carried on the books of Southern American as accounts receivable.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that the licenses of respondent to engage in the business of insurance be suspended for a period of six (6) months. Respectfully submitted and entered this 10th day of July, 1979, in Tallahassee, Florida. COPIES FURNISHED: Honorable William Gunter State Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32301 S. Strom Maxwell, Esquire Department of Insurance Suite 428-A, Larson Building Tallahassee, Florida 32301 Robert J. Kelly, Esquire Rogers, Towers, Bailey, Jones and Gay Post Office Box 1872 Tallahassee, Florida 32302 DIANE D. TREMOR 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 10th day of July, 1979.
Findings Of Fact The Respondent, Jeffrey Allan Azis, is licensed by the Florida Department of Insurance as a General Lines Agent and did business as the American Automobile Insurance Agency, Inc., 603 NW 10th Avenue, Gainesville, Florida, during the period of time delineated in the Amended Administrative Complaint. The Respondent transacted the sale of motor vehicle insurance and an automobile club membership to the persons identified in Counts I, II, IV and V of the Administrative Complaint. Each of the persons identified in Counts I, II, IV and V of the Amended Administrative Complaint was charged for membership in an automobile club by the Respondent or his employees. With respect to Counts I through VI of the Amended Administrative Complaint, the following findings are made: Count I James E. Rippy, Jr., purchased automobile insurance directly from the Respondent at the American Auto Insurance Agency, Inc., Gainesville, Florida, on or about June 10, 1979. He requested the minimum coverage necessary to insure his vehicle to obtain a license tag. (Vol. 1, T-35) Mr. Rippy did not request motor club coverage and was not aware of what a motor club covered. (Vol. 1, T- 32) Sometime after purchasing insurance from the Respondent, Mr. Rippy discovered that his coverage included membership in a motor club. (Vol. 1, T- 33-34) At the Respondent's office, Mr. Rippy and his wife Norma, signed documents which included a membership application in Nation Motor Club with a membership fee of $25.00 [Respondent Exhibit 2(1)] and an application for coverage which included the following disclosure statement also signed by Mr. Rippy in addition to the application form: I understand the Nation Motor Club (NMC) membership applied for this date 6/30/79, through the American Auto Insurance Agency, Inc. is a separate item, that pays in addition to my auto insurance policy. I understand the additional charge for this coverage is included with my down payment. Applicant (signed) Mr. Rippy was not pressured by the Respondent to sign these documents and could have taken additional time to read and ask questions if he had desired. (Vol. 1, T-49-50) write and do mathematics at a basic level. Count II On or about December 4, 1979, Deborah M. Zapp purchased automobile insurance from American Auto Insurance Agency, Inc. Gainesville, Florida, from an employee of the Respondent's identified as "Judy". (Vol. 1, T-17) Ms. Zapp was unclear regarding the coverage she requested from Judy, but was sure that she would not have purchased motor club membership since she regarded it as an "extra". (Vol. 1, T-18-20) While at the agency on December 4, 1979, Ms. Zapp was asked to sign various papers which she read before signing. (Vol. a, T-20) These included a membership application in Nation Motor Club (Respondent's Exhibit 1) and an application form which contained the following disclosure statement: I understand the Nation Motor Club membership applied for this date 12/4/79, though the American Auto Insurance Agency, Inc. is a separate item, that pays in addition to my auto insurance policy. I understand the additional charge for this coverage is included in my down payment. Applicant (signed) (Respondent's Exhibit 1) Ms. Zapp was not rushed while reading the documents presented to her for signing and could have taken as much time as she wanted to go over them. (Vol. 1, T-20) However, notwithstanding reading and signing the membership application and disclosure statement regarding the motor club, Ms. Zapp did not know she had purchased motor club coverage when she left the Respondent's office. (Vol. 1, T-21) Ms. Zapp is a graduate of Sante Fe Community College and attended a university for one year following her graduation. (Vol. 1, T-16) At the hearing on February 5, 1981, she appeared bright and fairly assertive. Count III In Count III, Petitioner alleges that the Respondent in the conduct of business under his license violated various provisions of the Insurance Code. The allegations of Count III requires an application of the facts found in Counts I and II to Sections 626.9521, 626.9541(11)(a), 626.9541(5)(a), 626.9541(15)(b), and 626.621(b), Florida Statutes. Count III is duplicated by Count VI and calls for legal conclusions which will be discussed in the conclusions of law section of this Recommended Order. Count IV The deposition of Charles D. Smith was admitted into evidence as Petitioner's Exhibit 10. Mr. Smith currently holds an insurance license and has a bachelor's degree. (Petitioner's Exhibit 10 at 4) Mr. Smith purchased automobile insurance from the American Auto Insurance Agency, Inc. on or about May 1, 1980 (Petitioner's Exhibit 10 at Appendix) Mr. Smith thought he was purchasing only Personal Injury Protection (PIP). (Petitioner's Exhibit 10 at 4) In order to get an auto tag, Mr. Smith requested the minimum coverage. (Petitioner's Exhibit 10 at 5) Like Mr. Rippy and Ms. Zapp, Mr. Smith signed an application for motor club membership and disclosure statement stating he understood he was purchasing motor club coverage at the time of his application for insurance. (Petitioner's Exhibit 10 at 7) Mr. Smith intended to purchase the minimum amount of insurance at the lowest price but did not require of either the Respondent or his employees whether motor club coverage was included in the price quoted. (Petitioner's Exhibit 10 at 8,9) Neither the Respondent nor his employees orally explained motor club coverage to Mr. Smith. At the bottom of Mr. Smith's insurance application the following disclosure statement was signed by him: I understand the interstate membership applied for this date 5/1/79, through the American Auto Insurance Agency, Inc. is a separate item that pays in addition to my auto insurance policy. I understand the additional charge for this coverage is included in my down payment. Applicant (signed) (Petitioner's Exhibit 10 at Appendix) Mr. Smith's decision to purchase from the Respondent was based solely on cost and not on any information provided by the Respondent or his employees. (Petitioner's Exhibit 10 at 13). Count V The deposition of Richard B. Divins was admitted into evidence as Petitioner's Exhibit 11. Mr. Divins' testimony parallels the other witnesses in that he also signed an application for motor club membership and a disclosure statement acknowledging the purchase and price. (Petitioner's Exhibit 11 at 11, 15, 16, 26) He purchased insurance and motor club coverage on July 13, 1979, from an employee of the Respondent at American Auto Insurance Agency, Inc., 603 NW 10th Avenue, Gainesville, Florida. (Petitioner's Exhibit 11 at 4,5) Mr. Divins thought he was purchasing only minimum liability insurance and was unaware that he had also purchased motor club coverage. (Petitioner's Exhibit 11 at 7,8) Mr. Divins is a senior in the School of Architecture at the University of Florida. (Petitioner's Exhibit 11 at 4. Count VI In Count VI, Petitioner alleges that the Respondent in the conduct of business under his license violated various provisions of the Insurance Code. Count VI requires an application of the facts found in Counts IV and V to Sections 626.9521, 626.9541 (11)(a), 626.9541(5)(a), 626.9541(15)(b) and 626.621(b), Florida Statutes. Count VI duplicates Count III and calls for legal conclusions and will therefore, be discussed in the legal conclusion section of this Recommended Order. Assuming that the witnesses who testified at the final hearing were representative of the Respondent's customers, his business was generally directed at persons who desired minimum automobile insurance coverage at the lowest possible price. (Vol. 1, T-17 and 31, Petitioner's Exhibit 11 at 7-8, Petitioner's Exhibit 10 at 8,9) An economic incentive existed to sell motor club memberships among agents whose customers desired minimum coverage due to the high commission rates associated with motor club policies. (Petitioner's Exhibit 9, Vol. 1, T-94-95, 97) Mr. Andrew Beverly was qualified as an expert witness on insurance matters and testified on behalf of the Respondent. (Vol. 1, T-29) Mr. Beverly owns the Florida Insurance School, serves as a consultant for several hundred insurance agencies and is a member of the Advisory Committee on Insurance Education of the Florida Insurance Department. (Vol. 1, T-78-79) A study by Mr. Beverly completed in 1979 for the Professional Insurance Agents Association of Florida demonstrated that insurance agents have been contacted by claimants or attorneys for claimants for failure to provide coverage or what is known in the industry as "errors and omissions." (Vol. 1, T-81-82) The Respondent is the first agent that Mr. Beverly has ever encountered who had difficulties arising from selling too much coverage. (Vol. 1, T-82-83) Mr. Beverly's conclusion concerning the value of motor club coverage and supplemental coverage generally is shared by Dr. Ronald T. Anderson, a colleague of Mr. Beverly's on the national faculty of the Society of Certified Insurance Counselors and an Insurance Commissioner of Colorado. (Vol. 1, T-83-85) In particular regard to this case, Mr. Beverly examined the application and disclosure statement signed by the witnesses for the Petitioner and responded to questions from counsel as follows: Q. Now, these documents -- if you would just take a look through those, you'll see in Respondent's Exhibits 3 and 4, I believe -- Respondent's Exhibit 1, for example, where in boldface type, the applicant for the insurance signs a statement regarding Motor Club. is that a common practice in the industry? A. It's a practice that is becoming extremely common with the careful and appropriate insurance agents to have a thorough documentation of each coverage, accepted or rejected by an injured. Q. And why is that? A. Partially because of the high incidents (sic) of Errors and Omissions insurance, claims coming in against insurance agents, and then partly so that the client himself will be completely aware of what it is that he's throwing away when he rejects a coverage so he'll know he hasn't bought that. Q. Does the type of procedure meet the standards of the industry in Florida for fire and casualty agents? A. It exceeds them. Q. Okay. What else, in your opinion, could Mr. Azis do in this type of situation other than have him sign the statements and advise him as he has testified to. A. Mr. Woods, there's nothing an insurance agent could possibly do, in my opinion, beyond explaining the coverage to the insured and then having him sign in his own handwriting. I can't believe that there is anything else that he could do. He's being as cautious as he possibly can. Q. You're not aware of any other practices or procedures that might even be better than this? A. I can't think of anything that you could do that could add to this great amount of documentation of the insurers election of what they purchased. Q. In your experience, is it common for people who have bought insurance to come back and question coverages? A. Yes, sir, it happens all the time. I have more than a hundred insurance agencies under contract at this hour, and I am constantly receiving long distance calls from agents: What do you do with this? What's the answer to it? Q. So, that's why they require the need for this documentation? A. Yes, sir. (Vol. 1, T-85-87) Mr. Beverly's testimony was not rebutted by the Petitioner and is accepted as credible. Although Respondent's license as a general lines agent in Florida expired as of August 30, 1980, he retains eligibility to become licensed for a period of two years from the date of licensure. Section 626.221(3)(f), Florida Statutes. (Petitioner's Exhibit 8)
Recommendation It is therefore RECOMMENDED that the Amended Administrative Complaint filed against the licensee, Jeffrey Allan Azis, be dismissed. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 3rd day of June, 1981. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of June, 1981. COPIES FURNISHED: Richard P. Harris, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301 David Yon, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301 Thomas F. Woods, Esquire 1030 East Lafayette Street Suite 112 Tallahassee, Florida 32301 =================================================================
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint dated October 24, 2008, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department is the state agency responsible for licensing, regulating, and imposing discipline on insurance agents in Florida. See §§ 626.016(1); 626.601, Fla. Stat. Ms. Sykes was licensed as a 2-14 "life including variable annuity agent" and as a 2-20 general lines agent in January 1998. At the times pertinent to this proceeding, Ms. Sykes worked at an insurance agency owned by David J. Heiny ("Heiny Agency"). Deena Buell also worked for the Heiny Agency, and Ms. Sykes, Ms. Buell, and Mr. Heiny were the only three employees who were licensed as 2-20 general lines agents. The remaining two employees of Heiny Agency during the times pertinent to this proceeding held 4-40 licenses as customer service representatives. Certificate of Liability Insurance The Heiny Agency marketed the insurance products of the Allstate Insurance Company ("Allstate") and also the products of other insurance companies at the times material to this proceeding. In 2003, Mr. Heiny decided to expand his business to include workers' compensation insurance. In July 2003, he submitted an application to the Florida Workers' Compensation Joint Underwriting Association ("FWCJUA"), the insurer of last resort in Florida for workers' compensation insurance, for authority to submit applications to it for workers' compensation insurance. Mr. Heiny was notified by the FWCJUA in a letter dated July 29, 2003, that he was authorized to submit workers' compensation insurance applications to the FWCJUA until July 29, 2004. Mr. Heiny did not have authority to bind coverage for the FWCJUA, nor did he have authority to issue certificates of liability insurance showing workers' compensation insurance coverage through the FWCJUA. Under his agreement with the FWCJUA, Mr. Heiny was required to meet with and explain the workers' compensation insurance coverage to applicants and to sign all of the application forms. Mr. Heiny was unfamiliar with workers' compensation insurance, and he intended for Ms. Buell to handle all of the workers' compensation insurance business because she had experience at another agency with workers' compensation insurance. Mr. Heiny's office submitted one application for workers' compensation insurance, which was rejected, and he decided that the FWCJUA required too much paperwork. Mr. Heiny decided that he did not want to be involved with workers' compensation insurance, and he did not apply to renew his authorization to submit workers' compensation insurance applications to the FWCJUA. As a result, his authority to submit workers' compensation insurance applications to the FWCJUA expired on July 29, 2004. Mr. Heiny informed both Ms. Sykes and Ms. Buell that he did not intend to renew his authorization with the FWCJUA. Ms. Sykes is fluent in Spanish and was the only licensed agent at the Heiny Agency who spoke Spanish at the times pertinent to this proceeding. Because of her fluency in Spanish, Ms. Sykes worked with the Heiny Agency's Spanish- speaking customers, and most of her business consisted of referrals from these customers. One of Ms. Sykes' long-standing customers was Mayola Campos, who owned Form Construction, Inc. ("Form Construction"), with her husband, Fortino Campos, and Ms. Sykes handled the commercial insurance for Form Construction. Mrs. Campos came into the Heiny Agency's office regularly to pay premiums and to discuss with Ms. Sykes's the corporation's various insurance policies and changes in coverage. As a result, Ms. Sykes and Mrs. Campos were well-acquainted, and Ms. Sykes received a number of referrals from Mrs. Campos. Form Construction was a trim and roofing company working in the construction industry. According to Ms. Sykes, Mrs. Campos came to her in or around July 2004 seeking workers' compensation insurance. Ms. Sykes was not familiar with workers' compensation insurance because she had never sold that type of insurance, and it was not a product normally sold through the Heiny Agency. Nonetheless, she completed an application and submitted it to Ms. Buell for processing. At the time, Ms. Sykes was aware that Mr. Heiny did not intend to renew his authority to submit applications for workers' compensation insurance to the FWCJUA and that the authority would expire at the end of July 2004. Ms. Sykes cannot recall hearing anything further about Form Construction's July 2004 application for workers' compensation insurance. She was going through a particularly difficult divorce proceeding and was not working full-time at the agency. In addition, Ms. Buell was working from her home so she could care for her infant and young daughter, and Ms. Sykes and Ms. Buell were not in regular communication. Without confirming that the FWCJUA had issued workers' compensation insurance to Form Construction, Ms. Sykes signed a Certificate of Liability Insurance for Form Construction and sent it to that company. The certificate, dated October 12, 2004, reflected that, in addition to general liability and automobile insurance, Form Construction had workers' compensation insurance through the FWCJUA that was effective from October 16, 2004, to October 16, 2005. The certificate holder was identified on the certificate as Gold Construction. Ms. Sykes was aware of the purpose of a Certificate of Liability Insurance since she routinely prepared and signed them for insurance companies whose products were marketed by the Heiny Agency. A Certificate of Liability Insurance is used to establish that a person or company has liability, automobile, and/or workers' compensation insurance. Although some insurance companies allow insurance agents to issue certificates of liability insurance, only the FWCJUA issues certificates of liability insurance for the workers' compensation insurance coverage it provides. The only exception to this policy is when an agent requests authority to issue a certificate of liability insurance for a specific insured for a specific purpose. The agent must request this authority in writing and specify the purpose of the certificate; the FWCJUA must give approval in writing to the agent before the agent can issue the certificate. The agent must then send a copy of the certificate to the FWCJUA for its records. In the construction industry, a certificate of liability insurance is presented to a contractor to establish that a company working on a project as a subcontractor has workers' compensation insurance. If a general contractor hires a subcontractor that does not have workers' compensation insurance, the general contractor is responsible for providing workers' compensation insurance for the employees of the uninsured subcontractor who worked on the contractor's job. See § 440.10(a), (b), and (c), Florida Statutes. Form Construction presented the Certificate of Liability Insurance signed by Ms. Sykes to Gold Construction, which was, at the times pertinent to this proceeding, a qualified contractor business. Gold Construction hired general contractors, which, in turn, hired subcontractors to work on its projects. The subcontractors were paid by Gold Construction, and it required all subcontractors to present a certificate of liability insurance showing that they had general liability and workers' compensation insurance at the time the subcontractors were hired. Sometimes, the subcontractor would provide the certificate directly to Gold Construction, and sometimes Gold Construction would call the subcontractor's insurance agency and request that the certificate be sent to it, directly. The Certificate of Liability Insurance signed by Ms. Sykes was presented to Gold Construction as evidence that Form Construction had liability and workers' compensation insurance, and, in November 2004, Gold Construction hired Form Construction to do truss work on two construction projects. Gold Construction was subsequently audited by its workers' compensation insurance carrier, and the auditor determined that that Form Construction did not, in fact, have workers' compensation insurance and that the Certificate of Liability Insurance was bogus. Gold Construction was, therefore, assessed an additional $12,000.00 in workers' compensation insurance premium to add coverage for Form Construction's employees. The only records the FWCJUA has relating to Form Construction is an application for workers' compensation insurance for Fortino and Mayola Campos, d/b/a Form Construction, which was signed by Mr. Heiny and dated August 27, 2003; a date stamp on the application shows that it was received by the FWCJUA on September 17, 2003. In a letter dated October 16, 2003, the FWCJUA notified Mr. Heiny that the application for Form Construction was being returned with no coverage having been bound, and there is nothing in the records of the FWCJUA showing that it received another application for workers' compensation insurance for Form Construction or that it provided compensation insurance for Form Construction. Automobile insurance endorsement The Heiny Agency wrote commercial automobile insurance through Allstate. Ms. Sykes joined the agency in 1995, after having worked for another agency that marketed Allstate insurance products. Ms. Sykes was recommended by one of Allstate's district managers, and her familiarity with the Allstate computer system and her fluency in Spanish were considered by Mr. Heiny to be very important contributions to his agency. Form Construction had commercial automobile insurance coverage with Allstate, which was written through the Heiny Agency. Ms. Sykes was the only agent at the Heiny Agency that worked with Mrs. Campos on insurance matters. Mrs. Campos visited the Heiny Agency's office frequently to pay premiums and to discuss the various insurance policies issued to Form Construction. Mrs. Campos always spoke with Ms. Sykes when she came into the office because none of the other agents or employees of the agency spoke Spanish. Form Construction's commercial automobile insurance policy came up for renewal in April 2005. When Mrs. Campos came in to pay the renewal premium, she and Ms. Sykes discussed raising the policy's bodily injury liability limits from $25,000.00 per person and $50,000 per occurrence. Mrs. Campos told Ms. Sykes that she needed to speak to her husband before she could raise the liability limits. Ms. Sykes did not hear anything from Mrs. Campos until June 2005, when Mrs. Campos came into the office and requested that Ms. Sykes add another vehicle to Form Construction's commercial automobile insurance policy. Ms. Sykes again advised Mrs. Campos that she should consider raising the policy's bodily injury liability coverage limits to at least $250,000. Mrs. Campos asked Ms. Sykes how much such an increase in coverage would cost, and Ms. Sykes went into the Allstate computer system and partially prepared an endorsement to the automobile insurance policy showing the increased limits so she could get a quote for Mrs. Campos on the price. Ms. Sykes did not submit the endorsement at that time, and it remained pending in the Allstate computer system. On or about July 12, 2005, Mrs. Campos visited the Heiny Agency's office and reported to Ms. Sykes that Mr. Campos had been involved in an automobile accident while driving a vehicle owned by Form Construction and that he had hit a person on a bicycle. Ms. Sykes advised her that her commercial automobile bodily injury liability coverage limits were $25,000.00 per person and $50,000.00 per occurrence. Ms. Sykes also reminded Mrs. Campos that she had advised her several times to raise the Form Construction's bodily injury liability limits. Ms. Sykes immediately submitted the claim to the Allstate claims Department, where it was assigned to Thomas Burger. On July 15, 2005, Mrs. Campos contacted Ms. Sykes and told her to raise the bodily injury liability limits in Form Construction's automobile insurance policy to $500,000.00 per person and $500,000.00 per occurrence. Ms. Sykes went into the Allstate computer system and prepared and submitted the endorsement to Allstate. The endorsement submitted by Ms. Sykes on July 15, 2005, carried an effective date of July 10, 2005, two days prior to the date on which Mrs. Campos reported the claim relating to Mr. Campos's automobile accident. A copy of the endorsement was sent to Mrs. Campos on July 16, 2005, and Mrs. Campos visited the Heiny Agency's office several days later with a check for the additional premium attributable to the increase in bodily injury liability limits. The Allstate claims department was, at the times pertinent to this proceeding, separate from the department handling commercial automobile insurance policies. The information available to Mr. Burger at the time the Form Construction claim was submitted showed bodily injury liability limits of $25,000.00 per person and $50,000.00 per occurrence on the Form Construction policy. On July 29, 2005, Allstate tendered a check to the person injured by Mr. Campos for the policy limit of $25,000.00. This check was not cashed. Mr. Burger did not learn until October 2005 that a policy endorsement raising the bodily injury liability limits had been submitted July 15, 2005, with an effective date of July 10, 2005. According to Ms. Sykes, someone from Allstate contacted her in August 2005 to question her about the endorsement, and she explained that the retroactive increase in bodily injury liability limits was a mistake and that the policy limits were $25,000.00 per person and $50,000.00 per occurrence at the time of the accident on July 12, 2005. Mr. Burger interviewed Ms. Sykes and Mr. Heiny on January 13, 2006, regarding the endorsement, and Ms. Sykes told Mr. Burger that she could not recall why she would have back-dated the endorsement. Ms. Sykes told Mr. Burger of the problems she had experienced with endorsements to automobile insurance policies being lost in the Allstate computer system. On January 26, 2006, the attorney representing the person injured by Mr. Campos wrote Allstate demanding disclosure of the policy limits of Form Construction's automobile insurance policy. In a letter dated February 3, 2006, Allstate notified Mr. Heiny and Ms. Sykes that it might seek indemnification from the Heiny Agency because it attributed the back-dated increase in bodily injury liability limits to agent error. Shortly thereafter, Mr. Heiny asked if Allstate could change the limits back to the original $25,000.00 per person and $50,000.00 per occurrence as of the date of the accident, but Allstate had already determined that the increased limits were effective July 10, 2005, because of the effective date on the endorsement and because of Mrs. Campos's payment of the premium for the additional coverage. In a letter dated February 17, 2006, Mr. Burger advised the attorney representing the injured person of the increase in the bodily injury liability limits, and, on March 2, 2006, Allstate tendered a check to the injured person's attorney in the amount of $500,000.00. Ms. Sykes attributed the back-dating of the endorsement to a glitch in the Allstate computer system by which the endorsement she submitted July 15, 2005, was automatically back-dated to July 10, 2005. Ms. Sykes had complained to Mr. Heiny on numerous occasions about problems with endorsements disappearing from the system, which required her to resubmit the endorsements. Ms. Sykes was not, however, aware of any endorsements being automatically back-dated by the system except for the July 2005 endorsement to Form Construction's commercial automobile insurance policy. Under the Allstate computer system, there are only two ways in which an endorsement's effective date can be established. The usual procedure requires the agent to complete the endorsement and submit it into the system; the system then automatically records on the endorsement the date it was submitted and the effective date of the endorsement. The other alternative is for an authorized agent to manually back-date the effective date of an endorsement and then submit it into the system. Mr. Heiny tested the Allstate computer system repeatedly, trying to determine whether the system would automatically back-date an endorsement. None of the test endorsements prepared by Mr. Heiny was automatically back-dated, and Mr. Heiny is aware of no instance in which an endorsement was automatically back-dated except for the Form Construction endorsement at issue herein. Findings of ultimate fact Certificate of Liability Insurance The evidence presented by the Department is sufficient to establish with the requisite degree of certainty that, when she signed the Certificate of Liability Insurance on October 12, 2004, showing that Form Construction had workers' compensation insurance issued by the FWCJUA with effective dates of October 16, 2004, through October 15, 2005, Ms. Sykes knew that Form Construction did not have workers' compensation insurance placed by the Heiny Agency through the FWCJUA and knew that Gold Construction would rely on the Certificate of Liability Insurance as evidence that Form Construction had workers' compensation insurance. Ms. Sykes' action demonstrates her lack of fitness and trustworthiness to engage in the business of insurance, and Ms. Sykes caused injury to Gold Construction because, as a result of its reliance on the Certificate of Liability Insurance, it was required to pay additional premium to its workers' compensation insurance carrier. Ms. Sykes's testimony regarding the circumstances in which she signed the Certificate of Liability Insurance was replete with inconsistencies and improbabilities and was wholly insufficient to support her contention that, when she signed the Certificate of Liability Insurance, she had a good faith belief that Form Construction had workers' compensation insurance issued by the FWCJUA. Mr. Heiny told Ms. Sykes that he did not intend to renew his authorization to submit workers' compensation insurance applications to the FWCJUA after it expired in July 2004, and, because she was the only agent at the Heiny Agency that dealt with Mrs. Campos, Ms. Sykes would necessarily have known if Form Construction had been issued a workers' compensation insurance policy by the FWCJUA. It is reasonable to infer, therefore, that Ms. Sykes was aware on October 12, 2004, that Form Construction was not, and had never been, covered by workers' compensation insurance issued by the FWCJUA as a result of an application submitted by Mr. Heiny. Finally, Ms. Sykes' testimony that, before signing the Certificate of Liability Insurance, she reviewed the Form Construction file and saw a check and a Federal Express receipt showing that "it all went out to the FWCJUA"2 directly conflicts with her testimony that Form Construction's records were destroyed when the Heiny Agency's office flooded in September 2004.3 Although the evidence presented by the Department is sufficient to establish that Ms. Sykes demonstrated a complete lack of knowledge about workers' compensation insurance, she was not authorized to submit applications to the FWCJUA and did not engage in any transactions involving workers' compensation insurance except for signing the Certificate of Liability Insurance for Form Construction. This act is not sufficient to establish that Ms. Sykes engaged in transactions involving workers' compensation insurance. Automobile insurance endorsement The evidence presented by the Department is sufficient to establish with the requisite degree of certainty that Ms. Sykes' deliberately back-dated an endorsement to Form Construction's commercial automobile insurance policy increasing the bodily injury liability policy limits so that the increased limits were effective two days before Mr. Campos was involved in an accident while driving a vehicle owned by Form Construction. Ms. Sykes' action constitutes willful misrepresentation of the coverage limits actually in effect on the date of the accident, and it demonstrates Ms. Sykes' unfitness and untrustworthiness to engage in the business of insurance. Ms. Sykes' explanation that the endorsement was automatically back-dated by the Allstate computer system is rejected as not credible. The evidence presented by the Department is not sufficient to establish that Ms. Sykes lacked in any respect adequate knowledge of or technical competence in commercial automobile insurance. Finally, the evidence presented by the Department is sufficient to establish by the requisite degree of certainty that, because Ms. Sykes committed misconduct relating to the signing of the Certificate of Liability Insurance, she engaged in dishonest practices while engaging in the business of insurance when she back-dated the endorsement to the Form Construction commercial automobile insurance policy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order Finding Madeline Hernandez Sykes guilty of one count of having violated Sections 626.611(7) and 626.621(6), Florida Statutes; Finding Ms. Sykes guilty of one count of having violated Section 626.611(5), (7), and (9), Florida Statutes; and Suspending Ms. Sykes' license to engage in business as a general lines insurance agent for a period of 15 months. DONE AND ENTERED this 30th day of April, 2009, in Tallahassee, Leon County, Florida. PATRICIA M. HART Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2009.
The Issue The issues are whether Respondent is guilty of violating any of the below-cited provisions of the Florida Insurance Code and, if so, what penalty should be imposed.
Findings Of Fact At all material times, Respondent has been licensed as follows: life agent, life and health agent, general lines agent, and health agent (Licenses). Respondent's license identification number is A192740. At all material times, Respondent has owned Florida Best Insurance Agency, Inc. (Best). Best sells insurance. Rose Duverseau has previously purchased insurance from Best and Respondent. Respondent has previously sold her insurance even though Ms. Duverseau lacked the cash necessary to pay the premium, although the record does not reveal the specifics of their arrangements in such transactions. On September 9, 2003, Ms. Duverseau telephoned Respondent at Best's office to discuss the purchase of automobile insurance. Satisfied with the premium cited by Respondent, Ms. Duverseau told Respondent to prepare the paperwork, and she would come to the office to sign the papers and obtain the insurance. When she arrived at Best's office later that day or the following day, Ms. Duverseau revealed to Respondent that she lacked the funds to pay the entire premium of $530. Respondent accepted from her a payment of part of the premium--$100. In return, Respondent issued to her insurance identification cards, showing that, effective September 9, 2003, she had coverage with American Vehicle Insurance Company (American) for personal injury protection benefits, property damage liability, and bodily injury liability. Ms. Duverseau told Respondent that she would bring him the rest of the money later. On September 23, 2003, Ms. Duverseau returned to Best's office and gave Respondent an additional $200 toward the premium. On September 25, 2003, Ms. Duverseau sent a friend with the remaining $230 to complete payment of the premium. Ms. Duverseau sent a friend because, earlier on September 25, Ms. Duverseau was involved in an automobile accident while in the covered vehicle. As a result of the accident, Ms. Duverseau incurred over $11,000 of medical expenses, which, after negotiations, was later reduced to $6243.25. She paid this amount with the proceeds of a settlement with another party involved in the accident. Ms. Duverseau later demanded that Respondent pay her this sum and the $530 that she had paid him for the policy, but Respondent gave her only $200 and a used computer that broke shortly after he gave it to her. Respondent never submitted the insurance application or premium payments to American. He is not an authorized agent of American. As he had in other insurance transactions, Respondent had intended to submit the application and premium to Fed USA Insurance and Financial Services, which is an agent of American, but Respondent intended to do so only after Ms. Duverseau had completed paying the full amount. However, Respondent is not an employee or agent of Fed USA.
Recommendation It is RECOMMENDED that Petitioner enter a final order suspending Respondent's Licenses for five years. DONE AND ENTERED this 13th day of January, 2006, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 13th day of January, 2006. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Carlos G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Robert Alan Fox Department of Financial Services Division of Legal Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Francois Noel 13285 Northeast Sixth Avenue, Apt. N104 North Miami, Florida 33161
