Findings Of Fact At the time of the hearing, and at all times relevant to the allegations contained in the Administrative Complaint, Alan David Cottrill was licensed as a general lines property, casualty, surety and miscellaneous lines agent by the Department of Insurance. The Department of Insurance regulates general lines-property, casualty, surety and miscellaneous lines agents pursuant to Chapters 626 and 627, Florida Statutes. Lloyd Register, III, and his son, Lloyd Register, IV, operate directly or indirectly a number of insurance agencies specializing in the sale of nonstandard insurance. These agencies generally employ an agent, who is an officer of a separate corporation in which one or both of the Registers is also an officer; and the Registers own a controlling interest in the corporation or otherwise have the capacity to terminate each corporation. Alan David Cottrill started his employment with Cash Register of Arlington, Inc. in July, 1992. He was designated as the primary agent at Cash Register of Jacksonville, Inc. at the end of July, 1992, at which time he was president of the corporation. In February of 1993, he became vice president and president of Cash Register of Westside, Inc. In March of 1993, the Mr. Cottrill was again employed by Cash Register of Arlington, Inc., and was an officer of that corporation and primary agent of that insurance agency. He was the primary agent and general manager of Cash Register of Palatka, Inc., from November of 1993 until October of 1994. From February of 1993 until October of 1994, Mr. Cottrill was general manager of all Cash Register Offices in Jacksonville and Orange Park, Florida. The Respondent was again employed full time by Cash Register of Westside, Inc. in March of 1994, and became the primary agent for that agency in May of 1994. All of the Cash Register Auto Insurance agencies with which the Respondent was employed, as indicated in Paragraph 4, above, were insurance agencies regulated under the laws of Florida. Lloyd Register, IV, was an officer and director of the foregoing Cash Register Auto Insurance agencies. Colonial Touring Association, Inc., is an automobile club providing accidental death and dismemberment as an ancillary product. COUNT I, II, and III The Petitioner did not present any evidence on the allegations of Counts I, II, III, VI, VII, IX, and X in the Administrative Complaint. COUNT IV Cassie Reimer contacted Cash Register Auto Insurance of Orange Park, Inc., at 203 Blanding Boulevard, Jacksonville, Florida, on January 8, 1993, regarding the purchase of automobile insurance. At the time Ms. Reimer purchased insurance from Cash Register Auto Insurance of Orange Park, Inc., the Respondent admitted he was the manager of the Orange Park office. The application executed by Ms. Reimer indicates that the Agency's name is "Cash Register Auto Insurance of Jax, Inc., 5631 University Blvd. W., Jacksonville, FL 32216," and the agent's number is 8009. Prior to going the Orange Park office of Cash Register Auto Insurance, Ms. Reimer had called and had obtained a quote for liability, collision, and personal injury protection for her automobile. Ms. Reimer advised the individual with whom she spoke on the phone that she wanted the minimum coverages necessary to satisfy the lien-holder of her automobile loan and the Florida law. Based upon the quote which she received, she went to the Orange Park office of Cash Register Auto Insurance. When Ms. Reimer arrived at the office, she was assisted by Andrew Voshell, who she knew as "Andy" and who helped her fill out the insurance applications (Petitioner's Exhibits 1 & 2) for liability, collision, and personal injury protection from American Union Insurance Company. Mr. Voshell helped her fill out the premium financing agreement, accepted a down payment in the amount of $83 from Ms. Reimer, and presented Ms. Reimer an application which she executed for Colonial Automobile Club which included additional insurance for accidental death and dismemberment (ADD) which cost $80. The transaction was memorialized in Petitioner's Exhibit 3 (the premium financing agreement), Petitioner's Exhibit 4 (cash receipt from Voshell), Petitioner's Exhibit 5 (Colonial Touring Association, Inc. designation of beneficiary), and Petitioner's Exhibit 6 (confirmation of coverage). The Confirmation of Coverage form (Petitioner's Exhibit 6) indicates that there were $2,000, $1,000, $500, and $250 deductibles for bodily injury; and that ADD coverage from Colonial was optional and cost $80. Ms. Reimer signed each of the spaces on the Confirmation of Coverage, indicating she had read and understood the policy. The Premium Financing Agreement (Petitioner's Exhibit 3) indicates that the total amount financed was $551, which included the $80 premium for Colonial Touring Association (CTA) for ADD and the $471 premium for American Union (AIB) for property damage and personal injury protection. Ms. Reimer was not advised by Mr. Voshell that she was purchasing an optional automobile club membership, and that the cost thereof was being added to her premiums and financed. Andrew Voshell was not a licensed agent at the time he dealt with Ms. Reimer. It was Mr. Voshell who acted as the agent presenting the applications and obtaining Ms. Reimer's signature and accepting payment from her; however, Alan David Cottrill knew about the transaction because he signed Ms. Reimer's applications outside her presence. COUNT V On December 10, 1992, Curtis Newton bought automobile insurance at the University Boulevard office of Cash Register Auto Insurance of Jacksonville, Inc. The Respondent was employed at that office as the primary agent at that time. Mr. Newton called the office and obtained a quote for the minimum liability and PIP coverage required by law. The Respondent completed most of Mr. Newton's application for insurance while speaking with him on the telephone. Because Mr. Newton wanted to finance the premiums, the Respondent included an auto club membership with ADD coverage in the quote. When Mr. Newton came to the agency, he dealt with Linda Palmer, an unlicensed individual, exclusively. Ms. Palmer worked at the office from September, 1992 until August, 1993 under the supervision of the Respondent. Ms. Palmer did not hold a license to transact any type of insurance business during her employment with Cash Register Auto Insurance. The Respondent permitted Ms. Palmer to take applications and receive money. The Respondent required that Ms. Palmer explain to the customer the Confirmation of Coverages form which the customer signed. This was the only explanation provided to customers of the insurance they were buying, and constituted an explanation of policies. Mr. Newton advised Ms. Palmer that he did not want to join an auto club and did not want ADD coverage. Ms. Palmer crossed off the ADD coverage on the Premium Financing Agreement; however, she had Mr. Newton execute the Coverage Confirmation which indicated $4,000 coverage for ADD, but which did not state a premium amount. There is no place under ADD to indicate "no coverage" as there is for the other optional coverages. Mr. Newton also executed a designation of beneficiary form for Auto Accidental Death Coverage, and paid a down payment of $91 to Ms. Palmer. Ms. Palmer did not advise Mr. Newton that he had executed the paperwork for ADD coverage. Ms. Palmer was required by Respondent to sell auto club and ADD coverage. The inclusion of the forms for auto club and ADD coverage was intentional. The premium financing agreement was for the amount of the liability and PIP coverage, $256, and this coverage was provided. However, the premium financing agreement indicates the down payment was $51, not $91. There is no evidence that Mr. Newton was provided with ADD coverage, which he did not want, but the $40 difference between the $51 down payment and the $91 which Mr. Newton tendered to Ms. Palmer was not refunded to Mr. Newton. There was no evidence that Mr. Newton ever made demand for this overpayment. Had the Respondent handled Mr. Newton's application, the Respondent would have known that Mr. Newton did not desire ADD coverage, and that the down payment tendered was excessive and inconsistent with the insurance being provided and the amount being financed. In filling out the applications, explaining the forms, and accepting the money from Mr. Newton, Ms. Palmer engaged in activities restricted to agents with the knowledge and consent of the Respondent. COUNT VI and VII The Department did not present any evidence regarding Counts VI and VII. COUNT VIII On October 22, 1992, Rosa Coleman bought automobile insurance at the 3796 Blanding Boulevard office of Cash Register Auto Insurance of Westside, Inc. from the Respondent who was employed at that office at that time. Ms. Coleman advised the Respondent that she wanted the minimum required coverages. Ms. Coleman came into the office on her lunch hour and executed an application (Petitioner's Exhibit 7) for bodily injury, property damage, and PIP insurance to Union American Insurance Company. Ms. Coleman executed various forms, among which were a Confirmation of Coverage form and Designation of Beneficiary form which indicated she was obtaining auto club and ADD coverage. The Respondent did not explain that there was a separate charge for auto club membership which included the ADD coverage, or that she did not have to have this coverage. The total insurance premium for the liability and PIP coverage was $291 and the charge for the auto club was $30, for a total of $321. The handwriting makes it difficult to read the two amounts; however, the ADD was for $3,000, and the premium was $10 per thousand of coverage. The receipt indicates the Respondent received $40 down payment. The remainder of the premium was financed by Ms. Coleman with Equity Premium, Inc. The application (Petitioner's Exhibit 7) the receipt (Petitioner's Exhibit 8) and designation of beneficiary form (Petitioner's Exhibit 11) indicate that insurance company was Cash Register Auto Insurance, 5631 University Blvd. West, Jacksonville, FL 32216. Although the Respondent was not the agent for the Blanding Boulevard office at the time Ms. Coleman purchased her insurance, the Respondent, who personally sold Ms. Coleman her insurance, was the primary agent for the agency listed on the application and receipt which she received from the Respondent. COUNT IX AND X The Department did not present any evidence on these two counts. COUNT XI On or about December 22, 1993, Dennis Hurlburt went into the Palatka office of Cash Register Auto Insurance of Putnam County, Inc., in Palatka, Florida, and purchased liability and PIP on his truck. At that time, the Respondent was the primary agent in the Palatka office. (Volume III, Page 345, line 19.) Mr. Hurlburt completed an application for property damage and PIP insurance from Security Insurance Company of Hartford with the assistance of Andrew Voshell, an unlicensed employee of Cash Register Auto Insurance of Putnam County, Inc. in Palatka, Florida, who was under the supervision of the Respondent. Mr. Hurlburt's premium for the coverages he applied for was $229, and he paid Andrew Voshell $75. Mr. Hurlburt financed the balance of the premiums which included PIP, property damage, automobile club, and ADD. Mr. Voshell receipted for the down payment, and signed Respondent's name on Mr. Hurlburt's application as brokering agent. The Respondent denied that he was aware of Mr. Voshell's actions; however, he was primary agent in that office during the time in question and is charged with the supervision of the office. Money was received and receipted for by Mr. Voshell, who the Respondent admits was authorized to see customers, review applications, make deposits, and keep books. At this time, the Respondent was also actively engaged as primary agent in another office. Based upon the record as a whole and credibility of the various witnesses, the Respondent's denial is rejected. GENERAL FINDINGS ON THE CONDUCT OF RESPONDENT'S BUSINESS Most purchasers of nonstandard automobile insurance who finance their premiums do not complete payment of the premiums; whereupon, the finance company notifies the insurance company which cancels the insurance and cancels the commission earned by the selling agent after deducting for the coverage provided. By selling the auto club memberships, which included ADD coverage, the agent receives 90 percent of the premium which protects the agent against the loss of unearned premiums charged back by insurance companies. It is for this reason that the owners and management of Cash Register had the employees of their outlets include auto club memberships in insurance contracts, particularly those with premium financing. In those cases in which a customer declines auto club membership, the Cash Register agencies refuse to finance premiums, or increase the charges for financing. The Respondent and his employees sell between 80-140 automobile insurance policies per month. The average premium has increased over time, but varied between $250 and $550 for the counts presented. The Respondent receives a commission between 15 and 17.5 percent on automobile insurance. The commission for an auto club ADD contract is 90 percent which means that the agency receives $54 of a $60 premium. This is a "guaranteed" commission because there is no refund on the auto club membership, and this permits the agency to risk the loss of unearned commission which occurs when an insured defaults on his or her premium financing agreement. The customers made a down payment, which was received by the agency, and the balance of the amount owed was financed by the customer. According to the premium financing contract, the down payment was subtracted from that total due for PIP, property damage, and ADD insurance; and the balance due was financed. Under the terms of the contract, the customer financed a portion of the ADD coverage. In actuality, the down payment was applied first to the auto club membership, which included ADD coverage, and only PIP and property damage coverages were financed. The contract for the premium financing and the explanations of what was being financed do not accurately reflect this reality. Government Employees Insurance Company markets its automobile insurance through the mail, and sends applications to the customers through the mail, which are subsequently executed by the agent when returned by the customer by mail. Prior to October 12, 1993, the Department had no rule proscribing the practice of unlicensed persons giving quotes on behalf of a licensed agent. The Department has no rule defining "solicit" and "procure" with respect to the sale of insurance. The Department has no rule which requires an agent sign an application in the presence of the insured.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the Department revoke the license of the Respondent for violation of Section 626.611(5) and (9), Florida Statutes, by aiding others to act as agents as alleged in Count V, and That the Department revoke the license of the Respondent for violation of Section 626.611(5) and (9), Florida Statutes, by aiding others to act as agents as alleged in Count VIII, and That the Department revoke the license of the Respondent for violation of Section 626.621(12), Florida Statutes, by aiding others to act as agents as alleged in Count IV, and That the Department revoke the license of the Respondent or impose a fine of $2,500 for violation of Section 626.621(12), Florida Statutes, by aiding others to act as agents as alleged in Count V, and That the Department revoke the license of the Respondent or impose a fine of $2,500 for violation of Section 626.621(12), Florida Statutes, by aiding others to act as agents as alleged in Count XI, and That the Department impose a $2,500 fine for Respondent's violation of Section 627.8405, Florida Statutes, by including ADD coverage in a premium financing agreement as alleged in Count XI, and That the Department impose a $500 fine for violation of Section 627.4085(1), Florida Statutes, for improperly identifying the agency's address as alleged in Counts IV, and That the Department impose a $500 fine for violation of Section 627.4085(1), Florida Statutes, for improperly identifying the agency's address as alleged in Counts VIII. DONE and ENTERED this 11th day of January, 1996, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of January, 1996. APPENDIX CASE NO. 94-5460 Both parties submitted proposed findings of fact which were read and considered. The following states where their findings were adopted or why they were rejected: Petitioner's Recommended Order Findings Paragraph 1,2 Paragraph 1 Paragraphs 3-10 Paragraph 4 Paragraph 11 Paragraph 5 Paragraphs 12,13 Paragraph 6 Paragraph 14,15 Paragraph 14 Paragraphs 16,17 Paragraph 18 Paragraph 18 Paragraph 6 Paragraph 19 Irrelevant and unnecessary. Paragraph 20 Paragraph 8 Paragraph 22,23 Paragraph 11 Paragraph 24 Paragraph 15 Paragraph 25 Contrary to better evidence. Paragraph 26 Paragraph 12 Paragraphs 27,28 Paragraphs 12,13,15 Paragraph 29 Paragraph 16 Paragraph 30 Subsumed by paragraph 15. (S-15.) Paragraph 31,32 Paragraph 28 Paragraph 33 Paragraph 29 Paragraph 34 Unnecessary. Paragraph 35 Paragraph 31 Paragraph 36 Contrary to better evidence. Paragraph 37 Paragraph 31 Paragraph 38 Contrary to better evidence. Paragraph 39,1st sent. Paragraph 30 Paragraph 39,remainder Contrary to better evidence. Paragraph 40 Contrary to better evidence. Paragraph 41 Paragraph 33 Paragraphs 42,43 Paragraph 34 Paragraphs 44-47 Paragraph 35 Paragraph 48 Paragraph 18 Paragraph 49 Subsumed in Paragraph 19. Paragraph 50 Subsumed in Paragraph 22. Paragraph 51 Paragraph 21 Paragraphs 52-55,57 Paragraph 24 Paragraph 56 Paragraph 22 Paragraph 57 Subsumed in Paragraph 24. Paragraphs 58,59 Paragraph 21 Paragraph 60 Paragraph 22 Paragraphs 61,63,64 Unnecessary. Paragraph 62 Subsumed in Paragraph 23. Paragraph 65 Subsumed in Paragraph 36. Paragraphs 66,67 Paragraph 38 Paragraph 68 Contrary to better evidence. Paragraph 69 Irrelevant. Paragraph 70 Paragraph 39 Paragraph 71 Irrelevant. Paragraph 72 Contrary to better evidence. Paragraph 73 Subsumed in Paragraph 33. Paragraph 74 Irrelevant. Paragraph 75 Paragraph 37 Respondent's Recommended Order Findings Paragraph 1 Paragraph 2 Paragraph 2 Paragraph 1 Paragraph 3 Irrelevant as to time. Paragraph 4 Irrelevant. Paragraph 5 Subsumed in Paragraph 17. Paragraph 6-8 Subsumed in Paragraph 7. Paragraph 9 Paragraphs 8,11 Paragraph 10 Paragraph 9 Paragraph 11 Subsumed in Paragraph 8. Paragraph 12 Subsumed in Paragraph 11. Paragraph 13 Subsumed in Paragraph 13 and second application is irrelevant. Paragraph 14 Subsumed in Paragraph 14. Paragraph 15 Contrary to Reimer's testimony: Vol I, pg 118. Paragraph 16 Subsumed in Paragraph 14. Paragraph 17 Subsumed in Paragraph 13. Paragraph 18 Subsumed in Paragraph 14. Paragraph 19 Irrelevant. Paragraph 20 Paragraph 20 Paragraph 21,22 Contrary to better evidence. Paragraph 23 Paragraph 18 Paragraph 24 Subsumed in Paragraph 19. Paragraph 25 Paragraph 19 Paragraphs 26,27 Subsumed in Paragraphs 20,21. Paragraphs 28,29 Subsumed in Paragraph 22. Paragraph 30 Subsumed in Paragraph 24. Paragraph 31 Rejected because Respondent's failure to perform the acts required of the agent lead to his mistaken belief. Paragraph 32 Paragraph 22 Paragraphs 33-35 Irrelevant. Paragraphs 36,37 Paragraph 27 Paragraph 38 Paragraph 28 Paragraph 39 True, but Respondent was the agent who dealt with Coleman and was directly responsible for his own acts. Paragraph 40 Subsumed in Paragraph 30. Paragraph 41 Rejected as contrary to better evidence. Paragraphs 42,43 Subsumed in Paragraph 30. Paragraphs 44,45 Irrelevant. Paragraphs 46,47 Paragraph 32 Paragraph 48 Paragraph 33 Paragraph 49 Rejected as contrary to better evidence. Paragraphs 50-52 Irrelevant. Paragraphs 53,54 Paragraphs 34,35 Paragraph 55 Rejected as contrary to better evidence. Paragraph 56 Subsumed in various paragraphs. Paragraph 57,58 Paragraph 36 Paragraph 59-69 Irrelevant or not necessary to resolution of the issues. Paragraph 70 Rejected as contrary to better evidence. Paragraph 71 Irrelevant. Paragraph 72 Not necessary to resolution of the issues. Paragraph 73,74 Rejected as contrary to better evidence. Paragraph 75-79 Irrelevant. Paragraph 80 While true, the fact asserted is contrary to the financing paper work. This is part of the misleading activities by Respondent and his employees. Paragraph 81-84 Irrelevant. Paragraph 85 Recites Hearing Officer's ruling. Paragraph 86,87 Not necessary to resolution of the issues. Paragraph 88,89 Irrelevant. Paragraphs 90,92 Paragraphs 43,44 Paragraphs 91 Irrelevant. Paragraph 93,94 Paragraph 45 COPIES FURNISHED: Allen R. Moayad, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, FL 32399-0333 Jed Berman, Esquire Infantino and Berman Post Office Drawer 30 Winter Park, FL 32790 Bill Nelson, State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Dan Sumner, Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300
Findings Of Fact Based upon the record evidence, the following Findings of Fact are made: In late 1990, Robert Sayre filed with Respondent an application for an independent motor vehicle dealer license authorizing him to do business as TNT Auto Sales at 2050 N.W. 36th Street in Miami, Florida. At the time, Sayre leased the location of his proposed business from James Philips. 1/ Sayre no longer holds a leasehold interest in the property. The property is now owned by Teobaldo Cabrera, who is leasing it to Fiory Motors, Inc. Fiory Motors, Inc., has a current license from Respondent to operate as an independent motor vehicle dealer on the property.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying Petitioner's application for an independent motor vehicle dealer license on the ground that he neither owns nor leases the property identified in the application as "the exact location of [his proposed] place of business." DONE AND ENTERED in Tallahassee, Leon County, Florida, this 11 day of September, 1992. STUART M. LERNER 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 11 day of September, 1992.
Findings Of Fact Based on the evidence adduced at hearing, the undersigned makes the following findings of fact: Respondent holds a license issued by Petitioner which permits it to engage in the business of a motor vehicle dealer at 9901 N.W. 80th Avenue, Bay 3C, Hialeah Gardens, Florida. On Friday, September 9, 1988, during normal business hours, Karen Reyes, who is employed by Petitioner as a License and Registration Inspector, visited this location to attempt to conduct an annual inspection of Respondent's records. The doors to the warehouse where the business was supposed to be located were closed and locked and no one was around the dealership. Reyes left a note requesting that a representative of the dealership contact her. She then-departed. Reyes returned to the location on Tuesday, September 20, 1988. Although it was mid-morning, the warehouse doors were closed and locked and there was no one present. Before departing, Reyes left a second note asking that she be contacted by someone from the dealership. The following day Reyes attempted to telephone the dealership. No one answered the phone, however, when she called. Reyes reported her findings to her supervisor. As a result, on October 20, 1988, Respondent's President, Javier F. Rodriquez, was sent a letter in which he was advised that Petitioner proposed to revoke Respondent's motor vehicle dealer license on the ground that Respondent had closed and abandoned its licensed location. The letter further advised that Respondent had the right to request a formal hearing before any final action was taken against it. Rodriquez responded to the letter by requesting a hearing at which he would have the opportunity to present proof that the dealership had not been closed or abandoned. In view of this response, Reyes was instructed by her supervisor to pay another visit to the dealership. She made this visit on Tuesday, November 8, 1988. This time she encountered two men at the location. There were also a couple of cars there as well. One of the men, who claimed to be a representative of the dealership, telephoned Rodriquez's wife and had her speak with Reyes. During their telephone conversation, Mrs. Rodriquez informed Reyes that her husband was still active in the automobile sales business, but that he was conducting his business at their home. At the conclusion of their discussion, Reyes asked Mrs. Rodriquez to have her husband call Reyes' office. Mr. Rodriquez telephoned Reyes' office on November 16, 1988. Reyes was not in, so Rodriquez left a message. Later, that day, Reyes returned the call, but was unable to reach Rodriquez. The following day, Reyes went back to the dealership, where she found the same two men she had met there on November 8, 1988. Rodriquez, however, was not at the dealership. Reyes therefore left. She came back later in the day. This time Mr. Rodriquez was present and he spoke with Reyes. When asked by Reyes why there was no business activity nor records at the licensed business location, Rodriquez responded that the dealership was now open every day from 9:00 a.m. to 4:00 p.m. He provided Reyes with no additional information. Reyes revisited the dealership on Friday, January 13, 1989, Wednesday, January 18, 1989, Thursday, January 19, 1989, and Monday, January 23, 1989, during normal business hours. On each of these occasions, she found no one at the location and the doors to the warehouse closed and locked. She made another visit on Monday, January 30, 1989. Although it was during normal business hours, there was no indication of any activity at the dealership. Furthermore, the sign which had identified the business had been removed. This prompted Reyes to speak with the leasing agent at the warehouse complex. The leasing agent told Reyes that Respondent was no longer occupying space at the complex.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a Final Order revoking Respondent's motor vehicle dealer license. DONE and ORDERED this 27th day of March, 1989, in Tallahassee, Florida. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of March, 1989. COPIES FURNISHED: Michael J. Alderman, Esquire Neil Kirkman Building, A-432 Tallahassee, Florida 32399-0504 Javier F. Rodriquez, President Inrodar Auto Sales, Inc. 9901 N.W. 80th Avenue, Bay 3C Hialeah Gardens, Florida 33016 Charles J. Brantley, Director Department of Highway Safety And Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500 Enoch Jon Whitney, Esquire General Counsel Department of Highway Safety And Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue Should discipline be imposed by Petitioner against Respondent's license as a life, health, and variable annuity agent (2-15), general lines agent (2-20), and a legal expense agent (2-56), held pursuant to Chapter 626, Florida Statutes (2003)?
Findings Of Fact Facts Established by the Answer Pursuant to Chapter 626, Florida Statutes, you, Brian Whitney McDaniel (Respondent), currently are licensed in this state as a life, health, and variable annuity (2-15), general lines (2-20) and legal expense (2-56) agent, and were so licensed at all times relevant to the dates and occurrences referenced herein. Respondent's license identification no. is A171563. Pursuant to Chapter 626, Florida Statutes, Petitioner has jurisdiction over your (Respondent's) license and appointments. At all times relevant to the dates and occurrences referenced herein Respondent, was employed with Cash Register. Respondent's Duties at Cash Register Respondent was employed at the Cash Register agency in Gainesville, Florida from March 1998 through September 2002. He began his employment as a limited customer service representative (4-40). Respondent became the designated primary agent at the location in June 2000, at which time he was licensed as a general lines agent (2-20). He continued in the capacity as a designated primary agent until his departure from the agency. As the primary agent at Cash Register, Respondent was expected to make sure that the customer service representatives employed at the agency were properly trained and the customers were taken care of in a manner that they were expecting as consumers. Respondent also took care of paper work such as payroll, keeping the lights on, and similar activities. In addition to his supervisory duties Respondent dealt with the public, to include selling insurance to members of the public. The principal form of insurance sold at Cash Register was automobile insurance. Cash Register also sold boat insurance, insurance for motorcycles, and ancillary products, such as towing and rental. Cash Register sold legal insurance underwritten by Southern Legal Services (Southern Legal). Other products sold were hospital indemnity and accidental death benefits policies. The products such as hospital indemnity and legal service plans, were insurance products that could be financed for the balance of the amount due following a down-payment. The towing and rental contracts were not insurance products and not subject to financing. Hypothetically, and the hypothetical pertains to the experiences that customers in this case would typically be exposed to when the customer came into the agency, the customer took a seat and Respondent began to collect necessary information. That information pertained to name, address, phone number, age, driving record, and vehicle information. Then the discussion would turn to the nature of the automobile insurance that the customer was interested in purchasing. That issue concerned whether the customer wanted only property damage liability, and personal injury protection (PIP), as required by the State of Florida to maintain their tag registration or desired greater coverage. Other offerings included bodily injury liability, uninsured motorists, comprehensive and collision. Comprehensive and collision was explained to the customer as being a necessary coverage where automobiles have been financed. The information that had been gathered would be entered into a computer program which Cash Register used. That program was known as "Quick Quote." The quotation method was designed to select the better price from among a number of insurance companies. This process that has been described concerning the quote would pertain equally when quotations were provided over the telephone. Cash Register is affiliated with LR3 Enterprises, Inc. (LR3), its parent company. The parent company insisted that its employees who sold automobile insurance at Cash Register agencies during the time in question follow a script in selling the insurance. This involved the offer of several options to purchase. The first option was to pay the full price of the insurance. The second option was a standard down-payment, which was a greater amount down than the third option. The second option with the greater down-payment carried a smaller monthly payment in the part financed and saved money for the customer over time compared to the remaining option. The third option was a lower down-payment with a larger monthly payment that included necessarily, among other mandatory alternatives, in accordance with the management policy from LR3, the purchase of a legal service plan in relation to traffic violations to include DUIs, accidents, and child support. The legal service plan that is at issue here is legal insurance underwritten by Southern Legal. The value of this required purchase was that if any of the legal services were needed, the insurance plan that was required under option three would help defray the cost for those legal services. Respondent emphasized that the employees within the Cash Register agency must follow the script concerning the three options, failing which the employee would be "fired on the spot." Respondent described how this requirement was the first thing he had been told when he was hired. Having considered this explanation concerning the three options, it leaves the impression that a customer might come to believe that the legal insurance plan was an integral part of the automobile insurance that the customer sought to purchase. This impression could be created notwithstanding the documents that might be produced beyond that point, where careful review might lead one to a different conclusion as to the necessity to purchase the ancillary product. It is a significant issue in that most customers who purchased automobile insurance wanted the lowest down-payment available when transacting business with Cash Register. In this connection, the majority of customers who were served by Cash Register were interested in obtaining "tag insurance," referring to the basic coverage necessary to comply with Florida law. Those are the customers who almost always wanted a low down-payment. Returning to the several options that were explained by Respondent, option two carried a 35 percent down-payment with no necessity to purchase an ancillary product in addition to the automobile insurance. By contrast the third option carried an 18 percent down-payment and the Cash Register agency through its employees, to include Respondent, would require that the customer buy a legal services plan to warrant the low down- payment. Alternatively, the 18 percent down-payment under option three would be available in the instance where a customer bought a motor club contract, towing and rental. In this setting, unlike the legal plan, the towing and rental contract could not be financed. More specifically, Respondent explained that when customers called for a quotation on automobile insurance, he routinely, that is taken to include those instances described in this case, would say to the customer, "There's three different ways of paying for this. You can pay for it all at once, paid in full, the cash price is this, or we have two different payment options. The standard down-payment option is more out of your pocket, but it keeps your monthly low and saves you money in the long run, and it is this. We also have a low down- payment, which is the other way around, it's less money out of your pocket, but your monthly payment goes up and it includes an additional coverage for legal fees for traffic violations, DUIs, accidents. If you need an attorney it helps to pay his fee and that price is this." The same script was followed with customers who came to the office, as opposed to calling on the telephone. Respondent described how the application involved with the purchase of auto insurance was printed and brought to the desk where the customer was located. The application was not the only document involved in the transaction. Among the papers with the insurance application, was a confirmation of coverages, a premium finance agreement, where applicable; and a disclosure form, and a new business receipt, where applicable. All these documents were printed through a computer program. The documents were presented to the customer so that the customer could read it. As Respondent explains, it was not necessary for the employee to read it because the employee was familiar with the information that is established by the documents. A pen would be used to direct attention to documents, the first document pointed out, the confirmation of coverages. An example of the discussion with the customer would be, "You are buying property damage liability with a $10,000.00 limit, personal injury protection with a $10,000.00 limit, with a $2,000.00 deductible. You are rejecting bodily injury liability. You are rejecting uninsured motorists. You are purchasing comprehensive and collision with a $500.00 deductible. You chose the low down-payment option so you are purchasing the legal protection plan which goes with the low down-payment option. Please sign both of these signatures and date it for me." The arrangement was one in which the low down-payment option necessarily committed the customer to purchasing a legal protection plan as Respondent describes the arrangement. The next document in the series was in relation to the automobile insurance application per se. By using a pen the Respondent would show the purchaser what they were obtaining in coverage and what they were not. Respondent would gain the signature from the customer. Next in series, depending on the nature of the option pursued by the customer, was the legal protection plan or motor club, if it was involved in the purchase; the finance agreement; and the disclosure form and receipt, as applicable. Copies of the documents that have been identified were provided to the customers. Other remarks concerning the legal protection plan, which Respondent would make to the customers, would be that it helps to pay legal fees such as, if you were given a ticket that is contested or an accident where the customer is being sued, or have issues concerning child support, the plan would help to pay for legal fees. Nothing in this explanation was designed to explain to the customer that the legal insurance was not part of the automobile insurance. Count I Beverly Akpo-Sani On November 27, 2001, Beverly Akpo-Sani went to the Cash Register in Gainesville and purchased automobile insurance. She was waited on by Respondent. Ms. Akpo-Sani intended only to purchase what the state required to maintain coverage for her 1988 Plymouth station wagon. She also discussed the requirement for an SR-22, which is a Florida financial responsibility form to provide proof of insurance. Respondent followed the script that has been set forth earlier in selling automobile insurance and legal insurance plan to Ms. Akpo-Sani, with the exception that additional discussion was held concerning the SR-22 Florida financial responsibility form. Respondent described to Ms. Akpo-Sani the three agency options for purchasing the automobile insurance. Her interest was to have a low down-payment. As a consequence, Respondent offered her option three. Ms. Akpo-Sani applied for automobile insurance from Direct General Insurance Company (Direct General Insurance). Petitioner's Exhibit numbered 1. Ms. Akpo-Sani also executed a document in relation to legal insurance, referred to as "Sav-Cash Traffic Protectors," for pre-paid traffic violation insurance. That insurance was underwritten by Southern Legal. A copy of the document supporting the purchase is Petitioner's Exhibit numbered 3. Ms. Akpo-Sani and Respondent signed the document. On its face it indicates that it was paid for through a premium finance agreement with Direct General Financial Services, Inc. (Direct General Financial), and an amount of $105.00 is stated. In pertinent part, the document related to the pre- paid traffic violation insurance stated: Cardholder acknowledges receipt of goods and/or services in the amount of the total shown hereon and agrees to perform the obligations set forth in the cardholder's agreement with the issuer. I hereby apply for participation in Southern Legal Services Plan, Inc. SL 210 Driver's Protection Legal Plan, and acknowledge coverage is conditioned by receipt and approval by the Company. I understand that legal services will be provided under the plan for certain legal proceedings and that I am responsible for all costs associated with any matter. I agree to abide by the provisions and rules of the plan. I agree and authorize that the premiums be paid as indicated above. I understand that my attorney-client relationship will be with the attorney providing legal services under the plan and not with Southern Legal Services Plan, Inc. I represent that to the best of my knowledge all of the information contained herein is correct and that no person to be insured under this policy is now involved in any litigation, court proceedings, or other matter which could result in legal action. Petitioner's Exhibit numbered 3, which is by way of an application, was to be mailed to Robinson Insurance Agency c/o CTA in Palm Coast, Florida. Other than the information which has been quoted from the application document, the exact nature of the coverage provided by the pre-paid traffic violation insurance has not been explained in this record. Although Ms. Akpo-Sani signed the document applying for the legal insurance as reflected in Petitioner's Exhibit numbered 3, she believed that she was purchasing automobile insurance and to the extent that the legal insurance was not part of the automobile insurance purchase she had no intent to buy it. Respondent did not explain adequately the legal insurance purchase. Instead Ms. Akpo-Sani was led to believe that it was part of the procedure necessary to get her automobile insurance policy. No oral explanation was made that the cost of the legal insurance was an additional charge. Ms. Akpo-Sani was provided additional documents that portrayed the legal insurance as a different cost item, mainly the Premium Finance Agreement with Direct General Financial. A copy of that finance agreement is Petitioner's Exhibit numbered 5, which was signed both by Ms. Akpo-Sani and Respondent. On its first page under the schedule of policies, it separately sets out that the auto coverage was for a premium of $688.00, with $124.10 down and the balance to be paid to Direct General Insurance on her behalf. The schedule of policies refers to the legal insurances as "LGL," totaling a $105.00 premium, with $18.90 down and $86.10 to be paid to Southern Legal on Ms. Akpo-Sani's behalf. But the document goes on to set out the total premium financed in the aggregate, without separately stating the amount related for Direct General Insurance and the Southern Legal, with installment payments in the aggregate of $73.68, to be made in connection with both purchases at an annual percentage rate of 27.29 percent. The second page in disclosing information about her purchases referred to the PIP, property damage liability, and bodily injury pertaining to an SR-22 requirement. It goes on to describe the legal services purchase separately on the second page. Ms. Akpo-Sani received a receipt, referred to as a New Business Receipt drawn on a form by Cash Register. That receipt is Petitioner's Exhibit numbered 4. It breaks out the cost items under a heading entitled "Vehicle(s)," wherein it sets out property damage liability, PIP, and bodily injury liability, all in the automobile insurance coverage category, as well as the driver's protection legal plan, which is not part of the automobile insurance. Nonetheless, it is depicted under the heading "Vehicle(s)." The document explains the amount tendered as an aggregate amount paid, which would be constituted of $124.10 for the automobile insurance and $18.90 for the legal plan, totaling $146.00 as depicted on the receipt. The document goes on to describe the "policy total" under the section in relation to the vehicle as being $796.00, which would include both the automobile insurance and the driver's protection legal plan. Other than the brief reference to the drivers protection legal plan depicted as part of the "Vehicle(s)," the balance of the receipt provides information concerning the automobile insurance side of the purchase. Another document provided to Ms. Akpo-Sani and signed by her on the occasion, was a document titled "Confirmation of Coverages." It is Respondent's Exhibit number 5. In relation to purchases made it sets out the property damage liability, and the PIP as required coverage, bodily injury liability as optional coverage, and the election of a driver's protection legal under ancillary products identified as optional. Although the document refers to the legal insurance as an optional opportunity, by the design of the form, given the manner in which this sale was made to Ms. Akpo-Sani, the impression created by Respondent would lead one to believe that it was not an option for her to decline the drivers protection legal. Instructions within the Confirmation of Coverages document explain the several parts. These parts are: auto insurance coverages required (1, 2), optional auto insurance coverages (3-6) and ancillary products (optional) (7-10), among them the driver's protection legal (10). The instructions state: Please READ the ten (10) sections above to be sure the coverages or benefits circled or checked are the coverages or benefits you want. The terms 'Full Coverage', 'Minimum Coverage', and 'State Required Coverage' are not specific enough to assure that you are buying the insurance coverages or benefits you want. The above confirmations are meant to protect you, your agent, and your insurance company from misunderstandings. If 'NO COVERAGE' or 'DECLINED' is marked in any section, you are not buying that sections coverages and benefits. COVERAGES AND BENEFITS ARE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE INDIVIDUAL POLICIES OR PLANS. Please read the policy jacket or plan descriptions that re available to you for detailed definitions of the coverages and benefits. If you still have questions, ask your agent to explain in more detail. Items seven (7) through ten (10) are high commission items that allow the agency to make a reasonable profit and continue to offer you the most competitive rates available on your auto insurance. These are separate plans from your auto policy and are optional. I have read, confirm and consent to the coverages and benefits indicated on this form. The instructions identify ancillary products, to include the driver's protection legal, as separate from the auto policy but the sales pitch by Respondent related to option three did not treat the purchase in that manner. It made the purchase of the legal plan appear mandatory. Moreover the instructions themselves make it appear that the ancillary products are linked with the auto insurance in the interest of establishing competitive auto insurance rates. Ms. Akpo-Sani did not read the application for pre- paid traffic violation insurance which is Petitioner's Exhibit numbered 3 before signing it. Similarly Ms. Akpo-Sani did not notice the details within the Premium Finance Agreement. Petitioner's Exhibit numbered 5. Ms. Akpo-Sani did not read the Confirmation of Coverages document, Respondent's Exhibit numbered 5, before signing. Mr. Akpo-Sani was in a hurry and this explains why she did not take the time to carefully read the documents that have been described. Count II Samina C. Ashraf On July 20, 2001, Samina C. Ashraf purchased automobile insurance at Cash Register in Gainesville from Respondent. Respondent also sold Ms. Ashraf pre-paid traffic violation insurance underwritten by Southern Legal as part of the transaction. Petitioner's Exhibit numbered 19 is the deposition provided by Ms. Ashraf which forms the basis of her testimony for hearing purposes. Attached to that deposition are various exhibits. Exhibit "A" is the application for insurance with Direct General Insurance. Exhibit "B" is Confirmation of Coverages document. Exhibit "C" is a document referring to a travel protection plan, which cost $60.00 as a premium. Exhibit "C" is related to bail bond coverage, ambulance assistance, collision loss of use, theft loss of use, emergency travel loss of use, and personal effects loss from an auto rented as a result of loss under previously stated coverages. Exhibit "D" to the deposition is the application for pre-paid traffic violation insurance through Southern Legal. Exhibit "E" to the deposition is the Premium Finance Agreement with Direct General Financial, which sets out costs related to the basic automobile insurance, the legal insurance, and the travel protection plan, which is a type of motor club. The automobile and legal insurance was financed beyond the down-payment. The motor club premium was fully paid at the time the transaction commenced. In format the application with Direct General Insurance, the Confirmation of Coverages document, the pre-paid traffic violation insurance underwritten by Southern Legal, and the Premium Finance Agreement are the same as has been discussed concerning Ms. Akpo-Sani. Highlighting the Ashraf transaction, $105.00 was paid for the legal insurance, consisting of an $18.90 down-payment, with $86.10 to be financed with Direct General Financial. The Premium Finance Agreement with Direct General Financial included the automobile insurance and legal insurance, with a total amount to be financed of $873.15 at 25.71 annual percentage rate, $97.93 due on each payment financed. When Ms. Ashraf arrived at Cash Register she was interested in purchasing the minimum insurance necessary for her automobile. She had just purchased the auto and told Respondent that she needed to obtain insurance and return to the car lot where she had purchased the auto and show proof of insurance coverage. Ms. Ashraf was interested in a low down-payment for auto insurance. Respondent told her that she could pay the full amount of the insurance premium. Alternatively, Respondent explained what the down-payment amount would be and the continuing payment process beyond that point in time. In discussing towing and rental, Respondent told Ms. Ashraf the cost for that premium. Respondent explained the towing option (motor club) to Ms. Ashraf. Respondent did not tell Ms. Ashraf of other options available, to include the legal plan, as she recalls the transaction. Ms. Ashraf did sign the various documents involved in the transaction that have been described. The documents that have been identified were stacked one on top of the next. Respondent told Ms. Ashraf in relation to those documents, "Just sign here, here, here, here." Respondent did not discourage Ms. Ashraf from reading the documents but she did not read them. She was in a hurry. She had told Respondent that she was only interested in the automobile insurance that was necessary in association with the purchase of the car on that day. She erroneously assumed that Respondent was giving her what was needed and nothing more. Aside from the motor club, which Ms. Ashraf knowingly purchased, she did not realize that she had also purchased legal insurance through Southern Legal. Respondent had not separately explained that the legal insurance product was optional and that it was not part of the basic auto insurance policy or that there was an additional charge for the legal plan, notwithstanding any written explanation provided that would suggest otherwise. In relation to the Premium Finance Agreement, Respondent explained the portion dealing with the amount financed, the finance charge, the total payments, and the total sales price, but not the individual breakout of charges set out at the top of the document. Count III Kim Langford and Count IV Joana Samad Kim Langford and Joana Samad bought auto insurance from the Cash Register agency in Gainesville and the legal plan through Southern Legal, as alleged in the Amended Administrative Complaint. However, Respondent did not sell the legal plan to these customers. He was not immediately involved with either transaction and cannot be factually implicated under terms set forth in the Amended Administrative Complaint.1 Count V Albert B. Tomes On November 2, 2001, Albert B. Tomes bought auto insurance from Respondent at Cash Register in Gainesville. The company that he purchased the automobile insurance from was Direct General Insurance. The application for auto insurance is Respondent's Exhibit numbered 24. Respondent also sold Mr. Tomes pre-paid traffic violation insurance underwritten by Southern Legal. Petitioner's Exhibit numbered 13. The format of the application for the legal insurance is the same as with Ms. Akpo-Sani. The total cost of the legal insurance was $105.00. During the transaction, a Confirmation of Coverages document was executed. Respondent's Exhibit numbered 27. A Premium Finance Agreement was entered into following a down- payment in relation to the Direct General auto coverage insurance and the legal insurance through Southern Legal. Respondent's Exhibit numbered 25. The format of Confirmation of Coverages and the Premium Finance Agreement through Direct General Financial were the same as with the transaction involving Ms. Akpo-Sani. The documents that have been described were laid out in front of Mr. Tomes and he quickly signed his name and initials where necessary. As he explains it, he was told, "Initial here, initial here, initial here, sign this, sign this, and that's what I did." Mr. Tomes was there at the agency about 20 minutes. Mr. Tomes signed all documents that have been described in relation to the transaction. Mr. Tomes did not read the Premium Finance Agreement which he signed that set out the charges for the auto insurance and legal insurance. Mr. Tomes signed the Confirmation of Coverages document without reading it. Mr. Tomes paid a down-payment for the auto insurance of $107.50, with a premium to be financed in the amount of $358.00. He paid $31.50 as a down-payment for the legal insurance, with $73.50 to be financed. As reflected in the Premium Finance Agreement pertaining to the purchase of auto insurance, and legal insurance, the total amount financed was $325.40 at an annual percentage rate of 33.55 percent. The installment amount for each payment was $37.75. Mr. Tomes had called ahead before going to Cash Register. Information provided in the telephone call described a down-payment and monthly payments beyond that point. When Mr. Tomes arrived at Cash Register and spoke to Respondent, he was told by the Respondent that the automobile insurance could be paid for in cash or a down-payment could be made in monthly payments to follow. Mr. Tomes was told by Respondent that if more were paid down, then the monthly payments would be lower in cost. Although Mr. Tomes acknowledged signing the application for pre-paid traffic violation insurance, he does not recall seeing the document on November 2, 2001. He did not understand what he was buying as evidenced by the document. The product described in the document was not explained to him by Respondent. All that Mr. Tomes was interested in purchasing was automobile insurance sufficient to "be legal." He just wanted the basic automobile insurance coverage, and that is what he asked for. He understood this to mean PIP coverage. Although Mr. Tomes does not recall the application for legal insurance and its terms, Respondent and Mr. Tomes generally discussed the legal plan. Mr. Tomes told Respondent he did not want the legal plan. Respondent said to Mr. Tomes "You don't have to have the legal plan just take the standard down-payment option. I know that is a little harder on your checkbook today, but it keeps your monthly payment a lot lower and saves you money in the long run." This is taken to mean the option that required a larger down-payment and smaller monthly payments without having to purchase the additional product, the legal plan. Mr. Tomes told Respondent in reply "Well, I want the low down-payment option but I don't want the legal." Respondent said in turn that he couldn't do it that way. He stated that if Mr. Tomes took the 18 percent down-payment, he would also have to take the legal plan. Mr. Tomes was not happy with that arrangement where he was allowed a low down-payment conditioned upon the purchase of the legal plan but ultimately "did it." Count VI Raymond L. Washington On September 19, 2001, Raymond L. Washington purchased automobile insurance from Cash Register in Gainesville. Respondent was the employee for the agency involved in the transaction. The automobile insurance was purchased from Direct General Insurance. At the same time, Respondent sold Mr. Washington pre-paid traffic violation insurance from Southern Legal and a motor club contract from American Bankers Motor. A Premium Finance Agreement was entered into between Mr. Washington and Direct General Financial in relation to the automobile insurance and the legal insurance. A Confirmation of Coverages document was executed on this occasion. The format of all documents that have been described was the same as for the Akpo-Sani transaction. Mr. Washington signed all the documents. The automobile insurance application is Respondent's Exhibit numbered 28. The application for pre-paid traffic violation insurance is Petitioner's Exhibit numbered 15. The Premium Finance Agreement with Direct General Financial is Respondent's Exhibit numbered 29. The Confirmation of Coverages document is Respondent's Exhibit numbered 31. The Premium Finance Agreement sets out a down-payment of $93.10, with a balance to be paid of $418.90 pertaining to the automobile insurance. Mr. Washington, according to the Premium Finance Agreement, paid $18.90 down for the legal insurance, with $86.10 to be paid through installment payments. The Premium Finance Agreement sets out that $567.10 in the aggregate was financed for the auto insurance and for the legal insurance, at an annual percentage rate of 28.22 percent. The monthly payment was $64.30. The motor club was a $60.00 one time premium payment. On the date in question, Mr. Washington went to Cash Register with the intent to purchase basic insurance, what he refers to as "PIP." He told Respondent what he wanted to buy. Respondent offered towing and rental insurance. Mr. Washington was interested in that offering and purchased the towing and rental through the motor club contract. By contrast, Mr. Washington has no recollection of the discussion between the parties of the legal insurance through Southern Legal. He was told he needed to sign the document applying for the legal insurance and that he should have it. The legal insurance was not something he was interested in purchasing. Mr. Washington had called for a quotation of the price of auto insurance before arriving at Cash Register. Once there, he spent approximately one and one-half hours to finish his business. Respondent explained the several options for auto insurance, to include the cash purchase, a higher down-payment or a lower down-payment, with the purchase of an additional product. Mr. Washington wanted to make a lower down-payment. While at the agency Mr. Washington read some of the Premium Finance Agreement but not in all its details. He did not read the top of the document referring to the schedule of policies, with the types of coverage and the listing of the auto insurance, legal insurance and motor club. He did not read the upper right portion of the document pertaining to the companies being paid through the finance agreement. He read the part setting forth the monthly amount to be paid as an installment, which was $64.30. Mr. Washington did not read the application for legal insurance through Southern Legal before signing the document. Concerning the Confirmation of Coverages, Mr. Washington looked at that part of that document that told him to read all ten sections above. But he did not read item 10 which had a check-mark placed next to the driver's protection legal plan SL-210-A. Although Mr. Washington was at the agency for over an hour, he did not feel that he had time to read all the documents provided him. He was in a hurry to leave. Mr. Washington cannot remember the details of the discussion but he does recall that some questions that he asked Respondent concerning the transaction were not fully addressed. He has no recollection of any discussion of item 10 within the Confirmation of Coverages document associated with the driver's protection legal plan, and he did not realize that he had purchased the legal insurance. Respondent recalls his dealings with Mr. Washington and the offering of the three options to purchase auto insurance and that Mr. Washington chose the low down-payment option. Count VII Change of Address On August 1, 2003, Respondent became an agent for Allstate at West Newberry Road, Highway 26, Jonesville, Florida, without notifying Petitioner of this change in his business address. According to records maintained by the Petitioner, Respondent had not provided information concerning the change of address as late as March 3, 2004. Petitioner's Exhibit numbered 18. Respondent proceeded with the mistaken belief that once he was appointed as an agent for Allstate, that the insurer would notify Petitioner of that appointment and presumably include information on the address of his business.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is RECOMMENDED: That a Final Order be entered finding Respondent in violation of those provisions within Counts I, II, and V through VII, that have been concluded as violations, dismissing the others within those counts, dismissing Counts III and IV; suspending Respondent's licenses for one year, imposing a $100.00 administrative fine, placing Respondent on two years' probation and requiring attendance at such continuing education courses as deemed appropriate. DONE AND ENTERED this 1st day of July, 2004, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS 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 1st day of July, 2004.
Findings Of Fact Respondent, Shirley Arlene Cook, is currently licensed by Petitioner as a life agent, a life and health agent, and a general lines agent, and has been so licensed since February 17, 1982, February 17, 1982, and February 13, 1980, respectively. Respondent has been employed in the insurance business since 1954. She has operated her current agency, American Family Insurors, since January 1990. During times material, Respondent engaged in the business of insurance through the corporate entity, American Family Insurors, Inc. (Family Insurors). Respondent was the sole officer and director of Family Insurors, Inc. from May 25, 1990 through February 26, 1992. As corporate officer and director of Family Insurors, Respondent was personally liable and accountable for wrongful acts, misconduct, or other violations of any provision of the insurance code committed by herself or agents who worked under her direct supervision and control. During times material, Respondent maintained a business bank account No. 1263147295 at Barnett Bank, in the name of Family Insurors. Respondent and Richard Rock were the authorized signators on the Respondent's account. Sometime in 1990, Rock was taken from the account as an authorized signator. Richard Rock was employed by Respondent as an outside producer and primarily solicited new accounts and canvassed existing accounts to pick up deposits and insurance applications which were collected by auto salesmen. He paid such salesmen ten dollars for every property damage referral that materialized into a policy with Family Insurors. Richard and his wife, Michelle Rock, who was also employed by Respondent, left Respondent's agency during June 1992. They left Respondent's agency due to personal problems stemming from Richard's drug and alcohol abuse, and when Respondent learned that he was paying referral fees to auto salesmen. Richard paid the salesmen the referral fees from Respondent's petty cash account, an account which was maintained and controlled by his wife, Michelle. Respondent was not aware of the referral fees and other gratuities which Richard would give to outside salesmen from time to time. The gratuities consisted of gift certificates to various retail establishments which were primarily restaurants. Funds received by Respondent and deposited into bank account No. 1263147295, which were received from or on behalf of consumers, represented premiums for insurance polices and were trust funds received in a fiduciary capacity. As such, they were to be accounted for and paid over to an insuror, insured, or other persons entitled thereto in the applicable regular course of business. During times material, Onyx Underwriters, Inc. (Onyx) was the sole managing general agent for Orion Insurance Company, now known as Aries, and American Skyhawk Insurance Company (American Skyhawk). On January 16, 1990, Respondent entered into an Insurance Broker's Agreement with Onyx. The broker's agreement was cancelled on March 19, 1992. While the broker's agreement was effective, all insurance placed by Respondent with Orion/Aries or American Skyhawk was pursuant and subject to the provisions of the broker's agreement with Onyx and constituted brokerage business. Pursuant to the broker's agreement with Onyx, Respondent retained agency commissions on policies issued and was responsible for forwarding the net premium to Onyx. This procedure is known in the industry as "netting authority" and is a procedure whereby the agent deducts the commissions that he or she is entitled to from gross premiums received on policies and forward the net premium to, in this case, Onyx. THE BARBARA CECIL TRANSACTION On October 13, 1990, Barbara Cecil (Cecil) purchased an automobile from Tony Taylor of Taylor Automotive in Pinellas Park. In connection with the sale, Tony Taylor, an unlicensed individual, solicited automobile insurance from Cecil on behalf of Respondent. Cecil paid Tony Taylor eighty dollars ($80.00) as the premium down payment, and Respondent later deposited Cecil's payment into her bank account. Respondent represented to Cecil that she was bound on October 13, 1990; however, the insurance documents indicate that coverage was bound for Cecil on October 27, 1990, or approximately fourteen (14) days after the date that she purchased her auto from Taylor Automotive. Cecil was, however, given a binder on October 13, 1990. Respondent later completed a policy application and submitted it to Orion Insurance Company (Orion). Orion thereafter issued a policy to Cecil for the policy period of October 27, 1990 through October 27, 1991. Orion cancelled Cecil's policy on February 6, 1991, due to the absence of photographs of her automobile. In this connection, Respondent had previously submitted a set of photographs to Orion which did not clearly depict the automobile. Therefore, a second set of photos were requested by Orion. The second set of photos was not sent to Orion prior to the cancellation date. The cancellation of Cecil's policy resulted in an unearned premium of one hundred eighty dollars and ninety-two cents ($180.92), and an unearned commission of thirty-eight dollars and seventy cents ($38.70). Cecil was without automobile insurance from February 6, 1991 to October 27, 1991, and she was informed of the cancellation. During times material, Tony Taylor was not licensed in Florida as an insurance agent, customer representative, or solicitor. THE KIMBERLEY JONES TRANSACTION On June 20, 1991, Kimberley Jones purchased an automobile from Tony Taylor of Taylor Automotive. In connection with this automobile purchase, Tony Taylor solicited insurance on behalf of Jones from Respondent's agency. Kimberley Jones paid Taylor one hundred dollars ($100.00) as the premium down payment and Taylor issued a receipt to Jones. Respondent did not bind coverage with American Skyhawk for Jones until one week later, i.e., June 27, 1991. The Jones' policy ran its full term. THE KAREN KLEIN TRANSACTION On August 26, 1991, Karen Klein purchased an automobile from Keith Rice of Car Stop Automobile Sales. In connection with this purchase, Keith Rice, an unlicensed insurance individual, solicited automobile insurance from Klein on behalf of Family Insurors. Klein paid Keith Rice approximately one hundred dollars ($100.00) as a premium down payment for issuance of an insurance policy on her newly purchased automobile, which was to be effective on August 26, 1991. American Skyhawk issued a policy to Klein for the period effective August 27, 1991 through August 27, 1992. Onyx cancelled Klein's policy on December 3, 1991, for underwriting reasons. That cancellation resulted in an unearned premium of three hundred thirty-three dollars and thirty-one cents ($333.31), and an unearned commission of seventy-three dollars and sixty-eight cents ($73.68). THE EDITH PURCELL TRANSACTION On September 27, 1991, Edith Purcell purchased an automobile from Bill Hoskins of Taylor Automotive. In connection with that purchase, Hoskins solicited automobile insurance from Purcell on behalf of Family Insurors. Hoskins advised Purcell that her coverage would be effective September 29, 1991, upon receipt of her down payment of one hundred dollars ($100.00). Purcell paid Hoskins the premium down payment on September 29, 1991, and Hoskins issued a receipt indicating Family Insurors as the recipient. Hoskins, on behalf of Family Insurors, represented to Purcell that she had full coverage for the policy period, September 27, 1991 through September 26, 1992, pursuant to binder number P91-1022. American Skyhawk thereafter issued a policy to Purcell for the period of October 3, 1991 through October 3, 1992. Purcell's policy was cancelled on December 26, 1991, for underwriting reasons. That cancellation resulted in an unearned premium of four hundred forty-two dollars ($442.00), and an unearned commission of seventy-seven dollars and thirty-five cents ($77.35). THE JOHN J. NARKIN, III TRANSACTION On October 4, 1991, John J. Narkin, III (Narkin) purchased an automobile from Bill Hoskins of Taylor Automotive. In connection with that purchase, Hoskins, an individual who was not licensed as an insurance agent, representative, or solicitor, solicited an automobile insurance policy for Narkin on behalf of Family Insurors. Hoskins requested and Narkin paid him the one hundred dollar down payment for issuance of the policy. Hoskins issued Narkin a receipt from Family Insurors for the down payment indicating full coverage for the period October 4, 1991 through October 3, 1992, pursuant to binder number N91-1059. American Skyhawk issued a policy to Narkin effective for the period of October 7, 1991 through October 7, 1992. American Skyhawk issued a notice of cancellation for nonpayment of an additional premium of fifty-four dollars ($54.00), because Narkin failed to provide proof of holding a Florida Driver's License when he was requested to do so. Respondent notified Narkin of this request by letter dated December 7, 1991. Narkin was told that he had until December 27, 1991 to remit his payment. Narkin paid Respondent the additional premium by check on December 13, 1991, which deposit was entered into Family Insuror's business bank account on December 18, 1991. The additional premium was not forwarded by Respondent to Onyx prior to the December 27, 1991 cancellation date with the result that Narkin's policy was cancelled. Narkin was without insurance from December 27, 1991 through October 7, 1992, and he had no knowledge of this fact. The cancellation of Narkin's policy resulted in an unearned premium of six hundred fifty dollars and eighty-two cents ($650.82), and an unearned commission of one hundred forty-nine dollars and sixty-three cents ($149.63). THE WENDY WARDLE TRANSACTION On May 17, 1991, Family Insurors solicited an American Skyhawk application for automobile insurance from Wendy Wardle. Wendy Wardle paid Respondent ninety-eight dollars ($98.00) as the premium down payment, and the policy was thereafter issued to Wardle. On August 19, 1991, American Skyhawk cancelled Wardle's policy for underwriting reasons, resulting in an unearned premium of two hundred dollars and fifty-seven ($200.57), and an unearned commission of sixty-one dollars and seventy-eight cents ($61.78). THE MARY ANN MAFETONE TRANSACTION On October 28, 1991, Mary Ann Mafetone purchased an automobile for her daughter, Cindy Mafetone, from John Rosa of River Auto Sales. In connection with this purchase, John Rosa, an individual who was not licensed as an insurance agent, broker, or solicitor, solicited automobile insurance for the Mafetones from Family Insurors. Mafetone paid Rosa one hundred twelve dollars ($112.00) as the premium down payment for issuance of a policy in the name of her daughter, Cindy. In exchange for soliciting insurance on behalf of or from Family Insurors, Family Insurors, through Richard Stock, paid various automobile salesmen commissions, ranging from ten dollars to twenty per transaction. These commissions were based on specific coverage being purchased by the consumer. Respondent's Position Andrew Beverly, an expert in the field of insurance, is a chartered property and casualty underwriter, a chartered life underwriter and a chartered financial consultant. He is the owner and operator of the Florida Insurance School, a statewide firm that prepares individuals for entry level positions in the insurance industry. Beverly reviewed Respondent's binder books and practices respecting the subject insureds in this proceeding. The binder book and procedures utilized by Respondent are typical industry practices for agents and agencies writing policies with nonstandard companies. In the process of taking an insurance application to an actual hard copy policy, three sets of numbers are used. They are the binder number signed by the agent in numerical sequence as customers make application for coverage, the working number which is assigned by an underwriter until the actual (hard copy) policy is issued and the policy number which is computer generated by the company. Discrepancies between the binding date and the coverage date is normal within the industry and coverage is effective as of the binder date. Thus, in all of these transactions, the insureds had coverage the instant they received binders from Respondent. Respondent's files indicate that Barbara Cecil was timely notified that the pictures taken on her vehicle were not properly developed and she needed to return to the agency with her vehicle to take new pictures to be forwarded to her insuror. Mrs. Cecil did not return in a timely manner and her policy was therefore cancelled. Respondent's records respecting Edith Purcell indicate that Purcell was given a quote, and coverage for her was bound on October 3, 1991. An application for insurance was taken and she was provided the paperwork including a copy of the premium finance agreement. Purcell was notified on November 13, 1991, that her driver license information could not be verified. On November 21, 1991, Purcell visited Respondent's office and provided the necessary information. Respondent telecopied the information to the underwriting company; however, she was not reinstated. Respondent contacted the company about the cancellation, but the company refused to rescind the cancellation and underwrite that risk. Kimberly Jones was given a quote of $276.00 for insurance coverage by Respondent and she paid a $100.00 down payment. The balance was to be paid in installments. However, during the policy period, Ms. Jones was involved in an automobile accident which resulted in an increase in her premiums. Respondent advised Ms. Jones to pay the additional premium of approximately of forty percent as required by the company and add the balance of that additional premium to her contract. Ms. Jones complied and her policy remained in effect the full term. Ms. Mafetone paid Respondent a down payment of $112.00 and Respondent notified her that an additional $32.00 was required. Ms. Mafetone erroneously remitted the additional money to the (premium) finance company instead of the insurance company. As a result, her account was not properly credited and her policy was cancelled. Respondent thereafter notified the premium finance company and found that she had been given a credit on her monthly account statement. Respondent had not been provided a statement to reflect that credit when Mafetone's policy was cancelled. A portion of Respondent's statement was telecopied to her and she immediately remitted the $212.00 to the insuror to reinstate Ms. Mafetone's policy. Ms. Mafetone's policy was reinstated and remained in full force for its term. Respondent's files respecting Wendy and Douglas Wardle indicate that Mr. Wardle did not have a valid Florida driver's license at the time his policy was purchased. Based on Mr. Wardle's failure to provide proof of a driver's license, the company cancelled his policy. Karen Klein was provided a quote by Michelle Rock. An application was prepared for her on August 17, 1991, and coverage was bound on August 27, 1991. Klein's policy was cancelled because she did not have a valid Florida driver's license. Ms. Klein was notified in writing and she did not return to Respondent to handle the matter. As a result, the company cancelled her policy. Respondent's file relating to Narkin reveals that he was given a quote of $320.00, of which he paid $100.00 as a down payment. Narkin was billed the balance of the premium. Narkin's policy was issued on October 7, 1991, and he paid the balance. Respondent notified Narkin that the company was unable to ascertain that he had a valid Florida driver's license. This problem was ultimately resolved and his policy was reinstated. However, an additional premium was required from Narkin because of his license status at the time he made his application. The additional $54.00 was remitted by Narkin to the agency and Respondent forwarded it on to the company. Narkin was cancelled for failing to timely make the payment. Although Respondent maintains that it was the insuror's obligation to notify Narkin that his policy was cancelled, the records indicate that Narkin promptly paid Respondent and the amount was not timely remitted to the company which resulted in the cancellation. Respondent therefore did not timely remit the additional premium amount paid by Narkin to his policy was cancelled. Respondent utilizes a practice of binding coverages on applications the moment a completed application is filed. In each of the above referenced transactions, Respondent timely issued binder numbers and each applicant was bound the moment their application was completed and when the binder was issued. In each instance, Respondent promptly bound each of the above referred insureds. Respondent was unaware that Michelle and Richard Rock were providing kickbacks and other gratuities to automobile salesmen who are not insurance agents, customer representatives, or solicitors. When she did discover that this activity was ongoing, she took immediate steps to terminate this practice. As a result of that activity, she terminated her relationship with Michelle and Richard Rock.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner enter a Final Order imposing an administrative fine of $500.00 to be payable to Petitioner within thirty (30) days of the entry of its Final Order for the violation derived in paragraph 50. In all other respects, Petitioner shall enter a Final Order dismissing the remaining allegations of the first Amended Administrative Complaint filed herein. DONE AND ENTERED this 6th day of December, 1994, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of December, 1994. APPENDIX TO RECOMMENDED ORDER, IN CASE NO. 93-7105 Rulings on Petitioner's proposed findings of fact: Paragraph 10 rejected, contrary to the greater weight of evidence. Paragraphs 13, 14, 15, 17, 18, 20, 23, 24, 25, 27, 29, 30, 31, 32, 35, 37, 38, 39, 42, 43, 45, 47, 48, 51, 53, 54, 55 rejected, contrary to the greater weight of evidence, paragraphs 37-46 recommended order. Paragraph 56 adopted as modified, paragraphs 36 and 46 recommended order. Rulings on Respondent's proposed findings of fact: Respondents proposed findings are in the form of a review of the testimony and written argument on that testimony. As such, although considered, no specific rulings are made with respect to Respondent's proposed findings of fact. COPIES FURNISHED: Daniel T. Gross, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0300 Thomas F. Woods, Esquire Gatlin, Woods, Carlson & Cowdery 1709-D Mahan Drive Tallahassee, Florida 32308 Tom Gallagher State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue Whether the Respondent knowingly sold rebuilt vehicles without disclosing in writing to the purchaser, customer, or transferee that the vehicles were previously titled as rebuilt vehicles.
Findings Of Fact The Respondent, Charles R. Kuhn, III, is and was at all times relevant to the allegations in the administrative complaint a licensed independent motor vehicle dealer in Florida. The Respondent did business in the name A-1 Auto and Truck Center and was located at 12180-1 Phillips Highway, Jacksonville. The Department is the state agency authorized by statutes to regulate licensed independent motor vehicle dealers and to maintain the titles of motor vehicles in the State of Florida. Pam A. Albritton testified about her experiences buying a vehicle from the Respondent. On August 22, 2003, as reflected by the date on the installment sales contract, Albritton purchased a 2000 Volkswagen (VW), VIN (Vehicle Identification Number) 3 VWSD 29 M1YM 197846, for $8,281.80. The Respondent did not at any time provide Albritton with a written statement that the vehicle she purchased, VIN 3 VWSD 29 M1YM 197846, hereafter the Albritton vehicle or car, was a rebuilt vehicle and had been previously titled as a rebuilt vehicle. The Respondent did not tell Albritton that this vehicle was a rebuilt vehicle. Albritton did not see the certificate of title to the vehicle until after the sale of the vehicle. Albritton took the car to an authorized VW dealer in November of 2003 because it was not shifting gears properly. The dealer found that the vehicle had suffered extreme damage from an accident and needed extensive repairs to the engine control system and the airbag in order to make the car safe to drive. The dealer told Albritton what had been found and advised her not to drive the car until it had been repaired. Albritton confronted the Respondent about the problems with the vehicle, and the Respondent gave her a handwritten "warranty" dated November 20, 2003. Pursuant to this agreement, Albritton took the car to the Respondent to have the seatbelts fixed; however, the repairs did not actually make the belts safe because the seatbelt retractor mechanism would not lock. In December of 2003, the wheel bearings on Albritton's car broke, and she contacted the Respondent about getting the car fixed. She was informed that the Respondent was away for two weeks, and nothing could be done until he returned. Needing her car for transportation in her work, she paid $200 to have the wheel bearings repaired. Pursuant to a mediation agreement, Albritton agreed to settle her complaint against the Respondent on the basis that he would get her a comparable vehicle. The Respondent was supposed to contact Albritton within 30 days of the mediation but failed to do so. The records introduced at hearing show that Albritton's vehicle had been re-titled as a rebuilt vehicle. Such a title indicates that the vehicle in question had been written off as an insurance loss and the original title cancelled or destroyed. Thereafter, the vehicle was repaired, and the person making the repair obtained a new title, which when issued, showed that the vehicle was rebuilt. Aylwin S. Bridges testified regarding his purchase of a VW from the Respondent. On or about June 14, 2003, Aylwin S. Bridges, purchased a 2000 VW, VIN 3 VWTE 29 MXYM 135556, from the Respondent for $11,555.00. Neither prior to nor at the time of the sale did the Respondent provide Bridges a written statement that the 2000 VW, VIN 3 VWTE 29 MXYM 135556, was a rebuilt vehicle. The Respondent did not tell Bridges that the car he was purchasing was rebuilt. The records introduced at hearing show that the Bridges' car had been re-titled as rebuilt. Bridges did not see a certificate of title to the vehicle prior to the sale of the vehicle. The Bridges' vehicle had extensive mechanical problems. For example, the engine control module had been spliced into the car and several codes had been deleted from it; the seat belts would not work; and the horn would not work. When Bridges sought to trade the vehicle, he found that the most he was offered for the car was only $2,500 because it was rebuilt. The Respondent testified in his own behalf. He did not deny having failed to disclose to Albritton and Bridges in writing prior to selling them their cars that the vehicles had previously been titled as rebuilt vehicles. The Respondent introduced a general disclaimer, Respondent's Exhibit 7, which was provided to Albritton and Bridges. This disclaimer states that the purchaser is buying a used car and that used cars may have any one or more of the listed problems. The Respondent testified that he knew the cars were rebuilt, but felt he had complied with the legal requirements of disclosure by providing the buyers with the aforementioned disclaimer. The specifics of the disclaimer are discussed in the Conclusions of Law for purposes of continuity, but are findings of fact.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department enter its final order finding that the Respondent violated Section 319.14, Florida Statutes, on two occasions; fine Respondent $1,000 for each violation; and suspend the Respondent's license for six months for each violation, said suspensions to run consecutively, and that payment of the fine be a condition precedent to re-issuance of a license. DONE AND ENTERED this 1st day of February, 2005, in Tallahassee, Leon County, Florida. S STEPHEN F. DEAN 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 1st day of February, 2005. COPIES FURNISHED: Charles Patrick Kuhn, III A-1 Auto and Truck Center 12180-1 Philips Highway Jacksonville, Florida 32256 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Suite A432 2900 Apalachee Parkway Tallahassee, Florida 32399 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Suite B439 2900 Apalachee Parkway Tallahassee, Florida 32399
The Issue The issues are whether the sale of ancillary products to two purchasers of automobile insurance involved sliding, as that term is defined in Subsection 626.9541(1)(z), Florida Statutes (2005)1; whether the alleged acts violated Subsections 626.611(7) and (9), 626.621(6), and 626.9521(1), which respectively prohibit a lack of fitness or trustworthiness to engage in the business of insurance, fraudulent or dishonest practices, and unfair trade practices; and, if so, what penalty should be imposed against Respondent's insurance license.
Findings Of Fact Petitioner is the state agency responsible for regulating insurance and insurance-related activities in Florida pursuant to Chapters 626 and 627. Respondent is licensed as a life, including variable annuity, general lines insurance agent pursuant to license number A085250. From October 22, 2003, through September 2, 2005, Respondent was employed as an insurance agent by Direct General Insurance Agency, Inc. (Direct). Direct is a Tennessee corporation doing business in Florida as Cash Register Insurance (Cash Register). Cash Register employed Respondent in an office located at 6325 North Orange Blossom Trail, Orlando, Florida, which conducts business as Friendly Auto Insurance Company (Friendly). Friendly-Cash Register paid Respondent a salary and commissions. Friendly-Cash Register paid commissions on the sale of ancillary products such as travel protection, accident medical protection, and term life insurance. Commissions comprised 18 percent of the compensation paid to Respondent. The two transactions at issue in this proceeding occurred on July 11 and August 29, 2005. In each transaction, Respondent sold automobile insurance and three ancillary products to Ms. Heather Dickinson and Ms. Carmen Phillips, respectively. Ms. Dickinson subsequently married and testified at the hearing as Ms. Heather Mason. When Ms. Mason and Ms. Phillips entered the Friendly- Cash Register office, each consumer requested the minimum automobile insurance coverage needed to be "legal and on the road." Neither customer left the office understanding she had purchased ancillary products. Ms. Mason purchased automobile insurance for a 1995 Jeep Cherokee 4x4 at an annual premium of $1,175.00. Friendly-Cash Register charged Ms. Mason a total sales price (total price) of $1,609.24. Ms. Mason agreed to pay $194.00 as a down payment and the balance in 12 installments of $117.94 at an annual percentage rate of 25.27 percent. Ms. Mason purchased three ancillary products at a total cost of $278.00. Ms. Mason paid $60.00 for travel protection, $110.00 for accident medical protection, and $98.00 for term life insurance. A finance charge of $151.69 and a charge of $4.55 for Florida documentary stamp taxes comprised other charges that are not at issue in this proceeding. Ms. Phillips purchased automobile insurance for a 1992 Chevrolet Blazer 4x4 at an annual premium of $779.00. Friendly-Cash Register charged Ms. Phillips a total price of $1,271.64. Ms. Phillips agreed to pay $129.00 as a down payment and the balance in 10 installments of $114.26 at an annual percentage rate of 25.06 percent. Ms. Phillips purchased three ancillary products at a total cost of $368.00. Ms. Phillips paid $60.00 for travel protection, $200.00 for accident medical protection, and $108.00 for term life insurance. A finance charge of $120.79 and a documentary stamp charge of $3.85 comprised other charges that are not at issue. Both Ms. Mason and Ms. Phillips signed Friendly-Cash Register forms which disclose that the ancillary products they purchased are optional and entail additional costs. Each customer signed a package of documents numbering approximately 19 pages.2 Page 1 of each package discloses the annual price for automobile insurance. The optional ancillary products and separate charges are disclosed in several additional pages. The package of documents that Ms. Mason signed discloses the annual cost for travel protection on pages 000006 and 000014 through 000016 (hereinafter pages 6, 14, 15, etc.). Pages 8, 9, and 14 through 16 disclose the cost of the accident medical protection. Pages 10 and 12 through 16 each disclose the cost for term life insurance. Pages 7, 9, 14, and 15 expressly provide that the ancillary products are optional. Page 16, the Premium Finance Agreement, separates the charges for mandatory automobile insurance from the optional ancillary products and the other charges. Ms. Mason signed or initialed pages 3 through 11, pages 14 through 17, and page 19. The package that Ms. Phillips signed includes disclosures similar to those in the package signed by Ms. Mason. Ms. Phillips signed or initialed relevant pages in the same manner as Ms. Mason. Ms. Mason and Ms. Phillips had adequate time to review the documents they signed or initialed, but neither customer read the documents. Each consumer is a literate adult with no disability or infirmity that would impede her capacity to understand the transaction. The factual disputes are whether Respondent orally explained the ancillary products that the two customers purchased, and, if so, whether the oral explanation was adequate. For reasons discussed in the Conclusions of Law, Respondent is not required to prove she did explain the ancillary products and that the explanation was adequate. Rather, Petitioner must prove Respondent did not explain the ancillary products or that the explanation was inadequate. Respondent does not recall the specific transactions at issue in this proceeding because she sold as many as 10 insurance policies each day at Friendly-Cash Register for almost two years. However, Respondent does recall that she followed the identical procedure with each customer and that the procedure she followed was carefully scripted by Friendly-Cash Register as a condition of employment. Respondent orally explained each disputed transaction in this proceeding in a manner that was adequate for each consumer to understand the transaction. Respondent orally explained that the ancillary products were optional. Respondent circled the optional items in the documents and explained that each ancillary product entailed an additional cost. The sixth document that Respondent reviewed with each customer is the "Explanation of Policies, Coverages, and Cost Breakdown." That page appears as page 14 in the exhibits, but page 14 is not organized in the exhibits in the same order that Respondent presented it to customers. Respondent orally explained pages pertaining to specific ancillary products after Respondent explained the page entitled "Explanation of Policies, Coverages, and Cost Breakdown." The procedure scripted by Friendly-Cash Register required Respondent to first interview Ms. Mason and Ms. Phillips to gather information needed for input into a computer which printed the 19-page forms utilized by Friendly- Cash Register. The interview included questions regarding life insurance beneficiaries and questions pertaining to the medical condition of each customer. After interviewing Ms. Mason and Ms. Phillips, Respondent entered the information into a computer and printed the 19-page packages. Respondent placed each package in front of the respective customer and discussed each page. Respondent circled the word "optional" when it appeared on a page, obtained the signature or initials of each customer, turned the page over, and proceeded to the next page. The trier of fact finds the testimony of Respondent to be credible and persuasive. As Respondent explained: Q. Did you tell the customers that this quote included those ancillary products? A. Yes. I informed . . . them that they had been quoted with the optional policies. * * * Q. How is page 14 labeled at the top? A. It says "Explanation of Policies, Coverages, and Cost Breakdown." . . . I would circle the items that are circled on here, and then I would present it to the insured. And I would say, you're purchasing the mandatory personal injury protection, bodily injury, [or] there's no property damage, there's no bodily injury. You also have the optional policies for the travel protection plan, accidental medical plan, life insurance, these are the costs, sign here. Q. [A]re you pointing at your circles? A. Yes. I point to each circle and I kind of run my finger down the cost to draw attention to it. Q. You point to the cost? A. Yes. * * * Q. Okay. What do you go over next? A. The next page is the second page of the travel protection plan. Q. This is page 7 of Exhibit 2? A. Correct. Q. How is that labeled at the top? A. "Optional Travel Protection Plan." It says, "American Bankers Insurance Company." I'd point out that there's bail bond coverage, collision of loss of use [sic], personal effects loss from auto rented. Q. Do you make those circles that we see on that page? . . . . A. Yes. I circle them when they're sitting there and then I hand it--hand the paper to them, and I would say, "This is optional coverage, please sign here." * * * Q. Okay. After she signed that, what did you go over with her next? A. Next one would be the accidental medical protection plan. Q. Page 8 of Exhibit 2? A. Yes. Q. Okay. . . . [A]fter she signed that page, what did you do? A. Page 9. Q. Page 9 of Exhibit 2? A. Your cost is $110. The annual benefit is $45,625. . . . Please sign here. Q. Did you make those circles on a piece of paper? A. Yes. Before I handed it to her, I circled the items that are circled on it and drew the line. * * * Q. [A]fter she signed this page, what would you do next? A. Okay. The next page is page 10, which is the life insurance policy. Q. This is page 10 of Exhibit 2? A. Yes. Q. Okay. How would you explain this page to a customer? A. This 10,000 [sic] term policy. The premium is $108. It's not replacing any other previous life insurance policy. Q. Did you make those circles? A. Yes, I did. . . . * * * Q. This is page 13 of Exhibit 2? A. Yes. It's a statement of policy cost and benefit information that I would just run my finger down and just say, "These are your benefits and the cost, please sign here." Transcript (TR) at 251-270. Petitioner proposed in its PRO a finding that Respondent did not orally explain the ancillary products to the two consumers. However, Ms. Mason and Ms. Phillips did not remember what Respondent said to them. Testimony that a witness does not remember what Respondent said is less than clear and convincing evidence that Respondent did not explain the ancillary products adequately. The testimony of Ms. Mason during cross examination is illustrative. Q. Would you say that what you were really paying attention to when you conducted this transaction was how much it was going to cost you? A. Yeah. Yes. Q. Cause you . . . you talked [on direct] about your recollection about these things. And it was interesting that some things you were able to say you don't recall, but [counsel for Petitioner] was able to get you to commit to certain things that you absolutely said would not have happened. Such as, you know that if . . . the word "optional" had been used that you would not have accepted the product, correct? A. If it would have cost more, then I would not have accepted it. Q. Okay. But you don't specifically recall what was discussed in the course of your meeting with Ms. Fitzgerald, correct? A. No. Q. And you acknowledged that at least when confronted with some of the paperwork, things like a beneficiary on the $10,000 benefit for the life insurance policy, that was certainly discussed with you, right? A. I--yes, I guess. I don't--like I said, I feel so stupid because I don't--I know I said my brother's name and he's down for a beneficiary, but I don't remember why I would have--I don't understand why I did that. . . . * * * Q. You thought that the questions that were being asked to you about the life insurance policy--you thought that they were actually part of car insurance? A. I don't remember being asked questions about life insurance. Q. Do you remember being given a series of questions asking you about your health and about treatment-- A. Yes. * * * Q. So when . . . I ask you the question about whether or not you were told what your lump sum was going to be and you say, "I don't remember," that doesn't mean you weren't told? A. Correct. Q. It just means you don't remember? A. Correct. * * * Q. Turn to page 14. . . . Do you recall what explanation was given about this particular page? A. No. * * * Q. If you turn to page 15, please. . . . Fair to say that you don't recall what was said about this page? A. Yes. TR at 156-170. The oral explanation that Respondent provided to Ms. Mason and Ms. Phillips did not include a statement that each customer could have saved 17.27 and 28.94 percent of the total price, respectively, by declining the ancillary products. Nor did the oral explanation include a suggestion that either customer use the money to buy automobile insurance with a smaller deductible or more complete insurance.3 The omissions discussed in the preceding paragraph are not alleged in the Administrative Complaint as grounds for the statutory violations charged in the Complaint (the un-alleged omissions). Rather, the Complaint limits the alleged grounds to a failure to "inform" Ms. Mason and Ms. Phillips that the ancillary products were: . . . separate from and not a part of the automobile insurance she had requested, was not required by law or a lien holder, was optional, or that there was an additional charge for this product. . . . Administrative Complaint, paragraphs 7, 11, 15, 32, 36, 41, and 45. The un-alleged omissions did not involve the exercise of discretion by Respondent and were not willful. While it is clear that Respondent was the office manager, it is less than clear and convincing that Respondent was in charge of scripting the oral explanation for Friendly-Cash Register.4 Rather, Friendly-Cash Register required the omissions as a condition of Respondent's employment. As Respondent explained in her testimony: Q. . . . I don't see where [this script] asks the consumer if they actually want the optional policies. . . . So how would you know to quote the ancillary products if they had not asked for it yet? A. We were required to offer them to everybody. Q. And the method that Direct General instructed you to use was to just . . . include them in the quote; is that correct? A. State that they were optional, yes, and include them in the quote. * * * A. I would have preferred not to quote with them on the policy-- Q. Why? A. . . . I just preferred it that way, you know. . . . I didn't like it. Q. Do you feel like the way Direct General had you quote these consumers . . . may have led consumers possibly buying policies without full informed consent? A. No. TR at 280 and 295. On September 2, 2005, Respondent voluntarily left the employment of Friendly-Cash Register. Respondent is now employed by Car Insurance.com. Petitioner argues in paragraph 47 of its PRO that the Friendly-Cash Register forms are "vague or ambiguous and make it difficult to decipher (document-deficiency)." The Administrative Complaint does not allege document-deficiency as a ground for the charged violations. The alleged grounds are limited, in paragraphs 7, 11, 15, 32, 36, 41, and 45, to the "failure to inform" the consumers that they were purchasing ancillary products. Moreover, Petitioner acknowledges in paragraph 43 of its PRO that the "optional nature of the ancillary products is evident" from a review of the documents. If it were found that an allegation of document- deficiency is implied in the Administrative Complaint, the trier of fact finds that the ancillary products purchased by Ms. Mason and Ms. Phillips were not mis-labeled or illusory. They provided benefits to each purchaser. Travel protection primarily provided daily rental reimbursement of $25.00 up to 10 days during repairs for collision damage and up to five days during travel interruption. The accident medical protection plan provided medical expense reimbursement up to $1,000.00 and daily hospital coverage of $125.00 up to 365 days. The term life insurance provided a death benefit of $10,000.00. Even if the relevant forms were found to be deficient, any deficiency is rendered moot because each consumer testified that she did not read or rely on the content of the Friendly-Cash Register forms.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding Respondent not guilty of the allegations in the Administrative Complaint. DONE AND ENTERED this 18th day of January, 2008, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 18th day of January, 2008.
