The Issue The issue in this proceeding is whether Petitioner's lottery prize should be withheld and used to pay an outstanding debt for child support.
Findings Of Fact The Petitioner did not appear and no evidence was presented.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Banking and Finance enter a final order dismissing the Petitioners request for a formal hearing, and transferring Petitioner's lottery prize to the Department of Revenue in partial satisfaction of Petitioner's debt for past public assistance obligation. DONE and ENTERED this 20th day of October, 1995, at 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 20th day of October, 1995. COPIES FURNISHED: James Merriweather 1333 7th Street West Jacksonville, FL 32209 Chriss Walker, Esquire Child Support Enforcement Department of Revenue P. O. Box 8030 Tallahassee, FL 32314-8030 Louisa Warren, Esquire Department of the Lottery 250 Marriott Drive Tallahassee, FL 32399 Stephen S. Godwin, Esquire Office of the Comptroller Suite 1302, The Capitol Tallahassee, FL 32399-0350 Hon. Robert F. Milligan, Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, FL 32399-0350 Harry Hooper, Esquire Department of Banking and Finance The Capitol - Room 1302 Tallahassee, FL 32399-0350
The Issue On October 3, 2016, Petitioners, Ammar Al Batha, as Personal Representative of the Estate of Abdel-Kader Al Batha, deceased, and Shahira Alshami, individually, filed a Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien (Petition) with the Division of Administrative Hearings (DOAH) pursuant to section 409.910(17)(b), Florida Statutes (2016).1/ The final hearing was scheduled for December 14, 2016. On November 30, 2016, Respondent filed a Motion for Summary Final Order. In the Motion for Summary Final Order, Respondent asserted that Petitioners, as a matter of law, cannot successfully challenge the amount payable to AHCA under section 409.910(17)(b) because Petitioners are not the Medicaid recipients. On December 2, 2016, Petitioners filed a Motion for Continuance and Extension of Time to Respond to Motion for Summary Final Order. That motion was granted by the undersigned on December 6, 2016, and the hearing scheduled for December 14, 2016, was canceled. On December 12, 2016, Petitioners filed an Objection to Respondent’s Motion for Summary Final Order, asserting that a Medicaid recipient’s right to challenge the payment of a Medicaid lien through DOAH does not die with the recipient, and the recipient’s representative is entitled to challenge the amount payable to AHCA under the procedure in section 409.910(17)(b). Both Respondent’s Motion for Summary Final Order and Petitioners’ Objection to Respondent’s Motion for Summary Final Order have been duly considered in preparation of this Summary Final Order.
Findings Of Fact Based on the record as a whole, the following Findings of Fact are made: On July 2, 2015, Abdel-Kader Al Batha (Mr. Al Batha) was involved in a car accident in Broward County, Florida. In this accident, Mr. Al Batha suffered catastrophic physical and neurological injuries, and, as a result, died on July 20, 2015. Mr. Al Batha was survived by his spouse, Shahira Alshami (Ms. Alshami). Mr. Al Batha’s medical care related to his injury was paid by Medicaid, and AHCA, through the Medicaid program. Medicaid provided $143,663.18 in benefits associated with Mr. Al Batha’s injury. This $143,663.18 represented the entire claim for past medical expenses. Mr. Al Batha’s funeral expenses were in the amount of $3,850. As a result of Mr. Al Batha’s injury and death, Ms. Alshami suffered economic and non-economic damages, which are defined and limited by the Florida Wrongful Death Act to loss of support, services, companionship, and protection from the date of injury, as well as her mental pain and suffering from the date of injury per section 768.21, Florida Statutes. In addition, the Estate of Abdel-Kader Al Batha (the Estate) suffered economic damages, which are defined and limited, by the Florida Wrongful Death Act, to medical expenses, funeral expenses, and loss of net accumulations per section 768.21(6). Altogether, the total combined monetary value of Ms. Alshami and the Estate’s individual damages, and the value a jury would assign to these damages, are no less than $2,500,000 to $5,000,000. Ammar Al Batha, as the Personal Representative of the Estate, brought a wrongful death action to recover both the individual statutory damages of Ms. Alshami, as well as the individual statutory damages of the Estate, against the driver/owner of the vehicle that caused the accident (Defendant). While Ms. Alshami and the Estate’s damages have an exceedingly high monetary value in excess of $2,500,000 to $5,000,000, there were significant limitations to recovering the full value of these damages from the Defendant associated with disputed facts, liability, and policy insurance limits of the primary responsible parties. Based on these significant limiting factors, the wrongful death action was settled through a confidential settlement. While settlement was appropriate given the limiting factors, that does not negate that in the settlement, Ms. Alshami and the Estate are not being fully compensated for all their damages, and they are only receiving a fraction of the total monetary value of all their damages. Understanding that the settlement does not fully compensate Ms. Alshami and the Estate for all their damages, and in the settlement they are only receiving a fraction of the total monetary value of all the damages, including only a fraction of the $143,663.18 claim for past medical expenses, the parties to the settlement made an allocation to the claim for past medical expenses. This allocation was based on the calculation of the ratio the settlement bore to the total monetary value of all damages. Using the conservative valuation of all damages of $2,500,000, the parties calculated that Ms. Alshami and the Estate were receiving 44.5 percent of the total monetary value of all their damages in the settlement, and accordingly they were receiving in the settlement 44.5 percent, or $63,930.12, of their $143,663.18 claim for past medical expenses. In making this allocation, the parties agreed that: The settlement does not fully compensate Mr. Al Batha’s surviving spouse and the Estate of Abdel-Kader Al Batha for all the damages they have suffered and the settlement only compensates them for a fraction of the total monetary value of all the damages; The damages have a value in excess of $2,500,000; The claim for past medical expenses was $143,663.18; and Allocation of the $63,930.12 of the settlement to past medical expenses, and the remainder of the settlement toward the satisfaction of claims other than the past medical expenses, is reasonable and proportionate based on the same ratio this settlement bears to the total monetary value of all the damages. The parties memorialized the allocation of $63,930.12 of the settlement to past medical expenses in the General Release (Release). The Release stated: Although it is acknowledged that this settlement may not fully compensate Releasing Party for all of the damages they have allegedly suffered, this settlement shall operate as a full and complete Release as to Released Parties without regard to this settlement only compensating Releasing Party for a fraction of the total claimed monetary value of their alleged damages. The parties agree that Releasing Party’s alleged damages may have a value in excess of $2,500,000, of which approximately $143,663.18 represents the claimed amount for past medical expenses. Given the facts, circumstances, and nature of Releasing Party’s damages and this settlement, the parties have agreed to allocate $63,930.12 of this settlement to Releasing Party’s claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the claimed total monetary value of all Releasing Party’s damages. As a condition of Mr. Al Batha’s eligibility for Medicaid, Mr. Al Batha, before his death, assigned to AHCA his right to recover from liable third parties, medical expenses paid by Medicaid. During the pendency of the wrongful death action, AHCA was notified of the action, and AHCA, through its collections contractor, Xerox Recovery Services, asserted a $143,663.18 Medicaid lien against the Estate’s cause of action and settlement of that action. The attorney handling the wrongful death claim notified AHCA of the settlement by letter and provided AHCA with a copy of the executed General Release. The letter explained that the damages had a value in excess of $2,500,000, and the settlement represented only a 44.5 percent recovery of the $143,663.18 claim for past medical expenses, or $63,930.12. The letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $143,663.18 Medicaid lien. AHCA calculated its payment pursuant to the formula in section 409.910(11)(f) based on the gross settlement, which includes those funds compensating Ms. Alshami for her individual claim for pain and suffering and loss of support, services, and companionship. This resulted in AHCA demanding payment for the full amount of the Medicaid lien, or $143,663.18.
Findings Of Fact Exhibit 3, a proposal of B & G Services, Inc. to perform work for Charles L. Deveny was admitted into evidence without objection. Therein B & G Services, Inc. contracted to perform work consisting of an addition to Deveny's residence and received as down payment for said work $351.44. This check was made payable to Don Clapp Industries. At the time of the execution of this contract Don Clapp Industries was the wholly owned subsidiary of B & G Services, Inc. (hereinafter referred to as B & G). Mr. Essex was President of B & G at this time and held the contractor's license for the company. Although he acknowledged that B & G had received the money from Deveny and no work had been performed under this contract, Mr. Essex stated that this was the first time he had ever seen the contract. When advised by the Board of the charges pending against him he repaid the $351.44 to Deveny. He stated that he paid this money from his own funds because he felt a personal obligation to the customer for the work that had been scheduled to be performed by B & G and had not been done. Exhibit 2, Petition for Bankruptcy, filed May 24, 1975 was also admitted into evidence without objection. Mr. Essex further testified that the petition for reorganization and for an arrangement under Chapter 11 of the Bankruptcy Act had been modified and that straight bankruptcy is being processed. B & G has been discharged as a creditor, however, the bankruptcy proceeding has not been terminated to date.
The Issue The primary issue in this case is whether Respondent misrepresented or failed to disclose material terms and conditions pertaining to annuities that he sold to several senior citizens. If Respondent were found guilty of any disciplinable offense, then the next issue would be whether Petitioner should impose discipline for such violations as Respondent may be found to have committed.
Findings Of Fact At all times relevant to this case, Respondent Peter S. Tust ("Tust") held a valid license to transact business in Florida as a life insurance agent, which authorized him to sell products such as life and health insurance policies and fixed and variable annuities. This case arises from two separate transactions in which Tust sold an insurance product known as an equity index annuity to (a) Dora Indiviglia and (b) Abraham and Elaine Gelch. Petitioner Department of Financial Services ("DFS" or the "Department") is the state agency charged with administering the provisions of the Florida Insurance Code, among other responsibilities. The Department alleges that Tust fraudulently induced Ms. Indiviglia and the Gelchs to purchase annuities that were not suited to their respective financial needs. Because Tust is a licensed insurance agent, he falls within the Department's regulatory and disciplinary jurisdiction. Broadly speaking, an annuity is a contractual arrangement pursuant to which an insurance company, in exchange for a premium (or purchase price), agrees to pay the owner or his beneficiary a specified income for a period of time. Annuities are generally classified as "fixed" or "variable." Under a fixed annuity, the benefit is paid according to a predetermined interest rate. With a variable annuity, the premium is invested on the owner's behalf in, for example, stocks or bonds, and the amount of the benefit, when paid, reflects the performance of that investment, be it positive or negative. Fixed annuities can be either "immediate" or "deferred." An immediate fixed annuity is one under which the insurer begins paying the benefit upon purchase of the annuity. Under a deferred annuity, in contrast, the premium is allowed to grow over time, until the contract "matures" or is "annuitized" and the insurer begins paying the benefit. The equity index annuities which Tust sold to Ms. Indiviglia and the Gelchs are considered fixed deferred annuities. An equity index annuity is a contract under which the insurer agrees to pay a benefit based on a premium that earns interest at a rate determined by the performance of a designated market index such as the S&P 500. The premium is not invested in the market for the owner's account (as would be the case with a variable annuity). Rather, to explain the concept in the simplest terms, the interest rate rises (or falls) in relation to the index's performance, within predetermined limits. (None of the annuities involved in this case permitted the interest to fall below zero; that is, an owner's principal was never at risk of being lost due to the market's performance.) It is undisputed that the equity index annuities which Tust sold to Ms. Indiviglia and the Gelchs were approved for sale to senior investors by the Department. Equity index annuities are typically long-term investments. Owners of such annuities have limited access to the funds invested and accumulating in their accounts, although some equity index annuities permit yearly penalty-free withdrawals at set percentages. The accrued interest is generally not taxed until the funds are withdrawn or the benefit is paid under annuity. Besides taxes, the purchaser may incur substantial surrender penalties for canceling the contract and receiving his funds ahead of a specified date. Some equity index annuities identify a date——often many years in the future——on which the insurer will "annuitize" the contract if it has not done so already at the purchaser's request. This date is sometimes called the "maturity date." The benefit payable under the annuity is determined based on the account's value as of the maturity date, and the payments to the owner or beneficiary of the annuity begin at that time. Under the annuities in question here, the purchaser was not required to keep his or her funds invested until the maturity date. Rather, subject to certain limitations not at issue, the purchaser could elect to "annuitize" his or her contract practically at any time and thereby begin receiving the annuity payments. Therefore, in this case at least, the fact that the maturity date was beyond a purchaser's expected lifespan is not, of itself, compelling proof that the annuity was an unsuitable investment for him or her. The Indiviglia Transaction. In February 2005, Ms. Indiviglia attended one of the luncheon seminars that Tust routinely conducted in restaurants near his place of business in Boca Raton, Florida. At these seminars, Tust provided a meal and a sales presentation to his invitees. Tust made clear to those in attendance that he was selling equity index annuities and would recommend the purchase of this sort of annuity to anyone interested for whom such an investment would be suitable. Ms. Indiviglia was interested and made an appointment to meet with Tust. She was 65 years old at the time. As she told Tust when they met on February 25, 2005, Ms. Indiviglia's annual income was about $41,000, which she received from pensions and Social Security. She had recently sold some property and wanted to invest the proceeds, which amounted to about $150,000. Ms. Indiviglia had made financial investments before meeting Tust. She had invested in the stock market beginning in the late 1970s. Additionally, she had invested in a 401k account when she worked for the investment bank J.P. Morgan, had purchased mutual funds outside of the 401k, and had bought a variable annuity through another broker in 2003 or 2004. Ms. Indiviglia told Tust her goals were safety, growth, and future income. Upon meeting with Tust, Ms. Indiviglia agreed to purchase an equity index annuity from Fidelity and Guaranty Life Insurance Company ("F&G") for a premium of approximately $149,000. By purchasing this particular product, Ms. Indiviglia was eligible for, and received, a bonus of approximately $15,000, which was added to her account. If she surrendered (or canceled) this annuity during the first 14 years, however, Ms. Indiviglia would pay a penalty, starting at 18% for a cancellation during the first year and declining each year thereafter until the fourteenth year, when the surrender penalty would be 1%. The maturity (or annuity) date on Ms. Indiviglia's annuity was April 22, 2030. (Because she would be 90 years old by that time, the chances were good that Ms. Indiviglia would surrender or annuitize the contract before the maturity date.) In applying for the F&G annuity, Ms. Indiviglia executed an Annuity Application, a Confirmation Statement, and a Senior Annuity Suitability Acknowledgement. On page one of the Senior Annuity Suitability Acknowledgement, Ms. Indiviglia declined to answer certain questions related to her financial needs and objectives by placing a check mark beside the following statement: "No, I decline to answer the questions below, but I believe a Fidelity and Guaranty Life or Americom Life and Annuity annuity contract meets my needs for my financial situation." Ms. Indiviglia placed her signature and the date (3/8/2005) beneath this statement. On the second page of the Senior Suitability Acknowledgement, Ms. Indiviglia manifested her understanding of several statements, including the following, which she checked: ? This is not a short-term investment. ? Cash withdrawals from or a complete surrender of the contract are subject to certain limitations and charges as described in the contract. ? Surrender charges/fees may be incurred as a result of liquidating certain existing accounts; however, I believe this transaction to be in my best interest. Ms. Indiviglia placed her signature and the date (3/8/2005) below these statements. Tust delivered the F&G annuity contract to Ms. Indiviglia on May 16, 2005. Ms. Indiviglia executed a Delivery Receipt acknowledging that she had received not only the annuity contract, but also a contract summary. On the "Policy Information" page of the contract, which is Page 1, in boldfaced type, were the following provisions: RIGHT TO CANCEL. If you decide not to keep this policy, return it within 10 days after you receive it. It may be returned to any of our agents or it may be mailed to us.The return of this policy will void it from the beginning. Any premium paid will be refunded within 10 days of our receipt of this policy. YOU HAVE PURCHASED AN ANNUITY POLICY. CAREFULLY REVIEW THIS POLICY FOR LIMITATIONS. CANCELLATION MAY RESULT IN A SUBSTANTIAL PENALTY KNOWN AS A SURRENDER CHARGE. On Page 2 of the contract, the Annuity Date of April 22, 2030, was plainly disclosed, as was the "Surrender Factor" for each policy year from first (18%) to the fourteenth (1%). Three pages later, on Page 5, under the boldfaced heading, "SURRENDERS," appeared the following: Surrender Charge A surrender charge may be imposed on withdrawals and at death. The surrender charge equals the surrender factor for the appropriate policy year, as shown on the policy information page, multiplied by the amount of the account value withdrawn. The account value withdrawn consists of the amount paid upon a surrender request, or applied to an annuity option, and the surrender charge thereon. Waiver of Surrender Charges The surrender charge will not apply to the account value if payments are made under an annuity option. The Policy Information page clearly identified the Riders and Endorsements to the contract, one of which was entitled, "Partial Withdrawals Without Surrender Charges Rider." That Rider, which was attached to the contract, provided as follows: After the first policy anniversary, a portion of the account value withdrawn will not be subject to a surrender charge. The amount, which can be surrendered without a surrender charge, is up to 10% of the premiums paid, less any amounts previously surrendered in the current policy year which were not subject to the surrender charges. Maximum Benefit: the total maximum amount, which can be surrendered without a charge, is 25% of the premiums paid. Once the maximum amount has been surrendered without charges, any additional surrenders will incur a charge, unless additional premium is paid. Ms. Indiviglia held the F&G annuity into the third policy year. In or around July 2007, she made a penalty-free withdrawal of $12,000. Then, about a month later, she elected to surrender the contract, incurring a 16% penalty for the early withdrawal of her account balance. Although the evidence is not clear as to precisely how Ms. Indiviglia fared, financially, in this transaction, it is undisputed that, notwithstanding the surrender penalty, she actually made money on the investment——at least about $2,000 and perhaps as much as $14,000 or so. The provisions of the F&G annuity which DFS alleges Tust misrepresented or failed to disclose to Ms. Indiviglia were clearly stated, unambiguously, in the contract itself. The evidence fails to convince the undersigned to find, without hesitancy, that Tust misrepresented or failed truthfully to disclose to Ms. Indiviglia any of the F&G annuity contract's material terms and conditions, knowingly made other false representations of material fact about the product, or otherwise made any false promises in connection with the investment. Likewise, the evidence is insufficient to convince the undersigned that the F&G annuity was an inappropriate investment for Ms. Indiviglia, taking into account her stated financial needs and goals, age, wealth, and relative sophistication as an investor. To the contrary, viewing the evidence as a whole, the undersigned determines that the F&G annuity fell squarely within the range of reasonable investments for a person having Ms. Indiviglia's investment profile. The Gelch Transaction. In September 2006, Abraham Gelch, 73, and his wife Elaine, 68, attended one of Tust's luncheon seminars. Mr. Gelch was a retired accountant; to that time he had been primarily responsible for his family's financial decisions. Although Mrs. Gelch denied being knowledgeable regarding investments when she testified in this proceeding, she is well-educated, holding a bachelor's degree and a master's degree, and was sufficiently conversant at hearing regarding the subject annuities to persuade the undersigned that she was and is able to comprehend the particulars of the transaction in issue. After the seminar, the Gelchs met with Tust to discuss purchasing equity index annuities. At the time, they were living on Social Security plus the returns on their investments. The Gelchs had, in 2006, financial investments totaling nearly $2 million, most of which wealth was held in a brokerage account at Morgan Stanley. According to their U.S. income tax return, which they gave to Tust, the Gelchs' adjusted gross income for 2005 was approximately $100,000, about $35,000 of which was derived from investments, according to other information the Gelchs provided Tust. At the meeting with Tust, Mr. Gelch completed a "financial goals and needs" form on which he ranked his investment objectives in order of importance. He ranked the items from 1 to 6, with "1" being the most important, as follows: Protecting my assets from losses 1 Growing my assets 2 Generating more income 3 Leaving money to my children/heirs 6 Replacing my pension income for my spouse if I pass first 4 Protecting my assets from taxes at death 5 Mr. Gelch placed his signature and the date (09/27/06) below this enumeration of his priorities as an investor. On the same form, Mr. Gelch expressed his agreement with the statement, "It is important that my investments are 100% safe from this point forward," and he expressed disagreement with the statement, "I am willing to take some risk (and possible losses) with my investments." Mr. Gelch disclosed on the form that he and his wife had suffered investment losses of $300,000 between 2000 and 2002. In completing the statement, "My greatest financial concern is ," Mr. Gelch wrote: "OUTLIVING MY INCOME." Ultimately, Mr. and Mrs. Gelch agreed to purchase six equity index annuities, two issued by Allianz Life Insurance Company of North America ("Allianz"), and four by Midland National Life Insurance Company ("Midland"), for premiums totaling, in the aggregate, approximately $1.4 million. These annuities were similar in concept to the F&G annuity that Ms. Indiviglia had purchased, having interest rates pegged to market indices, surrender charges for early termination, limitations on penalty-free withdrawals, annuity dates some years in the future, and strong protection against loss of principal.1 With the Allianz annuities, surrender penalties declined over ten years, from 15% in the first year down to 2.14% in the tenth policy year. After one year, the Gelchs could withdraw up to 10% of the premium annually without penalty, to a maximum (over the first 10 policy years) of 50% of the premium paid. Under the Allianz annuities, the Gelchs could begin making systematic withdrawals of credits——that is, they could take distributions of interest earned on their accounts—— without penalty after the fifth policy year. The maturity dates for the Allianz annuities were in 2016. The Midland annuities, like the others, provided for surrender penalties, which declined from 18% to 2% over fourteen years. After the first year, the Gelchs could withdraw up to 10% of the "accumulation value" (premiums paid plus interest earned) of each policy annually without penalty, up to the entire value of the respective annuity. The maturity dates for the Midland annuities fell in 2048 and 2053. In connection with the applications for the Allianz annuities, Mr. and Mrs. Gelch each completed the following forms: Application for Annuity, Product Suitability Form, and Statement of Understanding. In the Product Suitability Form, the Gelchs identified a net worth of more than $1 million and confirmed prior investments in certificates of deposit, fixed annuities, variable annuities, and stocks/bonds/mutual funds. In a section entitled, "Accessing your money," the Gelchs indicated that they intended to access the funds in "10 or more years" as a lump sum. Each Allianz Statement of Understanding is a five page document that identifies the terms of the annuities, including the surrender charges and the methods of calculating interest. The Statements of Understanding do not guarantee a 6-9% return, which is what Mrs. Gelch testified Tust had promised the annuities afforded. Instead, for an indexed investment, each document states, "At the end of each contract year, the capped monthly returns are added together to calculate your indexed interest for that year. If this sum is negative, the indexed interest for that year will be zero." In connection with the applications for the Midland annuities, the Gelchs were provided Annuity Disclosure Statements, which identified the liquidity provisions and contained the following declaration: I understand that [this] annuity is a long- term contract with substantial penalties for early surrenders. A surrender charge is assessed, as listed below on any amount withdrawn, whether as a partial withdrawal or full surrender, that is in excess of the penalty-free amount applicable. The surrender charges vary by product option and decline as [shown in the table.] (Emphasis in original; table in original not reproduced here.) Mr. And Mrs. Gelch each signed and dated this declaration, manifesting their understanding of the surrender charges, which charges, as the disclosure form further explained, "allow the company to invest long-term, and in turn, generally credit higher yields." In addition, on the respective disclosure forms that the Gelchs signed, each of them specifically refused (by signing or placing initials next to the word "Decline"), a 7-year surrender charge option offering no bonus; and a 10-year surrender charge option offering a 5% bonus. Instead, Mr. And Mrs. Gelch each separately requested (by signing or placing initials next to the word "Elect"), the 14-year surrender charge option offering a 10% bonus. Mr. Gelch also completed a Deferred Annuity Suitability Form for Midland, which among other things included the following: 4. An annuity is a long-term contract with substantial penalties for early surrenders and/or distributions. In answering the following question, do not include the funds used to purchase this annuity contract, or any funds from annuities already owned. Do you have sufficient available cash, liquid assets or other sources of income for monthly living expenses and emergencies? Yes ? No (Emphasis in original; check mark handwritten on original.) Mr. Gelch affixed his signature to the suitability form, immediately below a declaration stating: I acknowledge that I have read this Deferred Annuity Suitability Form and believe this annuity meets my needs and is suitable. To the best of my knowledge and belief, the information above is true and complete. Mr. and Mrs. Gelch owned the Allianz and Midland annuities for a little more than a year before surrendering them in January of 2008. The surrender penalties for such early terminations, which charges had been fully disclosed to the Gelchs, were steep: 18% on the Midland annuities and 15% on the Allianz annuities. Despite the surrender penalties, which totaled approximately $200,000, the Gelchs' net loss on the investments (owing to their decision to surrender the annuities so soon after purchasing them) was only about $23,000, due to the investment gains and the bonuses. The provisions of the Allianz and Midland annuities which DFS alleges Tust misrepresented or failed to disclose to the Gelchs were clearly stated, unambiguously, in the written disclosures provided to the Gelchs, not to mention in the contracts themselves. The Gelchs, in turn, gave Tust (and through him the issuing insurers) numerous objective manifestations, in writing, of their understanding of these material terms and conditions. The evidence fails, ultimately, to convince the undersigned to find, without hesitancy, that Tust misrepresented or failed truthfully to disclose to the Gelchs any of the annuity contracts' material terms and conditions, knowingly made other false representations of material fact about the products, or otherwise made any false promises in connection with the Gelchs' investments. Likewise, the evidence is insufficient to convince the undersigned that the Allianz and Midland annuities were inappropriate investments for the Gelchs, taking into account their stated financial needs and goals, respective ages, health, wealth, and relative sophistication as investors. To the contrary, viewing the evidence as a whole, the undersigned determines that the annuities fell squarely within the range of reasonable investments for persons having the Gelchs' investment profile. Ultimate Factual Determinations. In view of the historical facts found above, the undersigned has determined, based the appropriate standard of proof (discussed below) as applied to the evidence adduced at hearing, that Tust is not guilty of any of the following offenses with which he was charged: (a) willfully misrepresenting the terms of any annuity contract as proscribed in Section 626.611(5), Florida Statutes; (b) demonstrating a lack of fitness or trustworthiness to engage in the business of insurance, which is punishable under Section 626.611(7), Florida Statutes; (c) engaging in fraudulent or dishonest practices, a disciplinable offense pursuant to Section 626.611(9), Florida Statutes; (d) willfully failing to comply with, or of violating, a provision of law, which is punishable under Section 626.611(13), Florida Statutes; violating any applicable provision of law, which may subject the violator to discipline under Section 626.621(2), Florida Statutes; (e) engaging in unfair methods of competition or deceptive acts, as prohibited in Section 626.9541, Florida Statutes; and (f) failing to present accurately and completely every fact essential to a client's decision, as required under Florida Administrative Code Rule 69B-215.210. Moreover, although Tust did not have the burden to prove his innocence in any respect, the greater weight of the evidence nevertheless persuades the undersigned to determine that he did, in fact, fulfill the obligations he owed to Ms. Indiviglia and the Gelchs under Section 627.4554, Florida Statutes, which governs transactions involving sales of annuities to senior consumers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a Final Order finding Peter S. Tust not guilty of the charges that were brought against him in this proceeding. DONE AND ENTERED this 3rd day of November, 2009, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 3rd day of November, 2009.
The Issue The issue is whether Section 11B(3) of the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2004 Second Edition, is an invalid exercise of delegated legislative authority.
Findings Of Fact The petitions filed by FFVA and TIC challenge the validity of Section 11B(3) of the 2004 Manual,4/ which prior to October 1, 2007, was adopted by reference as part of Florida Administrative Code Rule 69L-7.501(1). Florida Administrative Code Rule 69L-7.501(1) was amended effective October 1, 2007, to adopt by reference the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2006 Edition ("the 2006 Manual"). Florida Administrative Code Rule 69L-7.501(1), as it existed when the petitions were filed and as it currently exists, adopts by reference the 2006 Manual, not the 2004 Manual. The 2004 Manual is no longer adopted by reference as part of Florida Administrative Code Rule 69L-7.501, or any other rule. AHCA applied the 2004 Manual in the reimbursement dispute initiated by HRMC against FFVA under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on October 24, 2007, which was attached to FFVA's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 07-5414. AHCA applied the 2004 Manual in a reimbursement dispute involving TIC under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on January 9, 2008, which was attached to TIC's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 08-0703.
Conclusions For Claimant: Daniel Harwin, Esquire Freedland, Harwin, Valori, P.L. Suite 2300 110 Southeast 6th Street Fort Lauderdale, Florida 33301 For Respondent: S. William Fuller, Jr., Esquire Hall Booth Smith, P.C. Suite 400 200 West Forsyth Street Jacksonville, Florida 32202
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review pursuant to section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of administrative appeal with the agency clerk of the Division of Administrative Hearings within 30 days of rendition of the order to be reviewed, and a copy of the notice, accompanied by any filing fees prescribed by law, with the clerk of the district court of appeal in the appellate district where the agency maintains its headquarters or where a party resides or as otherwise provided by law.
