The Issue The issues in this case are whether Respondent, Timothy Michael Crowley, committed the offenses alleged in an Administrative Complaint issued by Petitioner, the Department of Financial Services, on September 14, 2006, and, if so, what penalty should be imposed.
Findings Of Fact The Parties. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat. Respondent Timothy Michael Crowley was, at the times relevant, licensed in Florida as a life and health (2-18) agent, and a general lines, property and casualty agent. Mr. Crowley’s license number is A058537. Mr. Crowley, who is 61 years of age, has been an insurance agent for approximately 30 years. At the times relevant to this matter, Mr. Crowley was employed by Insurance Center of South Florida (hereinafter referred to as “Insurance Center”). Insurance Center is located in Coral Springs, Florida. At all relevant times, Mr. Crowley transacted commercial lines of insurance for Insurance Center. Count I; Xiaoqu Ma and Q-Nails. The Department has abandoned the charges of Count I, involving Xiaoqu Ma and Q-Nails, in Department’s Proposed Recommended Order. The evidence concerning Count I failed to prove the factual allegations necessary to support the charges of Count I. Count II; Charles Rosenthal and Cer-Tax, Inc. On or about December 15, 2004, a letter and three forms were faxed from Mr. Crowley on Insurance Center letterhead to Cer-Tax, Inc. (hereinafter referred to as “Cer-Tax”), an accounting business owned and operated by Charles Rosenthal. Insurance Center had been providing office general liability insurance coverage to Cer-Tax for several years. Mr. Crowley’s letter was sent to Cer-Tax because it was time for Cer-Tax to renew its insurance. Mr. Crowley stated, in part, the following in his letter, which was dated December 10, 2004, to Cer-Tax: We are pleased to offer the following quote for the renewal of your expiring office general liability policy. North Point Insurance Company $300,000 General Liability Policy Aggregate $300,000 General Liability Per Occurance [sic] $100,000 Damage to Rented Property of Others This policy is for premises liability only. Total annual premium $582.00 This quote is based on the imformation [sic] provided, subject to loss history verification, a satisfactory inspection and compliance with all recommendations. In order to bind the coverage we will need a check in the amount of $582.00 and the enclosed forms signed. You can fax the forms back to me and then please mail the originals with your signature. Please be sure to read the attached notice of terrorism insurance coverage. This notice is required by Federal Law and must be signed at the time of binding. Please feel free to call in the event you should have any questions regarding your coverages or the renewal process. The three forms attached to the December 10, 2004, letter for Mr. Rosenthal’s signature included: a “Notice-Offer of Terrorism Coverage and Disclosure of Premium” form; an “Applicant Information Section”; and a document titled “Nation Safe Drivers Enrollment Application” (hereinafter referred to as the “Nation’s Application”). While Mr. Crowley’s letter clearly indicates that all three forms, including the Nation’s Application, had to be signed on behalf of Cer-Tax and a total payment of $582.00 had to be made “[i]n order to bind the coverages,” described in the letter as “general liability” coverages, the Nation’s Application had nothing to do with the office general liability coverage Cer-Tax desired and Mr. Rosenthal thought he was renewing. In fact, the Nation’s Application was for an ancillary insurance coverage or product that provided accidental death benefits and membership in a motor club. Insurance Center had begun selling the Nation Safe Drivers product after Mr. Crowley became employed by Insurance Center. In addition to having no direct relationship to the office general liability coverage Cer-Tax desired and Mr. Rosenthal was told by Mr. Crowley in his December 10, 2004, letter Insurance Center was renewing, there was a separate charge for the Nation Safe Drivers product. The charge was $100.00 and it was included in the $582.00 charge Mr. Crowley told Cer-Tax was the total annual premium for Cer-Tax’s renewal of its office general liability policy. The actual cost of the office general liability insurance policy was $482.00, a fact which was not explained by Mr. Crowley to Mr. Rosenthal. Even if Mr. Rosenthal had paid more attention to the documents he was told to sign, it is unlikely that Mr. Rosenthal or any other reasonable person would have concluded that he was paying for anything other than the renewal of Cer-Tax’s office general liability insurance policy. Nor should Mr. Rosenthal, given Mr. Crowley’s explanation, have reasonably concluded that the Nation Safe Drivers product was a policy separate from the one he thought he was purchasing. As instructed in the December 10, 2004, letter from Mr. Crowley, on or about December 16, 2004, Mr. Rosenthal signed the three documents where they had been marked with an “x” in a circle. Mr. Rosenthal also included his birth date on the Nation’s Application. The forms and a check for $582.00 payable to Insurance Center were returned to Insurance Center. Insurance Center, while informing Mr. Rosenthal and Cer-Tax that it was selling Cer-Tax an insurance product from North Pointe Insurance Company, actually sold two separate products: an office general liability policy from North Pointe Insurance Company; and a Nation Safe Drivers product providing accidental death benefits and membership in a motor club. The latter product was not one which Cer-Tax was aware it was purchasing or one that it desired. While Mr. Rosenthal is an educated accountant, authorized to represent clients before the Internal Revenue Service, he is not an insurance agent. Mr. Rosenthal, given the representations in Mr. Crowley’s December 10, 2004, letter, acted reasonably in following Mr. Crowley’s instructions and in not inquiring further about the Nation’s Application. Count III; Selma Schevers and Realty Unlimited, Inc. On or about December 10, 2004, a document and three forms were faxed by Mr. Crowley to Realty Unlimited, Inc. (hereinafter referred to as “Realty Unlimited”), and Selma Schevers, the owner of Realty Unlimited. Mr. Crowley stated, in part, the following in the document: Insurance Company: National Insurance Company---Rated A+ by A.M. Best Co. Business Personal Property Business property - $25,000.00 per location #1 & #2, Location #3 $40,000 special form including theft valued on a replacement cost basis. $500 deductible Theft sublimt [sic] $25,000 Including wind/hail 2% deductible or $1,000 whichever is greater Any other peril deductible - $1,000 Business income $100,000 per location payable 1/3 over 90 days Commercial General Liability Coverage General Aggregate: $2,000,000 Per Occurrence: Products and Completed $1,000,000 Operations: $Excluded Personal Injury: $1,000,000 Advertising Injury: $Excluded Fire Damage Leagal [sic] Liability: $100,000 Medical Payments: $5,000 Deductible $500 per claim – Occurrence Basis Professional Liabilty General Aggregate: None Included in General Liability Total Annual Premium $5190.00 . . . . Please sign the two applications, terrorism form, and the Nations enrollment form. Please fax back to me with your check and be sure to mail the original signatures to me. Also please sign this form and return the original to me to authorize me to sign your name to the premium finance agreement. X I will bind your coverages as soon as I receive your check and the faxed signed forms. I will then send you a certificate of insurance showing all the coverages are in effect. Please call should you have any questions about your coverages or what needs to be signed. One of the forms sent to Ms. Schevers was a Nation’s Application identical to the one sent to Cer-Tax. While Ms. Schevers could not remember seeing the Nation’s Application, she did identify her date of birth written on the application as being in her handwriting. While Mr. Crowley’s letter, unlike the one sent to Cer-Tax, identifies the Nation’s Application, his letter only describes the insurance Realty Unlimited was interested in purchasing, which was business general liability insurance, and fails to explain what the Nation’s Application is for. Mr. Crowley indicates in the document that he will “bind your coverages as soon as I receive your check and the faxed signed forms,” which included the Nation’s Application. Mr. Crowley also suggested in the document that the “Total Annual Premium” of $5,190.00 was for the business general liability insurance. He failed to inform Realty Unlimited that the $5,190.00 premium included an additional charge of $200.00 for Nation Safe Drivers coverage, coverage which had not been requested by Realty Unlimited and was unwanted coverage. While Ms. Schevers, on behalf of Realty Unlimited, signed some of the forms sent to her by Mr. Crowley, she did not sign the Nation’s Application. She returned the signed forms on or about December 10, 2004, with a down payment of $1,480.00, which Mr. Crowley had indicated was acceptable. The down payment from Realty Unlimited was divided by the Insurance Center, with $1,280.00 being applied toward the business general liability insurance desired by Realty Unlimited and $200.00 applied in full payment for Nation Safe Drivers coverage despite the fact that Ms. Schevers had not signed the Nation’s Application. Insurance Center, while informing Ms. Schevers and Realty Unlimited that it was selling Realty Unlimited an insurance product from National Insurance Company, actually sold two separate products: a business general liability insurance policy from National Insurance Company; and a Nation Safe Drivers product providing accidental death benefits and membership in a motor club. The latter product was not one which Realty Unlimited was aware it was purchasing, one that it desired, or one for which Ms. Schevers even signed an application. Nor was it one, assuming Ms. Schevers saw the Nation’s Application, Ms. Schevers should have realized was not part of the insurance product she wished to purchase. Counts IV and V. The Department has abandoned the charges of Counts IV and V at hearing and in Department’s Proposed Recommended Order. No evidence concerning Counts IV and V was presented at hearing to support the charges of these Counts. Aggravating/Mitigating Factors; Prior Disciplinary Action Against Mr. Crowley. In addition to this disciplinary matter, an Administrative Complaint (hereinafter referred to as the “1997 Administrative Complaint”) was issued against Mr. Crowley on or about April 2, 1997. The charges of the 1997 Administrative Complaint, which included allegations of wrong-doing similar to those at issue in this case, were resolved by a Consent Order issued pursuant to a Settlement Stipulation for Consent Order. Among other things, the Consent Order ordered that Mr. Crowley cease and desist from using any methods or practices in the business of insurance which would constitute the act or practice of “sliding.” Aggravating/Mitigating Factors; Reimbursement of Premiums. The premiums paid by Cer-Tax and Realty Unlimited have been refunded by Mr. Crowley and Insurance Center.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Timothy Michael Crowley violated the provisions of Chapter 626, Florida Statutes, described, supra; dismissing all other charges; and suspending his license and appointment for a period of twelve months. DONE AND ENTERED this 27th day of November, 2007, in Tallahassee, Leon County, Florida. S LARRY J. SARTIN 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 27th day of November, 2007. COPIES FURNISHED: Robert Alan Fox, Senior Attorney Division of Legal Services Department of Financial Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Jed Berman, Esquire Infantino and Berman Post Office Drawer 30 Winter Park, Florida 32790-0030 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307
Findings Of Fact Petitioner, an association of automobile insurers, has standing to prosecute the instant challenge on behalf of its members. Insurance is classified into the following "kinds" of insurance: life, health, property, casualty, surety, marine, and title. Section 624.6011, Florida Statutes. The kinds of insurance at issue here are health, property, and casualty insurance. In the broadest sense, health insurance protects named beneficiaries against bodily injury, disablement, or death resulting from an accident or sickness. Section 624.603, Florida Statutes. Traditional property insurance protects the real or personal property of named insureds against loss or damage to that property. Section 624.604, Florida Statutes. Casualty insurance historically gives liability protection to the named insured or beneficiary for loss or damage to the person or property of others. However, by statutory definition, a casualty insurance policy may also provide benefits to the named insured or beneficiary for certain losses or damage to person and property irrespective of liability. Section 624.605, Florida Statutes. The various kinds of insurance are not mutually exclusive. Section 624.601, Florida Statutes. Some insurance policies provide benefits which may be classified as more than one kind of insurance. Casualty insurance is statutorily divided into "types" of insurance including, but not limited to, vehicle insurance. Section 624.605(1)(a), Florida Statutes. For purposes of this challenge to the proposed rule, vehicle insurance includes two "lines of business" for private passenger automobiles: automobile liability and automobile physical damage. The automobile liability line of business includes, but is not limited to, no-fault personal injury protection (PIP) coverage and property damage liability coverage. The property damage liability component of automobile insurance is a classic example of casualty insurance which provides coverage for insureds in the event they become liable for damage to property of others arising out of the use of a motor vehicle. Section 627.7275, Florida Statutes. Pursuant to Section 627.736, Florida Statutes, PIP coverage provides benefits to: the named insured, relatives residing in the same household, persons operating the insured's motor vehicle, passengers in such motor vehicle, and other persons struck by such motor vehicle and suffering bodily injury while not an occupant of a self- propelled vehicle, . . . for loss sustained by any such person as a result of bodily injury, sickness, disease, or death arising out of the ownership, maintenance, or use of a motor vehicle . . . . PIP is not a traditional component of vehicle insurance. It was created by the Florida legislature as part of the Florida Motor Vehicle No-Fault Law (Sections 627.730 through 627.7405, Florida Statutes) in the early 1970's. PIP provides medical, surgical, funeral, and disability benefits, irrespective of fault, so that covered persons could reap those benefits, without resort to litigation. PIP is a hybrid form of insurance which provides benefits directly to the named insured and liability coverage for injury to other persons, i.e., passengers and by-standers. As an integral part of the no-fault law, PIP is not traditional health insurance. It cannot be issued without automobile property damage liability coverage. Section 627.7275(1), Florida Statutes. PIP is casualty/vehicle insurance which currently is creating increased losses in the insurance industry. The automobile physical damage line of business includes comprehensive and collision coverage for property damage to the insured's vehicle. Automobile comprehensive insurance coverage ordinarily protects the insured vehicle from risks and perils such as broken glass, theft, or a rock hitting the car. Automobile collision insurance coverage generally protects the insured vehicle from its collision with another vehicle or object. An automobile insurance contract is a liability insurance contract because of its property damage liability component. All coverages under an automobile policy are incidental to and issued as a part of the property damage liability component. Only those insurance carriers licensed to write automobile insurance may provide these coverages. Accordingly, the proposed rule correctly requires premiums for all automobile insurance coverages to be reported as casualty insurance on the automobile liability and automobile physical damage lines of business. Approximately 1,100 property and casualty insurers must regularly report their financial condition to Respondent. Some of these insurers are authorized to do business only in the state of Florida. Others hold certificates of authority to do business in multiple states or nationally. Every insurer authorized to do business in the state of Florida, whether domestic or foreign, currently reports its financial condition on annual and quarterly statements approved by the National Association of Insurance Commissioners (NAIC). These reports allow Respondent to review the financial solvency of insurers. The NAIC quarterly statement (Page 18) lists lines of business and requires the insurer to report information relating to loss experience (Part 1) and direct premiums written (Part 2) for each line of business including, but not limited to, auto liability and auto physical damage. This schedule does not list any other line of business pertaining specifically to automobile insurance, whether commercial or private. The NAIC annual statement (Page 8) lists lines of business and requires the insurer to report information relating to recapitulation of all premiums (Part 2A) and premiums written (Part 2B) for each line of business including, but not limited to, auto liability and auto physical damage. This schedule does not list any other line of business pertaining specifically to automobile insurance, whether commercial or private. All insurers doing business in the state of Florida must file an additional state schedule (Page 14) with their annual report relating to premiums and losses for business transacted in Florida. This schedule lists lines of business including, but not limited to, private passenger auto no-fault (PIP), other private passenger auto liability, and private passenger auto physical damage. This form does not list any other line of business pertaining specifically to private passenger automobile insurance. Section 624.6012, Florida Statutes, requires Respondent to classify "kinds" of insurance into "lines of insurance" consistent with the reporting requirements of the NAIC. The proposed rule lists auto liability and auto physical damage as the only lines of business pertaining to automobile insurance consistent with NAIC's quarterly statement (Page 18) and annual statement (Page 8). As to automobile insurance, NAIC's quarterly statement (Page 15) and annual statement (Page 8) are the only reporting schedules that are appropriate for use in determining the adjusted ratios of gross and/or net written premiums to surplus pursuant to Section 624.4095(4), Florida Statutes. The schedule for reporting premiums written in the state of Florida alone (Page 14 of the NAIC annual statement) is not appropriate because the adjusted ratios apply to a company's gross and net premiums regardless of the state in which they were written. To require insurers to include information on the Florida only schedule for premiums written in every state would require a report not authorized by Florida law or NAIC. Additionally, the quarterly statement (Page 18) and the annual statement (Page 8) are appropriate because adjusted ratios may be calculated on an annualized basis, at any time during the year. The Florida only schedule (Page 14) is filed only once a year. The proposed rule lists homeowners multi peril as a line of business under the property kind of insurance. It does not contain a separate listing for mobile home homeowners insurance. Under the current version of the proposed rule, mobile home property insurance which is written on an automobile physical damage policy form (mobile home physical damage coverage), is reported on the automobile physical damage line of business as casualty insurance. Homeowners multiple peril is also listed as a line of business on the NAIC's quarterly statement (Page 18) and annual statement (Page 8). The state schedule (Page 14 ) lists separate lines of business for homeowners multiple peril and mobile homeowners multi peril. Property insurers usually provide homeowners insurance for damage to a dwelling or a mobile home on a property insurance policy form. Consequently, they are subject to assessment for windstorm insurance risk apportionment pursuant to Section 627.351(2), Florida Statutes. Mobile home physical damage coverage is substantially similar to traditional homeowners insurance. The former is a limited type of homeowners insurance which protects the mobile home estate from fire and other damage to structure and contents. Carriers selling mobile home physical damage coverage are not subject to assessment for windstorm insurance risk apportionment. Section 320.01(1), Florida Statutes, does not include a mobile home within the definition of a motor vehicle. Section 320.01(2), Florida Statutes, provides a separate definition for a mobile home for purposes of licensing and taxation. Section 627.732(1), Florida Statutes, specifically excludes a mobile home as a motor vehicle for purposes of the Florida Motor Vehicle No-Fault Law. The only record evidence presented at the final hearing relative to mobile home insurance indicates that it is not casualty insurance, regardless of the policy form on which it is written, and should not be reported as such. Respondent's own expert opined that mobile home physical damage coverage is property insurance rather than casualty insurance. In response to confusion in the insurance industry, Respondent published the proposed rule to clarify how the premium adjustment factors of Section 624.4095, Florida Statutes, applied to various "lines of business." The proposed rule lists specific lines of business for each kind of insurance. Some of the lines listed under casualty insurance have a long tail meaning that a claim may not materialize for a long time, i.e., medical malpractice. Other lines of casualty insurance have a short tail with a high loss ratio like automobile liability and automobile physical damage. Restriction of premiums written for risks with long tails or high loss ratios helps to limit the volume of losses which is directly related to an insurer's solvency. Record evidence indicates that claims on automobile insurance policies do not have long tails. However, insureds often make multiple claims on their automobile coverages within the same policy period resulting in high loss ratios. There is no record evidence that claims on mobile home physical damage coverage take any longer to materialize than claims on mobile home property insurance written on the traditional homeowners policy form. Moreover, there is no record evidence relative to loss ratios for mobile home insurance premiums. The only evidence presented pertaining to the risk of mobile home insurance indicates that all such coverages should be reported as property insurance and subject to assessment for wind storm risk apportionment. Under Section 624.4095, Florida Statutes, a company can write less casualty insurance relative to its surplus as to policyholders than health or property insurance because casualty insurance has a higher adjustment factor. Respondent did not ignore or contravene Section 624.601, Florida Statutes, or any of the statutes implemented, when it drafted the proposed rule as it relates to private passenger auto no-fault (PIP), private passenger automobile property damage liability, and private passenger automobile physical damage including comprehensive and collision coverage. However, for purposes of this proposed rule, Respondent never considered classifying mobile home physical damage coverage as property insurance rather than as casualty insurance. A plain reading of Section 624.605(1)(a), Florida Statutes, includes all coverages for private passenger automobile insurance but not coverage for mobile home physical damage. Competent substantial evidence indicates that Respondent acted arbitrarily and capriciously when it designed the proposed rule to include premiums written for mobile home estates in the automobile physical damage line of business under casualty insurance solely because it is written on an automobile physical damage policy form.
Findings Of Fact THE INSURANCE AGENCY At all times material to the instant case, Lloyd Eldo Register was a licensed insurance agent in the State of Florida, licensed as an Ordinary Life, including Disability, General Lines and Disability Agent. The Respondent, Lloyd Eldo Register (hereinafter Register) at all times material herein, was the president, owner, and registered agent for Friendly Auto Insurance, Incorporated (hereinafter referred to as Friendly Auto). In his capacity as president and registered agent, the Respondent, Register, was responsible for and exercised supervision and control over the employees and sales agents employed by Friendly Auto. At all times material herein, Respondent, Shirley Jean Hopkins was a licensed insurance agent and was employed by Friendly Auto to sell various types of auto insurance and coverages. Specifically, Shirley Hopkins was licensed as an Ordinary Life, including Disability Agent, General Lines Agent, and an Independent Adjuster. As an employee of Friendly Auto, she worked under the supervision and control of the Respondent, Lloyd Register. At the time of the various transactions which are the subject of this administrative proceeding, Florida law required personal injury protection (hereinafter PIP) insurance coverage for each owner of a motor vehicle in Florida. (See Section 627.733 and 627.736, Florida Statutes (1981)). Because it was necessary to show proof of such PIP coverage in order to purchase a license tag for an automobile, this type of insurance was and is commonly referred to as "tag insurance." Friendly Auto offered and sold PIP or tag insurance as well as other types of insurance, including motor club policies, which included as its primary benefit an accidental death benefit. The accidental death benefit (hereinafter referred to as ADB) which was sold by Friendly Auto, was one of the benefits under a motor club policy very similar to that sold by AAA (American Automobile Association). The motor club policies also included such benefits as theft reward, hit and run services, rental car discounts, credit card services, vacation travel arrangements, trip routing, and lost baggage service. The amount of premium paid and type of plan applied for determined the benefits to be received. During the period of the transactions in this action, the Respondent, Lloyd Register, had established a policy of not selling PIP alone. Customers were required to buy PIP coupled with a motor club policy. The reason for this policy was that the commission on minimum PIP coverage was too low to justify the cost of selling it alone. The commission on the motor club policies was as high as 80 percent of the premium charged. The sales agents were instructed by Mr. Register to not sell a customer PIP unless they also purchased the ADB policy. This policy was followed by the sales agents during 1981 and the first eight months of 1982. Customers, upon entering the Friendly Auto office, would indicate the kind of insurance they wanted and they were then given a quote by a sales agent for the coverage requested plus ADB. The cost of the ADD or ADB policy was added to the cost of the coverage requested without informing the purchaser and a single quote was given to the customer. If a customer inquired about the ADB coverage, they were told it was part of the coverage and that the requested coverage could not be purchased without the accidental death benefit. The customers were not informed by the salesperson nor the forms used in the transaction that they were being charged a separate and distinct premium for the ADB or that they could reject the ADB coverage. The basic PIP coverage also included a death benefit Although the Respondent, Lloyd Register, testified that in order to make a profit, it was necessary to sell the ADB with the minimum PIP coverage, the ADB was sold inn the same manner to persons purchasing PIP, as well as liability and collision coverage. The premium for the ADB ranged from $15 to $25. The decision as to which premium to charge was made by the employee of Friendly Auto and was not discussed with the customer. The sales agents had been instructed by the Respondent, Lloyd Register, to base premium charged for ADB on the customer's driving record. However, the premium charged only affected what motor club benefits would be received. No reason was given as to what effect a person's driving record had upon the premium or benefits or risk involved. After the customer was given the quote and agreed to purchase, the sales agent then filled out and gave to the customer several documents to be signed and initialed. The places to be initialed were marked by the sales agent with a red square, rubber stamped onto the appropriate points of the forms by the sales agent, and a check mark or "X" was placed next to where they were to sign. One of the documents was an application for the motor club or ADB. Respondents contend that by signing the application and the acknowledgement at the bottom of the liability coverages rejection form, the customers were made aware that they were purchasing a separate coverage for ADB. However, when inquiry was made by customers about the ADB, they were told it was part of the coverage and had to be purchased. They were not told a separate premium was involved or that it was a separate policy. The majority of the complaining witnesses in this case were not even aware they had purchased the motor club or ADB. Most of the complaining witnesses admitted they did not read the documents they were asked to sign. The sales agents did not pressure them to sign or hurry them in any way that prevented them from reading the documents. Most of the complaining witnesses had limited education, very little knowledge of insurance and basically relied upon the sales agent to give them the coverage they requested. No complaining witness requested ADB or motor club coverage. Anne Zugelder, office manager for Friendly Auto, and Shirley Hopkins testified generally regarding the procedures used, but neither person testified about the facts of the specific transactions in this case. Shortly after January 18, 1982, Mr. John A. Hoback, an investigator for the Department of Insurance, went to the offices of Friendly Auto where he reviewed approximately 35 to 40 files relating to customers who had purchased insurance from Friendly Auto. He discovered that many of these files contained the original policy for ADB coverage; the identification card on PIP coverage; and the original policy for PIP coverage. Some of these policies had been in the files for four, five, and six months. Specifically, Mr. Hoback examined the file of James Richard Johns and found the original copy of the auto policy issued by Fortune and the ADD policy issued by American Travelers Association. The auto policy had been issued on June 4, 1981. Mr. Hoback examined the file of Charles Meadows and found that the Fortune PIP policy had been issued on June 2, 1981, and the original was still in the file. The original ADD policy issued by American Travelers was also in the file. In the file of Phillip Johnson, Mr. Hoback found the original copy of the Fortune auto policy issued to Mr. Johnson on June 1, 1981, and also found the original ADD policy in the file. The file relating to Ruben Simpson was also examined and the original copies of the Fortune auto policy and the ADD policy were still in the file. These original policies were supposed to have been sent to the insureds by the agency upon receipt from the insurance company. The deposition of Mr. James T. Harrison, Jr., was admitted and considered. However, because Mr. Harrison's opinion was based upon incomplete facts in terms of the actual sales procedures used, his opinion relating to Respondents' meeting the standard of care in the industry was given no weight. FORMS In each of the purchases involved in this action, Friendly Auto's agents used several preprinted forms as part of each sale. These forms include primarily: (1) a quote sheet, (2) rejection of liability coverages form, (3) prenumbered receipts, and (4) motor club or ADB application. QUOTE SHEET The quote sheet is a small yellow form with spaces for entering information about the insured and the cars to be insured. The quote sheet in the Section titled "Type of Coverage" reflects "PIP, LIAB, COMP, COLL". These terms refer to personal injury protection, liability, comprehensive, and collision. Nowhere on the form does ADB or motor club coverage appear. There is a space at the bottom of the form for computations. LIABILITY COVERAGES REJECTION FORM The Rejection of Liability Coverages form is divided into four main parts. The top part of the form informed the customer that they had the right to purchase liability coverage and that they can also reject liability coverage. If the customer desired to reject liability coverage, there was a signature block where the customer signed rejecting such coverage. The second portion of the form dealt with PIP and had optional blocks to be checked in order to reflect the deductible desired. The deductible ranged from $250 to $8,000. There were also optional blocks to select the type of PIP coverage and at the bottom of this section was again a signature block. The third section dealt with uninsured motorist coverage and had a block where the customer entered the limits of coverage desired if they were purchasing uninsured motorist coverage. There was a block to be checked if the customer was rejecting uninsured motorist coverage. At the bottom of this section, was again a signature block. The last section referred to an accidental death benefit and contained the following language: I UNDERSTAND THE ACCIDENTAL DEATH BENEFIT THROUGH MY NATION MEMBERSHIP IS A SEPARATE ITEM, THAT PAYS IN ADDITION TO MY AUTO INSURANCE POLICY. I UNDERSTAND THE ADDITIONAL CHARGE FOR THIS COVERAGE IS INCLUDED IN WITH MY DOWN PAYMENT. The above language was followed only by a signature block. There were no blocks to be checked or initialed rejecting or accepting the accidental death benefit. (this statement is referred to hereafter as the acknowledgement.) The Rejection of Liability Coverages form was used in all sales of automobile insurance at Friendly Auto. The reference in the acknowledgement above to "MY NATION MEMBERSHIP" refers to a company which provided an ADB policy prior to the time Friendly Auto began using American Travelers Association. Once Friendly Auto decided to stop using the Nation Company, the Respondent, Register, elected not to reprint the form. He also considered, but did not feel it necessary, to have the sales agents mark through Nation and pencil in American Travelers Association. Mr. Register felt that the American Travelers Association policy could be interpreted to be a "Nation membership" because it covered the insured anywhere in the nation. However, Mr. Register could not specifically recall having instructed his sales agents to give this explanation to the customers. Prior to July or August of 1982, Mr. Register had not instructed his employees to explain that the accidental death benefit referred to in the form was optional. Beginning in July or August, 1982, Mr. Register instructed his sales agents to begin telling customers the ADB was optional. This change occurred about the same time the law relating to the $8,000 deductible PIP changed and was due in part to "heat" which Friendly Auto had been getting from the Department of Insurance. RECEIPT The receipt form contained basic information blocks for date, amount, received from, and signature block for the sales agent of Friendly Auto. There was a line preceded by "In re:" which was used to reflect the coverages for which the premium was being paid. A copy of the receipt was kept in the Friendly Auto file on each customer. AMERICAN TRAVELERS ASSOCIATION APPLICATION The last of the four forms was a motor club application for "Travel/Accident Benefits including Accidental Death and Dismemberment Coverage." The form contained spaces for the name and address of the applicant and name and address of their beneficiary. Just above the signature block of the applicant, were spaces for the effective date, the expiration date, the plan, amount of ADD coverage, and the fee. (See Respondent's Exhibit 24.) An almost identical form was used when the ADB policy was written with Southern Management Company. THE SALES Each count of the First Amended Administrative Complaint against Respondent, Lloyd Register, relates to a sale to a particular customer. Several of these same transactions were also the subject of the Administrative Complaint against the Respondent, Shirley Hopkins. The following facts are found as to both the counts of the First Amended Administrative Complaint against Lloyd Register and the Administrative Complaint against Respondent Shirley Hopkins: (the count number refers to the First Amended Administrative Complaint in Case No. 82-2048). COUNT I SALE TO BRENDA CONNER On October 9, 1981, Brenda Conner went to Friendly Auto to purchase PIP insurance. She informed the Respondent, Shirley Hopkins, that she wanted to purchase PIP only. No other coverages were explained to her, but there was some discussion about who she wanted as her beneficiary. She signed the documents she was requested to sign but did not read them. She thought she had paid for PIP only. Her receipt from Friendly Auto was for $37.00 and listed only PIP as the only coverage purchased. The receipt was signed by the Respondent, Shirley Hopkins. She never received a policy from American Travelers Association. She was charged $15.00 as part of the $37.00 premium for the American Travelers Association ADB policy. She received her policy for the PIP coverage. COUNT II SALE TO BRUCE T. EDWARDS On September 15, 1981, Bruce T. Edwards purchased insurance from Friendly Auto. Mr. Edwards was sold the insurance by Respondent, Shirley Hopkins. The receipt received by Mr. Edwards reflected a total premium of $43.00 and listed only "PIP" as the coverage purchased. Mr. Edwards was unaware that as part of the $43.00 premium, he purchased accidental death and dismemberment coverage (ADB) from American Travelers Association. The premium for the ADB was $20.00. Mr. Edwards signed but did not fill out the yellow ADB application form. Shirley Hopkins explained the PIP coverage but made no mention that he was purchasing a separate ADB insurance policy. He did not read the documents he signed, but merely initialed and signed the blocks Ms. Hopkins marked. He did not request ADB coverage and thought he was getting PIP only. He had no intention of buying any insurance other than PIP. Prior to Mr. Edwards going to Friendly Auto, his wife had called and obtained a quote of $43.00 for tag insurance. She specifically told the person on the phone that her husband wanted the cheapest coverage necessary to get a tag. COUNT III SALE TO PATRICIA EDWARDS On or about August 28, 1981, Patricia Edwards purchased insurance from Friendly Auto through its sales agent Shirley Hopkins. Patricia Edwards first called Friendly Auto and requested a quote for PIP coverage only. She also gave the person all the necessary information over the phone for the needed documentation. The person who actually went to Friendly Auto and purchased the insurance and signed the documents was Bruce Edwards, Patricia Edwards' husband. Patricia Edwards requested only minimum coverage needed to get her tag. She was given a quote of $37.00. The receipt given by Friendly Auto was signed by the Respondent, Shirley Hopkins, and reflected a $37.00 payment for PIP coverage only. The total payment of $37.00 included a $15.00 payment for an Accidental Death and Dismemberment (ADB) and travel benefits with Southern Management Company. Mr. Edwards signed the Accidental Death and Dismemberment application as well as the accident death benefits acknowledgement at the bottom of the Rejection of Liability Coverages form. The acknowledgement referred to "Accidental Death Benefit Through My Nation Membership" and not to an "Accidental Death and Dismemberment" coverage with Southern Management Company. (See Respondent's Exhibit 5.) Neither Bruce Edwards nor Patricia Edwards requested Accidental Death and Dismemberment coverage and neither was aware that such coverage had been purchased. COUNT IV SALE TO ELIZABETH JONES On September 1, 1981, Elizabeth Jones purchased insurance from Friendly Auto. She first called and asked for a quote for PIP and liability insurance for a `71 Oldsmobile Delta 88. She was given a quote of $42.00 for PIP and liability. Ms. Jones then went to the office of Friendly Auto where she first talked with two different men and then Respondent, Shirley Hopkins. Shirley Hopkins informed her the premium would be $63.00 rather than $42.00. Ms. Jones had obtained quotes from several agencies for the PIP and liability in an attempt to obtain the needed coverage for no more than the 560.00 which she had available for insurance. Ms. Jones has a fifth grade education and had never purchased insurance before. She specifically told the sales people at Friendly Auto that she did not understand insurance. Because the cost was $63.00 rather than $42.00, Ms. Jones had to return home to obtain additional money. When she returned, Ms. Hopkins had the forms prepared and had marked with an the places where she needed to sign. The receipt from Friendly Auto reflects that Ms. Jones purchased "Liab. PIP. ADB" for a premium of $63.00. Ms. Jones signed the accidental death and dismemberment coverage application and the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverage form. Prior to returning home, Ms. Jones was told by one of the sales agents that she needed the accidental death benefit that could be willed to her daughter. Ms. Jones asked if that was included in the liability and PIP and did not recall whether the person replied or not. She was not aware nor did she understand that she was purchasing a separate travel and accidental death benefit policy and paying a separate premium. She did not read the documents before she signed them and relied upon Ms. Hopkins and the other two agents to give her the coverage she had requested. Ms. Jones did not receive her ADB policy. COUNT V SALE TO BARBARA BARBATO On September 21, 1981, Barbara Barbato purchased insurance from Respondent, Shirley Hopkins, at the Friendly Auto agency. Before going to the agency, Ms. Barbato called and obtained a quote for "full coverage" on her new Camero. She spoke with a gentleman named Mike. When she arrived at the agency, she informed Ms. Hopkins that she wanted full coverage on her Camero. Ms. Hopkins did not explain the various coverages to her. Ms. Barbato paid for the insurance and signed the documents without reading them. The Friendly Auto receipt received by Ms. Barbato was signed by Shirley Hopkins and reflected a payment of $138.00 for "Liab. and Coll. and Comp.". Ms. Barbato signed the ADD coverage application and the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverages form. She named her mother as beneficiary of the accidental death benefit and understood that benefit to be part of the auto insurance she was purchasing. She was not aware the accidental death benefit was separate and extra. She did not receive a policy for the ADB coverage with American Travelers Association. COUNT VI Count VI was voluntarily dismissed by Petitioner and no evidence was presented as to Count VI. COUNT VII Mary Beth Jones did not appear and testify and no other testimony was presented as to Count VII. COUNT VIII SALE TO JOANN BROOKS On September 1, 1981, Joann Brooks purchased insurance from Respondent, Shirley Hopkins, at the Friendly Auto Agency. Ms. Brooks is a farm laborer who completed the eleventh grade. Upon arriving at Friendly Auto, Ms. Brooks informed Ms. Hopkins that she wanted full coverage on her automobile. Ms. Brooks understood full coverage to include collision, liability, and PIP and she had no intention of purchasing any type of coverage other than these. Although Ms. Brooks received some explanation of the accidental death and dismemberment coverage, she signed the accidental death application form and named herself as beneficiary. Ms. Brooks thought the death benefit was part of the full coverage she requested. This was the first time she had purchased insurance and did not understand insurance matters. Ms. Brooks signed and initialed the documents she was given by Ms. Hopkins. She did not read them. The receipt Ms. Brooks received from Friendly Auto was signed by Shirley Hopkins and reflected that she paid $86.00 for "Liab. & Comp. & Coll.". COUNT IX SALE TO RUBEN SIMPSON On May 7, 1981, Ruben Simpson purchased auto insurance from Friendly Auto. Mr. Simpson is from Jamaica and does not read because of his very limited education. When he arrived at Friendly Auto, Mr. Simpson informed the sales agent that he wanted to buy PIP insurance in order to get his tag. Mr. Simpson could not recall the full details of the discussion but remembered giving them his mother's name as the person who would receive money if he were killed in an accident. Mr. Simpson signed his name where he was shown to sign. When he left the agency, Mr. Simpson believed he had purchased only the PIP insurance required to get his tag. Mr. Simpson signed the Southern Management Company Accidental Death and Dismemberment application and received a copy of it when he left the agency. (See Respondent's Exhibit No. 13.) The receipt given to Mr. Simpson at Friendly Auto reflects he paid $44.50 for "PIP ADB". The premium for the ADB was $22.50. At no time did Mr. Simpson request or agree to purchase anything other than tag insurance. Mr. Simpson signed the acknowledgement of the ADB at the bottom of the Rejection of Liability Coverages form, but was unaware that he was paying a separate premium for a policy which was neither PIP nor required to obtain his tag. COUNT X Prior to taking evidence in the formal hearing, Petitioner voluntarily dismissed Count X of the First Amended Administrative Complaint. No evidence was presented in support of Count X. COUNT XI On September 3, 1981, Mr. Ellison J. Eady, Jr., purchased insurance from Friendly Auto. Mr. Eady informed the sales agent at Friendly Auto that he wanted the necessary minimum insurance to get a tag for a new car he had purchased. The agent asked Mr. Eady some brief questions about his driving record and then gave him a quote for the price of the insurance he requested. The agent did not suggest any coverages in addition to what Mr. Eady had requested, but included the cost of an ADB policy in the quote he gave Mr. Eady. Mr. Eady agreed to the price quoted, and the agent then brought out several forms for Mr. Eady to fill out and sign. All Mr. Eady wanted was insurance for his tag and to his knowledge, that was all he purchased. At the time he purchased his insurance, Mr. Eady signed and received a copy of the American Travelers Association application form. (See Petitioner's Exhibit 2.) He did not ask any questions about the form. Mr. Eady thought that the American Travelers Association coverage was part of the insurance he was purchasing. However, the agent did not specifically tell him it was part of the insurance he was purchasing. At the time he purchased his insurance, Mr. Eady already had a motor club policy with Montgomery Ward which provided similar services to the American Travelers coverage. Mr. Eady did not read the various forms he signed. The agent gave him a brief explanation of what each form was. Mr. Eady just relied upon what the agent told him. Mr. Eady had no knowledge of Florida insurance. When he left Friendly Auto, he thought the only thing he had purchased was the minimum required by the state. One of the documents he signed was the acknowledgement of the accidental death benefit at the bottom of the Rejection of Liability Coverages form. (See Respondent's Exhibit 14.) Mr. Eady already had separate life insurance coverage. The agent did not explain the accidental death benefit to him. Mr. Eady did not request any coverage other than the state minimum to get his tag. The receipt given Mr. Eady reflected an $82.00 payment for "PIP. . . ADB. . . C&C". (See Respondent's Exhibit 14.) Fifteen dollars of the premium paid by Mr. Eady was for the American Travelers Association motor club policy. COUNT XII SALE TO MARY GOOD On March 17, 1981, Mr. Edward T. Good and his wife Mary Good purchased insurance at Friendly Auto. Mr. Good informed the sales agent at Friendly Auto that he wanted the cheapest insurance required by the state to get his license tag. The agent explained to him the other auto coverages he could obtain, but Mr. Good insisted that he only wanted minimum tag insurance. He was then given a lump sum quote by the agent. One of the forms Mr. Good signed was an ADB application for Southern Management Company. The agent explained that this would pay he or his wife money if they were killed in an auto accident. The agent did not explain that there was an extra charge for this benefit or that it was optional. Mr. and Mrs. Good understood the ADB coverage to be part of the PIP coverage they had requested. The receipt they were given at Friendly Auto reflected a payment of $37.00 but did not list the coverages purchased. (See Respondents' Exhibit 1.) When Mr. and Mrs. Good left Friendly Auto, they thought they had purchased only tag insurance. However, $15.00 of the $37.00 premium paid was for the ADB policy with Southern Management Company. COUNT XIII SALE TO ALICE LEAR DICKSON On or about September 3, 1981, Alice Lear Dickson (formerly Alice J. Lear) purchased auto insurance from a sales agent of Friendly Auto. Ms. Dickson called Friendly Auto to obtain quotes for full coverage for a newer automobile and minimum coverage for an older one. After obtaining these quotes, Ms. Dickson went to the office of Friendly Auto where she informed the sales agent on duty that she wanted full coverage insurance on two autos. She informed the sales agent she wanted fire, theft, windstorm, collision, liability, and uninsured motorist coverage. The sales agent also suggested a coverage for such things as towing charges. Ms. Dickson informed the agent she did not want that coverage because she already was a member of an auto club. In signing the various documents to purchase the insurance, Ms. Dickson was asked to sign a document designating a beneficiary of a life insurance benefit. She did not want this life insurance coverage, but was told by the sales agent that it was required and went along with her automobile policy and had to be purchased. In reliance upon this representation, Ms. Dickson accepted the coverage. Ms. Dickson paid a total premium of $144.03 for collision, liability, PIP, and accidental death benefit. Her receipt from Friendly Auto reflected the $144.03 was for "C&C, LIAB., PIP, ADB." (See Respondents' Exhibit 11.) The accidental death benefit purchased by Ms. Dickson was one of the travel and accident benefits provided in the American Travelers Association policy which cost Ms. Dickson $15 of the $144.03 premium she had paid. At the bottom of a Rejection of Liability Coverage form used by Friendly Auto, Ms. Dickson signed the acknowledgement relating to the ADB, but she was not aware that she could reject this coverage or that it was part of a separate motor club policy. Ms. Dickson did not desire to purchase a motor club policy and would not have purchased the motor club policy had she been aware that it was not required as an included coverage with the PIP coverage. COUNT XIV Prior to the taking of evidence at the formal hearing, the Petitioner voluntarily dismissed Count XIV of the First Amended Administrative Complaint and presented no testimony in support of that Count. COUNT XV SALE TO CHARLES MEADOWS On June 2, 1982, Charles Meadows purchased auto insurance from Friendly Auto. Mr. Meadows went to Friendly Auto to purchase PIP insurance, and upon arriving at Friendly Auto's office, he informed the sales agent he wanted only PIP insurance. When he left the Friendly Auto office, Mr. Meadows thought he had only purchased PIP. At the time he purchased his insurance, Mr. Meadows signed an American Travelers Association application. (See Respondents' Exhibit 2.) The only explanation he was given by the sales agent regarding this coverage was that if he were killed, someone would receive some money and he needed to designate who that would be. The amount of the fee charged for the American Travelers Association policy was not reflected in the appropriate block on the application form. He was not given any explanation regarding the price of this coverage. In purchasing the insurance, Mr. Meadows initialed and signed several forms. He did not read them before signing. Mr. Meadows does not read and write very well and has a problem understanding insurance policies. He completed the seventh grade in school. One of the forms signed by Mr. Meadows was the acknowledgement relating to the accidental death benefit at the bottom of the Rejection of Liability Coverages form. The quote sheet used to give Mr. Meadows his quote of $48.00 makes no reference to any coverage other than PIP. PIP is circled on the form. The receipt Mr. Meadows received from Friendly Auto reflects a $48.00 premium for "PIP. . .ADB". The cost of the PIP coverage was $23.00 and the cost of the American Travelers Association policy was $25.00. Mr. Meadows never received a policy or certificate informing him of the coverages under the American Travelers Association policy. Mr. Meadows never intended to purchase any coverage other than PIP to obtain his tag. He never requested any coverage other than PIP. COUNT XVI SALE TO PHILLIP JOHNSON On July 1, 1982, Mr. Phillip Johnson purchased auto insurance from a sales agent at Friendly Auto. Mr. Johnson went to Friendly Auto to purchase tag insurance. He informed the sales agent that he wanted just the PIP or tag insurance. The agent then prepared the necessary forms and Mr. Johnson initialed and signed the documents where he was instructed by the agent to sign and initial. No explanation of the coverages was given by the agent. Mr. Johnson was asked to name a beneficiary and was given a pink copy of an American Travelers Association application which he had signed. That form reflects a $20.00 fee was charged for the American Travelers Association policy. The receipt which Mr. Meadows received at Friendly Auto reflects a $42.00 premium paid for "8,000 PIP". (See Respondents' Exhibit 3.) Mr. Johnson also signed the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverages form. Mr. Johnson felt when he left Friendly Auto that he had purchased only PIP insurance. Mr. Johnson completed the ninth grade in school and has difficulty reading and writing. COUNT XVII SALE TO JAMES RICHARD JOHNS On June 4, 1982, Mr. James Richard Johns purchased insurance from the Respondent, Shirley Hopkins at Friendly Auto. Mr. Johns told Shirley Hopkins he would like to purchase PIP insurance in order to get his tag for his car. Ms. Hopkins then gave him a quote for PIP and also a quote for liability coverage and she then gave him several forms to initial and sign. She gave no explanation regarding the forms and he did not read them before signing. Although Mr. Johns thought he was only purchasing PIP insurance, he was, in fact, sold PIP with an $8,000 deductible plus an American Travelers Association policy. The cost of the PIP coverage was $24.00 and the cost of the American Travelers Association policy was $25.00. Mr. Johns signed the American Travelers Association application and was given a copy of it. He also designated a beneficiary. At the time of purchase, Mr. Johns understood that the death benefit was part of the PIP insurance he was purchasing. No explanation was given by Ms. Hopkins regarding the American Travelers Association policy or coverage. Mr. Johns also signed the acknowledgement of the accidental death benefit at the bottom of the Rejection of Liability Coverages form. The receipt he received from Friendly Auto was for $50.23 paid for "PIP. . . ADB. . . 123(illegible)". When Mr. Johns left the Friendly Auto Agency, he felt he had purchased only PIP insurance. He did not receive an American Travelers Association policy and did not receive his Fortune Insurance policy for his PIP insurance until December of 1982 or January, 1983.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Insurance enter a Final Order finding Respondent, Lloyd Register, guilty of the violations as set forth above and that his insurance licenses be suspended for a period of one (1) year. That the Department of Insurance enter a Final Order finding Respondent, Shirley Hopkins, guilty of the violations as set forth above and that her license be suspended for a period of 90 days and that she be required to pay a civil penalty of $500. DONE and ENTERED this 1st day of August, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of August, 1983. COPIES FURNISHED: Curtis A. Billingsley, Esquire Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Thomas F. Woods, Esquire 1030 East Lafayette Street Suite 112 Tallahassee, Florida 32301 Honorable Bill Gunter Insurance Commissioner and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32301
The Issue Should discipline be imposed by Petitioner against Respondent’s insurance license held pursuant to Chapter 626, Florida Statutes? Although Respondent was unlicensed at the time of the specific insurance transactions enumerated in the Administrative Complaint, she since has become licensed. It is the existing license of Respondent that Petitioner seeks to discipline in this action.
Findings Of Fact The Parties Petitioner was created in accordance with Section 20.13, Florida Statutes. Petitioner has been conferred general power by the Legislature to regulate the insurance industry in Florida, in accordance with Section 624.307, Florida Statutes, and Chapter 626, Florida Statutes, grants Petitioner the authority to license and discipline insurance agents doing business in Florida. At times relevant to the inquiry, Respondent was not licensed by Petitioner to transact insurance. (Pet. Ex. 2) Respondent was employed by Beck-De Pratter, Inc., a Florida Corporation, doing business as William Dye Insurance, Inc./Brentwood (hereinafter referred to as the “Agency”) from 1996 until 2004. Count I: Aaron Curtis On August 16, 2000, Aaron Curtis came into the Agency to re-new the insurance on his vehicle. Respondent took down the information necessary for Curtis to re-new his insurance. The company that had insured Curtis' vehicle was no longer writing coverage in Florida, and the Agency placed Curtis' coverage without significant alternation with another carrier. John Beck signed this application as agent. Count II: Stacy Collier On October 7, 2002, Collier came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Collier to re-new the insurance. The company that had insured Collier's vehicle was no longer writing coverage in Florida, and the Agency placed Collier's coverage without significant alternation with another carrier. John Beck signed this application as agent. Count III: Ruby Hubbard On October 11, 2002, Ruby Hubbard came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Hubbard's vehicle was no longer writing coverage in Florida, and the Agency placed Hubbard's coverage without significant alternation with another carrier. John Beck signed this application as agent. Count IV: Mary Kennedy On March 6, 2002, Mary Kennedy came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed the related vehicle inspection report. Count V: Charles Howard On September 10, 2001, Charles Howard came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed the related vehicle inspection report. Count VI: Not appointed as Customer Representative Petitioner’s official records reveal that Respondent was not appointed as customer representative by any insurance agency at the time the preceding transactions occurred. Respondent’s employer, John Beck, testified that he never appointed Respondent as a customer representative. Count VII: John Kennedy On March 2, 2001, John Kennedy came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed this application as agent.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a final order be entered dismissing the allegations contained in the administrative complaint against Respondent, Sharon G. Taylor. DONE AND ENTERED this 2nd day of November, 2004, 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 2nd day of November, 2004. COPIES FURNISHED: Greg S. Marr, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Jed Berman, Esquire Infantino and Berman Post Office Box 30 Winter Park, Florida 32790 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Tom Gallagher, Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issues are whether Respondent is guilty of any violations of the Insurance Code, including Chapter 626, Florida Statutes, and, if so, what penalty should be imposed.
Findings Of Fact At all material times, Respondent has been licensed as a general lines insurance agent, holding license number A129688. At all material times, Respondent has been the sole owner and director of America Security Insurance Agency, Inc., formerly known as America Auto Security Insurance Agency, Inc. (America Security). On April 1, 2000, Dionne Jacques purchased a motor vehicle from Sawgrass Ford in Fort Lauderdale. She did not own a vehicle at the time and testified that she purchased a model that was selected for her by someone at the dealership. In closing on the purchase, Ms. Jacques dealt extensively with a dealer employee named Herbert McKenzie. Ms. Jacques financed the motor vehicle purchase with Ford Credit. In the course of completing the required paperwork at the dealership, Mr. McKenzie referred Ms. Jacques to American Security for motor vehicle insurance. Mr. McKenzie mentioned that he dealt with someone named "AJ" at the insurance agency. According to Ms. Jacques, Mr. McKenzie informed Ms. Jacques that one year's insurance would cost $468 or $468.99. Mr. McKenzie did not testify, but Respondent testified that he spoke with Ms. Jacques on the telephone and explained the relevant features of the policies that were available to her. Although it is unclear who quoted the premium to Ms. Jacques, Petitioner has failed to prove by clear and convincing evidence that Mr. McKenzie did so. Ms. Jacques agreed to purchase the insurance and produced a credit card for the amount due. The testimony of Ms. Jacques suggests that she allowed Mr. McKenzie to charge her credit card for the insurance premium. However, the more definitive testimony of Respondent, which is credited, is that he took her credit card information over the telephone and arranged for the card debit. In return, according to Ms. Jacques, Mr. McKenzie gave her a document that she believed would document her coverage until she received an insurance policy in the mail in about 30 days. It is impossible to determine on this record that Mr. McKenzie attempted to bind coverage on behalf of the insurer. At no time prior to the purchase of the insurance did Respondent, Mr. McKenzie, or anyone else disclose to Ms. Jacques that she was purchasing other ancillary products besides insurance. Likewise, no one informed her that she was financing part of the annual insurance premium. For unclear reasons, Respondent did not obtain insurance coverage for Ms. Jacques until May 2000. At that time, he took the $468 that she had charged and, without her knowledge, applied only $143 of this sum toward the policy premium. Without Ms. Jacques' knowledge, Respondent, or someone at his direction, signed Ms. Jacques' name to a premium finance agreement, evidencing an unpaid premium balance of $504. At the same time, also without Ms. Jacques' knowledge, Respondent used $300 of the initial $468 that Ms. Jacques paid to purchase ancillary coverage that she had not agreed to purchase. This ancillary coverage included towing, supplemental medical coverage, replacement rental car, and emergency cash. These coverages supplemented a $647 personal injury protection policy containing no personal liability or uninsured motorist coverage. At no time has American Security designated a primary agent. By Immediate Final Order entered March 12, 1991, the Florida Department of Insurance, now known as Petitioner, ordered Respondent to cease and desist from the unlicensed sale of insurance. However, Respondent has made substantial restitution to Ms. Jacques, who suffered no significant financial injury as a result of Respondent's misdealings.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order suspending Respondent's license for one year. DONE AND ENTERED this 18th day of November, 2004, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 2004. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Gregg S. Marr Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Charles P. Randall Charles P. Randall, P.A. Bank of America Tower, Suite 500 150 East Palmetto Park Road Boca Raton, Florida 33432-4832
The Issue Should discipline be imposed by Petitioner against Respondent's licenses as a general lines agent (2-20) and Florida Residential Property and Casualty Joint Underwriters Association (FRPCJUA) agent (0-17), held pursuant to Chapter 626, Florida Statutes (2001)?
Findings Of Fact Facts Admitted by Answer Pursuant to Chapter 626, Florida Statutes, you Jennifer L. Faloon, currently are licensed in this state as a general lines (2-20) agent and a FRPCJUA (0-17) agent, and were so licensed at all times relevant to the dates and occurrences referenced herein. Your license identification no. is A080736. Pursuant to Chapter 626, Florida Statutes, the Department of Financial Services has jurisdiction over your licenses and appointments. At all times relevant to the dates and occurrences referenced herein you, Jennifer L. Faloon, were employed with Beck Insurance, in Jacksonville, Florida. Additional Facts Established by Responses to Requests for Admissions Respondent was licensed as a general lines (2-20), and a Florida Residential Property and Casualty Joint Underwriters Association (0-17) agent, in Florida, from June 25, 2001, until and including the present time. From June 25, 2001, until and including February 19, 2002, Respondent was employed with Beck Insurance, in Jacksonville, Florida. Respondent signed the insurance application on February 19, 2002, to bind coverage for Ms. Wilson (Danyetta Wilson). Respondent signed the insurance application on January 21, 2002, to bind coverage for Mr. Appling (Marc Appling). Respondent signed the insurance application on January 22, 2002, to bind coverage for Ms. Brown (Laura Brown). Anna Michelle Mack transacted insurance business with Laura Brown on January 22, 2002. Respondent signed the insurance application on June 25, 2001, to bind coverage for Mr. Henderson (William Henderson). Respondent's Duties at Beck Insurance Respondent began her employment with Beck Insurance, in September 1996. She began as an unlicensed person. While working with Beck Insurance she obtained her (4-42) license allowing limited customer service related to the sale of automobile insurance. She subsequently obtained her (2-20) insurance agent license related to property and casualty, which would allow the sale of automobile, homeowners, and commercial insurance. Prior to this case Respondent has had no complaints filed against her in her capacity as insurance agent. In addition to selling insurance at Beck Insurance, Respondent is familiar with ancillary products offered through that agency. In particular, she is familiar with the sale of contracts involving towing a disabled car operated by a party who has contracted for those services. Respondent is also conversant with rental car contracts sold at Beck Insurance. The rental car contract allows for the customer to rent a car when the customer's personal car is unavailable. During the years 2001 and 2002, the years in question in this case, Respondent served as a supervisor at Beck Insurance in her capacity as a licensed (2-20) agent for persons employed by Beck Insurance, both unlicensed and licensed. The licensed agents that she had supervisory responsibility for were (4-42) limited or unlimited customer service licenses for automobile insurance and (4-40) full customer service agents. Respondent also was expected to deal with issues of underwriting for the insurance policies sold. As few as five and as many as ten agents were employed with Beck Insurance in the relevant time frame. This included another supervising (2-20) agent named Lon Woodward. Both Respondent and Mr. Woodward supervised the licensed (4-42) and (4-40) agents at Beck Insurance, who could not conduct business without supervision from the licensed (2-20) agent. The office hours in the relevant time period were from 9:00 a.m. to 6:00 p.m. Monday through Friday, and 9:00 a.m. to 5:00 p.m. on Saturday. In any given month in excess of 100 customers might be served. Not all activities in providing service were in relation to writing insurance policies. Beck Insurance, at times relevant to the inquiry, represented numerous insurance companies involved with the sale of automobile insurance. The clientele that purchased automobile insurance from Beck Insurance was principally constituted of persons with problematic driving records, including suspensions, DUIs, lapses in coverage, as well as persons who only intended to pay the minimum amount necessary for a premium to obtain insurance that would allow that person to operate a motor vehicle in Florida. As a non-standard agency, the majority of Beck Insurance customers are persons who would not be provided insurance by the standard insurance companies such as State Farm, AllState, and Nationwide. Typically, when a customer initially contacted Beck Insurance by telephone they wanted the best price. In response, the Beck Insurance employee would consider the price structure among the 35 insurance companies represented by Beck Insurance to choose the most economical policy. When telephone inquiries were made about purchasing automobile insurance through Beck Insurance no mention was made of the All World towing and rental plan. Beck Insurance trains its employees in the manner those employees will serve the customers. Respondent was included in that training, having received training and provided training in those approaches. Ordinarily when a customer inquired concerning the purchase of automobile insurance at Beck Insurance, he or she was asked about the type coverage he or she was interested in purchasing. Information was gathered concerning the automobile to be insured. A questionnaire was completed. Within that document is a reference to towing and rental car reimbursement coverage, as well as information about the automobile insurance itself. The questionnaire which was used at times relevant to this case sought information about the customer and the use of the automobile that was being considered for coverage with blanks being provided to the left of the questions for initialing by the customer and blanks to the right for an affirmative or negative response. By contrast to other items, item 11 within the questionnaire was declarative in nature. It had a space for the initials of the customer, but not one to declare acceptance or rejection of what was described. By its terms it stated: "Motor Club - I am aware that towing and rental car reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier)." The parenthetical reference within item 11, was by smaller type, unlike the interrogatories that were found within the questionnaire. The statement in item 11 has an internal contradiction. In its initial sentence, it talks about the optional opportunity to obtain towing and rental car reimbursement, but it is followed by a sentence which says that the customer wants to carry the coverage with no apparent opportunity within the document to decline that coverage. Moreover, at the bottom of the questionnaire, there was the opportunity for the customer to say that he or she did not want to carry and was rejecting bodily injury liability, uninsured motorist, medical payments, comprehensive and collision, and custom or special equipment coverage, by initialing the blank provided with each category of coverage, but there was no similar opportunity to reject the towing and rental car reimbursement that was described earlier in the document. The insurance coverages were referred to as optional, as was towing and rental. An example of the text within the document, aside from its execution, is found as Petitioner's Exhibit numbered 5. The execution of that document will be discussed subsequently in relation to the customer Danyetta Wilson. According to Respondent, the typical customer for automobile insurance at Beck Insurance is told "In this price we are also giving you towing and rental reimbursement." The nature of the plan for towing and rental is described. For example, if it is Plan 3, the customer is told "you will receive free tow reimbursements for six months for $100.00 each. You will also receive -- -- if you are involved in an automobile accident with another vehicle and you have to have your vehicle in a shop for repair, you will receive $25.00 a day reimbursement for five days. These claims have to be filed through our agency. You bring us the receipt within 60 days, we file it." The towing and rental services being sold by Beck Insurance, which are the subject in this dispute, are offered through All World All Safe Drivers (All World), part of Beck Insurance. Once more specific discussion is entered into concerning the automobile insurance policy applied for, the Beck Insurance employee also returns to the discussion of the All World towing and rental products. Beyond the presentation of the information concerning the purchase of the insurance coverage that has been chosen, Respondent testified that during the time in question the customer would be told "this is your towing and rental reimbursement contract." The details concerning the towing and rental in the contemplated agreement between Beck Insurance and the customer are as set forth in Respondent's Exhibit numbered 28, a form application for towing and automobile rental reimbursement through All World. The form application which constitutes the basis for providing the coverage makes no mention concerning the charge for the various plans offered to the customer for the towing and rental. The terms set forth in the application bundle the reimbursement plan for automobile rental and towing services, as opposed to separate coverage for automobile rental reimbursement and towing reimbursement. Notwithstanding the lack of explanation within the form application for All World rental reimbursement and towing service reimbursement, concerning the costs for the various plans described, Respondent indicated in her testimony that those packages are $35, $60, and $75, in costs. The discussion of the amount charged for towing and rental is included in the price breakdown that also pertains to the costs for the automobile insurance purchased. Approximately 50 percent of the customers solicited purchased All World towing and rental contracts in the time in question. Customarily, the application for automobile insurance is signed by an appointed licensed (2-20) agent at Beck Insurance who has authority to review the application to make certain that it has been correctly executed. When the transaction is complete between a customer and the Beck Insurance employee, there is but one receipt provided to the customer. That receipt sets out the aggregate charges and then breaks out individual charges for the automobile insurance policy, All World, and the motor vehicle report (MVR) fee that some insurance companies charge. As the receipt suggests, the amount tendered at the time that the automobile insurance is purchased and towing and rental reimbursement is purchased is a single amount that would have cost components for the automobile insurance, towing and rental, and a MVR fee. Another form is provided to customers with Beck Insurance. An example is found as Respondent's Exhibit numbered 27. That form outlines automobile insurance coverage by providing explanations about the types of coverage and advice on making certain that the insurance company pays claims made by the customer. There is a reference within this form to a subject other than automobile insurance, namely a reference to towing and rental-car reimbursement wherein is stated: "Reimbursement for towing charge when your covered vehicle is unable to safely proceed under its own power. Reimbursement for rental car when your covered vehicle has been involved in an accident. This coverage is optional. Consult individual plans for different payment amounts and certain restrictions that may be applied to each optional plan." As anticipated by law, persons who work for Beck Insurance, other than the licensed (2-20) agent, may take information supporting the application for automobile insurance sold through Beck Insurance. Count II Danyetta Wilson Danyetta Wilson was interested in purchasing automobile insurance in February 2002. She called Beck Insurance and spoke to Respondent concerning that purchase. After receiving a telephone quote, Ms. Wilson immediately went to Beck Insurance to transact business. The date was February 19, 2002. Before arriving at Beck Insurance, Ms. Wilson had told Respondent what she wanted in the way of automobile insurance coverage, and Respondent indicated that everything necessary to conclude the transaction would be prepared in advance before Ms. Wilson arrived at Beck Insurance. Of course, the application for insurance had not been executed, but pertinent information had been written down by Respondent on scratch paper. Essentially Ms. Wilson told Respondent in the telephone call that she wanted a minimum down-payment and low monthly payments, without discussing the amount of the deductible. When Ms. Wilson arrived at Beck Insurance, she saw Respondent. Both the Respondent and Tracy Laroe assisted Ms. Wilson in the transaction. Ms. Laroe was employed by Beck Insurance. Her application to become a licensed (4-42) limited customer representative was authorized by Petitioner on December 11, 2001. Petitioner issued license no. EO10041 (4-42) to Ms. Laroe on March 8, 2002, as recognized by Beck Insurance on March 29, 2002. As of July 1, 2002, Ms. Laroe's license was inactive based upon cancellation by Beck Insurance as the appointing entity. On February 19, 2002, Respondent was responsible for Ms. Laroe as supervisor at Beck Insurance, in relation to Ms. Wilson's transaction with Beck Insurance in purchasing automobile insurance through Progressive Insurance and automobile rental and towing reimbursement through All World. Most of the activities involved with the transaction occurred between Ms. Wilson and Ms. Laroe when addressing the purchase of automobile insurance on the date in question. During the transaction at Beck Insurance, Ms. Laroe, while assisting Ms. Wilson, did not suggest possible interest in buying the motor club also referred to as a towing and rental contract. Nor was there mention of All World as the company to provide that ancillary product. What was established in discussion was the amount of down-payment and the monthly payments for the automobile insurance. The down-payment was made by cash. Ms. Wilson was told that the down-payment would be $332, which is the amount that she paid. Ms. Wilson completed and was provided copies of certain documents in the transaction. Petitioner's Exhibit numbered 2 is the application for the automobile insurance questionnaire that was completed by providing answers and initials in relation to the underwriting information that was requested in the application form. Ms. Wilson signed the application on February 19, 2002. She did not read the document carefully because she was, as she describes it, "in a rush." The completed application was counter-signed by Respondent as producing agent on February 19, 2002, at 1:41 p.m. On February 19, 2002, Ms. Wilson was provided a receipt indicating a total amount of $332. The receipt reflected that $269 was a down-payment for Progressive Insurance, an amount of $60 as related to All World rental and towing, and $3 for a MVR fee. Ms. Wilson did not examine the receipt at the time it was provided to her. The receipt was filled out by a cashier at Beck Insurance, a person other than Respondent and Ms. Laroe. No explanation was made concerning its several parts. In addition to the questionnaire associated with the application for insurance coverage pertaining to the Progressive Insurance policy, Ms. Wilson executed the Beck Insurance questionnaire which described automobile insurance generally and the All World towing and rental. That questionnaire is Petitioner's Exhibit numbered 5. Petitioner's Exhibit numbered 5 creates the impression that towing and rental is an integral part of the purchase of automobile insurance. It was signed by Ms. Wilson on February 19, 2002, and initialed in its numbered parts. Those parts included the reference to the motor club at number 11 where it stated, "Motor Club - I am aware that the towing and rental care reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier.)" Again, while the towing and rental car reimbursement was stated as being optional, the quoted material was ambiguous as to its optional nature, and there was no opportunity in the latter portion of the questionnaire to specifically decline this ancillary product. In connection with the rental and towing service through All World, Ms. Wilson signed as applicant for the product. This application which formed the basis for charging Ms. Wilson $60 for rental and towing is Petitioner's Exhibit numbered 4. It is in the manner described earlier as to its form, in which no indication is made concerning the amount charged to purchase Plan 3. Ms. Wilson did not read Petitioner's Exhibit numbered 4, which described the automobile rental and towing reimbursement offered through All World. She signed her name by a red "X" on the application line. The document which described the nature of the reimbursement plan offered through All World was not specifically explained to her. Ms. Wilson was not told that there was an additional charge for the towing and rental. She had no interest in towing and rental, having been provided similar services through her cell-phone plan. In this process, Respondent came over to the location where Ms. Wilson was seated and pointed out certain places in the insurance application to check-off and initial.1 Respondent did not sit at the desk with Ms. Wilson when the transaction took place. During the transaction, Ms. Laroe told Ms. Wilson that the questions she was asking would have to be directed to Respondent, in that Ms. Laroe could not help Ms. Wilson by providing the answers. Ms. Laroe mentioned that her participation was part of the customer service. Ms. Wilson also was involved with a sheet which was informational in nature describing the various types of insurance coverage. Respondent showed Ms. Wilson that form. It is Respondent's Exhibit numbered 1, which was signed by Ms. Wilson on February 19, 2002. It indicates that Ms. Wilson declined uninsured motorists and medical payments coverage. Zeros are placed next to those explanations. Within the document is a reference to towing and rental reimbursement, wherein it is stated: Towing and Rental Car Reimbursement. Reimbursement for towing coverage when your covered vehicles are unable to safely proceed under its own power. Reimbursement for rental car when your covered vehicle has been involved in an accident and is being repaired. This coverage is optional. Consult individual plans for different payment amounts and certain restrictions that may be applied to each optional plan. The towing and rental had a dash placed by that item together with the balance of the items on the information sheet that described insurance coverage. Respondent saw Ms. Wilson place the marks by the side of the forms of coverage and the information about towing and rental reimbursement, which is not part of automobile insurance coverage as such. The overall expectation within Respondent's Exhibit numbered 1 is to generally describe available products. It does not serve as an application. The status of the document is not changed by having Ms. Wilson sign the document. Respondent saw Ms. Wilson initial item 11, concerning the motor club found within Petitioner's Exhibit numbered 5. Ms. Wilson did not ask any questions of Respondent concerning Petitioner's Exhibit numbered 5. Respondent was present when Ms. Wilson signed the application for towing and rental, Petitioner's Exhibit numbered 4. Respondent in relation to that document asked if there were any questions. Ms. Wilson did not indicate that she had questions. In relation to Petitioner's Exhibit numbered 4, Respondent recalls the nature of the explanation that she gave to Ms. Wilson as: "What this is, is this is your towing and rental contract. It gives you three tows per six months, $100.00 reimbursement on every tow, on each tow with a limit of three per six months. The rental benefit is $25.00 a day for five days if you are involved in an automobile accident and you need reimbursement. All claims have to be brought here to the office within 60 days in the form of receipts. We file the claims for you. Now, I need you to sign there." Nothing in that explanation indicates that there was an opportunity to decline to participate. The explanation did not establish the cost for the plan. Respondent indicated hat Ms. Laroe in her participation in the transaction with Ms. Wilson was there to listen and learn. Count III Marc Appling On January 21, 2002, Marc Appling purchased automobile insurance from Beck Insurance. He wanted full coverage for his car. The amount quoted for the insurance as a down-payment was $288. On January 21, 2002, $200 was paid. On January 24, 2002, the additional $88 was paid. Of the $288 paid, $222 was a down- payment for automobile insurance through Superior American Insurance Company (Superior), $60 was for All World automobile towing and rental reimbursement, $3 for a MVR fee, and $3 for some unexplained charge. The receipt provided Mr. Appling when he paid the initial $200 reflects $222 for down-payment to Superior, $60 for All World, and $3 for a MVR fee. That receipt is Exhibit numbered 9 to the Appling deposition, Petitioner's Exhibit numbered 16. On January 21, 2002, Mr. Appling primarily dealt with Lance Moye, an employee of Beck Insurance who gave him a price quotation for the purchase of insurance through Superior. Mr. Moye explained to Mr. Appling the details, to include the amount of payment per month beyond the down-payment. Michelle Mack, an employee for Beck Insurance was sitting next to him. If Mr. Moye experienced problems in carrying out the transaction, he would ask Ms. Mack her opinion. Mr. Moye has never been licensed by the Petitioner in any capacity. During 1991 and 1993, he had applied for a (2-20) general lines property and casualty license. On the date in question, Michelle Mack, known to Petitioner for licensing purposes as Anna Michelle Mack, was licensed as a (4-42) limited customer representative agent. Mr. Appling executed the Beck Insurance questionnaire and acknowledgement form that has been previously described, to include initialing item 11, related to the motor club which says: "I am aware that the towing and rental car reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office as it is not written with your auto carrier.)" This form that was signed and initialed and answered yes or no in various places was Exhibit numbered 8 to the Appling deposition, Petitioner's Exhibit numbered 16. Mr. Moye told Mr. Appling that "you pay," addressing Mr. Appling, "X amount of dollars for rental car coverage and everything like that." However, Mr. Appling was not satisfied with the explanation. The questionnaire Exhibit numbered 8 to the Appling deposition, describing towing and rental car reimbursement as optional, did not create below that statement the specific opportunity to decline that option as would have been the case as items such as uninsured motorist and medical payments. Mr. Appling was left with the impression that the motor club was part of the insurance policy that he purchased and that the $288 down-payment included the motor club. Because Mr. Appling was interested in full coverage, he believed that the automobile insurance itself would cover rental reimbursement. Notwithstanding that the form questionnaire, Exhibit numbered 8 to the Appling deposition referred to towing and rental car reimbursement as an optional item, Mr. Appling did not understand that it was an optional purchase. Had he been persuaded that it was a separate item he would not have purchased the motor club. Exhibit numbered 7 to the Appling deposition, Petitioner's Exhibit numbered 16, is the application for All World towing and rental reimbursement. The automobile insurance application through Superior is found as Exhibit numbered 5 to the Appling deposition, Petitioner's Exhibit numbered 16. It was executed and signed by Mr. Appling on the date in question, then was marked as bound and signed by Respondent on that date. Although Respondent signed the Appling application for automobile insurance with Superior, she had no specific recollection of the event and was not otherwise involved in the transaction. Count IV Laura Brown On January 21, 2002, Laura Brown purchased automobile insurance through Beck Insurance. She dealt with Valerie Lynn Webster and Anna Michelle Mack, employees at Beck Insurance. At various times in 2002 and 2003, Ms. Webster had applied to Petitioner to be licensed as a (2-14) life, including variable annuity agent and a limited customer representative (4-42). No licenses were issued to Ms. Webster. Before arriving at Beck Insurance, Ms. Brown had obtained a preliminary quotation by telephone from the agency related to the purchase of automobile insurance. Ms. Brown was interested in obtaining full coverage for her car. The nature of the discussion once Ms. Brown arrived at the agency was about the purchase of automobile insurance, not about a towing and rental contract, motor club membership or the All World plan. A down-payment was made with installments to follow, associated with the automobile insurance. Ms. Brown thought that the entire amount of the down-payment was for the insurance premium. No explanation was made to the effect that the motor club was separate from the automobile insurance policy. When Ms. Brown left the Beck Insurance agency, she did not realize that she had purchased anything other than automobile insurance. Petitioner's Exhibit numbered 12 is the automobile insurance application through Superior, executed by Ms. Brown on the date in question. It was signed by Respondent, noting that the policy was bound. Respondent had no other direct involvement in the transaction. Petitioner's Exhibit numbered 13 is a receipt dated January 22, 2002, issued to Ms. Brown by Ms. Webster and Ms. Mack, totaling $247 that Ms. Brown paid on that date. It is broken out as $184 for Superior, $60 for All World, and $3 for a MVR fee. Petitioner's Exhibit numbered 14 is an executed application for All World automobile reimbursement and towing service reimbursement executed by Ms. Brown for the period January 22, 2002, through June 22, 2002, under Plan 3 in the form that has been previously described. As reflected in Petitioner's Exhibit numbered 15, Ms. Brown executed the Beck Insurance questionnaire in the form that has previously been described that contains item 11, relating to the motor club stating, "I am aware that the towing and rental car reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier.)" The questionnaire additionally sets forth that the towing and rental car reimbursement is optional but without the opportunity to decline that option that is specifically described for other optional coverage in the form, such as uninsured motorists and medical payments. In an affidavit containing Ms. Brown's statement prepared on May 23, 2002, Ms. Brown stated, "I knew that I had purchased towing or rental reimbursement policy for my policy 1/22/2002/2003 because I saw the form and I asked questions about it. The lady in picture number 10 (Ms. Mack depicted on Petitioner's Exhibit numbered 17) told me I would get so many tows for free, she also told me it was from Beck Insurance." But in that affidavit Ms. Brown goes on to state, "I did not know that I paid an additional $60 for the towing policy. I thought this was just something I got with the car insurance policy." Again, nothing in Petitioner's Exhibit numbered 14, the application for All World towing and rental, reflects the cost of Plan 3. That was made known in the receipt, Petitioner's Exhibit numbered 13. Count V William Henderson On June 25, 2001, William Henderson purchased automobile insurance from Beck Insurance. He dealt with Daphne Ferrell, a person Respondent claims was a licensed agent at the time. No proof has been presented to contradict Respondent's position, and it is found that Ms. Ferrell was a licensed agent when the transaction took place. On the date in question, Mr. Henderson was interested in purchasing full coverage for his automobile. He executed an application with Atlanta Casualty Company (Atlanta Casualty) to purchase the automobile insurance. That application is Petitioner's Exhibit numbered 6. Respondent's involvement in the purchase was the signing of the application in the place indicated for the agent's statement vouching for the application's correctness. The automobile that was covered by the purchase was inspected by Ms. Laroe as evidenced in Petitioner's Exhibit numbered 7. The inspection was not a function that required a licensed person to perform. Mr. Henderson paid Atlanta Casualty $306 on June 25, 2001, for automobile insurance. That payment is reflected in Petitioner's Exhibit numbered 8, a copy of the check written to Atlanta Casualty. The money that was paid was acknowledged by a receipt from Ms. Ferrell dated June 25, 2001, Petitioner's Exhibit numbered 9. That receipt reflects $306 down-payment for the automobile insurance to Atlanta Casualty and $75 for a rental contract involved with All World, for a total of $381. Whether Mr. Henderson paid the $75 for towing and rental, aside from the $306 check written for the insurance to Atlanta Casualty, is not clear from the record. Mr. Henderson had made application on the form related to All World for auto rental reimbursement and towing service reimbursement, which has been previously described. The specific application by Mr. Henderson is Petitioner's Exhibit numbered 10, relating to Plan 3. Mr. Henderson executed the Beck Insurance questionnaire form that has been previously described setting forth item 11, the motor club, which states: "I am aware that the towing and rental car reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier.)" While Mr. Webster initialed item 11 on the form, as other customers had done in the circumstances addressed in the Administrative Complaint, the form he executed, as with other customers, did not create an opportunity to opt out of the motor club. While the form at item 11 spoke of the optional nature of the motor club, it was followed by a statement that made it appear that the opportunity to decline the coverage had already been determined, when it said: "I want to carry this coverage." The reference to the optional nature of the towing and rental car reimbursement in the latter portions of the form was not followed by an opportunity to specifically decline the motor club, as allowed in reference to other forms of optional insurance coverage pertaining to such items as uninsured motorist and medical payments, for example. The executed questionnaire is Petitioner's Exhibit numbered 11. In completing the Beck Insurance questionnaire, Petitioner's Exhibit numbered 11, his instructions were to initial where the solid arrow runs from items 1 through 14, at the top of the page, and by the Xs at the bottom of the page. The arrow and the Xs were placed by someone other than Mr. Webster. Only a brief explanation was given to Mr. Webster concerning the questionnaire. Mr. Webster has no recollection of someone specifically reading item 11, related to the motor club. During the transaction at issue, Mr. Webster remembers a discussion of towing and rental. He indicated that he was not interested in rental reimbursement. He did want towing. Mr. Webster, like the other customers who have been discussed, did not carefully read the documents presented to him for his consideration in purchasing the automobile insurance and in relation to the motor club. Mr. Webster has a vague recollection of someone placing an "X" on the applicant's signature line in Petitioner's Exhibit numbered 10 and signing that application for the All World motor club, but he thought that he was only purchasing towing not rental. The application covers both rental and towing.
Recommendation Upon the 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 Count II that have been referred to, dismissing the others within that count, dismissing Counts III through V; suspending Respondent's licenses for nine months, placing Respondent on two years' probation and requiring attendance at such continuing education courses as deemed appropriate. DONE AND ENTERED this 3rd day of June, 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 3rd day of June, 2004.
Findings Of Fact At all times pertinent to this proceeding, Respondent was licensed in this state by the Petitioner as an insurance agent. Respondent was licensed, pursuant to the Florida Insurance Code (Chapter 626, Florida Statutes) as a general lines agent, a health insurance agent, and a residential property and casualty joint underwriting association representative. In February 1990, Maria del Carmen Comas, who was subsequently known as Maria del Carmen Diaz (hereinafter referred to as Maria Diaz), was licensed by Petitioner as an insurance agent. By Final Order entered September 20, 1994, the licensure of Ms. Diaz was revoked by the Petitioner. At all times pertinent to this proceeding, Respondent and Ms. Diaz maintained a close personal and professional relationship. On October 12, 1990, an entity known as The First Assurance, Inc., (hereinafter referred to as FIRST) was incorporated under the laws of the State of Florida. At all times pertinent to this proceeding, Respondent was the president and sole officer of FIRST, which is a Florida incorporated general lines insurance agency. FIRST operated out of offices located at 10680 Coral Way, Miami, Florida (hereinafter referred to as the Coral Way location) until June 1994, when Respondent moved the office of FIRST to 8780 Sunset Drive, Miami, Florida. On September 21, 1993, an entity known as The First Assurance of Miami, Inc., (hereinafter referred to as FIRST OF MIAMI) was incorporated under the laws of the State of Florida by Respondent and Maria Diaz. At all times pertinent to this proceeding, Respondent was the president and sole officer of FIRST OF MIAMI, a Florida incorporated general lines insurance agency doing business at 8780 Sunset Drive, Miami, Florida (hereinafter referred to as the Sunset Drive location). Respondent and Ms. Diaz were equal owners of FIRST OF MIAMI until that corporation ceased its operation in February 1995. On August 26, 1994, an entity known as Marlin Insurance Agency, Inc., (hereinafter referred to as MARLIN) was incorporated under the laws of the State of Florida. Respondent was the sole incorporator of MARLIN. At all times pertinent to this proceeding, Respondent was the president and sole officer of MARLIN, a Florida incorporated general lines insurance agency doing business at the Sunset Drive location where Respondent operated FIRST and FIRST OF MIAMI. MARLIN was originally incorporated for the purpose of purchasing the business of Rodal Insurance Agency in Hialeah, Florida. After the purchase of Rodal was rescinded by court order, MARLIN remained dormant until February 1995, when MARLIN began operating as a general lines insurance agency at the Sunset Drive location. At all times pertinent to this proceeding, Respondent was the supervising agent of MARLIN. As long as FIRST and FIRST OF MIAMI maintained separate offices, Respondent managed the day to day affairs of FIRST and Ms. Diaz managed the day to day affairs of FIRST OF MIAMI. After FIRST moved its offices into those of FIRST OF MIAMI, the separation of management became less distinct. At all times pertinent to this proceeding, Carlos Gonzalez was an employee of FIRST or of FIRST OF MIAMI. Mr. Gonzalez was hired and trained by Respondent and worked under his direct supervision. At no time pertinent to this proceeding did Mr. Gonzalez hold any license or appointment under the Florida Insurance Code. At all times pertinent to this proceeding, Alvaro Alcivar was an employee of FIRST OF MIAMI or of MARLIN. Mr. Alcivar acted under the supervision of either Maria Diaz or of Respondent. At no time pertinent to this proceeding did Mr. Alcivar hold any license or appointment under the Florida Insurance Code. At all times pertinent to this proceeding, Respondent had sole signatory authority of the FIRST's account number Number33080870-10 (the FIRST expense account) and of FIRST's account Number0303043975-10, both maintained at Ready State Bank in Hialeah, Florida. At all times pertinent to this proceeding, Respondent had joint signatory authority with Maria Diaz of the FIRST's account number Number33095150-10 maintained at Ready State Bank in Hialeah, Florida. At all times pertinent to this proceeding, Respondent had joint signatory authority with Maria Diaz of the FIRST OF MIAMI's account number Number33095630-10 maintained at Ready State Bank in Hialeah, Florida. At all times pertinent to this proceeding, Respondent had sole signatory authority of the FIRST OF MIAMI's account number Number0303116492-10 maintained at Ready State Bank in Hialeah, Florida. All premiums, return premiums and other funds belonging to insureds, insurers, and others received in transactions under his license were and remain trust funds held by Respondent in a fiduciary capacity. Respondent obtained a power of attorney from his customers as a routine business practice. Respondent has repeatedly issued checks in payment of fiduciary funds that have subsequently been dishonored by the bank because the account on which the checks were drawn had insufficient funds. ARCAMONTE TRANSACTION (COUNT ONE) On or about July 14, 1993, Susan Arcamonte of Miami, Florida, purchased a new car. Susan Arcamonte needed insurance for this automobile and discussed that need with Carlos Gonzalez, who was employed by FIRST. As a result of her discussions with Mr. Gonzalez, Ms. Arcamonte agreed to purchase a policy of insurance that would be issued by Eagle Insurance Company. The annual premium quoted by Mr. Gonzalez for this policy totaled $1,618.00. Mr. Gonzalez advised her that there would be additional charges if the premium was paid by a premium finance company. Because she did not have the funds to pay the lump sum annual premium and did not want to finance the premium, she had her parents, Edmond and Nancy Arcamonte, pay the annual premium. As instructed by Carlos Gonzalez, this check was in the amount of $1,618.00 and was made payable to "The First Assurance, Inc." This check was in full payment of the annual premium for the automobile insurance policy that was to be issued by Eagle Insurance Company. After receiving the check from Mr. and Mrs. Arcamonte, Mr. Gonzalez issued to Susan Arcamonte an insurance card containing the name "The First Assurance, Inc." and binder numbers 12873 and 931374 written across the top. Mr. Gonzalez represented to Ms. Arcamonte that this was a binder of the coverage they had discussed. Mr. Gonzalez thereafter delivered the check and the completed application for insurance to FIRST. Respondent reviewed the application for insurance and signed the application. The Arcamontes' check was thereafter deposited by Respondent into the FIRST expense account at Ready State Bank, Hialeah, Florida. In July 1993, Respondent or some person in his employ at FIRST and acting with his knowledge under his direct supervision and control, affixed the signature of Susan Arcamonte to a Century Premium Insurance Finance Co., Inc. (Century PFC) premium finance agreement and, in the space provided for her address, filled in the office address of FIRST. Ms. Arcamonte's signature was affixed to this agreement without her knowledge or consent. Respondent personally signed the premium fiance agreement that was sent to Century PFC. Because the address of FIRST was inserted on the premium finance agreement, Ms. Arcamonte did not receive payment coupons, cancellation notices, and other correspondence from Century PFC. Consequently, the existence of the premium finance agreement was concealed from Ms. Arcamonte. The original application for insurance signed by Susan Arcamonte contained a power of attorney purporting to grant Respondent the authority to sign Ms. Arcamonte's name to "applications or similar papers including premium finance contracts". There was no disclosure that the signature on the premium finance agreement was not that of Ms. Arcamonte or that FIRST was executing her signature pursuant to a power of attorney. Respondent contends that the premium finance agreement was executed pursuant to the power of attorney because the check from Mr. and Mrs. Arcamonte was inadvertently separated from her application for payment and erroneously deposited into the FIRST expense account. This contention lacks credibility and is rejected. The fact that Respondent deposited the check in his expense account, that the paperwork for the premium finance agreement contained the FIRST address, that Respondent took no action to rectify this alleged error even after receiving correspondence from the finance company, and that Ms. Arcamonte's signature was forged on the application belie Respondent's contention that this was an innocent mistake. On or about September 20, 1993, the Eagle Insurance policy that Ms. Arcamonte purchased was cancelled for nonpayment of premiums because Respondent, or persons acting under his direct supervision and control, failed to make a regular installment payment on the premium finance agreement. Ms. Arcamonte never received the 10 Day Notice of Cancellation Notices that Century PFC mailed to FIRST's address. It was not until October 1993 when she received a Notice of Cancellation from Eagle mailed September 27, 1993, that she learned that her policy had been cancelled effective September 20, 1993. As a result of Respondent's actions and those of Carlos Gonzalez, Susan Arcamonte failed to timely receive automobile insurance, suffered a finance charge for automobile insurance without her knowledge or consent, had her automobile insurance cancelled, and incurred higher premium charges for subsequent coverage because of a gap in her coverage. Following a criminal complaint filed against him by Ms. Arcamonte, Respondent was arrested and placed in a pretrial intervention program. It was only after this action was taken that Respondent made restitution to the Arcamontes for the $1,618.00 premium they paid. At no time during the transaction, did the Arcamontes deal with anyone from the FIRST other than Carlos Gonzalez. Mr. Gonzalez held himself out to be and acted as an insurance agent during this transaction. Specifically, Carlos Gonzalez did the following: Was introduced to the Arcamontes as an insurance agent and did not correct that misidentification. Interviewed Susan Arcamonte to gather the information necessary to determine level of coverage and to quote a premium for that coverage. Discussed coverage options and requirements including whether Ms. Arcamonte needed personal injury protection. Discussed deductible options and answered general questions about insurance. Selected an insurer for Ms. Arcamonte, quoted a premium for that coverage, and made representations as to the quality of the insurer. Offered to bind insurance coverage for the automobile Ms. Arcamonte was in the process of purchasing and sent a binder to her at the automobile dealership via fax. Personally completed the insurance application and related paperwork. Personally completed an insurance identification card, including binder numbers, as proof of insurance, and presented the identification card to Ms. Arcamonte. Presented Ms. Arcamonte with a business card that identified himself as a representative of FIRST. Respondent knew or should have known of the acts of Carlos Gonzalez. Respondent received from Mr. Gonzalez the application for insurance he had completed for Ms. Arcamonte so that all Respondent had to do was sign it. JOHNSON - MOREL TRANSACTION (COUNT TWO) On May 31, 1993, Linda E. Johnson and her husband, Miguel Morel, visited the residence of Wilfreido Cordeiro, an employee of FIRST who was acting on behalf of FIRST. As a result of their conversation with Mr. Cordeiro about their insurance needs, Mr. Morel and Ms. Johnson completed an application for automobile insurance from Armor Insurance Company (Armor) to be issued through FIRST. Mr. Cordeiro, who was not licensed by Petitioner for any purpose, held himself out to be an agent. He represented to these consumers that coverage with Armor was bound and gave them an identification card with the FIRST name on it that purported to be a binder of coverage. The FIRST insurance identification card was issued without authorization from Armor and in violation of the established policies and practices of Armor. Because Mr. Cordeiro was unlicensed, Respondent acted as the agent of record for this transaction. On or about May 31, 1993, Mrs. Linda E. Johnson tendered to Respondent, or persons acting with his knowledge and under his direct supervision and control, a check in the amount of $500.00 payable to FIRST as a premium down payment for the automobile insurance from Armor. On or about June 4, 1993, Respondent, or persons acting with his knowledge and under his direct supervision and control, deposited Mrs. Johnson's check in the FIRST expense account at the Ready State Bank. On or about June 29, 1993, Mrs. Johnson was contacted by her bank and informed that she had no automobile insurance. She immediately contacted Respondent who provided the bank with a certificate of insurance indicating coverage was placed with American Skyhawk Insurance (American Skyhawk) effective June 1, 1993. No authority to bind coverage had been extended by American Skyhawk prior to the submission of the application two and one-half months after the coverage effective date indicated on the certificate of insurance. On or about August 18, 1993, Respondent, or persons acting with his knowledge and under his direct supervision and control, completed a Century PFC and affixed thereto the signature of Mr. Morel without his knowledge or consent. This agreement reflected that Mr. Morel had paid the sum of $400.00 as a downpayment, despite the fact that Mrs. Johnson's check, in the amount of $500.00, had been received and deposited in the Respondent expense account. As a result of Respondent's action, Mrs. Johnson and Mr. Morel failed to timely receive automobile coverage; suffered a finance charge for automobile insurance without their knowledge or consent; and suffered the loss in at least the amount of $100.00. At no time during the transaction with FIRST did Mr. Morel or Mrs. Johnson knowingly execute a power of attorney. HWANG TRANSACTION (COUNT THREE) On August 29, 1992, Mr. Show Ming Hwang of Miami, Florida, purchased via telephone a policy of insurance for a car he was purchasing. Mr. Hwang called from a car dealership and spoke to an employee of FIRST who was acting under Respondent's direct supervision. Mr. Hwang tendered to FIRST a check in the amount of $869.00 as the full premium for this insurance, which was to be issued by an insurer named Security National. Respondent was the agen t of record for this transaction. Security National issued policy NumberSN00127048 providing insurance coverage for Mr. Hwang effective August 29, 1992. On December 22, 1992, Mr. Hwang asked FIRST to cancel his policy with Security National because he had moved and had secured other coverage. On January 15, 1993, Security National cancelled insurance policy NumberSN00127048 in response to Mr. Hwang's request. On January 26, 1993, Security National sent to Respondent its check Number216878 in the sum of $366.35 payable to Mr. Hwang. This check was a refund of the unearned premium for the cancelled policy. In addition to the unearned premium, Mr. Hwang was also entitled to a refund of the unearned commission from FIRST. The amount of the unearned commission was $64.55 and should have been paid by FIRST directly to Mr. Hwang. On February 8, 1993, Respondent, or an employee of FIRST acting under his direct supervision, endorsed the check from Security National in the name of Mr. Hwang and deposited that check in the FIRST expense account at Ready State Bank. Mr. Hwang was unaware that his name had been endorsed on the check and had not authorized such endorsement. This endorsement was not pursuant to a validly executed power of attorney. Mr. Hwang made repeated attempts to obtain the refunds to which he was entitled. Finally, he secured the intervention of the Petitioner. After that intervention, Respondent issued a FIRST check on December 17, 1993, payable to Mr. Hwang in the amount of $431.00 as payment of the refunds. Less than a month later, this check was dishonored because there were insufficient funds in the account on which it was drawn. After further intervention by the Petitioner, Respondent issued a cashier's check in the amount of $431.00 payable to Mr. Hwang. This check, dated March 22, 1994, was thereafter received and deposited by Mr. Hwang. Respondent failed to return the refunds to Mr. Hwang in the applicable regular course of business and converted the refund from Security National to his own use until the intervention of the Petitioner. As a result of Respondent's actions, Mr. Hwang failed to timely receive these refunds. MARIA DIAZ (COUNT FOUR) On September 20, 1994, the Petitioner entered a Final Order that revoked all licenses that it had previously issued to Maria Diaz (who was at that time known as Maria del Carmen Comas). In September 1994, Ms. Diaz, accompanied by Respondent, visited the Petitioner's office in Miami where she was told that the revocation of her license was forthcoming. After that information was given to them, Respondent and Ms. Diaz knew or should have known that the revocation of her licensure was imminent. There was insufficient evidence to establish when Ms. Diaz received a written copy of the order revoking her licensure. Ms. Diaz and Respondent assert that they did not know about the revocation until the end of January, 1995. The order entered in September 1994 prohibited Ms. Diaz from engaging in or attempting to engage in any transaction or business for which a license or appointment is required under the Insurance Code or directly owning, controlling, or being employed in any manner by any insurance agent or agency. After Respondent and Ms. Diaz had been told that the revocation of her licensure was imminent, Ms. Diaz engaged in transactions requiring licensure and acting in violation of the order revoking her licensure. This activity included applying to Seminole Insurance Company (Seminole) in December 1994 seeking appointment as a general lines insurance agent by Seminole, the submission of a large number of applications to Seminole, and the mishandling of an insurance transaction with Johannah Rexach in July and August 1995. Ms. Diaz began a business as a travel agent at the MARLIN office and continued to be present in the MARLIN office long after she had received written notice of the revocation of her licensure by Petitioner. At least on one occasion in May 1995, Ms. Diaz answered the MARLIN telephone by saying "insurance". Ms. Diaz continued to greet her former insurance customers and mailed out renewal notices after both she and Respondent had actual knowledge of the revocation of her licensure. Respondent knew or should have known of Ms. Diaz's activities. While there was insufficient evidence to establish that Ms. Diaz was formally on MARLIN's payroll, the evidence is clear and convincing that Respondent permitted Ms. Diaz to share office space while she attempted to develop her travel agency and that, in return, Ms. Diaz helped out at the MARLIN office. Respondent employed the services of Ms. Diaz and he placed her in a position to engage in transactions that required licensure after he knew or should have known that her licensure had been revoked. MARTINEZ TRANSACTION (COUNT FIVE) On April 23, 1994, Mr. and Mrs. Santiago Martinez of Miami, Florida, completed applications for automobile insurance from Fortune Insurance Company (Fortune) and Aries Insurance Company (Aries). The record is unclear as to whether the insurance was to be issued through FIRST or FIRST OF MIAMI. The individual with whom Mr. and Mrs. Martinez dealt was Alvaro Alcivar. This was during the time that FIRST and FIRST OF MIAMI maintained separate offices and it was before Respondent and Ms. Diaz had been told that her licensure was about to be revoked. The greater weight of the evidence established that Mr. Alcivar was, at that time, an employee of FIRST OF MIAMI and that he was working under the supervision of Maria Diaz. Succinctly stated, premiums paid by Mr. and Mrs. Martinez were deposited into a FIRST OF MIAMI bank account that showed First Assurance of Miami, Inc., d/b/a Complete Insurance as the owner of the account. The premium payment was not forwarded to the insurer. Because of this failure, Mr. and Mrs. Martinez did not receive insurance coverage for which they had paid. While Petitioner established that Mr. Alcivar and whoever was his supervising agent mishandled this transaction, there was insufficient evidence to establish that Respondent was aware of this transaction until Mr. and Mrs. Martinez demanded a refund of the premium they had paid. At that juncture, he attempted to resolve the problem. Consequently, it is found that the evidence failed to establish that Respondent was responsible for these violations of the Florida Insurance Code. ZAFRANI TRANSACTION (COUNT SIX) In July 1992, Mr. Issac Zafrani and his son, Ramon, of Miami, Florida, purchased automobile insurance with Oak Casualty Insurance Company (Oak) after dealing with Carlos Gonzalez. The various documents associated with this transaction refer to the agency issuing this policy as FIRST, FIRST OF MIAMI, or Rodal Insurance Agency. Mr. Gonzalez was an employee of FIRST and operated under the direct supervision of Respondent. The entire transaction was completed by Mr. Gonzalez at the automobile dealership where Mr. Zafrani was purchasing an automobile. All subsequent dealings by Mr. Zafrani was through Mr. Gonzalez by telephone or at locations other than the offices of FIRST. Mr. Gonzalez held himself out to be and acted as an insurance agent during this transaction. Specifically, Carlos Gonzalez did the following: Was introduced to the Zafranis as an insurance agent and did not correct that misidentification. Personally completed the insurance application and related paperwork. Discussed coverage and deductible options. Selected an insurer for the Zafranis, deter- mined the premium for the coverage, and accepted the payment for the premium. Personally completed an insurance identifi- cation card, including what purported to be proof of insurance, and presented the identification card to the Zafranis. Presented the Zafranis with a business card that identified himself as a representative of FIRST. The Zafranis paid for the renewal of their policy through FIRST each year on an annual basis. On September 1, 1994, the Zafranis tendered to Mr. Gonzalez their check in the amount of $1,748.00 as payment in full of the annual premium for the policy year 1994-95. This check was made payable to FIRST OF MIAMI and was deposited in the FIRST Expense Account at Ready State Bank ( Number0303080870- 10). Respondent was the only person with authority to sign on this account. On September 30, 1994, an employee of FIRST completed a premium finance agreement that purported to finance the Zafranis' premium for the Oak Casualty insurance and forged Issac Zafrani's signature to that agreement. This false document reflected that the total premium was $1,748.00 and that the Zafranis had made a downpayment of $524.00 and had an unpaid balance of $1,224.00. This action was taken without Issac Zafrani's knowledge or consent. Mr. Zafrani had not executed a power of attorney to authorize these acts. Respondent knew or should have known of this act. On September 30, 1994, Respondent, or an employee of FIRST working under his direct supervision, issued a premium finance draft from Artic to Oak in the amount of $1,485.80 based upon this false application. A few weeks after they paid the renewal premium, the Zafranis complained to Mr. Gonzalez that they had not received their renewal policy from Oak. Mr. Gonzalez advised them that the company had cancelled their policy in error. He promised that he would investigate the matter and take corrective action. On December 23, 1994, Respondent, or an employee of FIRST acting under his direct supervision, submitted an automobile insurance application to Seminole Insurance Company indicating that coverage had been bound for Issac Zafrani. On December 23, 1994, Respondent issued FIRST check Number1196 payable to Seminole in the amount of $1,681.65 in payment of the policy he was attempting to secure on behalf of the Zafranis. On or about December 27 1994, Mr. Gonzalez issued to the Zafranis a FIRST card with what purported to be a binder number from Seminole Insurance Company. No authorization to bind that coverage had been issued by Seminole. On January 3, 1995, Artic issued a cancellation notice on the Oak Casualty policy because of missed payments on the premium finance agreement. The Zafranis did not know about this premium finance agreement and Respondent failed to make the payments. In January 1995, FIRST check Number1196 that had been tendered to Seminole was dishonored by Respondent's bank because the account on which the check was drawn had insufficient funds to pay the check. As a result of these actions, the Zafranis failed to timely receive automobile insurance for which they had fully paid and suffered the loss of the sum of $1,748.00. Respondent knew or should have known of these actions. DEBT TO WORLD PREMIUM FINANCE COMPANY (COUNT SEVEN) On August 29, 1995, a final judgment was entered in a Dade County Court action brought by World Premium Finance Co., Inc. (World PFC) against FIRST OF MIAMI and the Respondent, individually, as defendants. This final judgment awarded damages against FIRST OF MIAMI in the sum of $7,203.03 and awarded damages against both defendants in the sum of $15,000 plus attorney's fees of $1,000. The World PFC complaint was based on worthless checks FIRST OF MIAMI and Respondent had issued in connection with premium finance contracts and included debts for unpaid downpayments and unearned commissions on premium finance contracts that had been cancelled. Respondent's assertion that these debts were the responsibility of Maria Diaz is rejected. While Ms. Diaz initially made the arrangements for FIRST OF MIAMI to finance through World PFC and was the agent responsible for some of these transactions, it is clear that Respondent was the agent for many of these underlying transactions. Further, some, if not all, of these worthless checks were drawn on accounts for which Respondent was the only person with signatory authority. The downpayments and unearned commissions constitute fiduciary funds for which Respondent is responsible. Respondent has failed to pay these fiduciary funds to World PFC after repeated demands for payments. GUTIERREZ TRANSACTION (COUNT EIGHT) On October 11, 1993, Ms. Madalina N. Gutierrez of Miami, Florida, completed an application for automobile insurance. Aries Insurance Company was the insurer for this policy and FIRST was the insurance agency. The premium for this policy was to have been $574.00. The person with whom Ms. Gutierrez dealt with was Carmen "Mela" Babacarris, an employee of FIRST OF MIAMI. Ms. Babacarris has never held any license or appointment under the Florida Insurance Code. Ms. Gutierrez paid to FIRST the sum of $287.00 on October 11, 1993, when she applied for this insurance. On that date, Ms. Babacarris gave to Ms. Gutierrez an insurance card that purported to bind coverage with Aries. She returned on November 1, 1993, and paid to FIRST the balance owed of $287.00. Both of these payments were tendered to and received by Ms. Babacarris on behalf of FIRST. The sums paid by Ms. Gutierrez for this insurance coverage were not remitted by the FIRST to Aries or to any other insurer. As a consequence, Ms. Gutierrez did not receive the insurance coverage for which she had paid. Ms. Gutierrez was unable to obtain a refund of the sums that she had paid to FIRST. Respondent knew or should have known of the acts pertaining to this transaction by Ms. Babacarris since the transaction was processed through the FIRST, the agency for which Respondent was the sole supervising agent. RICO TRANSACTION (COUNT NINE) On June 27, 1994, Mr. Rafael Rico of Miami, Florida, completed an application for automobile insurance from Aries Insurance. It is unclear from the documents whether this insurance was to be issued through FIRST or through FIRST OF MIAMI. This confusion in the record is attributable to the fact that the persons involved in this transaction and associated with these two agencies made little distinction between the two agencies. This application was completed at the automobile dealership from which Mr. Rico was purchasing the vehicle to be insured. The individual with whom Mr. Rico dealt was Alvaro Alcivar. At all times during the transaction with Mr. Rico, Mr. Alcivar held himself out to be and acted as an insurance agent. Specifically, Mr. Alcivar did the following: Personally completed the insurance application and related paperwork. Discussed coverage and deductible options and answered Mr. Rico's general insurance questions. Selected the insurer for Mr. Rico's coverage. Personally completed an insurance identification card, including a policy number, as proof of insurance and provided it to Mr. Rico. Indicated that coverage was bound immediately and gave to him a card that purported to be a Florida Automobile Insurance Identification Card indicating that Mr. Rico had insurance coverage through Aries. Developed the premium and downpayment. Accepted payment from Mr. Rico. Presented Mr. Rico with a business card identifying himself as a representative of FIRST OF MIAMI. Mr. Alcivar was the only representative of the FIRST or of the FIRST OF MIAMI with whom Mr. Rico dealt. On June 27, 1994, Mr. Rico tendered to Mr. Alcivar the sum of $947.00 as payment for this insurance with the sum of $500.00 being paid in cash and the balance being charged to Mr. Rico's Mastercard. This Mastercard entry was processed through the account of the FIRST, not that of the FIRST OF MIAMI. Despite the payments by Mr. Rico, the premium to which Aries was entitled for this coverage was not remitted by FIRST or by FIRST OF MIAMI. As a result of this failure, Aries cancelled the binder that had been issued to Mr. Rico. Mr. Rico was damaged as a result of this failure. He lost the premium he had paid and the lending institution that financed his vehicle placed insurance on the vehicle at a higher premium than that charged by Aries. Based on the relationship between FIRST and FIRST OF MIAMI, the relationship between Respondent and Ms. Diaz, the repeated references to FIRST in the documentation of this transaction, and the deposit of at least $447.00 in the Mastercard account of FIRST, it is concluded that Respondent knew or should have known about this transaction. CHERI TRANSACTION (COUNT ELEVEN) On November 19, 1994, Mr. Dieuseul Cheri of Miami, Florida, completed an application for automobile insurance that was to be issued by Seminole Insurance Company as the insurer. The application for insurance reflects that Maria Diaz was the agent for this transaction, but the name of the agency is FIRST, not FIRST OF MIAMI. Likewise, the premium finance agreement pertaining to this transaction reflects that FIRST is the producing agency. The entire transaction was handled by Alvaro Alcivar at an automobile dealership where Mr. Cheri was purchasing a vehicle and occurred after Ms. Diaz had been told in September that the revocation of her licensure was imminent. Mr. Cheri gave to Mr. Alcivar the sum of $205.00 in cash as the downpayment for the premium for this Seminole policy. At all times Mr. Alcivar held himself out to be and acted as an insurance agent. Specifically, Mr. Alcivar: Was introduced to Mr. Cheri as an insurance agent and did not correct that misidentification. Personally completed the insurance application and related paperwork. Discussed coverage and deductible options and answered Mr. Cheri's general insurance questions. Selected the insurer for Mr. Cheri's coverage. Personally completed an insurance identification card, including a policy number, as proof of insurance and provided it to Mr. Cheri. Completed a named driver exclusion agreement for Mr. Cheri's policy, which had a significant effect on the coverage provided under the policy, and completed a vehicle inspection. Developed the premium and downpayment. Accepted payment from Mr. Cheri on behalf of FIRST OF MIAMI. Presented Mr. Cheri with a business card identifying himself as a representative of FIRST OF MIAMI. Mr. Alcivar was the only representative of the FIRST or of the FIRST OF MIAMI with whom Mr. Cheri dealt. FIRST OF MIAMI failed to bind coverage with Seminole on Mr. Cheri's behalf until November 22, 1994. As a result, there was a lapse in Mr. Cheri's coverage from November 17 until November 22, 1994. On November 19, 1994, FIRST OF MIAMI submitted a premium finance agreement on Mr. Cheri's insurance policy to World Premium Finance Co., Inc. (World PFC). The World PFC contract as well as the application were signed by Maria Diaz. Ms. Diaz never met Mr. Cheri. The premium finance agreement submitted to World PFC by FIRST OF MIAMI indicated that he had made a premium downpayment of only $105.00 despite the fact that Mr. Cheri had made a downpayment of $205.00. The evidence is not clear that Respondent knew or should have known of this transaction because of the involvement of Ms. Diaz. Instead, this is an example of the Respondent permitting Ms. Diaz to continue to participate in insurance transactions that require licensure after Respondent and Ms. Diaz had been told in September 1994 that revocation was imminent. ALVARO ALCIVAR (COUNT TWELVE) Petitioner established by clear and convincing evidence that Alvaro Alcivar performed acts and made representations to consumers that require licensure pursuant to the Florida Insurance Code. Petitioner also established that Respondent knew or should have known of these acts and that he aided and abetted these violations by Mr. Alcivar. CARLOS GONZALEZ (COUNT THIRTEEN) Petitioner established by clear and convincing evidence that Carlos Gonzalez performed acts and made representations to consumers that require licensure pursuant to the Florida Insurance Code. Petitioner also established that Respondent knew or should have known of these acts and that he aided and abetted these violations by Mr. Gonzalez.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order that adopts the findings of fact and conclusions of law contained herein. It is further recommended that Petitioner revoke all licensure and appointment held by Respondent pursuant to the Florida Insurance Code and that it impose against Respondent an administrative fine in the amount of $10,000.00. DONE AND ENTERED this 15th day of April 1996 in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, 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 15th day of April 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-0317 The following rulings are made as to the proposed findings of fact submitted by Petitioner. The proposed findings of fact in paragraphs 1, 2, 3, 4, 5,6, 7, 8, 9, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22, 23, 27, 25, 27, 28, 29, 30, 31, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 73, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 123, 125, 126, 127, 139, 140, 141, and 142 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in part by the Recommended Order. The testimony at the formal hearing that the office was moved in June 1994. The proposed findings of fact in paragraphs 10, 17, and 81 are adopted in part by the Recommended Order, but are rejected to the extent they are contrary to the findings made. The proposed findings of fact in paragraphs 26, 32, 72, 74, 75, 76, 83, 129, 130, 131, 136, 137, 143, and 144 are subordinate to the findings made. The proposed findings of fact in paragraphs 46, 61, 82, and 124 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 77, 78, 79, 80, 128, 132, 133, 134, 135, and 136 are rejected as being contrary to the findings made. The following rulings are made as to the proposed findings of fact submitted by Respondent. The proposed findings of fact in paragraphs 1, 3, 4, 5, 7, 8, 9, 13, 15, 17, 18, 19, 20, 23, 26, 32, 33, 34, 35, 36, 37, 40, 41, 49, 50, 53, 54, 55, 64, 72, and 73 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in part by the Recommended Order, but are rejected in part since Respondent moved the offices of the FIRST from Coral Way to Sunset Drive at a time pertinent to this proceeding. The proposed findings of fact in paragraphs 6 and 52 are adopted in part by the Recommended Order, but are rejected to the extent they are contrary to the findings made. The proposed findings of fact in paragraphs 10, 11, 21 and 27 are rejected as being unsubstantiated by credible evidence. The evidence that supports these proposed findings lacks credibility. The proposed findings of fact in paragraphs 12 and 31 are adopted in part by the Recommended Order, but are rejected to the extent the proposed findings mischaracterize the evidence. The proposed findings of fact in paragraphs 16 are adopted in part by the Recommended Order, but are rejected to the extent they are unnecessary to the conclusions reached. The proposed findings of fact in paragraph 24 are adopted in part by the Recommended Order, but are rejected to the extent they are contrary to the finding that they knew that the revocation of Ms. Diaz's licensure was imminent. The proposed findings of fact in paragraphs 25, 28, 30, 38, 39, 40, 45, 46, 47, 51, 56, 58, 59, 60, 61, 62, 65, 66, 67, 69, 71, 74, 75, 76, 77, and 78 are rejected as being contrary to the findings made. The proposed findings of fact in paragraphs 29 and 57 are subordinate to the findings made. The proposed findings of fact in paragraph 31 are rejected since they contain an inference that Respondent told Ms. Diaz to move as soon as he knew of her interaction with insurance customers. The proposed findings of fact in paragraph 42 are rejected as being a mischaracterization of the evidence. The proposed findings of fact in paragraphs 48, 63, 68, and 70 are rejected as being unnecessary to the conclusions reached. COPIES FURNISHED: John R. Dunphy, Esquire Department of Insurance and Treasurer Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Charles J. Grimsley, Esquire Charles J. Grimsley and Associates, P.A. 1880 Brickell Avenue Miami, Florida 33129 Honorable Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Acting General Counsel Department of Insurance The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
