The Issue The issue in this case is whether Petitioner is eligible for licensure as a resident general lines agent.
Findings Of Fact On August 14, 1998, Robert Manns, a representative for Butler County, Missouri, filed a consumer complaint with the Missouri Department of Insurance, which alleged that Petitioner financed a premium for an insurance policy when the premium had, in fact, been paid by the county. On June 9, 1999, Petitioner was assessed a fine of $10,000.00 by the Missouri Department of Insurance based on Petitioner's having practiced forgery and deception in an insurance transaction. Specifically, it was found that Petitioner signed the names of the city finance director and county commission clerk to premium finance documents and letters representing that the city and county had financed a premium when, in fact, the city and county had paid the insurance premium for the city and county accounts in full on an annual basis. At the time Petitioner forged the premium finance agreement, he was licensed as an insurance agent in the State of Missouri. The Missouri Department of Insurance did not revoke Petitioner's license as an insurance agent in the State of Missouri. On February 14, 2000, the Indiana Department of Insurance denied Petitioner’s application for licensure based upon the Missouri administrative action. On September 19, 2003, Petitioner applied for licensure as a resident general lines agent in the State of Florida. Based on its review of Petitioner's application and the administrative documents from the Missouri Department of Insurance described in paragraphs 2 above, the Department denied Petitioner’s application. In regard to the incident described in paragraph 2 above, Petitioner denied that he forged the insurance contract, but he admitted that he forged the premium finance agreement associated with the subject insurance contract. However, Petitioner testified that "no one lost money" as a result of his forging the premium finance agreement. Petitioner testified that he was not proud of the incident, that he was very sorry for doing it, and that his actions could not be justified. The Department considers the forgery of documents and deception related to insurance documents and transactions by an insurance agent to be serious matters. This is particularly true in light of the fiduciary role of an insurance agent.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that final order be entered denying Petitioner’s application for licensure as a resident general lines insurance agent in the State of Florida. DONE AND ENTERED this 23rd day of November, 2004, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD 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 23rd day of November, 2004. COPIES FURNISHED: Johnny R. Howe 4367 Winding Oaks Circle Mulberry, Florida 33860 Michael T. Ruff, Esquire Ladasiah Jackson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 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
The Issue The issue presented is whether Respondent, a licensed insurance agent, is guilty of violating the statutes regulating the conduct of an insurance agent, and if so, what disciplinary action should be taken against him, if any.
Findings Of Fact At all times material hereto, Respondent has been eligible for licensure and licensed as a life and health insurance agent and as a dental health care contract salesman. For many years, Respondent had also been licensed to solicit general lines -- property, casualty, surety, and miscellaneous lines -- insurance in this state. Respondent was unaware that this license expired on March 24, 1987. At all times material hereto, Respondent was, however, eligible for licensure as a general lines agent. At all times material hereto, Respondent was one of the officers of Johnson's Model City Insurance Agency #1, Inc., a Florida corporation. That corporation was involuntarily dissolved on November 4, 1988. On December 30, 1986, Respondent telephoned Petitioner to discuss the propriety of an insurance agent charging a consulting fee. Following that telephonic conversation, an attorney for Petitioner directed correspondence to Respondent confirming that telephone conversation, advising that a consulting fee could legally be charged under certain circumstances. Those circumstances included the use of a separate consulting contract between the agent and the insured so that the insured would fully understand that he or she was entering into a separate contract and paying a separate consideration in advance of the performance of consulting services. Additionally, the services rendered must be other than those normally provided by an insurance agent. Further, if a separate consulting contract were effectuated, an agent could set up a separate consulting corporation to enter into such contracts. Hartford Insurance Company sells automobile insurance in the State of Florida by use of a toll-free telephone number. People who know the telephone number can call Hartford directly, obtain a quote for automobile insurance, and purchase a policy directly from Hartford. Hartford has no insurance agents in the State of Florida and pays no commissions to insurance agents in Florida for the obtaining of automobile insurance customers. A person can obtain a quote in writing from the Hartford in advance of purchasing a policy. Sometimes, the quotation card and the policy are issued and mailed simultaneously by Hartford to its new insureds. On September 20, 1987, Patricia Moss telephoned J. M. C. Insurance Consultants pursuant to an ad in the telephone yellow pages. She inquired about obtaining automobile insurance to replace her current policy which would expire on September 22, 1987. She spoke with an employee named Betty who advised her that she could obtain replacement insurance at a cost of $927. Since the cost quoted to her was substantially lower than the prices she had been quoted by the other agencies she had consulted, Moss went to the offices of J. M. C. on September 21, 1987. Betty presented Moss with a number of documents to sign. She signed a Power of Attorney appointing Johnson's Model City Insurance, Inc., doing business as JMC Insurance Consultants as her attorney-in-fact to obtain insurance for her, specifically ratifying and confirming actions taken on her behalf by J. L. Johnson- consultant. She also executed an Agreement with Consultant specifying the services that JMC Insurance Consultants would perform on her behalf. She signed a further statement which provided that: "I understand that JMC Insurance is acting as Consultants for my insurance placement and is entitled to any and all consultation fees." She also signed a document written in boldfaced type which states: IMPORTANT NOTICE THIS LETTER IS TO INFORM YOU THAT JMC INSURANCE CONSULTANTS ARE NOT AGENTS NOR DO WE REPRESENT HARTFORD INSURANCE COMPANY IN ANY WAY WHATSOEVER. WE REPRESENT "YOU" THE CLIENT AND WE ACT IN YOUR BEHALF WITH THE RIGHT THAT YOU GIVE US THROUGH A POWER OF ATTORNEY. WE ENDEAVOR TO PLACE YOUR AUTO INSURANCE FOR YOU ON YOUR BEHALF. WE ARE YOUR CONSULTANT. IF YOU HAVE A PROBLEM PLEASE CALL US WE ARE HERE TO HELP AND ACT IN YOUR BEHALF. CALL US FIRST. LET US HANDLE IT. CLIENT. I HAVE READ AND I UNDERSTAND. Moss gave JMC Consultants a check in the amount of $262.50 for which she was given a receipt which carried the specific notation that the money she had paid was for an insurance consultant's fee. She was also given a small card entitled Insurance Identification Card on which Betty filled in information showing that she would be insured by Hartford effective on the following day and specifically describing the coverage provided, the automobile insured, and the name and address of Moss. Within a week she received directly from the Hartford an insurance policy for the benefits which she sought. The policy itself reflected that the premium for the policy was $632 and that she would be receiving a bill from Hartford for that amount. She telephoned Betty, demanding a refund of her $262.50, which demand was refused. Betty explained to her that the amount was for the consultant's fee for obtaining the low- cost coverage for Moss. Hartford's direct marketing program does allow people to purchase insurance on someone else's behalf utilizing a Power of Attorney. Although Hartford's records do not reflect a Power of Attorney from Moss to J. M. C. Consultants or Respondent, Hartford's records regarding their policyholder Moss are not accurate. For example, they erroneously reflect that they quoted a rate to Moss on September 15, a week before they received any contact on her behalf. Although Moss testified that Betty told her the $262.50 was the down payment on her insurance premium, her testimony is not credible in view of the numerous documents that she signed stating that she fully understood that Respondent was not an agent for Hartford, that Respondent would be acting on her behalf pursuant to the Power of Attorney and Consultant's Agreement which she had signed, and the other documents reflecting that the $262.50 was a consultant's fee which she was paying to Respondent to act on her behalf. Her testimony that she did not understand is refuted by the documents she signed saying that she did. There is no allegation that Moss, a retired registered nurse, was unable to read. Rather, it is concluded that Moss voluntarily chose to pay the Hartford premium plus Respondent's consulting fee since the total price for the two charges was still substantially less than she could have obtained insurance for from other sources. Allstate Insurance Company is an insurer which sells insurance policies through their agents in the State of Florida. It also has a division which participates in Florida's Joint Underwriting Association (hereinafter "FJUA"), a program through which high-risk drivers who cannot obtain insurance in the regular voluntary insurance market can obtain automobile insurance. Prior to the time that his general lines agent license expired, Respondent participated in that program and was assigned to write insurance for Allstate for policyholders participating in the program. The Producers Contract entered into between Respondent and the FJUA, which assigned him to Allstate Insurance Company, provided that it would automatically terminate if an agent's general lines license expired. On July 22, 1988, James Tillie came to the office of J. M. C. to procure automobile insurance for the van that he used in his business. After meeting with Respondent, Tillie gave Respondent a check in the amount of $204 as a down payment on an automobile insurance policy. The check was endorsed and deposited into the business bank account of J. M. C. Respondent gave James Tillie an automobile insurance binder which reflected that his insurance policy was to be issued through Allstate Insurance Company. Under the terms of Respondent's contract with the FJUA, Respondent was required to submit James Tillie's application and premium to Allstate within 24 hours. The FJUA application acts as a binder. Once the application is completed and the premium is paid to the agent, the insured has automatic coverage for 30 days during which time the carrier, Allstate in this case, can act on the application. There is no evidence as to when Respondent forwarded James Tillie's application to Allstate; however, Allstate has no record of ever receiving the application. Respondent did tell James Tillie that within a couple of months he would receive from Allstate his policy and instructions for payment of the balance of his premium. After a month or two had elapsed, James Tillie became concerned since he had not yet received his insurance policy. He contacted Respondent who assured him that he did have insurance coverage. Shortly thereafter, James Tillie received in the mail from Respondent a card entitled Insurance Identification Card. On that card information had been filled in showing a policy number, the effective date, the insurance company as Allstate Insurance Company, a description of the insured vehicle, and the name and address of James Tillie. This is not an official Allstate identification card, and no one purported it to be such. An official Allstate Insurance card is issued by Allstate as part of the policy issued by it. On September 23, 1988, Sina Tillie, James' mother, visited J. M. C. for the purpose of purchasing automobile insurance for her new automobile. Sina Tillie is an elderly person who had never before owned an automobile or possessed a driver's license. She wished to purchase insurance on a brand- new automobile. Sina Tillie gave Respondent $1,828 in cash as full payment of the policy's annual premium. Respondent gave her an insurance binder which reflected that her insurance was placed with Allstate. Allstate has no record of receiving Sina Tillie's application and premium from Respondent. Subsequently, Sina Tillie became concerned when she had not yet received her insurance policy. She asked her daughter to contact Respondent. Respondent advised her daughter not to worry. He then mailed to Sina Tillie an Insurance Identification Card similar to the one which he had provided to James Tillie reflecting James' coverage. He also telephoned Sina Tillie to assure her that if anything happened, all she would need to do would be to show the card saying that she was covered and to contact him. Since neither he nor his mother had received a policy from Allstate, James Tillie called Allstate. He did not know that there were, in effect, two Allstates. The Allstate office which he contacted was a regular Allstate office which markets insurance to customers who call or come in, and not an office affiliated with the FJUA program. The person with whom he spoke told him that neither he nor his mother were insured by Allstate and that the policy numbers reflected on the Insurance Identification Cards given by Respondent to James and his mother were not Allstate policy numbers, but rather were binder numbers. James Tillie then contacted Respondent who consistently maintained that both James and Sina were insured. Respondent contacted Allstate regarding James' and Sina's policies. James Tillie came to the office of J. M. C. and met with Respondent. He advised Respondent that he and his mother had obtained insurance elsewhere and requested refunds of the premiums that he and his mother had paid. Respondent told Tillie that he could not refund the premiums since both James and his mother were insured in exchange for those premiums. Respondent eventually told James Tillie that he would refund the premiums if the Tillies would sign releases. James Tillie maintained that he would sign releases only after he had received the refund of the premiums. The meeting ended in stalemate. James Tillie contacted Petitioner, and Petitioner contacted Respondent. Respondent maintained that he would refund the premiums in exchange for a release. Petitioner forwarded a copy of Respondent's letter to James Tillie. Respondent eventually made arrangements with James and his mother to refund the premiums in monthly payments since he did not have the money to refund the premiums in full. By the time of the final hearing in this cause, Respondent had only refunded the total amount of $600 to the Tillies. At the time that Respondent's general lines agent license with Integrity Insurance Company was cancelled on March 24, 1987, he believed that he was being re-licensed by Fortune Insurance Company. However, he never received a license for or from Fortune and never checked to ascertain why.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent guilty of statutory violations as set forth in this Recommended Order and suspending Respondent's licensure and eligibility for licensure for a period of 60 days from the date of the Final Order entered in this cause. DONE and ENTERED this 13th day of June, 1990, at Tallahassee, Florida. LINDA M. RIGOT, 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 13th day of June, 1990. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact numbered 1-3, 7-9, 14-19, 21-26, and 28-32 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 4-6, 10, 11, 13, 20, and 27 have been rejected as not being supported by the weight of the credible evidence in this cause. Petitioner's proposed finding of fact number 12 has been rejected as being unnecessary for determination of the issues in this cause. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance and Treasurer Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Johnny L. Johnson 17120 Northwest 27th Avenue Opa Locka, Florida 33056 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell, General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all times relevant hereto, respondent, Ralph Edward Carter, was licensed and eligible for licensure as a life and health insurance agent and general lines agent - property, casualty, surety and miscellaneous lines by petitioner, Department of Insurance and Treasurer (Department). When the events herein occurred, respondent was licensed as a property and casualty insurance agent for Bankers Insurance Company (BIC) and Underwriters Guarantee Insurance Company (UGIC). In March 1987 respondent purchased an insurance franchise and began operating an insurance firm under the corporate name of Mr. Auto of South St. Petersburg, Inc. Records on file with the Department of State reflect that effective June 25, 1988 the name of the corporation was changed to Reliable Insurance of South St. Petersburg, Inc. Since February 1989 the business has been located at 3135 18th Avenue, South, No. C- 3, St. Petersburg, Florida. The corporation was primarily engaged in doing business as a general lines insurance agency. Respondent has been licensed as an agent since 1968, and during his tenure as an agent, has worked in sales with several large insurance companies. In January 1988 Betty Andrews purchased from respondent liability and property damage coverage on her two automobiles, a 979 Ford station wagon and a 1980 Chrysler. The insurance was written through UGIC and was effective for the year beginning January 8, 1988. Shortly after May 16, 1988 Andrews received a notice from UGIC reflecting that she owed an additional $38.90 on her policy. For some undisclosed reason, Andrews did not pay the additional premium owed. On July 6, 1988 Andrews visited respondent's office for the purpose of adding comprehensive and collision coverage on her two automobiles. After respondent quoted a rate, she agreed to purchase the additional coverage, filled out an application, and gave respondent two checks totaling $166. These monies were deposited into respondent's business account. The balance was to be paid in three monthly payments of approximately $55 each month through a finance company. Respondent gave Andrews a document entitled "Receipt and Binder Certificate" reflecting she had comprehensive and collision coverage with "Bankers" effective from July 6, 1988 to January 6, 1989. "Bankers" was in fact Bankers Insurance Company. When Andrews did not receive a policy from BIC, she attempted to contact respondent on several occasions to ascertain its whereabouts. Andrews could not recall when or how many times she telephoned respondent's office but indicated she was never able to reach him. This was probably because respondent operated a one-man office with no clerical help and was frequently absent from his office. In late August 1988 Andrews received a notice from UGIC advising that UGIC intended to cancel her policy effective September 7, 1988 because she failed to pay the $38.90 premium still due. At about this same time Andrews' husband sold the station wagon and purchased a truck. Accordingly, Andrews needed to transfer her insurance to the new vehicle. She went to respondent's office in early September 1988 and asked him why she had never received the new policy. She also asked him to find out why her existing policy was being cancel led and requested him to transfer coverage from the station wagon to the new truck. In Andrews' presence, respondent made a telephone call to UGIC and learned that Andrews' husband had failed to disclose on the insurance application that he had received a traffic ticket. This in turn caused a $38.90 increase in the annual premium, and because that amount had not been paid, the policy was being cancelled. Respondent attempted to persuade UGIC to reinstate the policy but was unsuccessful. Dissatisfied, Andrews told respondent she intended to file a complaint with the Department of Insurance. Respondent then wrote her a check for $166 which represented a full refund of her monies. There is no evidence to establish that respondent intended to defraud Andrews or to evade the requirements of the insurance code. Despite the fact that Andrews did not receive a policy, she was covered until September 1988 by her original policy and respondent's errors and omissions policy. Through testimony by an underwriting manager for BIC, David R. Wardlow, it was established that respondent had entered into a correspondent agreement with an agent of BIC. Wardlow's review of BIC's records reflected that BIC had never received Andrews' application and premium nor was a policy written on her behalf. However, there was no evidence to establish how promptly respondent was required to remit a new application and premium to BIC or whether respondent violated BIC policy by retaining the application and monies for some sixty days until he learned that the existing policy had been cancel led. Respondent readily conceded that he never forwarded the application and premium monies to BIC. He explained his actions by pointing out that after Andrews left his office he decided to secure the coverage from UGIC rather than BIC in order to have the entire coverage with one company at a cheaper rate. When he later learned that UGIC intended to cancel Andrews' policy for nonpayment of premium, he thought he might be able to persuade UGIC to reinstate the policy but was unsuccessful. He offered no excuse except inadvertence as to why he had not promptly followed up on Andrews' application. Petitioner also presented the testimony of Johnnie Ruth Bell who purchased automobile insurance from respondent in October 1988. Although Bell's testimony was often vague and confusing, the following facts were established. On or about October 1, 1988 Bell went to respondent's office to purchase full insurance coverage on her 1987 Toyota Corolla. After discussing various options with respondent, Bell agreed to purchase a policy issued through Redmond-Adams, a Sarasota underwriter for UGIC. Bell gave respondent a check in the amount of $227 as a down payment and agreed to finance the balance through a finance company at a rate of $78 per month for eight months. These monies were deposited into respondent's bank account. Respondent issued a "Receipt and Binder Certificate" reflecting coverage with "Underwriter - Redmond Adams". Because Bell had financed the car with a local bank, it was necessary for respondent to furnish the bank with evidence of insurance. Through inadvertence, but not intentionally or willfully, respondent misplaced the application and never forwarded the application and premium to the insurance company nor did he notify the bank of Bell's insurance coverage. However, Bell was covered during this period of time by respondent's errors and omissions policy. After Bell did not receive a copy of her policy from Redmond-Adams, but received a number of telephone calls and notices from her bank, she met with respondent around December 2, 1988. Respondent accepted an additional $156 in cash from Bell and issued her a new binder effective that date which was identical to the first binder except for the date. It is unknown why the additional money was collected. He then tore up the first binder. When Bell had still not received her policy by April 1989, she filed a complaint with petitioner. After respondent learned that Bell had filed a complaint, he contacted her in May 1989 and refunded all of her monies. There was no evidence to establish how promptly respondent was required to submit applications and premiums to UGIC or how that company construed the term "in the regular course of business" in the context of agents remitting applications and premiums. Respondent blamed his problems on the fact that he is the sole employee of his office and, according to his estimate, services some 500 active clients per year and more than 1,500 accounts. He desires to continue in the insurance profession and points to the fact that, of the many insurance transactions handled by him over the last twenty-two years, the Andrews and Bell transactions are the only two that have spawned any significant problems. Moreover, he has never been disciplined by petitioner during his tenure as an agent. Respondent asks that any penalty be limited to a period of probation during which time he can have the opportunity to improve his management and bookkeeping skills. There was no evidence to establish whether respondent's conduct demonstrated a lack of fitness or trustworthiness to engage in the insurance profession. As to respondent's knowledge and technical competence to engage in the transactions authorized by his licenses, he conceded he lacks training in bookkeeping and management skills, both needed for a general lines agent, but denied that he lacks the necessary skills in the sales part of the business. This was not contradicted. Finally, respondent has taken curative steps to insure that applications are not misplaced and the customer receives the requested insurance.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating sections 626.611(8) and 626.734 and that his general lines license be suspended for thirty days. All other charges should be dismissed with prejudice. DONE AND ORDERED this 13 day of March, 1990, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 13 day of March, 1990. APPENDIX Petitioner: 1-4. Partially adopted in finding of fact 1. 5-7. Partially adopted in finding of fact 3. 8-11. Partially adopted in finding of fact 6. Note - Where a finding has been partially adopted, the remainder has been rejected as being irrelevant, unnecessary, cumulative, subordinate, not supported by the evidence, or a conclusion of law. Respondent: A Partially adopted in findings of fact 5 and 6. Rejected as being irrelevant. Partially adopted in finding of fact 3. Partially adopted in finding of fact 5. Partially adopted in finding of fact 6. Rejected since respondent did not move his office until February 1989. Partially adopted in finding of fact 4. Partially adopted in finding of fact 6. I. Partially adopted in findings of fact 3 and 8. Partially adopted in findings of' fact 7 and 8. Partially adopted in findings of fact 6 and 7. Partially adopted in finding of fact 10. Partially adopted in finding of fact l. Partially adopted in finding of fact 10. Partially adopted in finding of fact 1. Note - Where a finding has been partially used, the remainder has been rejected as being irrelevant, cumulative, unnecessary, subordinate, not supported by the evidence or a conclusion of law. COPIES FURNISHED: Honorable Tom Gallagher Insurance Commissioner Plaza Level, The Capital Tallahassee, FL 32399-0300 Willis F. Melvin, Jr., Esquire 412 Larson Building Tallahassee, FL 32399-0300 Richard J. DaFonte, Esquire O. Box 41750 St. Petersburg, FL 33743-1750 Donald A. Dowdell, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 =================================================================
The Issue Has Petitioner, Unlimited Financial Services, LLC (Unlimited), conducted the unlicensed business of insurance in violation of section 626.112(7), Florida Statutes (2011)?1/ Has Unlimited engaged in an unfair or deceptive act or practice, false advertising, as prohibited by section 626.9541(1)(b)?
Findings Of Fact The Department is a state agency charged with administering chapters 624 and 626, Florida Statutes, governing the business of insurance. Unlimited is not a licensed Florida insurance agency. Matthew Dilday, its owner, is not a licensed Florida insurance agent. In the pre-hearing stipulation, Unlimited described itself as "an advertiser who obtains qualified leads for licensed Florida insurance agents." In its advertising materials directed at insurance agents, Unlimited describes itself as "the Nation's most sought after company for advisors in need of new marketing strategies" and "the Nation's No. 1 Annuity Leads and Preset Appointment Program." Unlimited promotes itself on its website as "No. 1 Annuity Lead Provider." Beneath that heading, Unlimited represents: When we talk with our annuity and investment lead prospects, our professionally trained call center staff is adamant about confirming that they have investment assets. When you purchase preset investment or annuity appointments from UFS Marketing [Unlimited], you also receive access to our highly recommended training programs that explain to you the best way to convert leads and appointments into sales. Unlimited's materials say: We provide annuity leads to financial professionals who sell deferred annuities, many who work for insurance companies. We also provide pre-qualified annuity leads programs to independent agents of the insurance companies who collect a commission from the insurance company when they sell an annuity. This commission is usually a a [sic] percentage of the total premium paid by the annuity investor. Unlimited's services facilitate contact between an agent and a potential client in several ways. According to the promotional materials, Unlimited's "Annuity Leads and Preset Appointment Programs are essential to insurance agents and financial advisors." Again, according to the materials, Unlimited sets "thousands of qualified appointments every month for agents nationwide." The program saves agents valuable time in prospecting for qualified prospective customers. Unlimited enters into marketing services agreements with Florida insurance agents and agencies designed to facilitate the marketing of life insurance products to Florida consumers. Unlimited is in the advertising and marketing business and operates a telemarketing call center. Although Mr. Dilday repeatedly testified that Unlimited was simply a "printing company," it is not. It is a direct mail and telemarketing marketing organization focused on developing customer leads for insurance agents.2/ In 2011, Unlimited entered into a contract with Florida Insurance Agent Andy Heygate titled, "Marketing Services Agreement" (Agreement). The "General Purpose" paragraph of the Agreement states: This Agreement will establish a business relationship among and between the aforementioned parties whereby UFS Marketing will supply fulfillment services on behalf of the Customer [Agent Heygate]. Marketing materials will be mailed to the general public on behalf of the Customer in accordance with the instructions received from the Customer and calls will be taken from the general public on behalf of the Customer in accordance with the Customer's instructions. The Agreement details marketing services and the parties' responsibilities. Among other things, it provides: Unlimited will send a mass mailing developed by the customer targeted at individuals who meet a demographic profile selected by the customer. The profile for the Agreement targeted homeowners aged 58-75 who had an annual income of over $30,000 and a home worth $150,000 or more. Unlimited will make a telephone bank available to accept responses from consumers following a script developed by the customer to screen the responses to make appointments or develop leads. Unlimited will make leads available and/or set appointments with consumers resulting from the inquiries generated from the marketing materials. The Agreement defines "Lead" as "a consumer who contacts an UFS Marketing representative in response to the Customer's marketing materials and agrees to be contacted by the Customer." The Agreement defines "Appointment" as "a consumer who contacts UFS Marketing in response to the Customer's marketing materials and schedules an appointment with the Customer for the purpose of discussing the Customer's products or services and is defined by [enumerated criteria]." The criteria include that the consumer has indicated "they are receiving regular statements for an investment or retirement plan," and the consumer has "indicated they will have their statements available at the time of the review." The Agreement requires the agent to pay Unlimited a fee. The "[f]ees are based upon the number of marketing pieces sent and resources required to take inbound calls, schedule appointments and develop leads on behalf of the [agent]." The fees are for the full range of services provided for in the Agreement, not just printing and mailing the postcards. The marketing materials and mass mailing the Agreement refers to are a postcard, which is an exhibit to the Agreement. The front address side of the postcard in very small print reads: Privacy Law Notice: This notice is provided in accordance with Federal Privacy Laws. The Policy of this agency is to protect the privacy rights of all consumers who respond to this notice. This agency DOES NOT POSSESS OR DISCLOSE NON-PUBLIC PERSONAL INFORMATION TO THIRD PARTIES IN ANY INSTANCE. If you choose to have an existing policy or contract reviewed by a licensed agent, that agent is also required to adhere to the state and federal consumer and privacy protection laws. Important information: This notice is being sent to you as a possible holder of an in-force annuity contract. This agency does not have a direct affiliation with the insurance carrier through which you are currently contracted. The agency is contracted with agents licensed to conduct insurance business in your state. This notice should be disregarded if you do not currently have an in-force annuity contract. The word "agency" evokes the concept of a government or insurance agency. Unlimited is not an agency. The description of Unlimited as an agency is false. The back side of the postcard in larger print states: This communication is to inform you that you may have an annuity that has reached the end of its surrender period. The end of a surrender period is a positive event that means an owner may cash in an annuity or make withdrawals without incurring a surrender charge. A surrender charges is a fee levied by an insurance company on an annuity contract for withdrawals before the end of the time set by the contract (the surrender period). Please contact the Annuity Department to discuss your options. (877) 836-2333 The first sentence on the back side of the postcard creates the impression that the sender has some knowledge of the financial circumstances and holdings of the addressee. The statement in the text box is an accurate statement. The overall import of the postcard, including the "Privacy Law Notice," the reference to Unlimited as an "agency," and references to the recipient having an annuity, create the impression that the sender has financial information about the recipient and some formal relationship with the recipient. This is so despite the disclaimers "may have" and "possible holder." It is also so despite the sentence stating the "agency" does not have a "direct" affiliation with the recipient's insurance carrier. Use of "direct" necessarily implies a relationship of some sort. The script is also an exhibit to the Agreement. The script calls for the operator to tell the caller: [I]f you've held an annuity for some time and you're due for a quick service review. This review will cover important contract features and make sure you are receiving all the benefits you are entitled to. The review will also cover information on how to stop paying taxes on your retirement investments. Have you been getting your statements on a regular basis? The script directs the operator to make sure the statement is a statement for an investment, not for social security. It also directs the operator to ensure that the amount of the last statement exceeded $20,000. The script calls for the operator to schedule an appointment with the agent and emphasize the importance of bringing the account statement. It does not provide for the recipient bringing the annuity contract, which is the document that would have terms such as the surrender period. After covering the annuity information and appointment conversation, the script goes on to lead the operator through similar questioning about an IRA or 401K and life insurance. The script is attached to this Recommended Order as Exhibit A. The Agreement requires Unlimited to provide the agent with recordings of every call resulting in an appointment or lead. The Agreement also contains several disclaimers. For instance it states: "UFS Marketing shall not participate in any sales activity or other business conducted by the Customer." It also states that "UFS Marketing shall not supervise or monitor the sales activity or other business activities of the Customer." The Agreement provides for the agent/customer to approve both the postcard and the script. The Agreement also includes several assertions by the agent/customer that they are properly qualified and licensed in the states where the appointments will be scheduled. In 2011, Unlimited mailed marketing postcards to Phyllis Sukut and Angie Perez Cabrera in Florida. The postcards were part of Unlimited's fulfillment of its Agreement with Mr. Heygate. Unlimited mailed approximately 240,000 of the postcards to Florida addresses. A copy of the postcard sent to Ms. Sukut pursuant to the Agreement is attached to this Recommended Order as Exhibit B. The postcard is identical to the Agreement's sample, except that it asks her to contact the "Scheduling Department," instead of the "Annuity Department" and includes the statement, "[w]ithdrawals may, however, still be subject to tax consequences." Before mailing the postcards, Unlimited did not know the insurance, investment, or financial circumstances of Ms. Sukut and Ms. Perez Cabrera. The postcard confused Ms. Sukut because it did not come from her insurance company, and she did not understand the references to "agency" and "surrender period." She called the number and spoke to a gentleman who wanted to schedule an appointment to discuss her "expiring" annuity. She declined. The gentleman gave her a number to call and Mr. Heygate's name, if she changed her mind. Ms. Sukut contacted her insurance agent, Ed Ludden, about it. Ms. Perez Cabrera also sent the card that she received to Mr. Ludden. Mr. Ludden forwarded the postcards to Prudential, who held the women's policies. He was concerned that somehow Prudential's confidential information about Ms. Sukut and Ms. Perez Cabera had been compromised. Even an experienced insurance agent like Mr. Ludden received the impression that the sender of the postcard had information about the recipients. Mr. Ludden also contacted the Department and provided the postcards to it.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final Cease and Desist Order: (1) finding that Unlimited Fulfillment Services, LLC, has engaged in the unlawful transaction of insurance; (2) finding that Unlimited Fulfillment Services, LLC, has engaged in a misleading or deceptive trade practice; and (3) ordering Unlimited Fulfillment Services, LLC, to cease and desist all written and oral insurance marketing or advertising efforts in Florida by means of direct mail, use of the internet, or telemarketing, unless and until it is properly licensed in the State of Florida. DONE AND ENTERED this 28th day of June, 2013, in Tallahassee, Leon County, Florida. JOHN D. C. NEWTON, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 2013.
The Issue Whether the Petitioner's application for licensure as a nonresident general lines insurance agent and a nonresident surplus lines insurance agent should be approved or denied.
Findings Of Fact On August 4, 2006, the Petitioner filed an application for licensure as a "09-20" nonresident general lines insurance agent and a "91-20" nonresident surplus lines insurance agent. By Notice of Denial dated December 11, 2006, the Respondent denied the Petitioner's application for licensure. The Notice of Denial, in material part, sets forth the factual basis for the denial as follows: You, Brian D. Boneck, at all times pertinent to the facts set below, were licensed in this state as a resident general lines insurance agent. You, Brian D. Boneck, at all times pertinent to the facts set forth below, were the owner of Brooke Agency Services of Bradenton, Florida. You, Brian D. Boneck, at all times pertinent to the facts set forth below, were the President and owner of Sierra Insurance Underwriters, Inc. On or about the last week of December, 2005, Christopher Waters of Port Charlotte, Florida, called the Brooke Agency in Bradenton, Florida, and spoke to you, Brian D. Boneck, regarding the renewal of a commercial general liability insurance policy for Waters Developers, LLC. On or about, January 4, 2006, Mr. Waters delivered a check to you in the amount of $809.30, payable to Sierra Underwriters. This check was to pay the down payment on the premium for renewal of Mr. Waters' general liability policy. Sometime in April 2006, Mr. Waters was notified by Mid-Continental [sic] Casualty Company that the policy was cancelled for non-payment of premium. You, Brian D. Boneck, failed to submit the money paid to you by Mr. Waters to the insurer, Mid-Continental [sic] Casualty Company, or to the insurer's general agent, Florida Homebuilders Insurance Agency, Inc. You, Brian D. Boneck, misappropriated the down payment made to you by Mr. Waters. To this date, you have not returned the money to Mr. Waters or paid the money to Mid- Continental [sic] Casualty Company, or to the Florida Homebuilders Insurance Agency, Inc. Your ownership of Brooke Agency Services of Bradenton, Florida, was through a franchise agreement with Brooke Franchise Corporation. Brook Insurance and Financial Services is a subsidiary corporation that manages business for Brooke Franchise Corporation. Pursuant to this relationship, you, Brian D. Boneck, were required to pay a share of the commissions received by Brooke Agency Service of Bradenton to Brooke Insurance and Financial Services and were required to provide information on insurance sales to Brooke Insurance and Financial Services. According to a sworn affidavit by Marian Ann Eupizi, who was formerly employed by you at Brooke Agency Services, you, Brian D. Boneck, also misappropriated premium payments made to you by other customers whose insurance was written by you or other agents of Brooke Agency Services of Bradenton, Florida, through the Florida Homebuilders Insurance Agency. You, Brian D. Boneck, did this by having customers write premium checks payable to your other company, Sierra Insurance Underwriters, Inc. By doing so, Brooke Insurance and Financial Services was unaware of your actions and you also misappropriated commissions owed to them. Also according to Ms. Eupizi, you, Brian D. Boneck, in mid- 2005, misappropriated a refund check issued for a policy on Callis Construction in the amount of approximately $1200. The Respondent offered no reliable evidence at the hearing to support the allegations which served as the factual basis for the denial. As to the allegation that Christopher Waters delivered the check to the Petitioner, the Respondent offered only the sworn affidavit of Mr. Waters and various attachments in support of the allegation. At the hearing, the Petitioner testified that he did not accept premium checks from customers and that the office staff accepted and processed premium checks. The Respondent offered no credible evidence to the contrary, and, for purposes of this Order, the Petitioner's testimony is credited. The Petitioner testified that the Waters account was one of 35 transferred to the corporate franchisor when the Petitioner sold the agency back to the Brooke Agency Services. Negotiations for the sale occurred over a period of time and concluded with a bill of sale executed in August 2006. Although the Petitioner's testimony regarding the chronology of the sale was poorly defined, there was no evidence that the Waters account was not included within those transferred. As to the allegation that the premium was misappropriated and not forwarded to Mid-Continent Casualty Insurance Company, the Respondent offered a copy of a sworn statement wherein a Mid-Continent Casualty representative alleged that the company's investigation indicated that the Waters premium was never forwarded through the Brook Agency to the Florida Homebuilders Insurance Agency, which initially issued and then ultimately cancelled the policy. Additionally, the Respondent offered a copy of an email to the Respondent's investigator from a representative of Florida Home Builders Insurance, Inc., wherein the representative restates information provided to the email writer from unidentified representatives of the Brooke Agency and AmGro Premium Finance Company (with whom the remaining premium due from Mr. Waters had been financed). The Respondent also offered banking records apparently provided in response to a subpoena that indicate the Waters check was deposited into the Sierra Insurance Underwriters Account, to whom the check was made payable. The Respondent offered no credible evidence that the deposit of the Waters check into the Sierra account was improper. As to the allegation that no money had been refunded to Mr. Waters as of the December 11, 2006, Notice of Denial, the Petitioner testified that the money was refunded by a check to Mr. Waters and had a check to Waters Developers from Sierra Underwriters, Inc., dated July 24, 2006, for $1,471 admitted into evidence. It is unclear why the refund amount exceeded the initial premium amount, but there is no evidence contrary to the Petitioner's testimony that the check was issued as a premium refund. As to the allegations related to the ownership structure of the Petitioner's agency, the Respondent offered no credible evidence regarding the interrelationship between the Brooke entities or how the Brooke entities operated with the Petitioner’s Sierra Underwriters, Inc. Regarding the allegations attributed to sworn affidavit of Marian Ann Eupizi, the Petitioner testified that Ms. Eupizi was a customer service representative who was not involved in the fiscal operation of the agency and whom he had fired for falsification of documents. There was no credible evidence contrary to the Petitioner's testimony, and it is credited. Ms. Eupizi’s affidavit has been disregarded in its entirety. There was no credible evidence to support the assertion in the affidavit that the Petitioner misappropriated premium payments from other customers, misappropriated commissions due to Brooke Insurance and Financial Services, or misappropriated a refund check to an entity identified as Callis Construction.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order granting the application of Brian D. Boneck for licensure as a nonresident general lines insurance agent and a nonresident surplus lines insurance agent. DONE AND ENTERED this 18th day of September, 2007, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 September, 2007. COPIES FURNISHED: Brian D. Boneck 70 East Horizon Ridge Parkway, No. 140 Henderson, Nevada 89002 William Gautier Kitchen, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 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
The Issue The issues to be determined in this proceeding concern whether the licenses of each Respondent should be subjected to disciplinary action for violations of Chapter 626, Florida Statutes, as more specifically alleged in the Amended Administrative Complaints. If the violations, or any of them, are proven, it must be established what, if any, penalty is warranted.
Findings Of Fact The Department is an agency of the State of Florida charged, as pertinent hereto, with the licensure and regulation of insurance agents of all types and the regulation of the practice of insurance agents, agencies, the business of selling insurance policies, and the insurance industry generally. The Respondents have been licensed by the Department at all times pertinent hereto. Mills Sr. is licensed as a non-resident life and health insurance agent and as a non-resident general lines insurance agent. Mills Jr. has been licensed at all times pertinent hereto as a non-resident life and health insurance agent. The Respondents have been charged with various violations of Chapter 626, Florida Statutes, as more particularly delineated in the Amended Administrative Complaints and as discussed with particularity in the Conclusions of Law below. It is undisputed that Florida Insurance Counselors, Inc. is a corporation organized and licensed under laws of Florida. It was purchased by Mills Sr. in 1988. Both Respondents have a pecuniary interest in Florida Insurance Counselors, Inc. That corporation was a Florida insurance agency engaged in the solicitation and sale of property and casualty insurance, but not in the business of sale of policies of life and health insurance. The corporation ceased doing business on June 1, 1993 and was formally dissolved on August 13, 1993 at the behest of Mills Sr., who was the principal owner, board chairman, and chief executive officer. Mills Jr. was a shareholder and president of the corporation. Mills Sr. has held a Florida non-resident life insurance agent's license and a Florida non-resident health insurance agent's license for many years, since approximately 1956. In 1991, Mills Sr. applied for and received a license as a Florida non-resident general lines agent. General lines agency includes the right to sell property and casualty insurance. Statements made by Mills Sr. in three license applications admitted into evidence in terms of the situs of his principal place of insurance business (Atlanta, Georgia) and the disclosure of his pecuniary interest in Florida Insurance Counselors, Inc. have been shown to be true and correct. In spite of the disclosure as to his pecuniary interest in Florida Insurance Counselors, Inc., upon his application for the non-resident general lines agent's license, the Department nevertheless and mistakenly issued the general lines non-resident agent's license. Upon graduation from college in the late 1940's, Mills Sr. went to work for Atlanta Insurance Company. Except for five years spent in the insurance business in Texas, Mills Sr. has lived in Georgia until the events mentioned hereinbelow. Most of his Georgia career has been associated with the Atlanta, Georgia, area, where his insurance business, residence and domicile has historically been located. The insurance agency owned and controlled by Mills Sr. in Atlanta, Georgia, is called Institutional Managers of America, Inc. In 1986, he sold that business to Monumental General Insurance Company, effective January 1, 1987. The transaction included a three-year management agreement from Mills Sr. In 1987, Mills Sr. started construction of a residence in Gulf Breeze, Florida, where Mills Sr. had earlier owned a summer home. In February, 1989, for unrelated business or financial reasons, Mills Sr. was forced to purchase the insurance business back from Monumental General Insurance Company. Mills Sr. had planned to retire after the expiration of the three-year management agreement responsibility but elected not to retire after he had to purchase the business back. Mills Sr. owns the building in which his agency is located at 395 Johnson Ferry Road N.E., Atlanta, Georgia. He directs the staff in that agency from a room in that office. His toll-free telephone number is for incoming calls to that office. All advertising materials of his business show the Atlanta address. Mills Sr. spends most week nights in his Roswell Road apartment in Atlanta, except for approximately one night every other week spent in his Gulf Breeze, Florida, residence, as well as nights spent on the road when traveling in Alabama, Florida, North Carolina, and South Carolina, where Mills Sr. holds non-resident agent licenses. Mills Sr. owns a farm near Yatesville, Georgia, where he spends some weekends, especially during hunting season. Most other weekends are spent at his residence at 3017 Bay Street, Gulf Breeze, Florida. Mills Sr. and his wife spend some weekends in Atlanta because their social life revolves around Atlanta and he has family in the Atlanta area. The records of the Georgia Insurance Department show that Mills Sr. is licensed as a resident agent in the State of Georgia for life, accident and sickness, property and casualty, surety, and allied lines of insurance. On February 15, 1988, Mills Sr. signed a sworn application seeking Florida homestead property tax exemption and filed that application with the Santa Rosa County property appraiser, listing his address as 3017 Bay Street, Gulf Breeze, Florida. The application stated that Mills Sr. became a permanent resident of Florida on or about June, 1987. Pursuant to that application, Mills Sr. was granted homestead property tax exemption for his property, a residence, located at 3017 Bay Street, Gulf Breeze, Florida. On May 9, 1988, Mills Sr. registered to vote in Santa Rosa County, Florida. In conjunction with that registration, Mills Sr. provided the supervisor of elections of Santa Rosa County with his home address as being 3017 Bay Street, Gulf Breeze, Florida. On January 7, 1989, Mills Sr. signed a renewal application for homestead property tax exemption. On that application, he affirmed that his status as a permanent resident of Florida had not changed since he submitted his original application for tax exemption. Pursuant to the aforementioned renewal application, Mills Sr. was granted continued tax exemption for his property located at 3017 Bay Street, Gulf Breeze, Florida. On January 9, 1990, Carmelia Mills, the wife of Mills Sr., signed an application for homestead property tax exemption for property owned jointly with Mills Sr. applying for the transfer of homestead property tax exemption from the property located at 3017 Bay Street, Gulf Breeze, Florida, to the property located at that address as joint owners (presumably by operation of law as tenants by the entireties). Pursuant to that application, Mills Sr. and his wife were granted the maximum allowable homestead property tax exemption. The maximum allowable homestead property tax exemption for the county is granted only when all owners of the property are permanent residents of Florida. In 1988, when Mills Sr. applied for homestead exemption for the home owned in Gulf Breeze, Santa Rosa County, Florida, he was informed by the office of the property appraiser that he would need to register a car in Florida and register to vote in Florida. Mills Sr. did both and was afforded the homestead exemption mentioned above. He is the owner of a 1989 four-door Chevrolet currently registered in Florida and he remains registered to vote in Florida. He holds a Florida driver's license. He and his wife have enjoyed the benefits of homestead exemption with regard to the above-referenced real estate and residence in Gulf Breeze, Santa Rosa County, Florida, in the manner and for the times referenced in the above Findings of Fact concerning the application for and the granting of the homestead exemption. Mills Sr., and presumably his wife, resided in their home in Atlanta until sometime in 1990 when the home was sold. Mills Sr. then moved into an apartment at 5143 Roswell Road, N.E., Atlanta, Georgia, in 1990 and to this date, resides in that apartment when he is located in Atlanta. In light of the above facts concerning his location and the residences he has maintained with his wife, Mills Sr. has believed that his residence is co-extensive with the situs of his insurance agency business, that is, that it is located in Atlanta, Georgia; and that was his belief at the time he executed all applications for insurance relevant to these proceedings. On August 30, 1976, Mills Sr. applied for licensure as a Florida non- resident life and health insurance agent. The application listed his address as 5910 Garber Drive, Atlanta, Georgia. Pursuant to that application, he was licensed as a non-resident life and health insurance agent. The last paragraph of that application contains a statement by Mills Sr. that "in further support of my application...I do not or will not maintain a place of business in the State of Florida for the purpose of soliciting insurance...". On February 13, 1990, Mills Sr. filed a corporation annual report with the Secretary of State of Florida stating that Mills Sr. was the president, director, and registered agent of Florida Insurance Counselors, Inc. On February 11, 1991, Mills Sr. filed such an annual report with the Secretary of State for that corporation, which stated that he is the president, director, and registered agent of Florida Insurance Counselors, Inc. This report indicated that Mills Sr. had changed his address from 5910 Garber Drive, Atlanta, Georgia, to 3017 Bay Street, Gulf Breeze, Florida. On May 30, 1991, Mills Sr. applied for licensure as a Florida non- resident general lines insurance agent. That application listed his home address as 5143 Roswell Road, N.E., Atlanta, Georgia. On that application, at paragraph 16, Mills Sr. disclosed to the Department that he was part owner of Florida Insurance Counselors, Inc. In spite of this application, in which Mills Sr. provided his Atlanta, Georgia, address and provided the disclosure that he was part owner of Florida Insurance Counselors, Inc., an insurance agency, the Department, by mistake, licensed Mills Sr. as a non-resident general lines insurance agent. On February 27, 1992, Mills Sr. filed a corporation annual report with the Secretary of State which stated that he was still the resident agent of Florida Insurance Counselors, Inc. and that he had become the chief executive officer of that corporation. Mills Sr. has filed no notification to the Department of any change of address nor any disclosure to the Department that he is a resident of Florida, as of the time of this hearing. In 1985, Florida Insurance Counselors, Inc. was incorporated. Mills Sr. owned a partial interest in the corporation at that time. Later, he bought out the other owners, becoming sole owner. Lee Newcomb is a director in the corporation and acted as the Florida licensed agent for the company until on or about May 1, 1992. The corporation did business in the Tampa area with an office in Brandon. The corporation had a Seffner, Florida, mailing address. Mills Sr. owned his interest in Florida Insurance Counselors, Inc. until it ceased doing business on June 1, 1993 and Mills Sr. dissolved the corporation in August of 1993. Mr. Newcomb acted as the Florida resident agent for the corporation and as manager of the agency from its inception. On May 1, 1992, Mills Sr. and Mills Jr. became aware that Mr. Newcomb had suddenly resigned effective April 30, 1992. It was learned from office personnel that Mr. Newcomb may have taken some personal property and records of the agency with him upon leaving. On May 4, 1992, Mills Jr., being concerned with this situation, left Atlanta, Georgia, and drove to Brandon, Florida, where he found that Mr. Newcomb had, indeed, taken certain records of Florida Insurance Counselors, Inc. with him. Florida Insurance Counselors, Inc. had a non-competitive agreement with Mr. Newcomb during his tenure as resident agent and managing agent. Upon his arrival in the Brandon, Florida, office and shortly thereafter, Mills Jr. began interviewing perspective replacement resident agents. He hired a resident licensed agent who commenced working as the resident licensed agent for Florida Insurance Counselors, Inc. after giving proper notice to her former employer. She began working in approximately the last week of May, 1992 for Florida Insurance Counselors, Inc. originating all insurance business and managing and operating the agency after that time. It was learned by Mills Jr. from a secretary in the office that Mr. Newcomb, while he was employed by Florida Insurance Counselors, Inc., was sending in certain applications for insurance coverage to a number of carriers or insurers. Copies of those insurance applications were not in the records of Florida Insurance Counselors, Inc., the implication being that Mr. Newcomb had taken those documents with him when he left. The secretary, Dolores Olrey, prepared as best she could duplicates of those applications from memory. Mills Jr. attempted to find out from the insurance carriers involved if they had received the applications for insurance coverage from Mr. Newcomb as originating agent, in order to find out if Mr. Newcomb had violated the non- competitive agreement by submitting applications for insurance coverage as a separately operating agent or agency while he was actually still working for Florida Insurance Counselors, Inc. Mills Jr. testified that he was told that the companies did not have time to look through their records of recent business to determine if Mr. Newcomb had submitted such applications in that fashion. According to Mills Jr., the companies involved advised him that if he merely submitted a duplicate application for the same coverage for the condominiums involved (property and casualty coverage), he would know if another application had previously been submitted, since the later applications would be automatically rejected if that were the case. Accordingly, Mills Jr. instructed Ms. Olrey to affix his signature stamp on an application by Northeast Heights Condominium of Tamarac, Florida, to the Public Service Mutual Insurance Company of New York, as well as on an application for insurance for the Altamonte Woods Condominium Association of Altamonte Springs, Florida, to MCA Insurance Company of New Jersey. Those were the two applications believed by Ms. Olrey to be replicas of those prepared earlier and submitted by Mr. Newcomb in supposed violation of the non- competitive agreement. These condominium associations were customers of Florida Insurance Counselors, Inc. Mills Sr. sent his applications in for the purpose of acquiring information which could be used against Mr. Newcomb if the Mills and Florida Insurance Counselors, Inc. later attempted to assert that he violated the non-competitive agreement. Mills Jr., however, could have determined by direct contact with those condominium association customers whether or not they had previously submitted an application for insurance through Mr. Newcomb, rather than attempting to find that out indirectly by submitting the applications for insurance involved to the companies. Mills Jr. genuinely believed that both insurance applications would be rejected because he believed that Mr. Newcomb had already sent in the original applications in violation of the non-competitive agreement. In fact, however, only one of the applications was rejected. The application for insurance for the Northeast Heights Condominium Association eventually resulted in a policy being issued by the Public Service Mutual Insurance Company. The effective date of that policy, as requested by the application, was from June 30, 1992 through June 30, 1993. Geraldine Corbitt became the duly-licensed resident agent of Florida Insurance Counselors, Inc. in the last week of May, 1992; therefore, the coverage became effective under her tenure as the appropriate resident agent for Florida Insurance Counselors, Inc., although Mills Jr. actually originated the application which resulted in that policy coverage. The application submitted for the Altamonte Woods Condominium Association was rejected by the insurer because its information, provided to Mills Jr., was that another agent had already received a quote from the company on that business on May 7, 1992, implicitly Mr. Newcomb. On March 2, 1989 through February 27, 1992, annual reports were filed with the Florida Secretary of State for Florida Insurance Counselors, Inc. which stated that Mills Jr. was the vice-president and director of Florida Insurance Counselors, Inc. and lastly, was the president and the director of Florida Insurance Counselors, Inc. For a period of approximately two weeks in May of 1992, as referenced in the above Findings of Fact, Mills Jr. directly operated and controlled the offices of Florida Insurance Counselors, Inc. due to the abrupt departure of the resident insurance agent, Mr. Newcomb. On both policy applications submitted by Mills Jr., the signature of Mills Jr. appears in the space marked "producer's signature" on a policy which was ultimately issued by Public Service Mutual Insurance Company under Policy No. 78-0047889 to Northeast Heights Condominium Association, effective June 30, 1992. The broker was listed as Florida Insurance Counselors, Inc. and "Bill Mills" was listed as the "contact person." Mills Jr. testified and acknowledged that although the policy was issued for the application he submitted, Ms. Corbitt had finalized the transaction after he sent the application to the insurer. The policy bearing the above number does not contain any indication that Ms. Corbitt sold the policy, originated the coverage, nor does her name appear anywhere on the policy. These policies were for the obtaining of coverage for property and casualty insurance in the State of Florida. The transaction or solicitation of property and casualty insurance in the State of Florida requires a general lines insurance agent's license. Mills Jr. holds no such license. Mills Jr. testified at the final hearing that he did not submit the applications for the purpose of transacting insurance business but to determine whether Mr. Newcomb was in violation of the covenant not to compete with Florida Insurance Counselors, Inc. Mills Jr. was a life and health insurance agent, and his experience was totally in the field of life and health insurance. He had no experience in the submission of applications for casualty insurance. Mills Jr. had submitted his application for licensure as a non-resident life and health insurance agent on March 15, 1982. Pursuant to that application, he was licensed in Florida as a non-resident life and health insurance agent. In that application, there was contained the statement executed by Mills Jr. that "in further support of my application...I do not or will not maintain a place of business in the State of Florida for the purpose of soliciting insurance...." Florida Insurance Counselors, Inc. is a Florida corporation engaged in the business of insurance agency and is an insurance agency for the purpose of property and casualty insurance. It does not engage in the business of soliciting and selling life and health insurance.
Recommendation In consideration of the evidence of record, the candor and demeanor of the witnesses, and the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondents, William Dewberry Mills, Sr. and William Dewberry Mills, Jr., guilty of the violations as determined in the above Conclusions of Law and that the remaining counts and statutory violations, found above not to have been proven, should be dismissed in their entirety. It is FURTHER RECOMMENDED that Respondent, William Dewberry Mills, Sr.'s licenses as a non-resident insurance agent in Florida be revoked, without prejudice to his re-application as a resident Florida insurance agent should he so desire, for the same level of licensure or other licensure for which he is, by education and demonstrated competency, qualified. The Respondent, William Dewberry Mills, Jr.'s Florida licenses should be suspended for a period of three (3) months. DONE AND ENTERED this 4th day of February, 1994, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of February, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-2350 and 93-2351 Petitioner's Proposed Findings of Fact 1-38. Accepted, but subordinate to the Hearing Officer's findings of fact on the same subject matter in those instances where the Hearing Officer's findings of fact may differ. Respondent's Proposed Findings of Fact 1-16. Accepted, but subordinate to the Hearing Officer's findings of fact on this subject matter to the extent that the Hearing Officer's findings of fact may differ. COPIES FURNISHED: John R. Dunphy, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Rollin D. Davis, Jr., Esquire SHELL, FLEMING, ET AL. Post Office Box 1831 Pensacola, Florida 32598-1831 Tom Gallagher, Commissioner Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, Esquire General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times material to this proceeding, Respondent was eligible for, and licensed as, an insurance agent in the State of Florida. The Respondent is currently eligible for, and licensed as, an insurance agent in the State of Florida. At all times material to this proceeding, Respondent was a licensed agent for United States Fidelity and Guaranty Company (USF&G). At all times material to this proceeding, Respondent was an officer, director, and stockholder of D.E. Brewer and Company (Company), an incorporated general lines insurance agency primarily located in Jacksonville, Florida. On or about April 24, 1986, the Company entered into an agency agreement with USF&G whereby the Company was given authority to solicit and sell insurance on behalf of USF&C. This agency agreement was cancelled unilaterally by USF&G on November 24, 1986. At all times material to this proceeding, all funds received by the Company on behalf of USF&G represented premium funds paid by consumers for the purpose of obtaining insurance and were trust funds received in a fiduciary capacity to be paid over to USF&G in the applicable regular course of business. Under the agency agreement with USF&G, accounts of premium funds received by the Company on behalf of USF&G were to be "rendered at the end of each month" and any "balance shown to be due to" USF&G was to "be paid to the designated reporting office not later than the twentieth day of the second succeeding month". On or about October 27, 1986, Southland Services of Jacksonville, Inc. (Southland) issued a check to the Company in the amount of $15,799.00 as a monthly installment for an auto policy and a general liability policy issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about November 21, 1986, Southland issued a check to the Company in the amount of $13,785.00 as a monthly installment for auto policy and a general liability policy issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about November 12, 1986, S. Gordon Blalock (Blalock) issued a check to the Company in the amount of $1,341.00 as a premium on an auto policy issued by USF&G. These premium funds were collected on behalf of USF&G. On or about December 3, 1986, USF&G notified Blalock that USF&G had not received the premium and unless Blalock remitted the premium within 15 days his policy would be cancelled. This matter was cleared up by Blalock with USF&G and the policy was not cancelled. On or about November 5, 1986, Anita Grusenmeyer, on behalf of Grusenmeyer & Associates, Inc. (Grusenmeyer) issued a check to the Company in the amount of $2,810.00 as a premium payment for insurance policies issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about December 15, 1986, USF&G requested documentation from Grusenmeyer as to proof of premium payment to the Company on these insurance policies since the Company had not rendered the premium payment to USF&G. This documentation was furnished and there was no interruption of the coverage. On or about November 24, 1986, USF&G unilaterally terminated its agency agreement with the Company due to the Company's failure to remit premium funds collected on behalf of USF&G. Prior to, and at the time of the termination of the agency agreement by USF&G, Respondent was Vice President, a director and stockholder (11%) of the Company, but on or about November 24, 1986, the date of the termination of the agency agreement, Respondent became president of the Company. By letter dated December 12, 1986 and addressed to Respondent, USF&G, under paragraph 9 of the agency agreement, made a demand on the Company for the records pertaining to business dealings between the Company and USF&G. This demand was again made by letter on January 21, 1987. However, there was some concern on Respondent's part in turning these records over to USF&G and it was determined that USF&G could make copies of such records with someone from the Company being present. Due to conflicts in schedules of both parties this was never accomplished, and, in the interim, USF&G concluded that it had the capability to reproduce the records on its computer. No further demand for the records was made and the records were never turned over to USF&G by the Company. Also in its letter dated January 2, 1987, USF&G advised the Company that the premium funds received in November, 1986, were overdue as well as the August, 1986, and October, 1986, account. The August, 1986, and October, 1986, account would be for premium funds received in June, 1986, and August, 1986, respectively. The September, 1986, account had been paid on or about November 20, 1986, using premium funds received from Southland on November 21, 1986, in the amount of $13,785.00 to cover a check previously issued by Donald Brewer on an account that did not have sufficient funds to cover the check. The deposit of the Southland check into the account made the check written by Donald Brewer "good". In accordance with the agency agreement, the premium funds received from Southland ($15,799.00) in October, 1986, were due and payable on December 20, 1986, and the premium funds received from Southland ($13,785.00), Blalock ($1,341.00) and Grusenmeyer ($2,810.00) during November, 1986, were funds due and payable on January 20, 1987. However, these premium funds had been disposed of prior to Respondent becoming president of the Company on November 24, 1986, and the Company having insufficient funds that could be used to pay USF&G after Respondent became president, the funds were not remitted to USF&G in the regular course of business set forth in the agency agreement. All the premium funds received by the Company from Southland ($15,799.00 and $13,785.00), Blalock ($1,341.00) and Grusenmeyer ($2,810.00) in October and November of 1986 were deposited in the Southeast Bank, N.A., of Jacksonville, Florida, Account No. 001632637, an account on which Respondent had no check writing authority. All of the above-referenced funds were deposited in that account prior to Respondent becoming president on November 24, 1986. The Respondent was not the responsible agent for the three insurance accounts: Southland; Blalock; and Grusenmeyer, and none of the premium funds remitted to the company by these accounts were "received by" the Respondent. There is no evidence that these premium funds were "received by" any employee of the Company who was under the Respondent's direct supervision and control. There is no evidence that Respondent had access to, or responsibility for, the premium funds paid by Southland, Blalock and Grusenmeyer during October and November of 1986. Likewise, there is no evidence that the Respondent diverted or appropriated any of such premium funds to his own use or to the use of anyone other than to those entitled to receive them. Upon becoming president, Respondent opened a new bank account with the Florida National Bank, but there was no evidence that the account ever had sufficient funds, other than possibly premium funds belonging to other insurers which had been received on their behalf by the Company, to pay USF&G the premium funds due it from the Southland, Blalock and Grusenmeyer accounts. There was evidence that the Respondent had paid salaries to the employees out of the account, but no amount was established. Upon becoming president, Respondent began negotiating a settlement with USF&G on the amount of premium funds due USF&G. There was a dispute as to the amount but a settlement of approximately $52,000.00 was reached. Some of this amount has been paid, but there is a remaining balance. There was no evidence that Respondent, prior to becoming President of the Company, took any part in the policy decisions or administration of the Company, such as determining the manner in which the Company's receipts would be spent or to direct, control or supervise the activities of the employees or other insurance agents of the Company.
Recommendation Based upon the Findings of Fact, Conclusions of Law, the evidence in the record and the candor and demeanor of the witnesses, it is RECOMMENDED that the Petitioner, Department of Insurance and Treasurer enter a Final Order dismissing all counts of the Administrative Complaint filed against the Respondent, John Lanahan, Brewer in Case No. 87-2692. Respectfully submitted and entered this 26th day of July, 1988, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 26th day of July, 1988. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 87-2692 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner Adopted in Finding of Fact 2, except that there was no evidence presented as to the types of insurance licenses Respondent held. Adopted in Finding of Fact 1. 3.-9. Adopted in Findings of Fact 3 through 9, respectively. 10. Adopted in finding of Fact 10 but clarified to show the date of the check to be November 12, 1986, rather than November 21, 1986. 11-14. Adopted in Findings of Fact 11 through 14. 15-16. Adopted in Finding of Fact 15. 17-18. Adopted in Finding of Fact 16. 19. Adopted in Findings of Fact 16 and 17. 20-22. Adopted in Finding of Fact 18. Adopted in Finding of Fact 19 and 22. Adopted in Finding of Fact 20 except that there is competent evidence to show that the Grusenmeyer payment was received and deposited prior to Respondent assuming the Presidency. Adopted in Finding of Fact 18. Adopted in Finding of Fact 23, but although there was a sincere dispute as to the amount there was no competent evidence that that amount was $200,000 or that the settlement figure of $52,000 was not a fair representation of the amount owed to USF&G by the Company. Specific Rulings on Proposed Findings of Fact Submitted by Respondent Adopted in Findings of Fact 1 and 2. Adopted in Findings of Fact 3, 19, and 24. Adopted in Findings of Fact 8, 9, and 19 but clarified. Adopted in Finding of Fact 18. Adopted in Finding of Fact 12. Adopted in Findings of Fact 18 and 19. 7-8. Adopted in Findings of Fact 12, 18 and 19. Adopted in Findings of Fact 20, 21 and 22. Adopted in Finding of Fact 23. 11-12. Rejected as being argument, not a finding of fact. COPIES FURNISHED: S. Marc Herskovitz, Esquire William W. Tharpe, Jr., Esquire 413-B Larson Building Tallahassee, Florida 32399-0300 Judith S. Beaubouef, Esquire Peter L. Dearing, Esquire Post Office Box 4099 Jacksonville, Florida 32201 Honorable William Gunter State Treasurer ana Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
