Findings Of Fact Liberty National Fire Insurance Company (hereinafter referred to as "Liberty National") is a licensed foreign insurer in the State of Florida and subject to the jurisdiction and regulation of the Florida Department of Insurance (hereinafter referred to as "Department"), pursuant to Chapter 624, Florida Statutes. Liberty National is headquartered in Birmingham, Alabama, and writes business in 45 states, in direct personal lines business, direct commercial lines business, and almost an equal amount of assumed reinsurance. Prior to Hurricane Andrew, as of August 1, 1992, Liberty National had approximately 40,000 personal line policies in the State of Florida. This figure includes all personal lines; the homeowners, preferred homeowners, special homeowners, industrial fire, business resale, and mobile homes. In 1987 Liberty National started writing mobile home programs with the Raymond Patterson Agency as their managing general agent. On May 19, 1993, the Department of Insurance promulgated emergency Rule 4 ER93-18. Subsection (3) imposed a 90 day moratorium on cancellations and nonrenewals of personal lines residential property insurance on the basis of hurricane claims. Subsection (4) provided: "This rule shall not apply if the insurer can affirmatively demonstrate to the Department that the proposed cancellation or nonrenewal is necessary for the insurer to avoid an unreasonable risk of insolvency." In direct response to the devastation in the wake of Hurricane Andrew and the resulting nonrenewals and cancellations of homeowner coverage by insurers, at Special Session B (1993) of the Florida Legislature, Section 1 of Chapter 93-401, Laws of Florida (HB 89-B) was passed which provided for a "moratorium on cancellation and nonrenewal of residential property coverage." This "moratorium law" was signed by the Governor on June 8, 1993, and by its terms was effective from May 19, 1993, until November 14, 1993. Subsection (1) of the moratorium law sets forth the "Findings and Purpose" of the Legislature in passing the bill: FINDINGS AND PURPOSE. -- The Legislature finds that property insurers, as a condition of doing business in this state, have a responsibility to contribute to an orderly market for property insurance and that there is a compelling state interest in maintaining an orderly market for property insurance. . . . The Legislature further finds that the massive cancellations and nonrenewals announced, proposed, or contemplated by certain insurers constitute a significant danger to the public health, safety, and welfare, especially in the context of a new hurricane season, and destabilize the insurance market. In furtherance of the overwhelming public necessity for an orderly market for property insurance, it is the intent of the Legislature to impose, for a limited time, a moratorium on cancellation or nonrenewal of personal lines residential property insurance policies. Subsection (3) describes the nature of the moratorium imposed by the Legislature: (3) MORATORIUM IMPOSED. -- Effective May 19, 1993, no insurer authorized to transact insurance in this state shall, until the expiration of this section pursuant to subsection (6), cancel or nonrenew any personal lines property insurance policy in this state, or issue any notice of cancellation or nonrenewal, on the basis of risk of hurricane claims. All cancellations or nonrenewals must be substantiated by underwriting rules filed with and accepted for use by the Department of Insurance, unless inconsistent with the provisions of this section. The Department of Insurance is hereby granted all necessary power to carry out the provisions of this section. On June 4, 1993, Respondent, Department of Insurance (DOI) filed 4ER93- 20 (published in the Florida Administrative Weekly, Vol. 19, No. 24, pp. 3398- 3400), indicating that the laws implemented included the moratorium law, Subsections 626.9541(1)(a)(d)(x) and Section 627.4133 of the Florida Insurance Code. The Emergency rule 4ER93-20 is entitled "Procedures For Applying for Moratorium Exemption and Required Insurer Corrective Action on Previous Notices of Cancellation or Nonrenewal" and indicates as follows: The purpose of this rule is to enumerate the procedures required for an insurer to be granted an exemption to that rule [the Department moratorium Rule 4ER93-18]; and to specify corrective action required of any insurer which has sent out a notice of cancellation or nonrenewal which is prohibited under the moratorium. On June 15, 1993, Liberty National submitted a request for an exemption from the Moratorium. In the request for partial exemption, Liberty National requested the nonrenewal of approximately 6,000 of 17,000 mobile home policies on one program only, which were written through Raymond Patterson Agency of Fort Lauderdale. The basis for Liberty National's request for exemption, was that subsequent to Hurricane Andrew they incurred problems with their ceded reinsurance program. Liberty National alleges that the problem with the reinsurance was that Liberty National was only able to secure foreign reinsurance and no domestic reinsurance. Liberty National is continuously trying to obtain domestic reinsurance. Effective July 1993 Liberty National's reinsurance provides caps for each county based on a Tier System dividing the counties in Florida into Tier 1, Tier 2, and Tier 3 counties. The cap for Tier 1 counties is $7,500,000; Tier 2 is $15,000,000; and Tier 3 is $25,000,000. A chart was submitted to the department as part of Liberty National's exemption application with the total exposure that Liberty National has in each county. Liberty National had also contracted with a firm, Applied Insurance Research, which does windstorm analysis for various companies, to develop loss scenarios, and this information was submitted to the Department as part of the application. On August 12, 1993, Liberty National submitted additional information to the Department, pursuant to their exemption request. In the material Liberty National reported surplus as of December 31, 1992, in the amount of $66,798,297, and a contribution by Tourchmark of $50,000,000 additional capital on July 16, 1993. On August 19, 1993, the Department held a public hearing on Liberty National's request for partial exemption at which Liberty National introduced two exhibits that contained supplemental information regarding Liberty National's application for partial exemption. On September 2, 1993, the Department issued a letter denying Liberty National's request for exemption.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance issue a Final Order in this case denying the exemption sought by the Petitioner. DONE AND ENTERED this 14th day of February 1994 in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 14th day of February 1994. COPIES FURNISHED: Mark A. Cohen, Esquire Mark A. Cohen & Associates, P.A. 1221 Brickell Avenue, Suite 1780 Miami, Florida 33131 Nancy Aliff, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue Should discipline be imposed by Petitioner against Respondent's insurance agent licenses alleged as life including variable annuity (2-14), general lines (2-20), and health (2-40), pursuant to Chapters 624 and 626, Florida Statutes?
Findings Of Fact Petitioner issued license E125386 to Respondent. At present the license is valid in the following categories: life including variable annuity (2-14) and general lines (2-20). At present Respondent has appointments with American Family Life Assurance Company of Columbus in the categories life including variable annuity and health (2-15) and general lines (2-20). February 9, 2005, is the relevant date in this case. On that date Respondent held a license in categories (2-14) and (2-20). The category (2-14) was for an appointment with Direct Life Insurance Company. The category (2-20) was an appointment with Direct General Insurance. At the time Respondent worked at an office in Tallahassee, Florida, referred to as the Case Register Insurance Agency, that sold life insurance offered by Direct Life Insurance Company, among other products. On February 9, 2005, Denise Daley Turnbull worked at Case Register. She was a customer representative category (4- 40), appointed by Direct General Insurance Agency, Inc. Respondent worked with Ms. Turnbull. On February 9, 2005, Patrician Ann Brown came to the Cash Register Insurance Agency to purchase personal injury protection (PIP) automobile insurance mandated by the State of Florida. Ms. Turnbull dealt with the customer. In doing so, Ms. Turnbull followed a script which in relevant part stated: * * * How did you hear about Cash Register? Are you currently insured? Have you had the policy for at least 6 months with no more than a 7-day lapse in coverage? If they say yes, say . . . Great! We will need you to bring in a copy of your renewal offer or a letter from your current company when we write the policy. This will make you eligible for a discount. Are you buying, leasing or do you own your vehicle? Is the vehicle registered or titled in your name? * * * What coverage will you be purchasing with us? Inform the customer about the work loss option. Under the mandatory Personal Injury Protection, there is a work loss option should you be involved in an accident that will pay up to 60% of your lost wages. Would you like to include this option? Quote only PIP/PD unless the client asks for BI. Always quote $750.00 deductible for Comp/Coll and $1000 deductible NI or NIRR for PIP. Other deductibles are available upon request. * * * What is your date of birth? Are you married or single? If married, get spouses information) What tickets, accidents, or suspensions have you had in the last 3 years? (Do you need an SR-22?) Who else living in your household is 14 years or older? Are there other drivers who do not live in the house? * * * What is the year, make and model of your vehicle? Does it have air bags, anti-lock brakes or an anti-theft device? Is the vehicle used for personal, business or commercial use? Is your vehicle customized in any way? (remember, we do not cover any customization) Mr/Mrs. I have quoted you with the State Mandatory liability limits up to $10,000 dollars Property Damage, Personal Injury Protection up to $10,000 dollars with a $1,000 deductible, Comprehensive and Collision with $750 deductibles and offered with this quote are the optional policies for Accident Medical Coverage, Rental Reimbursement and a $10,000 term life benefit. You will need only $ to start your policy and have 12 payments of only $ . How does that sound? (Always quote 20/27 day pay plan-can offer 10 day plan when client comes into office) (emphasis added) How does that compare to other quotes you have received? * * * Mr./Mrs. , Direct is now offering to our customers, a Direct Visa Debit Card for a special low price of only $699. This requires no bank account, no credit check and is valid wherever Visa is accepted! Only $699, so be sure to bring that amount in with your down payment so you can take advantage of this special offer. Ms. Patricia M. Brown purchased automobile insurance from Direct General Insurance Company, including PIP and property damage liability (PD) totaling $848.00 with fees assigned. In addition, Ms. Brown purchased a policy through American Banking Travel Protection Plan for one year. The cost for that policy was $60.00. Ms. Brown purchased from Lloyds Accident Medical Protection Plan an individual accident medical protection plan. The cost was $110.00. Ms. Brown bought life insurance with a one-year period, that was renewable, $10,000.00 coverage, with a premium charge of $108.00. In making her purchases, Ms. Brown signed a form titled Explanation of Policies, Coverages and Cost Breakdown (including non-insurance products). The total cost for all purchases was $1,133.99. Ms. Brown signed a form that referred to American Bankers Insurance Company of Florida, Travel Protection Plan- Florida Declarations. That form was counter-signed by Ms. Turnbull. Ms. Brown signed another form referred to as American Bankers Insurance Company Optional Travel Protection Plan. Ms. Brown and Ms. Turnbull signed a form entitled Accident Medical Protection Plan Application. Ms. Brown signed a related form referred to as 100% Certain Underwriters @ Lloyds/London (DB/33) ACCIDENT MEDICAL PROTECTION PLAN. Ms. Turnbull signed a page referred to as a Scan Cover Sheet Life Policy Policy No. FLAD162704741:1627016705. In that connection Ms. Brown completed an application for life insurance with Direct Life Insurance Company by initialing information in the application form about her insurability for such things as heart trouble or high blood pressure, cancer, tumors, etc. Ms. Brown signed the application. Although Respondent had no direct participation with Ms. Brown in relation to the details of the life insurance policy, leaving the task to explain the policy to Ms. Turnbull, Respondent placed his name on the application in two places. He printed his name as agent and wrote his license ID number E125386 and he signed it with his agent signature on that same page. In conversation, Ms. Turnbull asked Ms. Brown about possible medical problems such as high blood pressure or stroke or seizure as part of the process of initialing those questions on the application form. Ms. Turnbull told Ms. Brown that the life insurance policy was optional and that it was a $10,000.00 term life benefit.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is RECOMMENDED: That Petitioner enter a final order suspending Respondent's license for six months for the violations. DONE AND ENTERED this 27th day of March, 2007, 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 27th day of March, 2007.
The Issue Whether Highlands has standing to challenge the Department's Emergency Rule 4ER93-20, Florida Administrative Code, and if so, whether Sections 2(d) and 6(a) should be invalidated because they constitute invalid exercise of delegated legislative authority?
Findings Of Fact The Moratorium Statute During Special Session B of 1993 the Florida Legislature passed HB 89- B. The Governor signed the bill into law on June 8, 1993. Now codified as Section 1 of Chapter 93-401, Laws of Florida, the law, in pertinent part, provides as follows: Section 1. Moratorium on cancellation and nonrenewal of residential property coverages.-- * * * (3) MORATORIUM IMPOSED.--Effective May 19, 1993, no insurer authorized to transact insurance in this state shall, until the expiration of this section pursuant to subsection (6), cancel or nonrenew any personal lines property insurance policy in this state, or issue any notice of cancellation or nonrenewal, on the basis of risk of hurricane claims. All cancellations or nonrenewals must be substantiated by underwriting rules filed with and accepted for use by the Depart- ment of Insurance, unless inconsistent with the provisions of this section. The Department of Insurance is hereby granted all necessary power to carry out the provisions of this section. Pursuant to the Moratorium Statute, on an emergency basis, the Department promulgated Emergency Rule 20. The Challenged Sections The sections of Emergency Rule 20 Highlands seeks to have invalidated are 2(d) and 6(a): 4ER93-20 Procedures For Applying for Moratorium Exemption and Required Insurer Corrective Action on Previous Notices of Cancellation or Nonrenewal. * * * (2) General Provisions. * * * (d) House Bill 89-B, as enacted at the May 1993 Special Legaislative (sic) Session, revoked all prior approvals issued by the Department, of insurer plans for programs of onrenewals and cancellations, where the non- renewal or cancellation was not effective as of May 19, 1993, notwithstanding that the notice of nonrenewl or cancellation was issued before May 19, 1993. * * * (6) Required Action On Prior Notices of Cancellation. (a) Any insurer which, prior to May 19, 1993, shall have issued any notice of cancellation or nonrenewal, whether approved by the Department or not, upon the basis of risk of hurricane claims, which cancellation or non- renewal was not yet effective as of May 19, 1993, shall revoke said notice and shall not cancel or nonrenew such policy, or if same has been cancelled or non-renewed subsequent to May 19, 1993, shall immediately reinstate coverage without lapse as if there had been no cancellation or nonrenewal. The insurer shall also, by no later than June 10, 1993, mail by first class mail to every policy holder and agent who was sent such notice or whose policy was so cancelled or non-renewed, written advice that the previous notice is withdrawn, and that the coverage will not be cancelled or nonrenewed, or that the coverage is rein- stated, as the case may be. In the event that the renewal premium has not been received because the insured was operating under the impression that the coverage was not renewable, or a premium is due because the insurer has already refunded the unearned premium, the insurer shall allow the insured a reasonable period after receipt of an invoice from the insurer, in which to forward the required premium, and the insurer shall provide coverage during that reasonable period. Insurance and the parties Insurance is defined in Florida as "a contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies." Section 624.02, Florida Statutes. A highly regulated business activity, insurance is regulated primarily at the state level. The Department of Insurance, among other powers and duties, enforces the provisions of the Florida Insurance Code against insurers, including Highlands, defined by the Code as, "those persons engaged as indemnitor, surety or contractor in the business of providing insurance." Section 624.02, Florida Statutes. Highlands Insurance Company, domiciled in Texas, is a stock insurance company admitted to transact insurance in Florida as a foreign insurer. After many years of transacting insurance in Florida, Highlands was issued a "new permanent Certificate of Authority" from the Department by letter dated November 22, 1991. The certificate authorized Highlands to write "Homeowner Multi Peril" and "Commercial Multi Peril" lines of business as well as numerous other lines. Pursuant to its Certificate of Authority the standard homeowner's policy issued in Florida by Highlands allowed for cancellation by the homeowner at any time through notice to the company. It allowed for cancellation by Highlands under limited circumstances. And it allowed for non- renewal by written notice within a certain number of days before the policy's expiration date. Reinsurance From the early 1960s through June 30, 1993, Highlands wrote its Florida property and casualty insurance, through a reinsurance facility ("SU Reinsurance Facility") made available by Southern Underwriters, Inc. ("Southern"). Under the terms of the SU Reinsurance Facility, 93.5 percent of homeowners and commercial risks insured by Highlands are reinsured to a large group of reinsurers. Highlands retains only 6.5 percent of its homeowners and commercial lines risks. The SU Reinsurance Facility consists of two principal reinsurance agreements, which, in the aggregate, reinsure 93.5 percent of the liabilities of the homeowners and commercial lines insurance written in Florida by Highlands and its wholly owned subsidiary, Highlands Underwriters Insurance Company ("HUIC"). One agreement is the Quota Share agreement, the other is the Obligatory Surplus agreement. For each homeowners or commercial policy, the risks are ceded pro-rata under the two agreements, 25 percent to the Quota Share and 75 percent to the Obligatory Surplus. Highlands and HUIC retain 16 percent and 5.5 percent, respectively of the 25 percent of total risk attributable to the Quota Share agreement for a total of 5.375 percent of total risk. Highlands retains 1.5 percent of the 75 percent of total risk attributable to the Obligatory Surplus agreement or 1.125 percent of total risk. Highlands exposure to total risk, therefore, is 6.5 percent. The total risk for each policy attributable to Quota Share is 19.625 percent and to Obligatory Surplus 73.875 percent which equals, together, 93.5 percent of total risk. Hurricane Andrew and Claims against Highlands Hurricane Andrew struck Florida on August 24, 1992. The most costly civil disaster in the history of the United States, it caused over 16 billion dollars ($16,000,000,000) in insured losses, alone. As a result of the hurricane, Highlands incurred claims totalling approximately 337.3 million dollars ($337,300,000) under its homeowner and commercial lines policies. Highlands' 6.5 percent share of the losses on these claims was 21.9 million dollars ($21,900,000). The reinsurers' 93.5 percent share of the losses on the claims was 315.4 million dollars ($315,400,000). Highland's 1992 year-end policyholder surplus was 255.4 million dollars ($255,400,000). Thus, the claims incurred by Highlands as the result of Andrew exceeded its 1992 surplus by more than 80 million dollars ($80,000,000). Quota Share Reinsurance Cancellation By letter dated January 15, 1993, Highlands was formally notified that its reinsurers had terminated the Quota Share Facility for policies to be written or renewed on and after July 1, 1993. Highlands was unable to secure reinsurance to replace the terminated reinsurance. Highlands Response to Reinsurance Loss Based on the loss of the Quota Share reinsurance, Highlands notified the Department by letter dated January 22, 1993 (one week after the date of the letter by which Highlands received formal notice of the termination of the Quota Share reinsurance) that it would cease to write "Dwelling and Homeowner's insurance effective May 1, 1993 and after," Pet.'s Ex. 4., that is, that it would "discontinue" the writing of the "Multi Peril Homeowner's" line of insurance, one of the many lines authorized by the Certificate of Authority as shown on the certificate face. The January 22 "Discontinuance" letter was sent, in the words of Highlands' Vice-President for Reinsurance Jose Ferrer, because, "the magnitude of our involvement in Florida especially with Hurricane Andrew was such that we were losing our reinsurance protection, we had to take immediate action to protect our company." (Tr. 36) On January 22, 1993, discontinuance by an insurer from transacting any line of insurance in Florida was governed by Section 624.430, Florida Statutes and Emergency Rule 4ER92-11. Section 624.430, F.S., bears the catchline "Withdrawal of insurer or discontinuance of writing certain classes of insurance." With regard to the action taken by the January 22 letter, (notice of discontinuance of a line), the statute provides, in pertinent part: Any insurer desiring to ... discontinue the writing of any one or multiple kinds or lines of insurance in this state shall give 90 days' notice in writing to the department setting forth its reasons for such action. Rule 4ER92-11, (the "Withdrawal" Rule) entitled "Withdrawal of Insurers From the State," includes discontinuances of any line of property insurance as well as the complete cessation of writing any insurance business in an expansive definition of withdrawal: ... to cease substantially all writing of new or renewal business in this state, or to cease writing substantially all new or renewal business in any line of property insurance in this state; or in either of the two preceding instances, to cut back on new or renewal writings so substantially as to have the effects of a withdrawal. Section (2)(b), 18 Fla. Admin. Weekly 7318 (Nov. 25, 1992). The Withdrawal Rule goes on to interpret Section 624.430 as "authorizing the Department to evaluate the sufficiency of the reasons" for withdrawal (or as in the case of Highlands for discontinuance of one or more lines) and to "impose reasonable terms and conditions regarding withdrawal [including discontinuance] as are necessary to prevent or reasonably ameliorate such adverse consequences." Id. Section 3(c). At no time after Highlands' Notice was received by the Department and before May 1, 1993 did the Department provide a written response, request a meeting, impose conditions upon discontinuance, or otherwise object to or deny Highlands' Notice. In addition to mailing a notice that it would cease to write Homeowner's and Dwelling lines effective May 1, 1993, Highlands began sending out non-renewal notices. Some were sent after May 19, 1993, the effective date of the Moratorium Statute. Highlands began sending non-renewal notices because of the loss of reinsurance and because of its position that the moratorium did not apply to Highlands. It did not matter to Highlands whether Andrew had occurred or not. If the reinsurance had been cancelled without a hurricane, Highlands would have taken exactly the same steps. On the other hand, if the reinsurance had remained in place in the wake of Andrew, Highlands would be writing the same lines and policies it did before Andrew. Mr. Ferrer believed the reinsurance was cancelled, not because of the risk of future hurricane loss, but "as the result of the massive loss from Hurricane Andrew." (Tr. 51) While the obvious inference to be drawn from his belief is that the reinsurer fears the risk of future hurricane loss, that is not the only inference that could be drawn. Massive losses could render a reinsurer incapable of providing any reinsurance to any party under any circumstances, regardless of the risk of future hurricane claims. Nonetheless, Mr. Ferrer testified that if there were no risk of future hurricane loss to homeowners, Highland would continue to write policies it is now refusing to renew: Q ... If there were no risk of hurricane loss, would you write the business? A Yes, if we can include wind on all policies. HEARING OFFICER MALONEY: Could you repeat that answer ... ? A The answer is, if there is no windstorm ability, hurricane ability, we will have no problem writing the policies. (Tr. 54) Thus, Highlands began sending 45-day notices of nonrenewals to its homeowners policy holders, on the basis of its position that it had withdrawn the line in Florida and because it had lost its reinsurance. But Highlands is also not renewing policies which expire during the moratorium because of risk of future hurricane loss. Insurance Crisis in the Aftermath of Andrew The immensity of Andrew's impact to insurers doing business in Florida created an extremely serious situation for the Florida property insurance market. The Legislature described the situation this way: Hurricane Andrew ... has reinforced the need of consumers to have reliable homeowner's insurance coverage; however, the enormous monetary impact to insurers of Hurricane Andrew claims has prompted insurers to propose substantial cancellation or non- renewal of their homeowner's policyholders. ... [T]he massive cancellations and non- renewals announced, proposed, or contemplated by certain insurers constitute a significant danger to the public health, safety and welfare, especially in the context of a new hurricane season, and destabilize the insurance market. (Ch. 93-401, Laws of Florida, Section 1., Pet.'s Ex. 15). Between Hurricane Andrew and May 1993, the Department received notices from 38 insurers seeking to withdraw from homeowners insurance or reduce their exposure for homeowners insurance in the state. Twenty of these insurers filed notices of total withdrawal from the homeowners line. Eighteen sought to impose restrictions on new or renewal homeowners' business. Together the 38 insurers comprise approximately 40 percent of the Florida homeowners market. Of the 18 insurers seeking to impose restrictions, the greatest single source of impact on the Florida market came from the changes proposed by Allstate Insurance Company. Allstate proposed to nonrenew 300,000 homeowners policies in certain coastal counties. The Department scheduled two days of public hearing on Allstate's notice of intent to restrict writings. The first was scheduled to take place in Clearwater on May 17. The second, held in Plantation on May 18, was attended by "[p]robably close to a thousand [people] -- in excess of 500 hundred anyway. There was a lot of people." (Testimony of Witness Kummer, Tr. 148). Complaints from citizens were received expressing that "it was inappropriate for Allstate to be able to cancel their policies and that something should be done to assist in that." Id. at 150. The Department's Response On May 19, 1993, the Department promulgated Emergency Rule 4ER93-18, imposing a moratorium on the cancellation and nonrenewal of personal lines policies including homeowners, as follows: (3)90 Day Moratorium Imposed. As of the effective date of this rule, no insurer authorized to transact insurance in this state shall, for a period of 90 days, cancel or non- renew any personal lines property insurance policy in this state, or issue any notice of cancellation or nonrenewal, on the basis of risk of hurricane claims. All cancellations or nonrewals (sic) must be substantiated by underwriting rules established and in effect on August 23, 1992. The State's Response to the Insurance Crisis a. The Governor's Proclamation and Call for a Special Session. On May 25, 1993, Governor Chiles issued a Proclamation. Addressed "To the Honorable Members of the Florida Senate and Florida House of Representatives," it contains the following pertinent "Whereas" clauses: WHEREAS, the damage resulting from Hurricane Andrew has prompted the insurance industry in Florida to propose substantial cancellation or nonrenewals of homeowner insurance policies, and WHEREAS, it is appropriate to provide a moratorium period to protect Florida's home- owners while a study is conducted to assess the effect of these extraordinary events on the insurance industry which occurred as a result of Hurricane Andrew, and WHEREAS, a study of the commercial viability and competitiveness of the property insurance and re-insurance industry in Florida would provide the Governor and the Legislature with the information needed to assess whether current regulatory statutes should be amended, and WHEREAS, certain additional statutory amend- ments are required to make necessary insurance coverage available to provide fundamental protection to the citizens of this state, and WHEREAS, it is appropriate to amend the pro- clamation of May 13, 1993, to add to the matters considered by the Florida Legislature convened in special session, the implementa- tion of a moratorium on personal lines property insurance cancellations or non- renewals, ... (Pet.'s Ex. 24). The Proclamation convenes the Legislature for the purpose of considering: (a) Legislation to implement and, if necessary extend for [a] period not to exceed 90 additional days, the emergency rule promulgated by the Insurance Commissioner, 4ER93-18. 1993 Special Session B Pursuant to the Governor's May 25, 1993 Proclamation and a May 13, 1993 Proclamation, the 1993 Florida Legislature was called into special session, Special Session B. Finding the public necessity for an orderly property insurance market to be overwhelming, the 1993 Legislature imposed, "for a limited time," a moratorium on cancellation or nonrenewal of personal lines residential property insurance policies, beginning May 19, 1993. Id. The moratorium applies to personal lines residential property insurance. It does not apply to commercial coverages or passenger auto coverages, whether commercial or private. The Legislature allowed an exception from the moratorium for those insurers which "affirmatively demonstrate to the department that the proposed cancellation or nonrenewal is necessary for the insurer to avoid an unreasonable risk of insolvency." Section 1(4), Ch. 93-401, Laws of Florida. If the department determines that the exception affects more than 1 percent of any class of business within the personal lines residential property market, then the department may set a schedule for nonrenewals, cancellation or withdrawal that avoids market disruption. Presumably, the moratorium will cover the 1993 hurricane season. The section of Ch. 93-401, Laws of Florida, that imposes the moratorium is repealed on November 14, 1993. Promulgation of Emergency Rule 20 On June 4, 1993, the Department promulgated Emergency Rule 20, effective the same date. According to the testimony of Hugo John Kummer, Deputy Insurance Commissioner, Emergency Rule 20 embodies three aims: first, to set a procedure for applying for a moratorium exemption allowed by the Moratorium Statute, [set forth in the rule outside Sections 2(d) and 6(a)]; second, to require a notice to update consumers who had received notices of cancellation or nonrenewal with the information that the earlier notices had been rendered temporarily ineffective under the moratorium, [Section 6(a)], and; third, to inform insurers who had entered consent orders with the Department governing the method with which the insurers were with- drawing from the State or restricting coverage, that the approvals by the Department found in the consent orders were overridden by the Moratorium Statute, [Section 2(d)]. (Tr. 136) On this last point, Mr. Kummer's testimony is consistent with the testimony of Douglas Shropshire, Director of the Department's Division of Insurer Regulation, one of two drafters of Emergency Rule 20 and the drafter of Section 2(d). Mr. Shropshire testified that the rule "simply reiterates the statute and provides the procedures for implementing [the Moratorium Statute]." Resp.'s Ex. 11, p. 25. With regard to Section 2(d), Mr. Shropshire testified as follows: Q Now, could you please direct your attention specifically to just the words, "Revoked all prior approvals issued by the Department," and explain how this implements the statute. A It simply repeats what the statute provides. It, basically, reiterates the statute. That moratorium statute, 89-B, essentially freezes all cancellation or nonrenewal action during the pendency of the 89-B moratorium. Q What would be the status of the moratorium, subsequent to November 14th, 1993, as you understand it? A Assuming that no other legislation is enacted that affects the subject at the special session, then prior approvals would be, again, effective, and companies could again being (sic) acting -- they could, basically, pick up where they had left off when the moratorium began. Q All right. What, if any, additional restrictions does the language place upon insurers above the requirements of the statute? A Absolutely, none. It is apparent, therefore, that if the Department's silence in response to Highlands' January 22, 1993 "Discontinuance" Letter constituted an "Approval," it was not the intent of the Department through the promulgation of Section 2(d) of Emergency Rule 20 to revoke that approval. The goal of the Department in promulgating the section was simply to inform parties to Consent Orders that any Department approval contained in the Consent Order had been revoked. Moreover, the Department's intent in using the term "revoke" was not "revoke" in the legal sense of rendered null and void and forever ineffective but more akin to "suspend" in a temporal sense. It was the Department's intent that any prior approval by the Department of a withdrawal or imposition of restrictions by an insurer was simply suspended by the Moratorium Statute temporarily, that is, for the life of moratorium - until November 14, 1993. Likewise, if the Department's silence following the January 22 Discontinuance Letter constituted an "approval," it would be the Department's intent that Section 2(d) would have no effect other than suspending the approval until the repeal of the Moratorium Statute on November 14, 1993. The import of the Department's intent in promulgating Emergency Rule 20 is dependent on whether the rule is ambiguous or plain on its face as concluded below in this order's Conclusions of Law.
Findings Of Fact On October 19, 1982, the Petitioner Mikal Talib Hamin applied for licensure as a general lines insurance agent. The Respondent Department of Insurance denied the Petitioner's application on March 29, 1983, due to his failure to inform the Department on other applications for insurance licensure that he had been charged with or convicted of a felony. This denial was based on the Petitioner's previous applications for licensure as an ordinary life insurance and health insurance agent in which the Petitioner informed the Department that he had neither been charged with nor convicted of a felony. On March 3, 1973, the Petitioner, then known as Michael Thomas Hanks was convicted of robbery in the criminal court of record, Dade County, Florida, and sentenced to 15 years in prison. The Petitioner was released from prison on October 25, 1977 and was on parole supervision until October 25, 1979. When the Petitioner was convicted, he was 17 years old. Since his release from prison, the Petitioner has obtained his GED, been steadily employed and has encountered no other problems with the criminal justice system. The Petitioner is married and is three semesters away from obtaining a college degree in Business Administration. Due to the Petitioner's positive adjustment to parole, Martin Carroll, the Petitioner's parole officer recommended that the Parole Commission terminate the Petitioner's parole ahead of schedule. The Parole Commission granted early termination and the Petitioner's civil rights were restored effective March 22, 1979, by the Office of Executive Clemency. On January 24, 1982 and March 26, 1982, the Petitioner applied for licensure as a disability and ordinary life agent, respectively. Both of these applications asked the Petitioner whether he had been charged with or convicted of a crime and on both applications he stated "no". The Petitioner subsequently sat for these exams, passed the exams and was licensed as a disability and ordinary life agent. In completing these applications, the Petitioner consulted Jeff Dickerson, an insurance agent for whom be worked at the time, who advised the Petitioner that he need not disclose his previous conviction because of the length of time that had passed and the fact the Petitioner was only 17 when the conviction occurred. The Petitioner followed this advice and did not disclose his past felony conviction on his applications. Subsequently, the Petitioner went to work for another insurance agent, Hakim Shaeed, and applied for licensure as a general lines agent. In completing this application, the Petitioner consulted Shaeed, who informed him that the prior felony conviction should be disclosed to the Department. The Petitioner informed the Department of the misstatement on his prior applications, pending application and his felony conviction by letter to Joe Crutchfield, dated March 21, 1983. On November 15, 1978, the Petitioner changed his name from Michael Thomas Hanks, the name under which he was convicted, to Mikal Talib Hamin. The Petitioner submitted letters from Nashid Sabir, Esquire, Lorrett Duffy, Personnel Administrator, Broward Cablevision, Alphonse Wright, Coordinator Drug Abuse and Prevention Program, Liberty City Youth, Hakim Fakir, P.U.L.S.E. Coordinator, and B. W. Smith, an insurance agent, attesting to his good character and reputation in the community.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Administrative Complaint in Case No. 83-1435 dated July 13, 1983, be dismissed. Mikal Talib Hamin be allowed to sit for examination as a general lines agent. DONE and ENTERED this 29th day of September, 1983, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th this day of September, 1983.
The Issue The issue in the case is whether Petitioner is entitled to a Resident Independent All-Lines Insurance Adjuster license.
Findings Of Fact On July 24, 1999, Petitioner was involved in a physical altercation in her driveway, defending herself against a female neighbor. Shortly after the altercation, Petitioner was arrested for Aggravated Battery. On January 12, 2000, a Criminal Information was filed against Petitioner charging her with Aggravated Battery Causing Great Bodily Harm. On August 15, 2000, Petitioner pled no-contest to Felony Battery and was placed on two-years' probation. Adjudication of guilt was withheld. Fourteen months later, on October 18, 2001, Petitioner's probation was terminated early without any violations. On March 11, 2002, Petitioner applied for licensure as a Resident Independent All-Lines Insurance Adjuster and provided the prior arrest information in her application. On May 24, 2002, Respondent denied Petitioner's application for licensure on the basis of her single arrest and subsequent plea. On June 18, 2002, Petitioner submitted a timely Election of Proceedings form requesting a formal hearing. Respondent's licensing review committee, composed of the Bureau Chief of Licensing Division, Licensing administrators, the Assistant Division Director of Agent and Agency Services, and a Department attorney, reviewed Petitioner's application and determined that she was unfit and untrustworthy to hold a license. The review committee's decision was based strictly on Petitioner's prior criminal plea and the limited time between her completion of probation and application for licensure. The evidence presented at hearing, however, demonstrated Petitioner's fitness and trustworthiness to hold a license. Petitioner, an African-American, lives in a 50-house subdivision containing approximately three African-American families. On July 24, 1999, Petitioner attempted to enter her driveway but was blocked by a car that was parked in front of her driveway. A Caucasian woman was parked in front of Petitioner's driveway and was reading mail that she had retrieved from the community mailbox located in Petitioner's front yard. Despite having experienced the woman's similar rude behavior 2-weeks prior, Petitioner politely "tooted" her horn to encourage the woman to move her van forward and patiently waited. Shortly thereafter, Petitioner again beeped her horn. In response, the woman glanced at Petitioner, looked away, and refused to move. Thereafter, Petitioner placed her car in park, approached the driver's side of the woman's car, knocked on her window, and said, "I want to go in my driveway." Again, the woman ignored her request and continued to read her mail. Petitioner stated that after further knocking, she opened the woman's door and said, "I don't know you and you don't know me. I want to go into my driveway and I need you to move your van." In response the woman said to Petitioner, "You need to move. I want to close my door." Immediately thereafter, and without warning, the woman pushed Petitioner to the ground, got out of her car and attacked Petitioner. After being repeatedly struck by the woman, Petitioner bit the woman's shoulder in self-defense. Within seconds, the altercation, which Petitioner alleges was racially motivated, ended and the woman drove away. Petitioner ran into her house and relayed the events to her teenage children. Prior to calling 911, Petitioner called her uncle for advice. While on the telephone with her relative, the police arrived at Petitioner's home and she was arrested. Petitioner retained a lawyer to contest the charge. Upon her attorney's advice, Petitioner reluctantly agreed to plead no-contest to the charge, accept two years of probation, and receive a withholding of an adjudication of guilt. Petitioner's probation was terminated after 14 months without incident. Petitioner has never been arrested nor convicted of any crime prior to this incident. Since 1987, Petitioner has been working in the insurance industry in various capacities including claims examiner. She is currently entrusted with large sums of money, successfully works in customer service, and routinely deals with difficult customers in an appropriate and professional manner. Petitioner has been praised by her employers and co-workers and possesses an excellent demeanor. Petitioner has been offered a position as an adjustor trainee with Zurich Insurance Company contingent upon obtaining an adjustor's license. On June 21, 2001, approximately nine months before Petitioner submitted her application, Respondent repealed its law enforcement waiting period rule which outlined the length of time an applicant was required to wait, following a felony plea, in order to qualify for licensure. While Respondent adopted a new law enforcement waiting period rule pursuant to Section 626.207, Florida Statutes, on October 17, 2002, approximately five months after Petitioner submitted her application, Respondent stipulates that the new rule does not apply to Petitioner. In fact, at the time Petitioner submitted her application in March 2002, Respondent stipulates that it operated strictly under Sections 626.611 and 626.621, Florida Statutes. Consequently, Petitioner applied at a time when Respondent admittedly used only the statutes as a basis for denial. Waiting periods were not applied to applications for licensure during March 2002. While Petitioner's Notice of Denial contains a typographical error as to the date on the first page of the letter, the Agent Personal Data Inquiry correctly shows that Petitioner was officially denied on May 24, 2002.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent issue a Final Order approving Petitioner's application for licensure as a Resident Independent All-Lines Insurance Adjuster. DONE AND ENTERED this 19th day of March, 2003, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER 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 19th day of March, 2003. COPIES FURNISHED: Ladasiah Jackson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Maria N. Neal 5639 Breckenridge Circle Orlando, Florida 32818-1377 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue Whether the Petitioner's application for licensure as a resident customer representative insurance agent should be approved.
Findings Of Fact The Petitioner is an applicant seeking to be licensed as a resident customer representative insurance agent. The Respondent is the state agency charged with the responsibility of reviewing and issuing licenses governed by Chapter 626, Florida Statutes. On or about May 29, 2003, the Petitioner filed an internet application that required responses to questions regarding the Petitioner's fitness to be licensed. Among the screening questions listed on the application was the following inquiry: Have you ever been charged, convicted, found guilty, or pled guilty or nolo contendere (no contest) to a crime under the laws of any municipality, county, state, territory or country, whether or not adjudication was withheld or a judgment of conviction was entered? The options to the question noted above required the Petitioner to choose "Y" for affirmative or "N" for a negative response. The Petitioner selected "N." Thus, the Petitioner represented to the Respondent that she had not ever been charged, convicted, found guilty, or pled guilty to a crime. In fact, the Petitioner was charged with a crime and did enter a plea to a crime. On May 25, 1984, the Petitioner filed a Plea Agreement wherein she agreed to plead guilty to the offense of unlawful use of a communication facility. Judge Orrick in the United States District Court, Northern District of California, then accepted the plea and found the Petitioner guilty of a violation of 21 U.S.C. Section 843(b). The Petitioner was placed on probation for a period of three years. With regard to the instant case, the Petitioner admitted she failed to disclose the conviction. The Petitioner maintained her grandchildren distracted her when she was completing the form and checked the wrong response by mistake. The Petitioner did not review the error and advise the Department of the erroneous entry. Additionally, the Petitioner claimed that she did not realize the screening question related to activities in all jurisdictions and thought it meant only criminal conduct in the State of Florida. Again, the Petitioner did not seek any clarification as to the question's meaning prior to submitting an incorrect answer. Moreover, it is determined that the question is unambiguously stated to include jurisdictions beyond the State of Florida. The Petitioner believes that because she was able to successfully achieve citizenship after the criminal incident noted above she should similarly be favorably considered for the instant license. There is no evidence that supports a conclusion that the naturalization and immigration regulations for citizenship comport with the Florida laws regulating the licensure of insurance agents. Moreover, the Petitioner acknowledged that she disclosed the criminal history on her application for citizenship. The omission of pertinent facts regarding her criminal history was therefore not an issue in whether or not she should achieve citizen status.
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 denying the Petitioner's application for licensure. DONE AND ENTERED this 27th day of April 2004, in Tallahassee, Leon County, Florida. S ___________________________________ J. D. Parrish 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 April 2004. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Ladasiah Jackson, Esquire Department of Financial Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Nora Delgadillo 11432 Southwest 75th Terrace Miami, Florida 33173
The Issue The issue in this case is whether, for the reasons alleged in the Administrative Complaint dated February 10, 1984, the Petitioner should revoke the Respondent's license and eligibility for licensure as an insurance agent or impose some lesser penalty authorized by statute.
Findings Of Fact Based on the testimony of the witnesses and the exhibits admitted into evidence, I make the following Findings of Fact: 1/ On June 16, 1982, the Respondent, Shelby Dewey Blackman, executed an Application for Qualification as Nonresident Life Agent, which application he thereafter caused to be filed with the Petitioner, Department of Insurance and Treasurer. In that application Mr. Blackman stated that his residence address and his business address in his state of residence were both "2549 New York Avenue, Pascagoula, Miss. 39567." (Pet. Ex. 1; Tr. 12-13) The Department of Insurance and Treasurer does not issue Nonresident Life Agent licenses to people who are in fact residents of the State of Florida. Such licenses are only issued to people who are nonresidents of this state. Applicants for Resident Life Agent licenses are required to take an examination prior to licensure. Applicants for Nonresident Life Agent licenses are not required to take an examination prior to licensure. The Department would not have issued a Nonresident Life Agent license to Mr. Blackman if the Department had known that Mr. Blackman was a Florida resident. (Tr. 14) As a result of the filing of the application described above, the Department issued to Mr. Blackman a license as a Nonresident Life and Health Agent for the American Sun Life Insurance Company, which was the only company he was authorized to write insurance for in the State of Florida. When Mr. Blackman received his license, the license listed the name of the the only company he was authorized to write insurance for in this state. Licensees who are authorized to represent more than one insurance company in this state receive a separate license for each company they are authorized to represent. Mr. Blackman had only the one license to represent one company. (Pet. Ex. 1 and 2; Tr. 14-18) At all times material to this case, Mr. Blackman was a resident of Santa Rosa County, Florida. Specifically, Mr. Blackman was a resident of Santa Rosa County, Florida, at the time he applied for and was issued a Nonresident Life and Health Agent license and at the time of writing the four insurance applications which are described hereinafter. (Pet. Ex. 3; Tr. 20-21, 53) Continental Bankers Life Insurance Company of the South does not currently hold, and has never held, a Certificate of Authority to write insurance in the State of Florida. In November of 1982 Continental Bankers Life Insurance Company of the South was licensed to write insurance in the State of Alabama and Mr. Blackman was authorized by Continental to write insurance for Continental in the State of Alabama. (Pat. Ex. 8; Tr. 24-25) During November of 1982, Mr. Blackman wrote four applications for health insurance policies to be issued by the Continental Bankers Life Insurance Company of the South. One was an application dated November 2, 1982 from Mr. Thomas J. Barrow. Another was an application dated November 4, 1982, from Mr. Jimmie R. Williams. The last two were applications dated November 12, 1982, from Mr. Henry E. Marshall and Mr. Ercy L. Henderson, respectively. All four of the applications were written and signed in Jay, Florida. No part of the transactions which culminated in the writing of the four applications took place in the State of Alabama. On three of the applications Mr. Blackman wrote that the application was written and signed in Brewton, Alabama, and on one of the applications Mr. Blackman wrote that the application was written and signed in Flomaton, Alabama. The statements that the applications were written and signed in Alabama were false statements that Mr. Blackman knew to be false statements. (Pet. Ex. 4, 5, 6, 7; Tr. 37-38, 42, 49, 53-54) The false statements written on the four applications described above were relied upon by the Continental Bankers Life Insurance Company of the South and were, therefore, material misrepresentations. If Mr. Blackman had truthfully written on the applications that they were written and signed in the State of Florida, Continental would not have issued policies on the basis of those four applications because Continental was not licensed to write insurance in the State of Florida. The MM-6 policy is an insurance policy that Continental markets in Alabama and the false statements on the applications which indicated that the policies were applied for and completed in Alabama induced Continental to issue the policies. (Tr. 25-27, 32, 34-35)
Recommendation For all of the reasons set forth above, and particularly because of Mr. Blackman's demonstrated disregard for the truth, I RECOMMEND that the Department of Insurance and Treasurer enter a Final Order revoking Mr. Blackman's license and eligibility to hold a license. DONE AND ORDERED this 31st day of July, 1984, at Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 904/488-9575 Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 1984.
The Issue The issue is whether Respondent is guilty of transacting insurance business in violation of Sections 626.611 and 626.621, Florida Statutes, and, if so, what penalty should be imposed.
Findings Of Fact Respondent is licensed as a general lines insurance agent, holding license number A274461. He has been so licensed for over 20 years. The record discloses no previous discipline. Respondent bought L.N.V., Inc., d/b/a Federal Insurance (Federal Insurance), when he first became licensed in Florida. Respondent has retained ownership control of Federal Insurance since its purchase, except for a one-year period starting in June 2002, when Federal Insurance sold its assets to an unrelated party. However, after the party defaulted on its purchase obligations, Federal Insurance recovered the assets. Prior to June 2002, Respondent was, at all material times, the sole shareholder, the president, and a director of Federal Insurance. The acts and omissions alleged in Counts I, II, IV, and VII took place during this time period. After June 2003, Respondent's formal roles with Federal Insurance became less clear, although he continued to run the daily operations of the business and control the corporation. At minimum, though, Respondent was the Agency Owner from May 20, 2003, through November 7, 2003, and November 25, 2003, through December 29, 2003, according to the Agency Location Report, which is part of Petitioner Exhibit 2. The acts and omissions alleged in Counts V and VI took place, at least in part, during these time periods. Without doubt, regardless of his formal roles after June 2003, Respondent personally committed the acts and omissions that are the subject of Counts V and VI. Michael Smith is a licensed property and casualty insurance agent. He is also licensed to sell life and health insurance. He has held insurance licenses since 1983. Mr. Smith has been employed by Federal Insurance twice: from the late 1980s to the mid-1990s and 1999-2001. At all material times, Nicholas Polyviou, d/b/a Polyviou Corporation, was a self-employed manufacturer of office furniture. Mr. Polyviou did his insurance business at Federal Insurance where he dealt with Michael Smith. On October 13, 1999, Mr. Polyviou visited Michael Smith at Federal Insurance to purchase workers' compensation and liability insurance. Mr. Polyviou completed an application for workers' compensation insurance and delivered four Notices of Election to be Exempt, which had already been filled out and signed by Mr. Polyviou and the other three employees who were the subjects of the notices. The notices represented elections by qualified persons not to be covered by workers' compensation. To process the Notices of Election to Be Exempt and file them with the Division of Workers' Compensation, Federal Insurance charged Mr. Polyviou $75 per form, for a total of $300. The $75 fee per form consisted of a $50 fee charged by the Division of Workers' Compensation to file the notices and a $25 fee charged by Federal Insurance to process the notices and send them to the Division of Workers' Compensation. However, Federal Insurance never sent these notices to the Division of Workers' Compensation. Eventually, following an audit, Mr. Polyviou was assessed about $20,000 in unpaid workers' compensation premiums for these four individuals. Mr. Polyviou's injury was considerably less than $20,000 because the other three employees were ineligible to elect out of coverage in the first place. At all material times, David Wagner was self-employed in landscape maintenance. On August 21, 2000, Mr. Wagner visited Mr. Smith at Federal Insurance to purchase workers' compensation insurance. Mr. Wagner completed an application for workers' compensation insurance and delivered a Notice of Election to be Exempt, which had already been filled out and signed by Mr. Wagner. Respondent notarized the Notice of Election to be Exempt. To process the Notice of Election to Be Exempt and file them with the Division of Workers' Compensation, Federal Insurance charged Mr. Wagner $75. The $75 fee consisted of a $50 fee charged by the Division of Workers' Compensation to file the notice and a $25 fee charged by Federal Insurance to file the notice. However, Federal Insurance never filed the notice with the Division of Workers' Compensation. Eventually, an audit uncovered the absence of a filed notice, but the workers' compensation insurer and Petitioner were able to give effect to the notice, as of the date that it should have been filed, so that Mr. Wagner was not subject to any fines, fees, or penalties. Mr. Smith and other Federal Insurance employees described the office procedures at the time of the Polyviou and Wagner transactions. After completing the applications and notices and collecting the customers' checks, Mr. Smith typically placed the documents and checks in a basket where employees not performing other tasks would process the notices and payments, prepare checks for deposit, prepare money orders, and mail completed packages to the Division of Workers' Compensation. Because the Division of Workers' Compensation required the payment of filing fees by money order, not corporate check, Federal Insurance would not know if the Division of Workers' Compensation had received a package. On August 28, 2000--one week after the Wagner transaction--Evelyn Grenyer visited Mr. Smith at Federal Insurance to purchase renter's insurance. She informed Mr. Smith that all correspondence had to be mailed to a post office box, not her street address. Mr. Smith agreed to do so. Ms. Grenyer paid Federal Insurance a premium of $242.17. Over the next several days, Mr. Smith called Ms. Grenyer with questions about her residence, but he consistently assured her that she had insurance. In May 2001, Ms. Grenyer's home was robbed of property worth $2000. When she called Federal Insurance, she learned that she had not been insured because they had been unable to find her residence. Someone at Federal Insurance explained that they had sent mail to her residence, rather than, as instructed, her post office box, and the mail had been returned. Mr. Smith testified that Federal Insurance submitted the premium of $202.64 to the renter's insurance company. He thought that the difference may have been a charge to inspect the house. When the insurer required additional information, Federal Insurance attempted to contact Ms. Grenyer through her street address, rather than, as instructed, by her post office box. When she did not respond, the insurer canceled coverage, as of October 18, 2000, and refunded $149.53 of the premium to Federal Insurance, by check dated November 14, 2000. Federal Insurance deposited the check to its account. Only after Ms. Grenyer contacted Federal Insurance about the loss did it issue a check, in the same amount and dated May 10, 2001, to Ms. Grenyer. Obviously, no one at Federal Insurance visited the residence or tried calling Ms. Grenyer, whose phone number had not changed for five years and was in the records of Federal Insurance. Ms. Grenyer never recovered any insurance proceeds for the $2000 loss that she suffered. From 1995-1998, Federal Insurance employed Juan C. Montoya as an insurance agent. On January 22, 1998, Federal Insurance designated Mr. Montoya as the primary agent of Federal Insurance. In May 1998, Mr. Montoya's employment with Federal Insurance terminated. Federal Insurance failed to designate a new primary agent until July 9, 2001. For nearly three years, Federal Insurance operated without a designated primary agent. A few months after selling the insurance business, Respondent filed a notice with Petitioner, on September 25, 2002, identifying JEMS Services, 4207 Lake Avenue, West Palm Beach, as his new principal business address. When filing the notice, Respondent knew that he did not intend to transact insurance business at the JEMS Services address. In fact, Respondent used the JEMS Services address without the consent of the insurance agent conducting insurance business at that address. JEMS Services is an insurance agency owned by Janet Travieso-Otero, a friend of Respondent and his wife. Ms. Travieso-Otero never gave Respondent permission to use her address as his principal business address. Respondent has never been employed by JEMS Services, nor has he ever transacted business from this address, which has never been the principal business address of Respondent or any insurance business that he has owned or operated. Respondent accused Ms. Travieso-Otero of lying when she testified that she had never told Respondent that he could use her business as his principal place of business. To the contrary, Respondent is lying, and, even if he were not lying, Respondent intentionally provided Petitioner an incorrect business address. With Mr. Montoya and Ms. Travieso-Otero, Respondent has used friends and business associates, without their knowledge, to satisfy regulatory requirements. At all times during which Mr. Montoya was designated as the primary agent, including while he was employed by Federal Insurance, Respondent was the primary agent because Respondent, not Mr. Montoya, was responsible for the supervision of the insurance agents and their hiring and firing. The common thread in both situations is that Respondent, not someone on his behalf, has intentionally filed false information with Petitioner. Petitioner's expert witness, Wilford Ghioto, testified about Respondent's obligations. Mr. Ghioto, who has considerable relevant experience in the retail property-and- casualty insurance business, described the procedures that his office followed when processing and filing Notices of Election to be Exempt from workers' compensation insurance coverage. In particular, the insurance agent, but not the supervising agent, was responsible to ensure that the completed package was mailed to the proper location, and the supervising agent, if aware of any problems with an insurance agent, opened all of the insurance agent's mail to discover any problems. The supervising agent also ensured that the office routinely ran account receivable reports to find any money due an insured.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order dismissing Counts I-IV, finding Respondent guilty of Counts V-VII, imposing an administrative fine of $1250, and suspending Respondent's license for six months. DONE AND ENTERED this 20th day of July, 2004, in Tallahassee, Leon County, Florida. 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 20th day of July, 2004. COPIES FURNISHED: Gregg S. Marr David J. Busch Division of Legal Services Department of Financial Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Orrin R. Beilly Law Office of Orrin R. Beilly Citizens Building, Suite 705 105 South Narcissus Avenue West Palm Beach, Florida 33401 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capital, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capital, Plaza Level 11 Tallahassee, Florida 32399-0300
