08-005983 Loanwell Financial Corporation vs. Department Of Financial Services Status: Closed Recommended Order on Thursday, April 16, 2009.

Summary: Respondent should cancel approval of continuing education course that does not address insurance but is the focus of a finance mechanism known as a reverse mortgage.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LOANWELL FINANCIAL CORPORATION, )

)

Petitioner, )

)

vs. ) Case No. 08-5983

)

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Administrative Law Judge (ALJ) Daniel Manry conducted the

final hearing of this case for the Division of Administrative

Hearings (DOAH) on January 5, 2009, in St. Petersburg, Florida.

APPEARANCES

For Petitioner: Michael L. Banner, pro se

Loanwell Financial Corporation

13700 58th Street, North, Suite 207

Clearwater, Florida 33760

For Respondent: Regina Keenan, Esquire

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue is whether Respondent should withdraw its

approval of a continuing education course that Petitioner offers

to life, health, and variable annuity insurance agents.

PRELIMINARY STATEMENT

Respondent filed a Notice of Intent to Withdraw Approval of

Continuing Education Course on November 6, 2008, which was

amended on March 3, 2009, pursuant to an order granting a

stipulated motion to amend the Notice of Intent. Petitioner

timely requested an administrative hearing.

At the hearing, Respondent presented the testimony of one

witness and submitted nine exhibits for admission into evidence.

Petitioner testified and submitted 10 exhibits for admission

into evidence. The identity of the witnesses and exhibits, and

the rulings regarding each, are set forth in the one-volume

Transcript filed with DOAH on March 20, 2009.

Respondent timely fi led its Propos ed Recommende d Order (PRO)

on March 30, 2009. Petiti oner did not file a PRO.

FINDINGS OF FACT

1. Respondent is the state agency responsible, in relevant

part, for regulating continuing education courses for insurance

licensees, pursuant to Chapters 626 and 627, Florida Statutes

(2008). 1 Petitioner provides a course entitled, Reverse

Mortgages, identified in the record by course number I.D. 64231

(the course). On June 12, 2008, Respondent approved the course

for two hours of continuing education credit for licensed life,

health, or variable annuity insurance agents.

2. The course content addresses reverse mortgages rather

than insurance. A reverse mortgage is a financing device. It

is a special type of home loan that converts a portion of the

equity in a home into cash. Unlike a traditional home equity

loan or second mortgage, no repayment is required until the

borrowers no longer use the home as their principal residence.

3. References to life insurance in the course pertain to

the use of a reverse mortgage as a funding mechanism for life

insurance. The course does not have significant intellectual or

practical content to enhance and improve the insurance knowledge

of licensees who participate in the course. The course is not a

formal program of learning which contributes directly to the

professionalism, ethics, or competence of a licensee acting

under the scope of his or her license.

4. Respondent has statutory authority to regulate

continuing education courses for insurance licensees.

Respondent does not have statutory authority to regulate lending

and financing, including financing through reverse mortgages.

5. Withdrawal of approval for continuing education credit

does not prevent an insurance agent from taking the course in

addition to the required continuing education. If an insurance

agent conducts financial transactions in conjunction with an

insurance transaction, the agent should be sufficiently educated

to avoid a breach of the fiduciary duty owed to the insurance

consumer.

6. Petitioner presented evidence of courses that

Respondent has approved for continuing education, and those

courses do not address insurance topics. Respondent approved

those courses pursuant to rules that provide partial credit for

certain non-insurance topics, such as communication or time

management. 2 Respondent is currently seeking to amend the rule

to remove the partial credit provision because that provision is

not consistent with national standards.

CONCLUSIONS OF LAW

7. DOAH has jurisdiction over the parties to and the

subject matter of this proceeding. §§ 120.569 and 120.57(1).

DOAH provided the parties with adequate notice of the final

hearing.

8. Respondent has the burden of proof. Respondent must

show by clear and convincing evidence that the course does not

meet the requirements of the laws and regulations charged in the

Amended Notice of Intent and that the proposed penalty is

reasonable. Department of Banking and Finance, Division of

Securities and Investor Protection, v. Osborne Stern and

Company , 670 So. 2d 932, 935 (Fla. 1996); Ferris v. Turlington ,

510 So. 2d 292 (Fla. 1987).

9. For reasons stated in the Findings of Fact, Respondent

satisfied its burden of proof. Respondent showed by clear and

convincing evidence that the course does not “enhance and

improve the insurance knowledge of participants” and “does not

contribute to the professionalism, ethics, or competence of [an

insurance] licensee” within the meaning of Florida

Administrative Code Rule 69B-228.080(1)(c).

10. The course does not comply with the requirements of

Florida Administrative Code Chapter 69B-228. Withdrawal of

approval is the appropriate penalty pursuant to Florida

Administrative Code Rule 69B-228.210(3).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that Respondent enter a final order withdrawing

approval of the course.

DONE AND ENTERED this 16th day of April, 2009, in

Tallahassee, Leon County, Florida.

S

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of April, 2009.

ENDNOTES

1/ References to subsections, sections, and chapters are to

Florida Statutes (2008), unless stated otherwise.

2/ Fla. Admin. Code R. 69B-228.080(4).

COPIES FURNISHED :

Regina M. Keenan, Esquire

Department of Financial Service

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399

Michael L. Banner

Loanwell Financial Corporation

13700 58th Street, North, Suite 207

Clearwater, Florida 33760

Tracey Beal, Agency Clerk

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399-0390

Honorable Alex Sink

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

Benjamin Diamond, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0307

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.