03-004850PL Department Of Financial Services vs. Howard Irvin Vogel Status: Closed Recommended Order on Tuesday, July 20, 2004.

Summary: Recommended Respondent pay a $1,250 fine for two address violations and receive a six-month suspension for failure to designate a primary insurance agent.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 03 - 4850PL

)

HOWARD IRVIN VOGEL, )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in West

Palm Beach, Florida, on March 31 and April 1, 2004.

APPEARANCES

For Petitioner: 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

For Resp ondent: Orrin R. Beilly

Law Office of Orrin R. Beilly

Citizens Building, Suite 705

105 South Narcissus Avenue

West Palm Beach, Florida 33401

STATEMENT OF THE ISSUES

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.

PRELIMINARY STATEMENT

By Administrative Complaint dated December 15, 2003,

Petitioner alleged that, at all material times, Respondent was a

licensed general lines insurance agent, holding license number

A274461, and served as a corporate officer of L.N.V., Inc.,

d/b/a Federal Insurance.

Count I of the Administrative Compla int alleges that, on

October 12, 1999, a Federal Insurance employee, Michael Smith,

who is a licensed insurance agent, sold a workers' compensation

policy to Nicholas Polyviou, d/b/a Polyviou Corporation. Count

I alleges that, on January 27, 2000, Mr. Pol yviou paid Mr. Smith

$300 for processing four Notices of Election to be Exempt, which

Mr. Polyviou had already completed. However, the four forms

allegedly were never submitted to the Division of Workers'

Compensation.

Count II alleges that, on August 21 , 2000, Michael Smith

sold a workers' compensation policy and general liability policy

to David Wagner. Count II alleges that Mr. Wagner paid

Mr. Smith $1498 for these policies, but only $1004.99 was

submitted to the insurers as premium payment. Count II alleges

that Mr. Wagner provided a Notice of Election to be Exempt,

which he had already completed, but the form was never submitted

to the Division of Workers' Compensation.

Count III alleges that, on October 24, 2000, Michael Smith

sold a workers' comp ensation policy to Christopher York. Count

III alleges that Mr. York paid Mr. Smith $446 for the policy,

but only $281 was submitted to the insurer as premium payment.

Count III alleges that Mr. York provided a Notice of Election to

be Exempt, which he h ad already completed, but the form was

never submitted to the Division of Workers' Compensation.

Count IV alleges that, on August 28, 2000, Michael Smith

sold a tenant dweller's policy to Evelyn Grenyer, who provided

Mr. Smith with specific instructions a bout her mailing address.

Count IV alleges that Ms. Grenyer paid Mr. Smith $242.17 for the

policy, but only $202.64 was submitted to the insurer as premium

payment. Count IV alleges that, on May 20, 2001, Ms. Grenyer

suffered a loss at the insured proper ty, and she later

discovered that her policy had been canceled on October 18,

2000. Count IV alleges that the insurer had issued Federal

Insurance a refund on November 14, 2000, and Federal Insurance

issued a refund check to Ms. Grenyer on May 10, 2001, b ut only

after she had inquired about her policy.

Each of the above - described counts alleges that Petitioner

is authorized to suspend or revoke Respondent's license for the

violation of Section 624.11(1), Florida Statutes, which

prohibits the transaction o f insurance without complying with

the Insurance Code; Section 626.611(4), Florida Statutes, which

prohibits the willful use of a license or appointment to

circumvent any of the requirements of the Insurance Code;

Section 626.611(5), Florida Statutes, whic h prohibits the

willful misrepresentation of any insurance policy or willful

deception regarding such policy, either in person or by way of

advertising or other dissemination of information; Section

626.611(7), Florida Statutes, which prohibits the demonst rated

lack of fitness or trustworthiness to engage in the business of

insurance; Section 626.611(8), Florida Statutes, which prohibits

the demonstrated lack of reasonably adequate knowledge and

technical competence to engage in the transactions authorized by

the license or appointment; Section 626.611(9), Florida

Statutes, which prohibits fraudulent or dishonest practices in

the conduct of business under the license or appointment;

Section 626.611(10), Florida Statutes, which prohibits the

misappropriation, conversion, or unlawful withholding of money

belonging to insurers, insureds, beneficiaries, or others

received in the conduct of business under the license or

appointment; Section 626.611(13), Florida Statutes, which

prohibits the willful failure to comp ly with, or willful

violation of, any proper order or rule of Petitioner or willful

violation of any provision of the Insurance Code; Section

626.621(2), Florida Statutes, which prohibits the violation of

any provision of the Insurance Code or other insura nce law in

the course of dealing under the license or appointment; and

Section 626.621(3), Florida Statutes, which prohibits the

violation of any lawful order or rule of Petitioner.

Each of the above - described counts also alleges that,

pursuant to Secti on 626.734, Florida Statutes, a general lines

agent who is an officer, director, or shareholder of an

incorporated general lines insurance agency is personally liable

for any wrongful acts, misconduct, or violations of the

Insurance Code by such licensee o r any person under his direct

supervision and control while acting on behalf of the

corporation, provided that the officer, director, or shareholder

personally committed or knew or should have known of the act and

facts constituting a violation of the Insu rance Code.

Count V alleges that the business address on record for

Respondent is JEMS Services, 4207 Lake Avenue, West Palm Beach,

even though the actual business address has been, for a period

in excess of 60 days, 3564 South Military Trail, Lake Worth.

Count V alleges that Respondent's failure to notify Petitioner

in writing, within 60 days after a change in business address,

violates Sections 624.11(1), 626.611(13), 626.621(2), and

626.621(3), Florida Statutes, which are mentioned above.

By Motion to Amended Administrative Complaint filed January

30, 2004, Petitioner requested leave to add Count VI. The

Administrative Law Judge granted leave to amend the

Administrative Complaint. Count VI alleges that, on September

16, 2002, Respondent notified Peti tioner of a change of his

business address to JEMS Services, 4207 Lake Avenue, West Palm

Beach. Count VI alleges that Respondent never used this address

as a place of business, and he filed this address without the

knowledge or consent of the individual w hose business is located

at the address. Count VI alleges that Respondent thus violated

Sections 624.11(1), 626.611(7), 626.611(8), 626.611(13),

626.621(2), and 626.621(3), Florida Statutes, which are

mentioned above.

By Motion to Amend Amended Administr ative Complaint filed

February 13, 2004, Petitioner requested leave to add Count VII

and add the allegation, common to all counts, that Respondent

was a corporate director, as well as a corporate officer. The

Administrative Law Judge granted leave to amen d the Amended

Administrative Complaint. Count VII alleges that, based on the

notices filed with Petitioner by Federal Insurance, Juan C.

Montoya served as the designated primary agent from January 27,

1998, until September 27, 2002. However, Count VII al leges that

Juan C. Montoya's employment with Federal Insurance terminated

in early 1998. Count VII alleges that Respondent thus violated

Sections 624.11(1), 626.611(7), 626.611(8), 626.611(13),

626.621(2), and 626.621(3), Florida Statutes, which are

menti oned above.

At the hearing, Petitioner presented no evidence as to

Count III, so it is stricken.

At the hearing, Petitioner called ten witnesses and offered

into evidence 17 exhibits: Petitioner Exhibits 1 - 14 and 16 - 18.

Respondent called two witnesses and offered into evidence four

exhibits: Respondent Exhibits 1 - 4. All exhibits were admitted.

The court reporter filed the transcript on May 3, 2004.

The parties filed their proposed recommended orders on June 14,

2004.

FINDINGS OF FACT

1. 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.

2. Respondent bought L.N.V., Inc., d/b/a Federal Insurance

(Federal Insurance), when he f irst 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.

3. 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.

4. 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, tho ugh, 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.

5. Michael Smith is a licensed pr operty 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.

6. 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.

7. On October 13, 1999, Mr. Polyviou visi ted 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.

8. To process the Notices of Election to Be Exempt and

fil e 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 cha rged by Federal Insurance to process the notices and

send them to the Division of Workers' Compensation.

9. However, Federal Insurance never sent these notices to

the Division of Workers' Compensation. Eventually, following an

audit, Mr. Polyviou was asses sed 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.

10. 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.

11. 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.

12. 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.

13. 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 p ackages 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.

14. 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 stre et address. Mr. Smith agreed to do so.

15. 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.

16. 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 t o her residence, rather than, as instructed,

her post office box, and the mail had been returned.

17. 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 cance led coverage,

as of October 18, 2000, and refunded $149.53 of the premium to

Federal Insurance, by check dated November 14, 2000.

18. Federal Insurance deposited the check to its account.

Only after Ms. Grenyer contacted Federal Insurance about the

loss did i t 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 Insu rance.

19. Ms. Grenyer never recovered any insurance proceeds for

the $2000 loss that she suffered.

20. From 1995 - 1998, Federal Insurance employed Juan C.

Montoya as an insurance agent. On January 22, 1998, Federal

Insurance designated Mr. Montoya as the primar y agent of Federal

Insurance. In May 1998, Mr. Montoya's employment with Federal

Insurance terminated.

21. Federal Insurance failed to designate a new primary

agent until July 9, 2001. For nearly three years, Federal

Insurance operated without a designated p rimary agent.

22. 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.

23. 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.

24. Respondent accused Msavieso - Otero of lying when

she testified that she had ne ver 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.

25. 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 In surance, 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.

26. 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, d escribed 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 t he 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 rout inely ran

account receivable reports to find any money due an insured.

CONCLUSIONS OF LAW

27. The Division of Administrative Hearings has

jurisdiction over the subject matter. §§ 120.569 and 120.57(1),

Fla. Stats. (2004).

28. Section 624.11(1) provides:

No per son shall transact insurance in this

state, or relative to a subject of insurance

resident, located, or to be performed in

this state, without complying with the

applicable provisions of this code.

29. Section 626.611, Florida Statutes, provides in

relevant part:

The department or office shall deny an

application for, suspend, revoke, or refuse

to renew or continue the license or

appointment of any applicant, agent, title

agency, adjuster, customer representative,

service representative, or managing general

agent, and it shall suspend or revoke the

eligibility to hold a license or appointment

of any such person, if it finds that as to

the applicant, licensee, or appointee any one

or more of the following applicable grounds

exist:

(4) If the license or appo intment is

willfully used, or to be used, to circumvent

any of the requirements or prohibitions of

this code.

(5) Willful misrepresentation of any

insurance policy or annuity contract or

willful deception with regard to any such

policy or contract, done either in person or

by any form of dissemination of information

or advertising.

(7) Demonstrated lack of fitness or

trustworthiness to engage in the business of

insurance.

(8) Demonstrated lack of reasonably adequate

knowledge and technical competen ce to engage

in the transactions authorized by the license

or appointment.

(9) Fraudulent or dishonest practices in the

conduct of business under the license or

appointment.

(10) Misappropriation, conversion, or

unlawful withholding of moneys belongi ng to

insurers or insureds or beneficiaries or to

others and received in conduct of business

under the license or appointment.

(13) Willful failure to comply with, or

willful violation of, any proper order or

rule of the department, commission, or offic e

or willful violation of any provision of this

code.

30. Section 626.621, Florida Statutes, provides in

relevant part:

The department or office may, in its

discretion, deny an application for, suspend,

revoke, or refuse to renew or continue the

license or a ppointment of any applicant,

agent, adjuster, customer representative,

service representative, or managing general

agent, and it may suspend or revoke the

eligibility to hold a license or appointment

of any such person, if it finds that as to

the applicant , licensee, or appointee any one

or more of the following applicable grounds

exist under circumstances for which such

denial, suspension, revocation, or refusal is

not mandatory under s. 626.611:

(2) Violation of any provision of this code

or of any oth er law applicable to the

business of insurance in the course of

dealing under the license or appointment.

(3) Violation of any lawful order or rule of

the department, commission, or office.

31. Section 626.551, Florida Statutes, provides:

Every licensee shall notify the department

or office in writing within 60 days after a

change of name, residence address, principal

business street address, or mailing address.

Any licensed agent who has moved his or her

residence from this state shall have his or

her l icense and all appointments immediately

terminated by the department or office.

Failure to notify the department or office

within the required time period shall result

in a fine not to exceed $250 for the first

offense and, for subsequent offenses, a fine

of not less than $500 or suspension or

revocation of the license pursuant to

s. 626.611 or s. 626.621.

32. Section 626.592, Florida Statutes, provides in

relevant part:

(1) Each person operating an insurance

agency and each location of a multiple

location a gency shall designate a primary

agent for each insurance agency location and

shall file the name of the person so

designated, and the address of the insurance

agency location where he or she is primary

agent, with the department, on a form

approved by the department. The designation

of the primary agent may be changed at the

option of the agency, and any change shall be

effective upon notification to the

department. Notice of change must be sent to

the department within 30 days after such

change.

(2) F or the purpose of this section, a

"primary agent" is the licensed agent who is

responsible for the hiring and supervision of

all individuals within an insurance agency

location whether such individuals deal with

the public in the solicitation or negotiatio n

of insurance contracts or in the collection

or accounting of moneys from the general

public. An agent may be designated as

primary agent for only one insurance agency

location.

33. Section 626.734 provides:

Any general lines insurance agent who is an

offi cer, director, or stockholder of an

incorporated general lines insurance agency

shall remain personally and fully liable and

accountable for any wrongful acts,

misconduct, or violations of any provisions

of this code committed by such licensee or

by any pe rson under his or her direct

supervision and control while acting on

behalf of the corporation. Nothing in this

section shall be construed to render any

person criminally liable or subject to any

disciplinary proceedings for any act unless

such person per sonally committed or knew or

should have known of such act and of the

facts constituting a violation of this

chapter.

34. Petitioner must prove the material allegations by

clear and convincing evidence. Department of Banking and

Finance v. Osborne Stern an d Company, Inc. , 670 So. 2d 932 (Fla.

1996) and Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987).

35. In Ganter v. Department of Insurance , 620 So. 2d 202

(Fla. 1st DCA 1993), the court affirmed a final order of the

Florida Department of Insurance suspending f or six months the

license of an insurance agent. As is true in the present case,

the court determined that the applicable statute required proof

that the agent knew or reasonably should have known of the

misconduct of his employee, an unlicensed salespers on.

36. In Ganter , the agent was the president and director of

the company and the immediate supervisor of the salesperson, who

had misrepresented the coverage of policies to four customers,

so that they had unknowingly purchased auto service contracts.

How ever, the agent worked at a distant office four days a week,

during which time the agent left the salesperson in charge of

the office. The hearing officer noted that, as argued by

Petitioner, "a simple review of business written and a follow - up

of client files by [the agent] would have disclosed [the

salesperson's] improprieties . . .. There is no indication that

at any time during the period in issue, did [the agent] make

even the slightest effort to properly oversee his employees."

620 So. 2d at 204.

37. F ocusing on the lack of supervision and the practice

of allowing an unlicensed employee to use the agent's general

lines insurance license, the majority and concurring opinions

concluded that the agent knew or reasonably should have known of

the wrongful ac ts of the unlicensed salesperson. The majority

and dissenting opinions pointed out the lack of evidence of the

appropriate minimum standards of conduct, which are typically

necessary, in the form of testimony from an expert witness or a

rule, to establish the basis of what the agent should reasonably

have known. The absence of such evidence in Ganter was

excusable because the agent had left an unlicensed employee to

operate an insurance office four days a week.

38. The dissenting opinion raised another import ant point.

The majority and concurring opinions had agreed that the

Department of Insurance was required to prove that the agent

knew or reasonably should have known of the violations, thus

rejecting the Department's theory of strict liability. Agreeing

with the rejection of strict liability, the dissenting opinion

noted that the majority and concurring opinions actually

embraced the Department's strict liability theory by failing to

require allegations as to how the agent, not the salesperson,

had violat ed the Insurance Code or how the agent reasonably

should have known of the salesperson's wrongful acts.

39. Under all of the opinions in Ganter , Petitioner has

adequately pleaded Counts I, II, and IV of the Second Amended

Administrative Complaint by predica ting Respondent's liability

on two grounds. First, the Second Amended Administrative

Complaint alleges that the acts or omissions of Mr. Smith or

Federal Insurance violated various provisions of the Insurance

Code, and Respondent knew or reasonably should have known of

these violations. Second, the Second Amended Administrative

Complaint alleges that Respondent has demonstrated a lack of

reasonably adequate knowledge and technical competence to engage

in the transactions authorized by the license or appoi ntment, in

violation of Section 626.611(8), Florida Statutes. These

allegations describe Respondent's personal acts or omissions,

not the acts or omissions of Mr. Smith or other Federal

Insurance employees.

40. On the other hand, the expert evidence offered b y

Petitioner failed to prove that Respondent reasonably should

have known of the violations or was himself unknowledgeable or

incompetent. In effect, the expert witness testified that

Respondent was not required to check all of Mr. Smith's work

before it went out, or that Respondent, absent any indication of

trouble with Mr. Smith's work, had to open all of Mr. Smith's

business mail. The record does not establish that Mr. Smith was

incompetent, or, if he were, that Respondent was aware that

Mr. Smith was incompetent. The expert witness's testimony about

checking accounts receivable does not identify the problem in

the Grenyer transaction where Federal Insurance thought itself

unable to contact Ms. Grenyer, even if it knew that it owed her

money.

41. In sum, the expert testimony did not establish by

clear and convincing evidence exactly what Respondent reasonably

should have done to prevent the mistakes that occurred in the

Polyviou, Wagner, and Grenyer transactions. Although the

proximity of the mishandling of the Wagner and Grenyer

transactions is suspicious, the record fails to demonstrate that

Respondent has negligently discharged his responsibilities as to

these three transactions or that he has engaged in any practices

as obviously negligent or even as reckless as those of the

Ganter agent who left his office, and license, in the hands of

an unlicensed salesperson four days a week. Thus, Petitioner

has failed to prove Counts I, II, and IV.

42. Counts V, VI, and VII of the Second Amended

Administrative Compl aint raise different issues as to

Respondent's personal liability. Rather than isolating on

several mistakes that require careful analysis in the context of

a busy retail insurance agency, the allegations of Counts V, VI,

and VII address simple acts requi red of a licensee to assure

adequate administration of his license by Petitioner.

43. Count V alleges that Respondent had the duty to inform

Petitioner of changes in his principal business address and that

Respondent failed to perform this duty. Respondent ne ver

conducted insurance business at the JEMS Services address. He

conducted insurance business at the South Military Trail address

from June to December, 2003, while his last filing with

Petitioner showed the JEMS Services address. In his proposed

recomm ended order, Respondent concedes, as he must, that he

personally failed to perform this duty.

44. Count VI alleges that Respondent filed a change - of -

address form to change his business address to the JEMS Services

address, even though he never used this addr ess and filed it

without the knowledge of the person using this address. In his

proposed recommended order and at the hearing, Respondent

contended that he had the consent of Msavieso - Otero,

effectively conceding that he had not delegated the duty of

arranging his use of this address and notifying Petitioner. The

record amply demonstrates that Respondent personally undertook

responsibility for notifying Petitioner of this purported change

of address, Respondent personally and intentionally filed an

in correct address with Petitioner.

45. Count VII alleges that Federal Insurance designated

Mr. Montoya as the primary agent and failed to file a new

notice, designating a new primary agent, for three years after

Mr. Montoya left the employment of Federal Insuran ce. Section

626.592(1), Florida Statutes, requires the "person operating an

insurance agency" to designate a primary agent. Respondent

personally failed to perform this duty from early 1998, when

Mr. Montoya left Federal Insurance, through July 2001.

46. Flo rida Administrative Code Rule 69B - 231.040(1)(a)

provides:

The Department is authorized to find that

multiple grounds exist under Sections

626.611 and 626.621, F.S., for disciplinary

action against the licensee based upon a

single count in an administrative complaint

based upon a single act of misconduct by a

licensee. However, for the purpose of this

rule chapter, only the violation specifying

the highest stated penalty will be

considered for that count. The highest

stated penalty thus established for eac h

count is referred to as the “penalty per

count”.

47. Florida Administrative Code Rule 69B - 231.080(13)

provides for a suspension of six months for a violation of

Section 626.611(13), Florida Statutes.

48. Petitioner has proved that Respondent has personally

twic e violated Section 626.551, Florida Statutes. The first

violation was when Respondent informed Petitioner of the JEMS

Services address, even though he was not conducting business

from that address. The second violation was when, several

months later, Res pondent began conducting business at South

Military Trail and failed to update his address in the first 60

days. Petitioner has proved that Respondent has personally

violated Section 626.592(1), Florida Statutes, by failing to

designate a primary agent. Petitioner has proved that the

violations were willful, not accidental, so Petitioner has

proved violations of Section 626.611(13), Florida Statutes.

49. For the address violations, Section 626.551, Florida

Statutes, provides for a fine of not more than $250 f or the

first offense and, for a second offense, a fine of at least

$500, suspension, or revocation. For the designated primary

agent violation, Florida Administrative Code Rule

69B - 231.080(13) provides for a suspension of six months.

50. In its proposed recom mended order, Petitioner has

proposed to fine Respondent $250 for the first address violation

and $1000 for the second address violation. These are

appropriate penalties. Petitioner also proposed a 24 - month

suspension, two years' probation, and continuin g education, but

these are for the designated primary agent violation, which

Petitioner has proved, and the other counts, which Petitioner

has not proved.

The designated primary agent violation should result in a six -

month suspension, as suggested by the r ule.

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 m onths.

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

(8 50) 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

La w 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 - 03 00

Pete Dunbar, General Counsel

Department of Financial Services

The Capital, Plaza Level 11

Tallahassee, Florida 32399 - 0300

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 must be filed with the agency that

will issue the final order in this case.