04-000718PL Department Of Financial Services vs. Bradley W. Beshore Status: Closed Recommended Order on Thursday, March 10, 2005.

Summary: The representation of an unauthorized insurer requires a license suspension. Respondent failed to establish that the product sold was Employee Retirement Income Security Act-qualified and that state regulation was pre-empted.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 04 - 0718PL

)

BRADLEY W. BESHORE, )

)

Respondent. )

)

RECOMMENDED ORDER

On O ctober 4 through 7, 2004, an administrative hearing in

this case was held in Sarasota, Florida, before William F.

Quattlebaum, Administrative Law Judge, Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Philip M. Payne, Esquire

David J. Busch, Esquire

Department of Financial Services

624 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

For Respondent: R. David Prescott, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 32302 - 0551

STATEMENT OF THE ISSUE

The issues in the case are whether the allegati ons of the

Second Administrative Complaint are correct, and, if so, what

penalty, if any, should be imposed.

PRELIMINARY STATEMENT

On March 4, 2004, the Department of Financial Services

(Petitioner) forwarded to the Division of Administrative

Hearings (D OAH) a Petition for Formal Administrative Proceeding

filed by Bradley W. Beshore (Respondent) challenging an Amended

Administrative Complaint. (The initial Administrative Complaint

was amended prior to the case being referred to DOAH.) Also

enclosed with the Petition for Hearing was Respondent's Motion

to Dismiss the Amended Complaint. Petitioner filed a Response

to the Motion to Dismiss on March 5, 2004.

By Notice of Hearing dated March 15, 2004, the case was

scheduled for hearing commencing on June 28, 2004.

On May 18, 2004, hearing was held on Respondent's Motion to

Dismiss Amended Administrative Complaint.

On May 28, 2004, Petitioner filed a six - count Second

Amended Administrative Complaint. On June 10, 2004, Respondent

filed a Response to, and a Renewed Motion to Dismiss, the Second

Amended Administrative Complaint. Petitioner filed a Response

to the Renewed Motion to Dismiss on June 21, 2004.

On June 25, 2004, a hearing was held on Respondent's

Renewed Motion to Dismiss the Second Amended Ad ministrative

Complaint. By Order entered June 25, 2004, both pending Motions

to Dismiss were denied. By Notice of Hearing dated June 25,

2004, the hearing was continued and rescheduled for October 4

through 8, 11, and 12, 2004.

On September 20, 2004, t he parties filed a Prehearing

Stipulation wherein Petitioner dismissed the allegations set

forth in paragraph number four of the Second Amended

Administrative Complaint.

The case was transferred to the undersigned Administrative

Law Judge on September 28 , 2004. The hearing commenced on

October 4, 2004.

At the hearing, Petitioner presented the testimony of nine

witnesses. The following Petitioner's exhibits were admitted

into evidence: Exhibits numbered 1; 2A; 3 (parts A, B, and C);

5 (parts B, C, D, E, F, I, M, N, P, Q, and R); 7 (parts B, C, D,

E, F, G, H, I, J, K, M, N, P, Q, and S); 8 (parts C, D, E, F, G,

I, K, L, N, and P); 9 (parts D, E, F, G, H, I, J, K, L, M, and

N); 10 (parts B and C); 11 (parts B, D, E, F, G, H, I, J, and

N); 12B; 13 (parts C, D, E, F, G, H, I, K, N, L, and O); and

17A.

Respondent testified on his own behalf and had Exhibits

numbered 1 through 3 admitted into evidence.

The five - volume Transcript of the hearing was filed

November 4, 2004. Pursuant to an agreement between t he parties,

Proposed Recommended Orders were filed on January 28, 2005.

On February 3, 2005, Respondent filed Respondent's Motion

to Strike Portions of Petitioner's Proposed Recommended Order

(Motion to Strike) and attachments thereto. On February 18,

2 004, Petitioner filed a response to the Motion to Strike.

Upon review of the motion and response, Respondent's Motion

to Strike is granted as to Appendices 1, 2, 4 through 9, and 12.

Respondent's Motion to Strike is otherwise denied.

FINDINGS OF FACT

1. At all times material to this case, Respondent was an

insurance agent, holding Florida license number A020887, and was

licensed as a Resident Life, Health & Variable Annuity (2 - 15);

Life (20 - 16); Life & Health (2 - 18); General Lines, Property &

Casualt y Insurance (2 - 20); and Health (2 - 40) agent.

2. Respondent has been licensed in Florida since

February 14, 1994, and has consistently met all continuing

education requirements applicable to his licensure.

3. At all times material to this case, Respon dent was

employed as an account executive by HRH of Southwest Florida,

Inc. HRH of Southwest Florida, Inc., is a subsidiary of HRH,

Inc., a large provider of insurance agency services. Respondent

is not and has never been an officer, director, manager, or

shareholder of HRH of Southwest Florida, Inc.

4. HRH of Southwest Florida, Inc., provided insurance and

risk management services to businesses. Insofar as is relevant

to this case, HRH of Southwest Florida, Inc., offered to its

clients both fully i nsured health benefit plans and partially

self - funded health benefit plans.

5. Fully insured health benefit plans are those in which

an employer pays a premium (sometimes with an employee

contribution) to an insurer, and health benefit insurance

coverag e is provided to participants in the plan. Petitioner

has the responsibility for regulating fully insured health

benefit plans sold in the State of Florida.

6. Partially self - funded health benefit plans include

those where an employer's funds (again so metimes with an

employee contribution) are used to cover health expenses of plan

participants. The employer's funds are collected by a third -

party administrator responsible for paying claims out of the

employer's funds, and for obtaining stop - loss insuran ce to cover

claims in excess of the funds available from the employer.

Properly created, partially self - funded health benefit plans may

be exempt from regulation by state authorities under the

provisions of the federal Employee Retirement Income Security

Act (ERISA).

7. In the April 2001, HRH of Southwest Florida, Inc.,

began offering to clients in Lee, Manatee, and Sarasota

Counties, a health benefit product made available by Meridian

Benefit, Inc. (MBI).

8. MBI had no authorization to operate as an insurer in

the State of Florida.

9. Based on information provided to HRH of Southwest

Florida, Inc., MBI was operating as a third - party administrator

for partially self - funded health benefit plans. The information

provided to HRH of Southwest Florida, Inc., initially came from

Thomas Mestmaker and Associates, a managing general agency

representing MBI, and was confirmed through information

subsequently provided by MBI. The plans were presumed by

Respondent to be exempt from regulation by Petitioner un der the

provisions of ERISA based on the information provided by MBI.

10. According to the information provided to Respondent

and to HRH of Southwest Florida, Inc., the MBI plan included

establishment of a single employer trust (SET) on behalf of each

b usiness. Health claims from each business' employees would be

paid from the funds contributed to the trust by the employer.

"Stop - loss" insurance would be obtained to cover claims in

excess of an employer's contribution.

11. The information provided b y Respondent to his clients

was provided to Respondent or to HRH of Southwest Florida, Inc.,

by MBI and affiliated other sources. Based on such information,

Respondent presumed that MBI was a stable organization and that

the stop - loss coverage was in plac e.

12. Respondent had no specific training related to ERISA -

qualification of health benefit plans. He has sold other plans

that he believed were ERISA - qualified plans to other employers

in Florida.

13. Typically, a business owner would initially con tact

HRH of Southwest Florida, Inc., seeking health benefits for

employees. A representative of HRH of Southwest Florida, Inc.,

such as Respondent, would research a variety of options for the

business owner and then present the options to the client.

14 . The evidence establishes that the MBI health benefit

plan was one of several options (including both fully - insured

and partially self - funded plans) presented to clients. A client

was free to choose the MBI plan, another plan presented, or no

plan at al l. Clients generally reviewed health benefit plans on

an annual basis, at which point the process of presenting

various options was repeated.

15. Respondent eventually sold the MBI plan to ten or

twelve business clients seeking to provide health benefi ts to

employees.

16. Clients choosing to obtain health benefits through the

MBI plan submitted information related to the client's employees

through Respondent and HRH of Southwest Florida, Inc., to MBI,

which would respond with a preliminary rate proposa l. After a

client chose to accept the rate proposal, representatives from

HRH of Southwest Florida, Inc., including Respondent, would

assist client employees in completing applications. The

applications were submitted to MBI, which in turn established

ac tual rates and communicated the actual rate directly to the

client.

17. Clients who chose to accept the final rate proposal

then executed documents purportedly establishing an SET. The

documents apparently were created by MBI, and were delivered to

cli ents through representatives of HRH of Southwest Florida,

Inc., including Petitioner. After execution by the clients, the

documents were returned to MBI.

18. Some clients received a general document on MBI

letterhead titled "Technical Aspects of SET SING LE EMPLOYER

TRUST" wherein clients were advised that the SET was an

"Employee Welfare Benefit Plan" that was "designed to conform to

the Employee Retirement Income Security Act of 1974, as

amended." The document described the process of establishing

rates and advised that MBI was the plan administrator. The

document also referenced a trust document and stated that the

trust custodian was First Union National Bank. The document

stated as follows:

At First Union an account will be

established for each si ngle employer trust

into which all contributions received by the

trust from the employer group will be

deposited. Any income earned from funds

deposited in that account will be credited

to that account and any fees charged by the

bank will be charged to t hat account.

19. Some clients received a disclosure document from

"Hilb, Rogal and Hamilton of Sarasota" specifically applicable

to the client, which provided that the client "intends to

establish a SINGLE EMPLOYER TRUST Employee Welfare Benefit

Plan," t hat client contributions would be made to a trust, and

that "all benefits funded by the Plan will be paid out of the

assets of the Trust." The document further provided that "[I]n

its discretion, the Trust may purchase stop - loss insurance to

pay any claim s in excess of the amounts held in the Trust."

20. Clients were provided with a document titled

" DIRECTIVE TO ESTABLI SH A HEALTH AND WELF ARE BENEFIT PLAN UND ER

ERISA " wherein each client provided information, including the

number of total and participatin g employees and the plan

coverage sought. The document required the signature of a

client's representative and authorized MBI to establish a

"Health and Welfare Benefit Plan under ERISA."

21. Clients were provided with a document titled " HEALTH

AND WELFA RE PLAN - PLAN DOCUM ENT, " a lengthy document that set

forth the specific health care benefits provided to each client

under the selected benefit plan.

22. Each client was provided with a document titled

" HEALTH AND WELFARE P LAN SUMMARY " which essentia lly summarized

the plan being provided to the client, identified as the "Plan

Sponsor." The document identified MBI as the plan administrator

and the claim administrator.

23. The document provided as follows:

The Plan conforms to and is governed by the

E mployee Retirement Income Security Act of

1974, as amended ("ERISA"). The Plan is not

a policy of insurance. Neither the Plan

Sponsor, nor any trust established to fund

the benefits hereunder, is an insurance

company.

24. At various times, clients wer e provided with a

document titled " WELFARE BENEFIT PLAN TRUST. " In some

instances, the document purported to be a trust agreement

between the client and First Union, the designated custodian.

In other instances, the "WELFARE BENEFIT PLAN TRUST" document

did not identify the name of the trust custodian. In all cases,

the document identified the plan administrator as MBI, and

provided that MBI could "elect such financial institution as it

deems appropriate to serve as the custodian with respect to the

Trus t. . . ." The document further provided that the plan

administrator could "remove the Custodian at any time upon sixty

(60) days notice in writing to the Custodian . . ." and that the

custodian could resign with like notice to the plan

administrator. In the agreements where First Union was

designated the custodian, removal of the custodian required the

client to designate a replacement custodian. In the agreements

where no designation was made, the document provided that the

plan administrator would desi gnate the replacement custodian.

25. Once the documents were executed and returned to MBI,

MBI directly invoiced clients for payment of funds, and clients

paid such funds directly to MBI. There is no evidence that

Respondent was involved in handling fu nds transferred from the

client to MBI. There is no evidence that Respondent received

any information related to any trust accounts that may or may

not have been established under the agreement between the

client, a trust custodian, and MBI. There is no evidence that

Respondent received cancelled checks or copies of account

statements.

26. There is no credible evidence that custodial accounts

were established by MBI or that contributions submitted to MBI

by employers were deposited into custodial accou nts. Some

checks from multiple employers appear to have been deposited

into a single account at First Union. Some checks were

deposited into the PNC Bank. There is no credible evidence as

to the distribution of the deposited funds.

27. Although unde r the terms of the trust agreement not

all clients were required to approve substitute custodians,

there is no evidence that any client required to approve a

substitute custodian was ever asked to do so. There is no

evidence that the plan administrator co mplied with the trust

document language related to removal of the custodian.

28. At some point in 2002, questions arose about the

source of funds available to pay claims in excess of employer

contributions. The information initially provided to clients by

Respondent was that stop - loss insurance was in place to cover

such claims. However, according to a letter on MBI letterhead

dated February 25, 2002, to Thomas E. Mestmaker and Associates,

"MBI is responsible for any amounts due under adjudicated claim s

in excess of the contribution amount of its client, assuming

that all payments, obligations and bills submitted to the client

are timely paid, and the Plan is in good standing with MBI."

The letter further states, "MBI is responsible for any excess,

sub ject to the terms and conditions of the initial Directive

together with the Plan Trust Agreement, as applicable."

29. There were apparently concerns regarding the soundness

of MBI and their ability to handle losses. In March of 2002,

information availabl e to Respondent indicated that the stop - loss

coverage MBI had supposedly obtained would not be renewed.

Respondent began to prepare to move his MBI clients to other

benefit plans.

30. A letter to Respondent dated April 11, 2002, on MBI

letterhead and purportedly from the Controller of MBI states in

part as follows:

Meridian Benefit Inc. has acted as an

administrator for ERISA - based health plans

that it has developed for years. Meridian

Benefit Inc. has credibly sufficient

contributions and reserves n ecessary to pay

claims for these plans. Moreover, the

finances of Meridian Benefit Inc. have been

and continue to be sound.

Since Meridian Benefit Inc. is a privately

held company, we cannot share our detailed

financial data, however through management

an d underwriting Meridian Benefit Inc. has

been able to control claims and group

losses.

31. MBI then advised Respondent and others that the stop -

loss insurance was in place via a statement dated June 19, 2002,

indicating that "reinsurance" was being pro vided by American

National Life Insurance Company effective July 1, 2002.

32. As MBI or affiliated entities issued statements

regarding the soundness of the MBI plan and the availability of

stop - loss coverage, Respondent made the information, including

the aforementioned letters, available to clients.

33. The parties have stipulated that American National

Life Insurance Company did not provide "reinsurance" or

stop - loss insurance relative to any health and welfare benefit

plan with MBI as plan admi nistrator.

34. There is no credible evidence that any stop - loss

insurance was actually ever obtained by MBI on behalf of

employers.

35. In early 2003, MBI informed employers that the

employers would be responsible for payment of claims in excess

of c ontributions. By letter dated February 19, 2003, MBI issued

a letter to clients which indicated that if a client's claims

exceeded contributions, MBI would "advance funds" against the

employer's account and then would "approach the employer for

repayment of the deficit." The letter further provided that if

MBI and the employer "cannot successfully negotiate repayment

for the advance, MBI will unfortunately, be forced to stop

payment on any existing or future claims."

36. The February 19 letter clearly contradicted earlier

affirmations that stop - loss insurance was in place to cover

claims in excess of contributions.

37. The evidence fails to establish from where funds

"advanced" by MBI would have come. Respondent testified that he

did not know the so urce of the funds.

38. The evidence establishes that Respondent made no

independent effort to review MBI or the MBI plan being offered

to clients, to determine whether or not stop - loss insurance was

actually in place by contacting the insurer identified by MBI as

the stop - loss insurer, or to determine whether client funds were

being deposited into custodial accounts.

39. By letters dated February 20, 2003 (the day after

notifying employers that they would be required to reimburse MBI

for funds "advanc ed"), MBI advised employers of account deficits

and directed the employers to pay the deficits.

40. On or about May 15, 2003, MBI filed for Chapter 7

bankruptcy in the United States District Court in New Jersey.

41. MBI had an agreement with Healthca re Sarasota, a local

employer organization with an existing network of healthcare

providers (a preferred provider organization or "PPO"), to

permit MBI plan participants to utilize the Healthcare Sarasota

provider network.

42. Client benefit claims were handled between the PPO and

MBI. On occasion, representatives of HRH of Southwest Florida,

Inc., including Petitioner, became involved in resolving claim

issues at the request of clients, but Petitioner had no direct

involvement in paying claims.

43. Prior to and by the time MBI filed for bankruptcy,

there were numerous unpaid health benefits claims incurred by

employees of the employers who became involved with the MBI plan

through Respondent. Some employers have paid the claims and are

seeking resti tution from various parties. Other claims remain

unpaid. Although the evidence fails to clearly establish the

amount of the remaining unpaid claims, it is clear that at the

time of the hearing, thousands of dollars in health benefit

claims remain unpaid by any responsible party. Some employees

of businesses that participated in the MBI plan have had unpaid

claims forwarded by health providers to debt collection

agencies.

44. Petitioner has disseminated information to the public

and to licensed agents about potential difficulties that may

result from participating in health benefit plans that are not

subject to state regulation. There is no evidence that licensed

agents are required to read the information disseminated by

Petitioner, and there is no e vidence that Respondent did so.

Child Development Center

45. In mid - 2001, Respondent met with a representative of

the Child Development Center (CDC) to present various options

for health benefit coverage for CDC employees. CDC chose to

provide health b enefits through the MBI plan.

46. A CDC representative executed the document titled

"DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER

ERISA." The document was dated June 21, 2001, with an effective

date of July 1, 2001, and signed by Responde nt, identified as

the "Benefit Consultant."

47. A CDC representative executed the document titled

"WELFARE BENEFIT PLAN TRUST." The document provided an

effective date of July 1, 2001, but was executed on

September 19, 2001. The document stated that th e trust

custodian would be First Union. Nothing on the document

indicated that First Union had agreed to be the custodian.

48. Included with the information provided by Respondent

to CDC was the letter dated February 25, 2002, from MBI to

Thomas Mestma ker and Associates stating that MBI was responsible

for amounts due under adjudicated claims in excess of the

employer's contribution.

49. By July 2002, there were no apparent problems with

coverage or claims paid, and CDC renewed its participation in

t he MBI plan.

50. By January 2003, problems with CDC claims payments

were occurring and CDC representatives requested from Respondent

an accounting of claims paid. The accounting was not

immediately made available, although at some subsequent and

uniden tified time CDC received the information.

51. In March 2003, an employee of CDC located information

on the internet indicating that the States of Colorado and North

Carolina had issued "cease and desist" orders against MBI. The

CDC representative forwa rded the information to "Tyla Heatherly"

an employee at HRH of Southwest Florida, Inc., and asked that it

be provided to Respondent.

52. Respondent thereafter advised the CDC representative

that the problems in other states were related to the type of

plans that were being offered in those states, and that the CDC

plan was an ERISA - qualified SET.

53. By letter from MBI to CDC dated May 5, 2003, MBI

advised CDC that MBI was "experiencing severe financial problems

and is in the process of winding - down i ts business." The letter

advised CDC to "make immediate arrangements" to obtain either a

different third party administrator or to obtain other health

benefit coverage.

54. Beginning June 20, 2001, CDC paid funds by check to

MBI pursuant to the invoice s that MBI delivered directly to CDC.

Although the CDC checks to MBI were deposited, the evidence

fails to establish that the CDC funds were deposited into a

custodial trust account for the benefit of CDC.

Family Counseling Center of Sarasota, Inc.

55. At some point in 2001, Respondent met with a

representative of the Family Counseling Center of Sarasota, Inc.

(FCCS), to present various options for health benefit coverage

for FCCS employees. FCCS chose to provide health benefits

through the MBI plan.

56. An FCCS representative executed the document titled

"DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER

ERISA" dated October 31, 2001, and signed by Respondent, as the

"Benefit Consultant."

57. By his signature, an FCCS representative ackno wledged

receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document

indicating an effective date of December 1, 2001, which was also

signed by Respondent.

58. An FCCS representative executed the document titled

"WELFARE BENEFIT PLAN TRUST." The document has an effective

date of December 1, 2001, but the date of execution was

January 3, 2002. The document stated that the trust custodian

would be First Union. Nothing on the document indicated that

First Union had agreed to be the custodian.

59. Include d with the information provided by Respondent

to FCCS was the letter dated February 25, 2002, from MBI to

Thomas Mestmaker and Associates stating that MBI was responsible

for amounts due under adjudicated claims in excess of the

employer's contribution. R espondent provided to FCCS the MBI

letter to Respondent dated April 11, 2002, advising that MBI had

sufficient contributions and reserves necessary to pay claims

and was in sound condition. Respondent provided to FCCS the

document on MBI letterhead dated June 19, 2002, stating that

American National Life Insurance Company was providing

"reinsurance."

60. Towards the end of the first year of the MBI plan,

FCCS learned that renewal of the MBI plan would involve a

substantial cost increase. FCCS initial ly intended to change

benefit plans due to the cost increase, but Respondent

apparently negotiated with MBI to reduce the price increase to

40 percent over the initial year cost. FCCS renewed the MBI

plan because even with the rate increase the MBI plan w as still

less expensive than other available benefit plans.

61. FCCS received the MBI letter dated February 19, 2003,

stating that if a client's claims exceeded contributions, MBI

would "advance funds" against the client's account and then

would "approa ch the employer for repayment of the deficit." The

evidence fails to establish whether the letter was provided to

FCCS by Respondent or by MBI.

62. By letter from MBI to FCCS dated February 20, 2003,

MBI advised FCCS that the client needed to submit "a o ne - time

payment of $163,670.75 to bring your account into a positive

position or an increase in your contribution of 200% effective

5/1/2003."

63. The letters of February 19 and 20, 2003, contradicted

the assurances by Respondent to FCCS that stop - loss co verage was

in place to address claims in excess of employer contributions.

FCCS contacted Respondent to advise him of the situation.

64. By letter from FCCS to the chief executive officer of

HRH of Southwest Florida, Inc., dated April 25, 2003, FCCS

ad vised that MBI was not paying claims and that some of the

staff were having accounts turned over to collection agencies

for non - payment.

65. By letter from MBI to FCCS dated May 5, 2003, MBI

advised FCCS that MBI was "experiencing severe financial

probl ems and is in the process of winding - down its business."

The letter advised FCCS to "make immediate arrangements" to

obtain either a different third party administrator or to obtain

other health benefit coverage.

66. FCCS paid funds by check to MBI pur suant to the

invoices that MBI delivered directly to FCCS. Although the FCCS

checks to MBI were deposited, the evidence fails to establish

that the FCCS funds were deposited into a custodial account for

the benefit of FCCS.

Sarasota Land Services

67. I n the beginning of 2002, Respondent met with a

representative of Sarasota Land Services (SLS) to present

various options for health benefit coverage for SLS employees.

SLS chose to provide health benefits though the MBI plan.

68. An SLS representative e xecuted the document titled

"DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER

ERISA." The document was executed on February 11, 2002, with an

effective date of March 1, 2002, and was signed by Respondent,

as the "Benefit Consultant."

69. By h er signature, the SLS representative acknowledged

receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document

indicating an effective date of March 1, 2002, which was also

signed by Respondent.

70. An SLS representative executed the document titled

"WELFA RE BENEFIT PLAN TRUST." The document indicates the

agreement was executed on February 11, 2002, and was effective

as of March 1, 2002, but the SLS representative's signature was

dated September 10, 2002. The document did not identify the

name of the trus t custodian, but provided that MBI could "elect

such financial institution as it deems appropriate to serve as

the custodian with respect to the Trust. . . ."

71. SLS received the disclosure document from "Hilb, Rogal

and Hamilton of Sarasota" titled "D ISCLOSURE AND ACKNOWLEDGEMENT

REGARDING THE SARASOTA LAND SERVICES BENEFIT PLAN" dated

March 1, 2002. The SLS representative's signature on the

disclosure form is dated September 10, 2002.

72. By letter from MBI to SLS dated February 20, 2003, MBI

advi sed SLS that the claims history required an increase in

SLS's contribution of 100 percent effective March 1, 2003. Upon

receipt of the letter, the SLS representative contacted

Respondent and discussed the situation. The discussion included

references to the stop - loss insurance coverage that the SLS

representative expected to cover claims in excess of

contributions.

73. SLS did not renew its participation in the MBI plan.

74. Beginning February 12, 2002, SLS paid funds by check

to MBI pursuant to the i nvoices that MBI delivered directly to

SLS. Although the SLS checks to MBI were deposited, the

evidence fails to establish that the SLS funds were deposited

into a custodial account for the benefit of SLS.

75. SLS also paid an administrative fee direct ly to HRH of

Southwest Florida, Inc. The evidence does not establish what,

if any, of the administrative fee was paid to Respondent.

Center For Sight

76. In the fall of 2001, the Center For Sight (CFS)

entered into an agreement with MBI to obtain healt h benefit

services for CFS employees. CFS was already participating in

the MBI plan in March 2002, at the time the CFS representative

who testified at the hearing became employed at CFS.

77. A CFS representative executed on July 17, 2001, the

document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE

BENEFIT PLAN UNDER ERISA." The document indicated an effective

date of August 1, 2001, and was signed by Respondent, as the

"Benefit Consultant."

78. By their signatures, CFS representatives acknowledged

receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document

indicating an effective date of August 1, 2001.

79. CFS representatives executed the document titled

"WELFARE BENEFIT PLAN TRUST" with an effective date of August 1,

2001, although the document w as executed on September 1, 2001.

The document indicated that the trust custodian would be First

Union. Nothing on the document indicated that First Union had

agreed to be the custodian.

80. The CFS representative who testified at the hearing

was the chief operating officer for CFS. He reviewed the MBI

plan upon beginning his employment. He testified that claims

payment problems began "instantaneously," but stated that

Respondent was helpful in getting claims processed and paid. He

testified that he had no problems with Respondent.

81. The CFS representative had concerns about the

provision of stop - loss insurance and asked Respondent to obtain

a copy of a policy, but the policy was never provided to CFS.

However, prior to renewal in July 2002, Re spondent provided to

CFS the MBI document dated June 19, 2002, stating that American

National Life Insurance Company was providing "reinsurance."

82. At the end of the first year, Respondent presented

various health benefit options to CFS, but despite the claims

payment problems, CFS renewed the MBI plan in July 2002 because

the MBI plan was substantially less expensive than other benefit

plans.

83. At some subsequent time, Sarasota Memorial Hospital

and other local providers began to refuse services to CFS

employees covered under the MBI plan, apparently because claims

were not being paid.

84. CFS received the MBI letter dated February 19, 2003,

stating that if a client's claims exceeded contributions, MBI

would "advance funds" against the client' s account and then

would "approach the employer for repayment of the deficit."

85. By letter from MBI to CFS dated February 20, 2003, MBI

advised FCCS that the client needed to submit "a one - time

payment of $5,471.66 to bring your account into a positiv e

position or an increase in your contribution of 15% effective

4/1/2003."

86. By letter dated April 18, 2003, to MBI and copied to

Respondent, CFS set forth a list of concerns related to claims

which were unpaid or had been denied and to "high administra tive

cost" and asked that there be a resolution to the problems.

87. Eventually CFS paid approximately $300,000 in pending

employee claims using CFS funds and sought health benefits from

another source.

88. Beginning July 19, 2001, CFS paid funds by check to

MBI pursuant to the invoices that MBI delivered directly to CFS.

Although CFS checks to MBI were deposited, the evidence fails to

establish that the CFS funds were deposited into a custodial

account for the benefit of CFS.

Michael's Gourmet Gr oup

89. Prior to 2002, Respondent had an existing relationship

with Michael's Gourmet Group (MGG) and had previously assisted

MGG in obtaining health benefits from various sources. In March

of 2002, Respondent met with a representative of MGG to present

various options for health benefit coverage for MGG employees.

MGG chose to provide health benefits through the MBI plan.

90. As he did in presenting available health benefit

options to clients, Respondent informed MGG that the MBI plan

was a partially s elf - funded plan and that stop - loss insurance

would cover claims in excess of the MGG contributions.

91. An MGG representative executed the document titled

"DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER

ERISA." The document was executed o n February 27, 2002, with an

effective date of March 1, 2002, and was signed by Respondent,

as the "Benefit Consultant."

92. Although the evidence includes a "HEALTH AND WELFARE

PLAN SUMMARY" document applicable to MGG and indicating an

effective date o f March 1, 2002, there are no signatures on the

document.

93. An MGG representative executed the document titled

"WELFARE BENEFIT PLAN TRUST" with an effective date of March 1,

2002, although the document was executed July 24, 2002. The

document did no t identify the name of the trust custodian, but

provided that MBI may "elect such financial institution as it

deems appropriate to serve as the custodian with respect to the

Trust. . . ."

94. MGG received a document from "Hilb, Rogal and Hamilton

of Sar asota" titled "DISCLOSURE AND ACKNOWLEDGEMENT REGARDING

THE SARASOTA LAND SERVICES BENEFIT PLAN" dated March 15, 2002.

The MGG representative's signature on the disclosure form is

dated July 24, 2002.

95. MGG received the MBI letter dated February 19, 2003,

which stated that if a client's claims exceeded contributions,

MBI would "advance funds" against the client's account and then

would "approach the employer for repayment of the deficit."

96. By letter from MBI to MGG dated February 20, 2003, MBI

advised MGG that the claims history required an increase in

MGG's contribution of 300 percent effective March 1, 2003.

97. Subsequent to receipt of the two letters, MGG

discontinued its participation in the MBI plan.

98. Beginning February 27, 2002, MGG paid funds by check

to MBI pursuant to the invoices that MBI delivered directly to

MGG. Although MGG's checks to MBI were deposited, the evidence

fails to establish that MGG's funds were deposited into a

custodial account for the benefit of MGG.

99. MGG also paid an administrative fee directly to HRH of

Southwest Florida, Inc. The evidence does not establish what,

if any, of the administrative fee was paid to Respondent.

Cheddar's Casual Cafe

100. In September 2001, Respondent met with a

represe ntative of a restaurant chain known as Cheddar's Casual

Cafe (Cheddar's). Respondent presented various options for

health benefits to Cheddar's, and the Cheddar's representative

chose to provide health benefits through the MBI plan.

101. A Cheddar's re presentative executed the document

titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN

UNDER ERISA" dated December 18, 2001, and signed by Respondent,

as the "Benefit Consultant."

102. By his signature, the Cheddar's representative

acknowledge d receipt of the "HEALTH AND WELFARE PLAN SUMMARY"

document indicating an effective date of January 1, 2002.

103. By his signature, the Cheddar's representative on

January 14, 2002, executed the document titled "WELFARE BENEFIT

PLAN TRUST" with an effec tive date of January 1, 2002. The

document indicated that the trust custodian would be First

Union. Nothing on the document indicated that First Union had

agreed to be the custodian.

104. Beginning February 5, 2002, Cheddar's paid funds by

check to MB I pursuant to the invoices that MBI delivered

directly to Cheddar's. Although Cheddar's checks to MBI were

deposited, the evidence fails to establish that Cheddar's funds

were deposited into a custodial account for the benefit of

Cheddar's.

105. Chedda r's also paid an administrative fee directly to

HRH of Southwest Florida, Inc. The evidence does not establish

what, if any, of the administrative fee was paid to Respondent.

106. Cheddar's representative inquired as to the stability

of MBI and was adv ised by Respondent that MBI was stable. The

Cheddar's representative relied on Respondent's representation

when the Cheddar's health benefit plan came up for renewal

towards the end of 2002. Although Respondent presented health

benefit plans from several companies, Cheddar's renewed the MBI

plan, even though some employees had experienced late claims

payments.

107. By claim denial dated February 28, 2003, MBI denied

the hospital claim for a Cheddar's employee because the claim

was over 120 days old, bu t there is no evidence that Respondent

was advised of the denied claim.

108. By letter dated April 29, 2003, to MBI, Cheddar's

cancelled coverage as of April 1, 2003. The letter states that

"there are a substantial number of unpaid claims from calendar

years 2002 and 2003" and asserts that MBI has been unresponsive

to complaints about the problems.

109. A copy of the April 29, 2003, letter was sent to

Respondent with a cover letter expressing dissatisfaction with

the MBI plan, with the MBI operation, and with Respondent's

representation of MBI.

CONCLUSIONS OF LAW

110. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2003). 1

111. The Divisio n has jurisdiction over the determination

of whether the MBI plan met the requirements for ERISA -

qualification. The Board of Trustees of Diversified Industrial

Group v. Tom Gallagher , Case No. CV 91 - 0641SVW(Ex), U.S.

District Court, Central District of Ca lifornia, April 22, 1991.

112. Petitioner has the burden of establishing the

allegations of the Administrative Complaint by clear and

convincing evidence. Ferris v. Turlington , 510 So. 2d 292 (Fla.

1987). Department of Banking and Finance v. Osborne S tern and

Company , 670 So. 2d 932, 935 (Fla. 1996). Clear and convincing

evidence is that which is credible, precise, explicit, and

lacking confusion as to the facts in issue. The evidence must

be of such weight that it produces in the mind of the trier o f

fact the firm belief of conviction, without hesitancy, as to the

truth of the allegations. Slomowitz v. Walker , 429 So. 2d 797,

800 (Fla. 4th DCA 1983).

113. Section 624.02, Florida Statutes, provides as follows:

"Insurance" defined. -- "Insurance" is a

contract whereby one undertakes to indemnify

another or pay or allow a specified amount

or a determinable benefit upon determinable

contingencies.

114. Section 624.03, Florida Statutes, provides as follows:

"Insurer" defined. -- "Insurer" includes every

person engaged as indemnitor, surety, or

contractor in the business of entering into

contracts of insurance or of annuity.

115. The plan of health benefits offered by Respondent to

the clients referenced herein meets the definition of insurance.

The evi dence in this case establishes that the insurance benefits

were provided to employees of clients participating in the MBI

plan, and that MBI, responsible for payment of benefit claims,

was acting as an insurer. MBI was not authorized to transact

insurance business in the State of Florida.

116. Respondent asserts that the MBI health benefit plan is

exempt from state regulation because the documents executed by

the employers created ERISA - qualified SET health benefit plans.

117. Respondent has the burden of establishing that the MBI

health benefit plan met ERISA requirements and that state

regulation of the plan is preempted. Department of Financial

Services v. Clifford Eugene Kiefer , DOAH Case No. 03 - 2041PL,

Recommended Order entered April 2, 2004, Fina l Order issued

April 28, 2004, stating at page 36 as follows:

Any intent by Respondent to rely upon the

doctrine of preemption, in the assertion

that the health plans purchased by

Respondent's customers from TRG were ERISA

plans, is a form of defense and t he burden

to prove facts necessary to establish that

defense resides with Respondent. The proof

necessary concerns questions of fact when

examining whether the subject plan is "an

employee welfare benefit plan" sponsored by

a single employer or union, rec ognized under

ERISA and preempted from state regulation.

See Metropolitan Life Insurance Co. v.

Taylor , 481 U.S. 58, 107 S. Ct. 1542, 95

L.Ed. 2d 55 (1987); and Kanne v. Connecticut

General Life Ins. Co. , 867 F.2d 489 (9th

Cir. 1988), cert. denied 492 U.S . 906, 109

S. Ct. 3216, 106 L.Ed. 2d 566 (1989). See

also Balino v. Department of Health and

Rehabilitative Services , 348 So. 2d 349

(Fla. 1st DCA 1977).

118. Respondent has failed to meet the burden. There is no

apparent disagreement that a validly c reated SET providing health

benefits to employees of a single employer, and funded solely

from the contributions from said employees and employer, could

constitute a legitimate ERISA plan.

119. Although the MBI documents provided by Respondent to

his cl ients stated that the plan was an ERISA - qualified SET, the

evidence fails to establish that the operation of the MBI plan

complied with the framework set forth in the documents. An

employer's decision to extend benefits does not constitute, in

and of itse lf, the establishment of an ERISA plan. Wells v.

General Motors Corp. , 881 F.2d 166 (5th Cir. 1989), cert.

denied , 495 U.S. 923 (1990). The existence of an ERISA plan is

a question of fact, to be answered in the light of all the

surrounding circumstances from the point of view of a reasonable

person. Kanne v. Connecticut General Life Ins. Co. , 867 F.2d

489 (9th Cir. 1988); Credit Managers Ass'n v. Kennesaw Life &

Accident Ins. Co . , 809 F.2d 617 (9th Cir. 1987); Donovan v.

Dillingham , 688 F.2d 1367 (11th Cir. 1982).

120. MBI's documents and Respondent's representations to

his clients provided that an employer's contributions would be

placed into custodial trust accounts used to fund the payment of

claims and that stop - loss insurance would be utilized to c over

claims in excess of contributions. The MBI plan was clearly not

operated in accordance with the documents provided to employers

by Respondent. In reality, employer contributions were not

segregated into trust accounts, claims were paid from commingl ed

funds contributed by various employers, and MBI obtained no stop -

loss insurance and was responsible for paying the claims.

121. There is no credible evidence that MBI created

separate custodial trust accounts on behalf of the individual

employers or t hat employer funds were properly deposited into

such accounts. Federal law requires that the employer

contributions to an ERISA - qualified health benefit plan must be

held in trust. See 29 U.S.C. § 1103(a).

122. The evidence establishes that employers often remitted

contributions to MBI, and benefit plans became effective, before

employers executed trust documents. Common sense would suggest

that prior to the execution of the trust agreement documents, MBI

would have had no authorization from clients t o establish trust

accounts. At least some of the contributions from various

employers were deposited into a common account at First Union,

and there is no credible evidence that any individual trust

accounts existed from which to pay claims.

123. As ea rly as February of 2002, MBI's managing general

agent acknowledged that MBI was "responsible for any amounts due

under adjudicated claims in excess of the contribution amount"

assuming a client was current in making its contribution.

Although MBI could ha ve obtained stop - loss insurance to cover

claims in excess of contributions, there is no evidence that it

did so.

124. The evidence suggests that the commingling of funds

continued after clients executed trust documents. In the letter

of February 19, 2003, MBI advised employers that MBI would

advance funds to cover claims in excess of contributions.

Assuming an employer had insufficient funds in a segregated SET

account to pay excess claims, and absent any information related

to MBI's assets, it is re asonable to presume that the funds MBI

proposed to advance in the letter would have come from pooled

funds.

125. Because the evidence fails to establish that the MBI

plan met applicable ERISA requirements, it is unnecessary to

determine whether, as asse rted by Respondent, federal law would

have preempted state - regulation of the MBI plan in Florida.

126. The Second Amended Administrative Complaint alleges

that Respondent has violated Subsections 626.611(8), 626.621(2)

and (6), and 626.901(1), Florida St atutes.

127. Subsection 626.611(8), Florida Statutes, provides as

follows:

Grounds for compulsory refusal, suspension,

or revocation of agent's, title agency's,

adjuster's, customer representative's,

service representative's, or managing

general agent's l icense or appointment. -- 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:

* * *

(8 ) Demonstrated lack of reasonably

adequate knowledge and technical competence

to engage in the transactions authorized by

the license or appointment.

128. The evidence establishes that Respondent has violated

Subsection 626.611(8), Florida Statutes. T he MBI plan was

clearly not operated in accordance with the plan documents. As

stated earlier, trust agreements were often not executed until

after employers were already making contributions to MBI. No

trust accounts could have existed prior to executio n of the trust

agreements, and there is no credible evidence that any trust

accounts were created and funded. Respondent delivered plan

documents to employers and signed some of them. It is reasonable

to assume that Respondent read and understood the doc uments he

presented to his clients. In representing the MBI plan to his

clients, Respondent demonstrated a lack of reasonably adequate

knowledge and technical competence to engage in the transactions

at issue in this case.

129. Subsections 626.621(2) a nd (6), Florida Statutes,

provide as follows:

Grounds for discretionary refusal,

suspension, or revocation of agent's,

adjuster's, customer representative's,

service representative's, or managing

general agent's license or appointment. -- The

department or o ffice may, in its discretion,

deny an application for, suspend, revoke, or

refuse to renew or continue the license or

appointment of any applicant, agent,

adjuster, customer representative, service

representative, or managing general agent,

and it may susp end 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. 626.621:

* * *

(2) Violation of any provision of this code

or of any other law applicable to the

business of insurance in the course of

dealing under the license or appointment.

* * *

(6) In the conduct of business under the

license or appointment, engaging in unfair

methods of competition or in unfair or

deceptive acts or practices, as prohibited

under part IX of this chapter, or having

otherwise shown himself or herself to be a

source of injury or loss to the public or

detrimental to the public interest.

130. Other than as specifically addressed herein, there are

no violations of the insurance code or other applicable law;

accordingly, there is no violation of Subsection 626.621(2),

Florida S tatutes.

131. The evidence establishes that Respondent has violated

Subsection 626.621(6), Florida Statutes, as "a source of injury

or loss to the public or detrimental to the public interest."

132. A substantial amount of unpaid health benefit claims

remained at the time of the hearing. Such claims were to have

been paid by employer contributions deposited into trust

accounts on behalf of employees. There is no credible evidence

that such accounts were created. Stop - loss insurance was to

have been a vailable to cover claims in excess of contributions.

There is no credible evidence that MBI ever obtained such stop -

loss insurance.

133. There is no evidence that Respondent made any attempts

to verify the existence of trust accounts. There is no credib le

evidence that Respondent made any attempts beyond telephone calls

to MBI to verify the existence of stop - loss insurance on behalf

of his clients. Respondent made no serious effort to obtain any

information related to the operation of the MBI plan beyon d the

materials provided to him by MBI.

134. Subsection 626.901(1), Florida Statutes, provides as

follows:

626.901 Representing or aiding unauthorized

insurer prohibited. --

(1) No person shall, from offices or by

personnel or facilities located in thi s

state, or in any other state or country,

directly or indirectly act as agent for, or

otherwise represent or aid on behalf of

another, any insurer not then authorized to

transact such insurance in this state in:

(a) The solicitation, negotiation,

procur ement, or effectuation of insurance or

annuity contracts, or renewals thereof;

(b) The dissemination of information as to

coverage or rates;

(c) The forwarding of applications;

(d) The delivery of policies or contracts;

(e) The inspection of risks;

(f) The fixing of rates;

(g) The investigation or adjustment of

claims or losses; or

(h) The collection or forwarding of

premiums;

or in any other manner represent or assist

such an insurer in the transaction of

insurance with respect to subjects of

insurance resident, located, or to be

performed in this state. . . .

135. MBI had no authorization to transact insurance in the

State of Florida. By representing the MBI plan to clients in

Florida, Respondent acted in violation of Subsection 626.901( 1),

Florida Statutes.

136. Respondent asserts that Subsection 626.901(1), Florida

Statutes, requires Petitioner to establish that the offending

agent had or should have had knowledge that the unauthorized

entity was acting improperly. Respondent assert s that according

to documentation and representations by MBI as to the product

being marketed, the MBI plan was an ERISA - qualified SET

pre - empted from regulation by Petitioner. Respondent testified

that he had no knowledge of any problems with MBI's oper ation and

had no reason to believe that the representations were incorrect

or untrue.

137. Subsection 626.901(1), Florida Statutes, does not

require evidence of an offender's knowledge. Had the Legislature

intended to impose such a limitation on prose cution of a licensee

representing an unauthorized insurer, it could have done so. The

Legislature did as much in Subsection 626.901(2), Florida

Statutes, which provides civil liability for an agent who "knew

or reasonably should have known" that an insura nce contract was

placed with an unauthorized insurer. Subsection 626.901(1),

Florida Statutes, contains an unqualified prohibition against

representing an unauthorized insurer. MBI was an unauthorized

insurer. Respondent has failed to establish that the MBI plan

was exempt from regulation by Petitioner.

138. Florida Administrative Code Chapter 69B - 231 sets forth

penalty guidelines relevant to the statutory violations alleged

in the Second Amended Administrative Complaint. Florida

Administrative Code Rule 69B - 231.080 provides a penalty of a

six - month suspension for a violation of Subsection 626.611(8),

Florida Statutes. Florida Administrative Code Rule 69B - 231.090

provides a penalty of a six - month suspension for a violation of

Subsection 626.621(6), Florida Statutes. Florida Administrative

Code Rule 69B - 231.110 provides a penalty of a six - month

suspension for a violation of Subsection 626.901(1), Florida

Statutes.

139. Florida Administrative Code Rule 69B - 231.040 provides

as follows:

69B - 231.040 Calculating Penalty.

(1) Penalty Per Count.

(a) 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 complai nt

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 each

count is referred to as the "penalty per

count."

(b) The requirement for a single highest

stated penalty for each count in an

administrative complaint shall be applicable

regardless of the number or nature of the

violations established in a single count of

an a dministrative complaint.

(2) Total Penalty. Each penalty per count

shall be added together and the sum shall be

referred to as the "total penalty."

(3) Final Penalty. The final penalty which

will be imposed against a licensee under

these rules shall be the total penalty, as

adjusted to take into consideration any

aggravating or mitigating factors, provided

however the Department shall convert the

total penalty to an administrative fine and

probation in the absence of a violation of

Section 626.611, F.S. , if warranted upon the

Department's consideration of the factors

set forth in rule subsection 69B - 231.160(1),

F.A.C.

140. The maximum penalty per count in this case related to

the charged violations of Sections 626.611 and 626.621, Florida

Statutes, is a six - month suspension. The penalty for a violation

of Section 626.901, Florida Statutes, is an additional six - month

suspension. The combined suspension period is 12 months per

count. There are six counts to the Administrative Complaint.

The total pena lty is a suspension period of 78 months.

141. Determination of the final penalty requires

consideration of the total penalty as well as any aggravating or

mitigating factors. Florida Administrative Code Rule 69B - 231.160

provides in part as follows:

69B - 231.160 Aggravating/Mitigating Factors.

The Department shall consider the following

aggravating and mitigating factors and apply

them to the total penalty in reaching the

final penalty assessed against a licensee

under this rule chapter. After

considerat ion and application of these

factors, the Department shall, if warranted

by the Department's consideration of the

factors, either decrease or increase the

penalty to any penalty authorized by law.

(1) For penalties other than those assessed

under Rule 69B - 231.150, F.A.C.:

(a) Willfulness of licensee’s conduct;

(b) Degree of actual injury to victim;

(c) Degree of potential injury to victim;

(d) Age or capacity of victim;

(e) Timely restitution;

(f) Motivation of agent;

(g) Financial gain or loss to a gent;

(h) Cooperation with the Department;

(i) Vicarious or personal responsibility;

(j) Related criminal charge; disposition;

(k) Existence of secondary violations in

counts;

(l) Previous disciplinary orders or prior

warning by the Department; and

(m ) Other relevant factors.

142. In this case, there are no aggravating or mitigating

circumstances sufficient to warrant increasing or decreasing the

applicable penalty. There is no evidence that Respondent

intentionally participated in the marketing o f the MBI plan for

financial gain; in fact, Respondent testified without

contradiction, that commissions on the MBI plan were less than

other health benefit plans proposed to employers. Although

health claims remain unpaid, such claims payment is apparent ly

the subject of on - going litigation, and the degree of actual

injury to victims is unknown at this time. There is no evidence

as to previous disciplinary action against Respondent. On the

other hand, there is no evidence that Respondent made any seriou s

effort to review the MBI product he offered to his clients. The

fact that Respondent was marketing a benefit plan approved by his

employer does not offer reason to mitigate the penalty.

143. Petitioner has the ability to access an administrative

fine in lieu of suspension under the provisions of

Subsection 626.681, Florida Statutes, or to place Respondent on

probation for a period not to exceed two years pursuant to

Section 626.691, Florida Statutes. Based on the evidence

presented during the hearing , the final penalty of a 78 - month

suspension is warranted.

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 suspending the insurance licensur e of Bradley W.

Beshore for a period of 78 months.

DONE AND ENTERED this 10th day of March, 2005, in

Tallahassee, Leon County, Florida.

S

WILLIAM F. QUATTLEBAUM

Administrative Law Judge

Division of Administrative Hearin gs

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 10th day of March, 2005.

ENDNOTE

1/ All citations are to Florida Statutes (2003) unless

otherwise indicated.

COPIES FURNISHED :

R. David Prescott, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 3 2302 - 0551

Philip M. Payne, Esquire

David J. Busch, Esquire

Department of Financial Services

624 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The C apitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Pete Dunbar, General Counsel

Department of Financial Services

The Capitol, 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 should be filed with the agency that

will issue the Final Order in this case.