04-003838PL Department Of Financial Services vs. Michael David Garrett Status: Closed Recommended Order on Tuesday, June 28, 2005.

Summary: Respondent violated the Insurance Code by accepting $23,920.77 for health insurance and not securing the insurance for the applicants.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 04 - 3838PL

)

MICHAEL DAVID GARRETT, )

)

Respondent. )

)

RECOMMENDED ORDER

P ursuant to notice, a final hearing was conducted on

April 28, 2005, in Sarasota, Florida, before Administrative Law

Judge Jeff B. Clark of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Joe Thompson, Esquire

Depart ment of Financial Services

200 East Gaines Street,

Tallahassee, Florida 32399

For Respondent: Michael David Garrett, pro se

Post Office Box 50234

Sarasota, Florida 3424 2

STATEMENT OF THE ISSUE S

Whether the licensure and eligibility for licensure as an

insurance agent in Florida held by Respondent Michael David

Garrett should be disciplined based on the allegations of the

Administrative Complaint filed against him and, if so, the

extent of such discipline.

PRELIMINARY STATEMENT

On September 17, 2004, Petitioner, Department of Financial

Services, filed an Administrative Complaint against Respondent,

Michael David Garrett, wherein it was alleged that Respondent

had violated the following s ections of the Florida Insurance

Code : 626.561(1) ; 626.611(7), (9), (10), and (13) ; 626.621(6) ;

626.9521 ; and 626.9541(1)(o)1 . , Florida Statutes (2001). 1

On October 4, 2004, Respondent returned an Election of

Proceedings wherein he indicated that he dispu ted factual

allegations of the Administrative Complaint and requested a

hearing before the Division of Administrative Hearings.

On October 27, 2004, Petitioner forwarded the matter to the

Division of Administrative Hearings. On the same day , an

Initial Or der was forwarded to the parties requesting mutually

convenient dates for the final hearing. On November 8, 2004,

the final hearing was scheduled for January 4, 2005, in

Sarasota, Florida. On December 16, 2004, Respondent's request

for a continuance was granted , and the case was rescheduled for

hearing on February 2 and 3, 2005.

On January 24, 2005, the case was again continued, this

time at Petitioner's request, and rescheduled for April 28 and

29, 2005.

The final hearing took place as rescheduled on Apr il 28,

2005. Petitioner presented one witness, Jack Winebrenner, and

offered nine exhibits which were received into evidence and

marked Petitioner's Exhibits 1 through 9. Included in these

exhibits are the depositi ons of Gregory Sendoya taken on

April 26 , 2005, and David W. Butterfield taken on April 25,

2005, which were considered. The deposition of Randy Davis,

taken on April 27, 2005, was also received and considered.

Respondent did not testify. Respondent filed two depositions

and proffered one exh ibit. Proposed recommended orders were to

be filed with the Clerk of the Division of Administrative

Hearings on or before June 3, 2005. Petitioner timely filed its

Proposed Recommended Order.

On June 5, 2005, Respondent submitted a facsimile

transmission which contained hospital records from the Cayuga

( N.Y. ) Medical Center indicating that on May 26, 2005, Michael

Garrett had been involved in an accident wherein he suffered a

head injury which did not require hospitalization. In addition,

the facsimile t ransmission contained a Request f or Order of

Summary Judgment i n Favor of Respondent, With Costs. Although

not timely filed, the Request f or Order of Summary Judgment i n

Favor of Respondent, With Costs will be considered as a motion

for summary recommende d order. As such, Respondent's motion is

denied.

FINDINGS OF FACT

1. Petitioner is the state agency that is responsible for

the regulation of insurance agent conduct and licensure.

2. Respondent is currently eligible for licensure as an

insurance agen t and is licensed in this state as a life,

variable annuity and health agent, life and health agent, and

health agent.

3. The Association for Independent Managers (AIM) is an

entity that was founded in 1979 for the purpose of providing

educational and oth er services or benefits to a membership base

that is comprised primarily of small businesses. In

February 2002, Jack Winebrenner, AIM’s chief executive officer,

desired to secure health insurance benefits for AIM’s members.

4. On or about February 7, 20 02, Winebrenner delivered

applications for health insurance and a cashier’s check in the

amount of $23,920.77 to Respondent.

5. The pertinent applications were intended to secure

health insurance with an entity known as Mutual Service Life

Insurance Compa ny and/or an entity known as United States Life

Insurance Company. Winebrenner agreed to gather the

applications on behalf of AIM and to forward them to Respondent

and Respondent’s company, known as Eastwich Re, Inc.

6. Respondent had represented that he w as a licensed

insurance agent.

7. The identifying number of the $23,920.77 cashier’s

check referred to hereinabove that was delivered to Respondent

is 381524555.

8. Respondent’s company, Eastwich Re, Inc., had a business

checking account at Flagship National Bank (Flagship) in

Sarasota, Florida.

9. On February 12, 2002 , the $23,920.77 check that

Winebrenner had delivered to Respondent was deposited into

Eastwich Re’s Flagship account.

10. Respondent was a signatory on Eastwich Re’s Flagship

accoun t.

11. Respondent did not secure health insurance from United

States Life Insurance Company or Mutual Service Life Insurance

Company or any other company for any of the AIM applicants.

12. Respondent did not forward any premium moneys in the

year 2002 to United States Life Insurance Company or Mutual

Service Life Insurance Company for the purpose of securing

health insurance for any of the AIM applicants.

13. Respondent returned only $10,000.00 from the amount

that Winebrenner gave to him in the $23,920. 77 cashier’s check.

Winebrenner testified that he requested several times of

Respondent that the full amount ($23,920.77) of the cashier’s

check be returned, once it was clear that no health insurance

had been secured for any AIM applicants. AIM engaged private

counsel to seek return of the entire $23,920.77 amount, but the

efforts of private counsel were not successful. No reason was

offered for Respondent only returning $10,000.00.

14. On September 19, 1991, Respondent’s licenses and

appointments as a n insurance agent were surrendered as part of a

Consent Order into which he entered with the Department of

Insurance.

15. In 1996, Respondent’s application for licensure as an

insurance agent was denied. Respondent’s application for

licensure was deni ed based on information “indicating that

Respondent transacted insurance in 1992, in violation of the

September 19, 1991 Consent Order which resulted in the surrender

of all licenses and appointments held by Respondent . . . [and]

had the same force and ef fect as a revocation.”

16. Respondent was again granted a license as an insurance

agent in 1997. Respondent was a licensed insurance agent in

Florida at the relevant times that are material to the

Administrative Complaint that is the basis for the in stant

action.

CONCLUSIONS OF LAW

17. The Division of Administrative Hearings has

jurisdiction over the subject matter of and the parties to this

proceeding pursuant to Section 120.569 and Subsection 120.57(1),

Florida Statutes (2004) .

18. Petitioner has the burden of proving by clear and

convincing evidence the allegations against Respondent. See

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

19. S ubs ection 626.561(1), Florida Statutes, provides as

follows:

(1) All premiums, return premiums, or

o ther funds belonging to insurers or others

received by an agent, customer

representative, solicitor, or adjuster in

transactions under his or her license are

trust funds received by the licensee in a

fiduciary capacity. An agent shall keep the

funds belon ging to each insurer for which he

or she is not appointed, other than a

surplus lines insurer, in a separate account

so as to allow the department to properly

audit such funds. The licensee in the

applicable regular course of business shall

account for an d pay the same to the insurer,

insured, or other person entitled thereto.

20. Section 626.611, Florida Statutes, provides, in

pertinent part, as follows:

The department shall deny an application

for, suspend, revoke, or refuse to renew or

continue the license or appointment of any

applicant, agent, title agency, solicitor,

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 perso n, if it finds that as to

the applicant, licensee, or appointee any

one or more of the following applicable

grounds exist:

* * *

(7) Demonstrated lack of fitness or

trustworthiness to engage in the business of

insurance.

* * *

(9) Fraudulent or dishonest practices in

the conduct of business under the license or

appointment.

(10) Misappropriation, conversion, or

unlawful withholding of moneys belonging 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 or willful violation

of any provision of this code.

21. Section 626.621, Florida St atutes, provides, in

pertinent part, as follows:

The department 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, servic e

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:

* * *

(6) In the conduct of business under the

license or appointment, engaging in unfair

methods of competition or in unfai r 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

detr imental to the public interest.

22. Section 626.9521, Florida Statute s, stat es:

(1) No person shall engage in this state

in any trade practice which is defined in

this part as, or determined pursuant to s.

626.951 or s. 626.9561 to be, an unfair

method of competition or an unfair or

deceptive act or practice invol ving the

business of insurance.

(2) Any person who violates any provision

of this part shall be subject to a fine in

an amount not greater than $2,500 for each

nonwillful violation and not greater than

$20,000 for each willful violation. Fines

under this subsection may no t exceed an

aggregate amount of $10,000 for all

nonwillful violations arising out of the

same action or an aggregate amount of

$100,000 for all willful violations arising

out of the same action. The fines

authorized by this subsection may be imposed

in ad dition to any other applicable p enalty.

23. Subsection 626.9541(1)(o)1., states:

(1) UNFAIR METHODS OF COMPETITION AND

UNFAIR OR DECEPTIVE ACTS. -- The following are

defined as unfair methods of competition and

unfair or deceptive acts or practices:

* * *

(o) Illegal dealings in premiums; excess

or reduced charges for insurance. --

1. Knowingly collecting any sum as a

premium or charge for insurance, which is

not then provided, or is not in due course

to be provided, subject to acceptanc e of the

risk by the insurer, by an insurance policy

issued by an ins urer as permitted by this

code.

24. Petitioner proved by clear and convincing evidence

that Respondent received $23,920.77 under the pretense of

providing health care insurance for a gr oup of individuals , that

Respondent did not attempt to secure the insurance , and that no

insurance was provided. When a refund was demanded, he

returned $10,000.00, and, apparently without explanation, kept

$13,920.77. Petitioner has demonstrated clearl y and

convincingly that Respondent willfully violated his fiduciary

responsibility, has demonstrated a lack of fitness and

trustworthiness, and fraudulent and dishonest behavior , and has

converted funds in the conduct of the insurance business. In so

doin g, Respondent willfully violated each of the above - mentioned

provisions of the Florida Insurance Code.

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

penalty guidelines pertinent to this proceeding. Florida

Administrative Code Rule 69B - 231 .160(1)(a) through ( l ) sets

forth aggravating and mitig ating factors to be considered.

26. Section 626.692, Florida Statutes, reads, as follows:

If any ground exists for the suspension,

revocation, or refusal of a license or

appointment, the department may, in addition

to any other penalty authorized under this

chapter, order the licensee to pay

restitution to any person who has been

deprived of money by the licensee's

misappropriation, conversion, or unlawful

withholding of moneys belonging to insurers,

insureds, beneficiaries, or others. In no

instance shall the amount of restitution

required to be paid under this section

exceed the amount of money misappropriated,

converted, or unlawfully withheld. Nothing

in this section limits or restricts a

person' s right to seek other remedies as

provided for by law.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that Petitioner enter a final order finding

Michael David Garrett guilty of violating the provisions o f

Section and Subsections 626.561(1) ; 626.611(7), (9), (10) , and

(13) ; 626.621(6) ; 626.9521 ; and 626.9541(1)(o)1 . , Florida

Statutes. As penalty for these violations, it is recommended

that Petitioner (1) revoke Respondent's insurance licenses and

eligibil ity for licensure; (2) that Respondent be required to

pay an administrative fine of $20,000.00; and (3) that

Respondent be required to pay restitution to AIM for the benefit

of the defrauded insurance applicants in the amount of

$13,920.77.

DONE AND E NTERED this 28th day of June , 2005 , in

Tallahassee, Leon County, Florida.

S

JEFF B. CLARK

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 28th day of June , 2005 .

ENDNOTE

1/ All references herein are to Florida Statutes (2001) unless

o therwise noted.

COPIES FURNISHED :

Joe Thompson, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

Michael David Garrett

Post Office Box 50234

Sarasota, Florida 34242

Carlos G. Muñiz, General Counsel

Departmen t of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

NOTICE OF RIGHT TO SUBM IT 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.