08-006017PL Department Of Financial Services vs. Madeline Hernandez Sykes Status: Closed Recommended Order on Thursday, April 30, 2009.

Summary: Respondent signed a bogus Certificate of Liability Insurance and back-dated an endorsement increasing auto insurance policy limits so that the coverage was effective on the date of an accident for same client. Recommend a 16-month suspension of license.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 08-6017PL

)

MADELINE HERNANDEZ SYKES, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case

on February 5, 2009, by video teleconference, with the parties

appearing in West Palm Beach, Florida, before Patricia M. Hart,

a duly-designated Administrative Law Judge of the Division of

Administrative Hearings, who presided in Tallahassee, Florida.

APPEARANCES

For Petitioner: David J. Busch, Esquire

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399-0333

For Respondent: Madeline Hernandez Sykes, pro se

ee Lane

Lake Clarke Shores, Florida 33406

STATEMENT OF THE ISSUE

Whether the Respondent committed the violations alleged in

the Administrative Complaint dated October 24, 2008, and, if so,

the penalty that should be imposed.

PRELIMINARY STATEMENT

In an Administrative Complaint dated October 24, 2008, the

Department of Financial Services ("Department") charged Madeline

Hernandez Sykes in Count I with violations of

Sections 626.611(7), (8), and (9) and 626.621(6), Florida

Statutes (2005), 1 based on the factual allegations that Ms. Sykes

prepared and signed a bogus Certificate of Liability Insurance

for a customer and in Count II with violations of

Section 626.611(5), (7), (8), and (9), Florida Statutes, based

on factual allegations that she back-dated an endorsement

increasing the liability limits on a commercial automobile

insurance policy for the same customer after the customer filed

a claim under the automobile insurance policy. Ms. Sykes timely

requested an administrative hearing, and the Department

transmitted the matter to the Division of Administrative

Hearings for assignment of an administrative law judge.

Pursuant to notice, the final hearing was held on February 5,

2009.

At the hearing, the Department presented the testimony of

Luz Sotomayor, Leo Canton, Thomas Matthew Burger, and David J.

Heiny; Petitioner's Exhibits 1 through 24 were offered and

received into evidence. Ms. Sykes testified in her in her own

behalf but did not offer any exhibits into evidence.

The two-volume transcript of the record was filed with the

Division of Administrative Hearings on February 16, 2009, and

the parties timely filed proposed findings of fact and

conclusions of law, which have been considered in the

preparation of this Recommended Order.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the

final hearing and on the entire record of this proceeding, the

following findings of fact are made:

1. The Department is the state agency responsible for

licensing, regulating, and imposing discipline on insurance

agents in Florida. See §§ 626.016(1); 626.601, Fla. Stat.

2. Ms. Sykes was licensed as a 2-14 "life including

variable annuity agent" and as a 2-20 general lines agent in

January 1998.

3. At the times pertinent to this proceeding, Ms. Sykes

worked at an insurance agency owned by David J. Heiny ("Heiny

Agency"). Deena Buell also worked for the Heiny Agency, and

Ms. Sykes, Ms. Buell, and Mr. Heiny were the only three

employees who were licensed as 2-20 general lines agents. The

remaining two employees of Heiny Agency during the times

pertinent to this proceeding held 4-40 licenses as customer

service representatives.

Certificate of Liability Insurance

4. The Heiny Agency marketed the insurance products of the

Allstate Insurance Company ("Allstate") and also the products of

other insurance companies at the times material to this

proceeding. In 2003, Mr. Heiny decided to expand his business

to include workers' compensation insurance. In July 2003, he

submitted an application to the Florida Workers' Compensation

Joint Underwriting Association ("FWCJUA"), the insurer of last

resort in Florida for workers' compensation insurance, for

authority to submit applications to it for workers' compensation

insurance.

5. Mr. Heiny was notified by the FWCJUA in a letter dated

July 29, 2003, that he was authorized to submit workers'

compensation insurance applications to the FWCJUA until July 29,

2004. Mr. Heiny did not have authority to bind coverage for the

FWCJUA, nor did he have authority to issue certificates of

liability insurance showing workers' compensation insurance

coverage through the FWCJUA. Under his agreement with the

FWCJUA, Mr. Heiny was required to meet with and explain the

workers' compensation insurance coverage to applicants and to

sign all of the application forms.

6. Mr. Heiny was unfamiliar with workers' compensation

insurance, and he intended for Ms. Buell to handle all of the

workers' compensation insurance business because she had

experience at another agency with workers' compensation

insurance.

7. Mr. Heiny's office submitted one application for

workers' compensation insurance, which was rejected, and he

decided that the FWCJUA required too much paperwork. Mr. Heiny

decided that he did not want to be involved with workers'

compensation insurance, and he did not apply to renew his

authorization to submit workers' compensation insurance

applications to the FWCJUA. As a result, his authority to

submit workers' compensation insurance applications to the

FWCJUA expired on July 29, 2004. Mr. Heiny informed both

Ms. Sykes and Ms. Buell that he did not intend to renew his

authorization with the FWCJUA.

8. Ms. Sykes is fluent in Spanish and was the only

licensed agent at the Heiny Agency who spoke Spanish at the

times pertinent to this proceeding. Because of her fluency in

Spanish, Ms. Sykes worked with the Heiny Agency's Spanish-

speaking customers, and most of her business consisted of

referrals from these customers.

9. One of Ms. Sykes' long-standing customers was Mayola

Campos, who owned Form Construction, Inc. ("Form Construction"),

with her husband, Fortino Campos, and Ms. Sykes handled the

commercial insurance for Form Construction. Mrs. Campos came

into the Heiny Agency's office regularly to pay premiums and to

discuss with Ms. Sykes's the corporation's various insurance

policies and changes in coverage. As a result, Ms. Sykes and

Mrs. Campos were well-acquainted, and Ms. Sykes received a

number of referrals from Mrs. Campos.

10. Form Construction was a trim and roofing company

working in the construction industry. According to Ms. Sykes,

Mrs. Campos came to her in or around July 2004 seeking workers'

compensation insurance. Ms. Sykes was not familiar with

workers' compensation insurance because she had never sold that

type of insurance, and it was not a product normally sold

through the Heiny Agency. Nonetheless, she completed an

application and submitted it to Ms. Buell for processing. At

the time, Ms. Sykes was aware that Mr. Heiny did not intend to

renew his authority to submit applications for workers'

compensation insurance to the FWCJUA and that the authority

would expire at the end of July 2004.

11. Ms. Sykes cannot recall hearing anything further about

Form Construction's July 2004 application for workers'

compensation insurance. She was going through a particularly

difficult divorce proceeding and was not working full-time at

the agency. In addition, Ms. Buell was working from her home so

she could care for her infant and young daughter, and Ms. Sykes

and Ms. Buell were not in regular communication.

12. Without confirming that the FWCJUA had issued workers'

compensation insurance to Form Construction, Ms. Sykes signed a

Certificate of Liability Insurance for Form Construction and

sent it to that company. The certificate, dated October 12,

2004, reflected that, in addition to general liability and

automobile insurance, Form Construction had workers'

compensation insurance through the FWCJUA that was effective

from October 16, 2004, to October 16, 2005. The certificate

holder was identified on the certificate as Gold Construction.

13. Ms. Sykes was aware of the purpose of a Certificate of

Liability Insurance since she routinely prepared and signed them

for insurance companies whose products were marketed by the

Heiny Agency.

14. A Certificate of Liability Insurance is used to

establish that a person or company has liability, automobile,

and/or workers' compensation insurance. Although some insurance

companies allow insurance agents to issue certificates of

liability insurance, only the FWCJUA issues certificates of

liability insurance for the workers' compensation insurance

coverage it provides. The only exception to this policy is when

an agent requests authority to issue a certificate of liability

insurance for a specific insured for a specific purpose. The

agent must request this authority in writing and specify the

purpose of the certificate; the FWCJUA must give approval in

writing to the agent before the agent can issue the certificate.

The agent must then send a copy of the certificate to the FWCJUA

for its records.

15. In the construction industry, a certificate of

liability insurance is presented to a contractor to establish

that a company working on a project as a subcontractor has

workers' compensation insurance. If a general contractor hires

a subcontractor that does not have workers' compensation

insurance, the general contractor is responsible for providing

workers' compensation insurance for the employees of the

uninsured subcontractor who worked on the contractor's job.

See § 440.10(a), (b), and (c), Florida Statutes.

16. Form Construction presented the Certificate of

Liability Insurance signed by Ms. Sykes to Gold Construction,

which was, at the times pertinent to this proceeding, a

qualified contractor business. Gold Construction hired general

contractors, which, in turn, hired subcontractors to work on its

projects. The subcontractors were paid by Gold Construction,

and it required all subcontractors to present a certificate of

liability insurance showing that they had general liability and

workers' compensation insurance at the time the subcontractors

were hired. Sometimes, the subcontractor would provide the

certificate directly to Gold Construction, and sometimes Gold

Construction would call the subcontractor's insurance agency and

request that the certificate be sent to it, directly.

17. The Certificate of Liability Insurance signed by

Ms. Sykes was presented to Gold Construction as evidence that

Form Construction had liability and workers' compensation

insurance, and, in November 2004, Gold Construction hired Form

Construction to do truss work on two construction projects.

Gold Construction was subsequently audited by its workers'

compensation insurance carrier, and the auditor determined that

that Form Construction did not, in fact, have workers'

compensation insurance and that the Certificate of Liability

Insurance was bogus. Gold Construction was, therefore, assessed

an additional $12,000.00 in workers' compensation insurance

premium to add coverage for Form Construction's employees.

18. The only records the FWCJUA has relating to Form

Construction is an application for workers' compensation

insurance for Fortino and Mayola Campos, d/b/a Form

Construction, which was signed by Mr. Heiny and dated August 27,

2003; a date stamp on the application shows that it was received

by the FWCJUA on September 17, 2003. In a letter dated

October 16, 2003, the FWCJUA notified Mr. Heiny that the

application for Form Construction was being returned with no

coverage having been bound, and there is nothing in the records

of the FWCJUA showing that it received another application for

workers' compensation insurance for Form Construction or that it

provided compensation insurance for Form Construction.

Automobile insurance endorsement

19. The Heiny Agency wrote commercial automobile insurance

through Allstate. Ms. Sykes joined the agency in 1995, after

having worked for another agency that marketed Allstate

insurance products. Ms. Sykes was recommended by one of

Allstate's district managers, and her familiarity with the

Allstate computer system and her fluency in Spanish were

considered by Mr. Heiny to be very important contributions to

his agency.

20. Form Construction had commercial automobile insurance

coverage with Allstate, which was written through the Heiny

Agency. Ms. Sykes was the only agent at the Heiny Agency that

worked with Mrs. Campos on insurance matters. Mrs. Campos

visited the Heiny Agency's office frequently to pay premiums and

to discuss the various insurance policies issued to Form

Construction. Mrs. Campos always spoke with Ms. Sykes when she

came into the office because none of the other agents or

employees of the agency spoke Spanish.

21. Form Construction's commercial automobile insurance

policy came up for renewal in April 2005. When Mrs. Campos came

in to pay the renewal premium, she and Ms. Sykes discussed

raising the policy's bodily injury liability limits from

$25,000.00 per person and $50,000 per occurrence. Mrs. Campos

told Ms. Sykes that she needed to speak to her husband before

she could raise the liability limits.

22. Ms. Sykes did not hear anything from Mrs. Campos until

June 2005, when Mrs. Campos came into the office and requested

that Ms. Sykes add another vehicle to Form Construction's

commercial automobile insurance policy. Ms. Sykes again advised

Mrs. Campos that she should consider raising the policy's bodily

injury liability coverage limits to at least $250,000.

Mrs. Campos asked Ms. Sykes how much such an increase in

coverage would cost, and Ms. Sykes went into the Allstate

computer system and partially prepared an endorsement to the

automobile insurance policy showing the increased limits so she

could get a quote for Mrs. Campos on the price. Ms. Sykes did

not submit the endorsement at that time, and it remained pending

in the Allstate computer system.

23. On or about July 12, 2005, Mrs. Campos visited the

Heiny Agency's office and reported to Ms. Sykes that Mr. Campos

had been involved in an automobile accident while driving a

vehicle owned by Form Construction and that he had hit a person

on a bicycle. Ms. Sykes advised her that her commercial

automobile bodily injury liability coverage limits were

$25,000.00 per person and $50,000.00 per occurrence. Ms. Sykes

also reminded Mrs. Campos that she had advised her several times

to raise the Form Construction's bodily injury liability limits.

24. Ms. Sykes immediately submitted the claim to the

Allstate claims Department, where it was assigned to Thomas

Burger.

25. On July 15, 2005, Mrs. Campos contacted Ms. Sykes and

told her to raise the bodily injury liability limits in Form

Construction's automobile insurance policy to $500,000.00 per

person and $500,000.00 per occurrence. Ms. Sykes went into the

Allstate computer system and prepared and submitted the

endorsement to Allstate.

26. The endorsement submitted by Ms. Sykes on July 15,

2005, carried an effective date of July 10, 2005, two days prior

to the date on which Mrs. Campos reported the claim relating to

Mr. Campos's automobile accident. A copy of the endorsement was

sent to Mrs. Campos on July 16, 2005, and Mrs. Campos visited

the Heiny Agency's office several days later with a check for

the additional premium attributable to the increase in bodily

injury liability limits.

27. The Allstate claims department was, at the times

pertinent to this proceeding, separate from the department

handling commercial automobile insurance policies. The

information available to Mr. Burger at the time the Form

Construction claim was submitted showed bodily injury liability

limits of $25,000.00 per person and $50,000.00 per occurrence on

the Form Construction policy. On July 29, 2005, Allstate

tendered a check to the person injured by Mr. Campos for the

policy limit of $25,000.00. This check was not cashed.

28. Mr. Burger did not learn until October 2005 that a

policy endorsement raising the bodily injury liability limits

had been submitted July 15, 2005, with an effective date of

July 10, 2005. According to Ms. Sykes, someone from Allstate

contacted her in August 2005 to question her about the

endorsement, and she explained that the retroactive increase in

bodily injury liability limits was a mistake and that the policy

limits were $25,000.00 per person and $50,000.00 per occurrence

at the time of the accident on July 12, 2005.

29. Mr. Burger interviewed Ms. Sykes and Mr. Heiny on

January 13, 2006, regarding the endorsement, and Ms. Sykes told

Mr. Burger that she could not recall why she would have

back-dated the endorsement. Ms. Sykes told Mr. Burger of the

problems she had experienced with endorsements to automobile

insurance policies being lost in the Allstate computer system.

30. On January 26, 2006, the attorney representing the

person injured by Mr. Campos wrote Allstate demanding disclosure

of the policy limits of Form Construction's automobile insurance

policy.

31. In a letter dated February 3, 2006, Allstate notified

Mr. Heiny and Ms. Sykes that it might seek indemnification from

the Heiny Agency because it attributed the back-dated increase

in bodily injury liability limits to agent error. Shortly

thereafter, Mr. Heiny asked if Allstate could change the limits

back to the original $25,000.00 per person and $50,000.00 per

occurrence as of the date of the accident, but Allstate had

already determined that the increased limits were effective

July 10, 2005, because of the effective date on the endorsement

and because of Mrs. Campos's payment of the premium for the

additional coverage.

32. In a letter dated February 17, 2006, Mr. Burger

advised the attorney representing the injured person of the

increase in the bodily injury liability limits, and, on March 2,

2006, Allstate tendered a check to the injured person's attorney

in the amount of $500,000.00.

33. Ms. Sykes attributed the back-dating of the

endorsement to a glitch in the Allstate computer system by which

the endorsement she submitted July 15, 2005, was automatically

back-dated to July 10, 2005. Ms. Sykes had complained to

Mr. Heiny on numerous occasions about problems with endorsements

disappearing from the system, which required her to resubmit the

endorsements. Ms. Sykes was not, however, aware of any

endorsements being automatically back-dated by the system except

for the July 2005 endorsement to Form Construction's commercial

automobile insurance policy.

34. Under the Allstate computer system, there are only two

ways in which an endorsement's effective date can be

established. The usual procedure requires the agent to complete

the endorsement and submit it into the system; the system then

automatically records on the endorsement the date it was

submitted and the effective date of the endorsement. The other

alternative is for an authorized agent to manually back-date the

effective date of an endorsement and then submit it into the

system.

35. Mr. Heiny tested the Allstate computer system

repeatedly, trying to determine whether the system would

automatically back-date an endorsement. None of the test

endorsements prepared by Mr. Heiny was automatically back-dated,

and Mr. Heiny is aware of no instance in which an endorsement

was automatically back-dated except for the Form Construction

endorsement at issue herein.

Findings of ultimate fact

A. Certificate of Liability Insurance

36. The evidence presented by the Department is sufficient

to establish with the requisite degree of certainty that, when

she signed the Certificate of Liability Insurance on October 12,

2004, showing that Form Construction had workers' compensation

insurance issued by the FWCJUA with effective dates of

October 16, 2004, through October 15, 2005, Ms. Sykes knew that

Form Construction did not have workers' compensation insurance

placed by the Heiny Agency through the FWCJUA and knew that Gold

Construction would rely on the Certificate of Liability

Insurance as evidence that Form Construction had workers'

compensation insurance. Ms. Sykes' action demonstrates her lack

of fitness and trustworthiness to engage in the business of

insurance, and Ms. Sykes caused injury to Gold Construction

because, as a result of its reliance on the Certificate of

Liability Insurance, it was required to pay additional premium

to its workers' compensation insurance carrier.

37. Ms. Sykes's testimony regarding the circumstances in

which she signed the Certificate of Liability Insurance was

replete with inconsistencies and improbabilities and was wholly

insufficient to support her contention that, when she signed the

Certificate of Liability Insurance, she had a good faith belief

that Form Construction had workers' compensation insurance

issued by the FWCJUA. Mr. Heiny told Ms. Sykes that he did not

intend to renew his authorization to submit workers'

compensation insurance applications to the FWCJUA after it

expired in July 2004, and, because she was the only agent at the

Heiny Agency that dealt with Mrs. Campos, Ms. Sykes would

necessarily have known if Form Construction had been issued a

workers' compensation insurance policy by the FWCJUA. It is

reasonable to infer, therefore, that Ms. Sykes was aware on

October 12, 2004, that Form Construction was not, and had never

been, covered by workers' compensation insurance issued by the

FWCJUA as a result of an application submitted by Mr. Heiny.

Finally, Ms. Sykes' testimony that, before signing the

Certificate of Liability Insurance, she reviewed the Form

Construction file and saw a check and a Federal Express receipt

showing that "it all went out to the FWCJUA" 2 directly conflicts

with her testimony that Form Construction's records were

destroyed when the Heiny Agency's office flooded in

September 2004. 3

38. Although the evidence presented by the Department is

sufficient to establish that Ms. Sykes demonstrated a complete

lack of knowledge about workers' compensation insurance, she was

not authorized to submit applications to the FWCJUA and did not

engage in any transactions involving workers' compensation

insurance except for signing the Certificate of Liability

Insurance for Form Construction. This act is not sufficient to

establish that Ms. Sykes engaged in transactions involving

workers' compensation insurance.

B. Automobile insurance endorsement

39. The evidence presented by the Department is sufficient

to establish with the requisite degree of certainty that

Ms. Sykes' deliberately back-dated an endorsement to Form

Construction's commercial automobile insurance policy increasing

the bodily injury liability policy limits so that the increased

limits were effective two days before Mr. Campos was involved in

an accident while driving a vehicle owned by Form Construction.

Ms. Sykes' action constitutes willful misrepresentation of the

coverage limits actually in effect on the date of the accident,

and it demonstrates Ms. Sykes' unfitness and untrustworthiness

to engage in the business of insurance. Ms. Sykes' explanation

that the endorsement was automatically back-dated by the

Allstate computer system is rejected as not credible.

40. The evidence presented by the Department is not

sufficient to establish that Ms. Sykes lacked in any respect

adequate knowledge of or technical competence in commercial

automobile insurance.

41. Finally, the evidence presented by the Department is

sufficient to establish by the requisite degree of certainty

that, because Ms. Sykes committed misconduct relating to the

signing of the Certificate of Liability Insurance, she engaged

in dishonest practices while engaging in the business of

insurance when she back-dated the endorsement to the Form

Construction commercial automobile insurance policy.

CONCLUSIONS OF LAW

42. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and of

the parties thereto pursuant to Sections 120.569 and 120.57(1),

Florida Statutes (2008).

43. In its Administrative Complaint, the Department seeks

to impose penalties against Ms. Sykes that include the

suspension or revocation of her license and/or the imposition of

an administrative fine. The Department, therefore, has the

burden of proving by clear and convincing evidence that

Ms. Sykes committed the violations alleged in the Administrative

Complaint. Department of Banking & Finance, Division of

Securities & Investor Protection v. Osborne Stern & Co. , 670 So.

2d 932 (Fla. 1996); Ferris v. Turlington , 510 So. 2d 292 (Fla.

1987).

44. In Evans Packing Co. v. Department of Agriculture and

Consumer Services , 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA

1989), the court explained:

[C]lear and convincing evidence

requires that the evidence must be found to

be credible; the facts to which the

witnesses testify must be distinctly

remembered; the evidence must be precise and

explicit and the witnesses must be lacking

in confusion as to the facts in issue. The

evidence must be of such weight that it

produces in the mind of the trier of fact

the firm belief of conviction, without

hesitancy, as to the truth of the

allegations sought to be established.

Slomowitz v. Walker , 429 So. 2d 797, 800

(Fla. 4th DCA 1983).

Judge Sharp, in her dissenting opinion in Walker v. Florida

Department of Business and Professional Regulation , 705 So. 2d

652, 655 (Fla. 5th DCA 1998)(Sharp, J., dissenting), summarized

several pronouncements on clear and convincing evidence:

Clear and convincing evidence requires more

proof than preponderance of evidence, but

less than beyond a reasonable doubt. In re

Inquiry Concerning a Judge re Graziano ,

696 So. 2d 744 (Fla. 1997). It is an

intermediate level of proof that entails

both qualitative and quantative [sic]

elements. In re Adoption of Baby E.A.W. ,

658 So. 2d 961, 967 (Fla. 1995), cert.

denied , 516 U.S. 1051, 116 S. Ct. 719, 133

L. Ed. 2d 672 (1996). The sum total of

evidence must be sufficient to convince the

trier of fact without any hesitancy. Id.

It must produce in the mind of the trier of

fact a firm belief or conviction as to the

truth of the allegations sought to be

established. Inquiry Concerning Davie , 645

So. 2d 398, 404 (Fla. 1994).

45. In Count I of the Administrative Complaint, the

Department has charged Ms. Sykes with violations of

Section 626.611(7), (8), and (9), Florida Statutes, and of

Section 626.621(6), Florida Statutes; in Count II of the

Administrative Complaint, the Department has charged Ms. Sykes

with violations of Section 626.611(5), (6), (8), and (9),

Florida Statutes.

46. Section 626.611, Florida Statutes, provides in

pertinent part:

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, 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:

* * *

(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 competence

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.

47. Section 626.621, Florida Statutes, provides in

pertinent part:

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, 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:

* * *

(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.

48. Based on the findings of fact herein, the Department

has proven by clear and convincing evidence that, with respect

to Count I, Ms. Sykes is guilty of having violated

Sections 626.611(7) and 626.621(6), Florida Statutes. Ms. Sykes

demonstrated a lack of fitness and trustworthiness to engage in

the business of insurance by signing a Certificate of Liability

Insurance when she knew that the Form Construction had not

secured workers' compensation insurance with the FWCJUA through

the Heiny Agency, an action which resulted in actual harm to

Gold Construction, a member of the public.

49. Because a violation of Section 626.611(9), Florida

Statutes, requires more than a solitary act, however, the

Department has failed to prove that Ms. Sykes is guilty of a

violation of that statutory section based on the single act of

misconduct that occurred when she signed the bogus Certificate

of Liability Insurance. See Robert v. Department of Insurance ,

854 So. 2d 681, 683 (Fla. 2d DCA 2003)(single episode of

misconduct should be punished as such, so no violation of

Section 626.611(9), Florida Statutes, occurred with respect to

first count of administrative complaint; second instance of

misconduct gave rise to multiple practices that supported

violation of Section 626.611(9), Florida Statutes, with respect

to second count of administrative complaint).

50. Based on the findings of fact herein, the Department

has proven by clear and convincing evidence that, with respect

to Count II, Ms. Sykes is guilty of having violated

Section 626.611(5), (7), and (9), Florida Statutes.

a. Ms. Sykes' action in back-dating the endorsement

constituted a willful misrepresentation of the actual date on

which Mrs. Campos asked for the increased bodily injury

liability limits. Ms. Sykes deliberately entered the Allstate

computer system and manually entered the effective date of the

endorsement, knowing that the endorsement would retroactively

bind Allstate to significantly higher bodily injury liability

limits that those actually in effect on the date of the

accident. See Metro Dade County v. Department of Envt'l

Prot. , 714 So. 2d 512, 516-17 (Fla. 3d DCA 1998)("In

interpreting statutory terms, words must be given their

plain and ordinary meaning. . . . The court in Thunderbird

Drive-In . . . conclud[ed] that the usual meaning assigned to

'willful' 'is that the actor has intentionally done an act of an

unreasonable character in disregard of a known or obvious risk

that was so great as to make it highly probable that harm would

follow . . . .' Thunderbird Drive-In , 571 So. 2d at 1344

(quoting Smith v. Sno Eagles Snowmobile Club, Inc. , 823 F.2d

1193 (7th Cir. 1987).").

b. Ms. Sykes demonstrated her unfitness and

untrustworthiness to engage in the business of insurance when

she back-dated the endorsement to Form Construction's commercial

automobile insurance policy.

c. Finally, Ms. Sykes engaged in dishonest practices in

the business of insurance because this act of misconduct,

together with the act of misconduct committed when she signed

the bogus Certificate of Liability Insurance, resulted in the

multiple infractions that are necessary to establish that an

insurance agent has engaged in dishonest business practices.

51. Based on the findings of fact herein, the Department

failed, however, to prove by clear and convincing evidence that

Ms. Sykes violated Section 626.611(8), Florida Statutes, with

respect to either Count I or Count II.

Penalty

52. Florida Administrative Code Rule 69B-231.080 sets out

the penalties for violations of Section 626.611, Florida

Statutes, as follows:

If it is found that the licensee has

violated any of the following subsections of

Section 626.611, F.S. , for which compulsory

suspension or revocation of license(s) and

appointment(s) is required, the following

stated penalty shall apply:

* * *

(5) Section 626.611(5), F.S. - suspension

9 months

* * *

(7) Section 626.611(7), F.S. - suspension

6 months

* * *

(9) Section 626.611(9), F.S. - suspension

9 months

53. Florida Administrative Code Rule 69B-231-090 sets out

the penalties for violations of Section 626.621, Florida

Statutes, but no penalty is stated for a violation of

Section 626.621(6), Florida Statutes. Rather, reference is made

to Florida Administrative Code Rule 69B-231.100, which provides

penalties for a person guilty of having violated

Section 626.621(6), Florida Statutes, by "engaging in unfair

methods of competition or in unfair or deceptive acts or

practices" Florida Administrative Code Rule 69B-231.100 does

not include a penalty for a person guilty of violating

Section 626.621(6), Florida Statutes, by "having otherwise shown

himself or herself to be a source of injury or loss to the

public," and Florida Administrative Code Rule 69B-231.120

provides that the penalty for a person found guilty of having

violated a provision of the Florida Insurance Code for which no

specific penalty is set out in the Florida Administrative Code

is a three-month suspension if the violation is not willful.

54. The Department has proven that, with respect to

Count I of the Administrative Complaint, Ms. Sykes is guilty of

having violated one statutory provision carrying a six-month

suspension and one provision carrying a three-month suspension.

The Department has proven that, with respect to Count II of the

Administrative Complaint, Ms. Sykes is guilty of having violated

one statutory provision carrying a six-month suspension and two

provisions carrying a nine-month suspension.

55. Florida Administrative Code Rule 69B-231.040 defines

the manner in which penalties shall be calculated for violations

of the Florida Insurance Code and provides in pertinent part:

(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 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 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 administrative 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.

(a) 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.

The highest "penalty per count" with respect to Ms. Sykes'

violation of Sections 626.611(7) and 626.621(6), Florida

Statutes, in Count I is a six-month suspension. The highest

"penalty per count" with respect to Ms. Sykes' violation of

Sections 626.611(5), (7), and (9), Florida Statutes, in Count II

is a nine-month suspension. The total penalty to be levied

against Ms. Sykes is, therefore, a 15-month suspension, without

adjustments for aggravating and mitigating factors.

56. Aggravating and mitigating factors are set forth in

Florida Administrative Code Rule 69B-231.160(1). With respect

to Ms. Sykes, the following are aggravating factors pursuant to

the rule: Ms. Sykes' act of signing the bogus Certificate of

Liability Insurance caused actual injury to Gold Construction,

which was entitled to rely on the representations in the

certificate; Ms. Sykes' act of back-dating the endorsement to

Form Construction's commercial automobile insurance policy was

willful; and Ms. Sykes was personally responsible for both acts

of misconduct. These "aggravating factors" are, however,

necessary elements of the violations with which Ms. Sykes was

charged, and, as such, should not be used to increase the

penalty that the Department has set out in Florida

Administrative Code Rules 69B-231.080(5), (7), and (9) and 69B-

231.120. In mitigation of the penalty, Ms. Sykes has not

previously been the subject of any disciplinary orders or

warnings from the Department.

57. An adjustment to the total penalty upon consideration

the mitigating factor is not warranted in this case, given the

seriousness of Ms. Sykes' offenses. Accordingly, a 15-month

suspension of Ms. Sykes' license to engage in business as a

general lines insurance agent is the appropriate penalty.

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

1. Finding Madeline Hernandez Sykes guilty of one count of

having violated Sections 626.611(7) and 626.621(6), Florida

Statutes;

2. Finding Ms. Sykes guilty of one count of having

violated Section 626.611(5), (7), and (9), Florida Statutes; and

3. Suspending Ms. Sykes' license to engage in business as

a general lines insurance agent for a period of 15 months.

DONE AND ENTERED this 30th day of April, 2009, in

Tallahassee, Leon County, Florida.

___________________________________

PATRICIA M. HART

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 30th day of April, 2009.

ENDNOTES

1 / Ms. Sykes was charged with violations that occurred in 2004

and 2005. The provisions of the statutes cited in the

Administrative Complaint are the same for both years.

Accordingly, references to the Florida Statutes herein are to

the 2005 edition unless otherwise indicated.

2 / Transcript, volume 2, page 214.

3 / In her proposed findings of fact and conclusions of law,

Ms. Sykes attributed the flooding to the hurricanes that

battered West Palm Beach, Florida, in July, August, and

September 2004.

COPIES FURNISHED:

David J. Busch, Esquire

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399-0333

Madeline Hernandez Sykes

ee Lane

Lake Clarke Shores, Florida 33406

Alex Sink, Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

Daniel Sumner, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

Tracey Beal, Agency Clerk

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399-0390

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.