11-004054 Mb4wdqyjkozihvcnaqebbqaddqawcgifaknlunucaqm= vs. Department Of Financial Services Status: Closed Recommended Order on Wednesday, July 11, 2012.

Summary: Application for insurance license should be denied based on applicant's criminal history and failure to comply with a lawful subpoena.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM=, )

)

Petitioner, )

)

vs. ) Case No. 11 - 4054

)

FLORIDA DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Respondent . )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice, a for mal hearing was held in this case

on April 17 , 201 2 , by video teleconference between Lauderdale

Lakes and Tallahassee, Florida, before Administrative Law Judge

Claude B. Arrington of the Division of Administrative Hearings

(DOAH).

APPEARANCES

For Pet itioner: Michael D. Gelety , Esquire

1209 Southeast 3rd Avenue

Fort Lauderdale, Florida 33316

For Respondent: Da vid J. Busch , Esquire

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

Whether the Florida Department of Financial Services (the

Department) has grounds to deny the appl ication for a n " All -

Lines Public Ad juster ' s " license filed by MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM=

( MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ) as alleged in the Department's Notice of Amended

Denial and Notice of P ermanent Bar dated January 19, 2012.

Specifically, two grounds for denial were at issue. First,

whether MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM='s action in litigating a subpoena served on

him in 2008 by the Department constitutes grounds to deny his

application. Second, whether MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s criminal history

disqualifies him from licensure.

PRELIMINARY STATEMENT

The Department denied MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s application for

licensure as a n "All Lines Public Adjuster . " The Department ' s

initial denial letter asserted that his failure to timely comply

with a subpoena served upon him by the Department in 2008

constituted grounds for the denial based on the following

provisions: sections 624.307(3); 624.317(1); 624.318(1), (2),

and (5); 624.321(1)(b) and (2); 626.561(2); 626.601 (1);

626.611(7) and (13); 626.621(1), (2), (3), and (13); 626.870(4);

and 626.8698(1), Florida Statutes. MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= timely requested

a formal administrative hearing to challenge the Department ' s

proposed action , the matter was referred to DOAH, and this

p roceeding followed. Thereafter, the Department amended its

denial letter by asserting that MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s criminal history

disqualifies him from licensure.

At the formal hearing, MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= testified on his own

behalf and presented the additional testimon y of Andrew Fuxa.

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s pre - marked E xhibits 3, 10 - 13, 15, and 22 were

admitted into evidence. The Department presented the testimony

of Robert Keegan and Matt Tamplin, both of whom are Department

employe es . The Department ' s E xhibits 1 - 15 were adm itted into

evidence.

On April 16, 2012, counsel for MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= filed a " Motion

to Declare Florida Statute 626.207 Unconstitutional on its Face

and as Applied to Petitioner MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= " and " MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s Motion to

Strike Department ' s Amended Denial of License and Notice of

Permanent Bar and Motion in Limine to Prevent Mention or Use of

Information and Allegations Contained Therein as a Justification

for Denial of Licensure. " The motion to strike and the motion

in limine were denied on the merits. 1 / N o ruling was made on the

merits of the motion asserting that the statute is

unconstitutional because the undersigned lacks the authority to

do so. It is well established that only a court of competent

jurisdiction can rule on constituti onal issues. See Key Haven

Associated Enters., Inc., vs. o f the Internal Improvement

Trust Fund , 427 So. 2d 153 (Fla. 1982).

A Transcript of the proceedings, consisting of two volume s ,

was filed on May 3, 2012 . Both parties filed Proposed

Recommended Orders (PROs) , which have been duly considered by

the undersigned in the preparation of this Recommended Order. 2 /

FINDINGS OF FACT

1. The Department is the state agency that regulates the

practice of insurance in the State of Florida.

2. On April 20, 2011, MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= filed with the Department

an application for an " All - Lines Independent Adjuster ' s "

license.

CRIMINAL HISTORY

3 . On October 13, 1987, MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= entered a plea of nolo

contendere to three counts of insurance fraud and three co unts

of grand theft. Adjudication of guilt was withheld. He was

ordered to serve six months of community control to be followed

by 2.5 years of probation. MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s term of probation was

terminated May 24, 1989. 3 /

CHANGE IN THE LAW

4. Before it was invalidated in April 2010, Florida

Administrative Code Rule 69B - 211.042(8)(a) contained a 15 - year

waiting period before a person with MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s criminal

history would become eligible for the type license at issue in

this proceeding. 4 /

5 . Section 6 of chapter 2011 - 174, Laws of Florida, created

s ubsection 62 6 .20 7 (3), Florida Statutes . That provision became

effective on July 1, 2011, and provides as follows:

(3) An applicant who commits a felony of

the first degree; a capital felony; a felo ny

involving money laundering, fraud, or

embezzlement; or a felony directly related

to the financial services business is

permanently barred from applying for a

license under this part. This bar applies

to convictions, guilty pleas, or nolo

contendere ple as, regardless of

adjudication, by any applicant, officer,

director, majority owner, partner, manager,

or other person who manages or controls any

applicant.

6 . Section 626.207(1) defines the term " financial services

business " to include any financial ac tivity regulated by the

Department of Financial Services, Office of Insurance

Regulation, or Office of Financial Regulation. The foregoing

provision is applicable to the type of application submitted by

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM=.

7. The foregoing provision is applicable to MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s

application because his application was pending when the

provision became law. Section 18 of chapter 2011 - 174, Laws of

Florida, provides as follows:

The amendments to s. 626.207, Florida

Statutes, made by this act do not apply

retroactively and apply only to applicants

whose applications are pending or submitted

on or after the date that the amendments to

s. 626.207, Florida Statutes, made by this

act become law. This section shall take

effect upon thi s act becoming a law.

PRIOR LICENSE

8. In compliance with the then existing 15 - year waiting

period, MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= waited until December 18, 2003, to file with

the Department an application for licensure as an " Independent

Adjuster. " That application disclosed MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s criminal

history. On July 9, 2004, the Department granted MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s

application and issued an " Independent Adjuster " license to

him. 5 / He held that license until he converted it to a " Public

Adjuster Apprentice " license in August 2009. MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s

" Public Adjuster Apprentice " license expired February 11, 2011. 6 /

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= held no license from the Department as of the date of

the formal hearing.

SUBPOENA

9. Prior to February 12, 2008, the Departmen t received

complaints that MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= was performing services beyond the

scope of his licensure. At that time, MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= was an owner

and operator of a business known as Professional Insurance

Estimating & Appraisals. On February 12, 2008, the Departmen t

served an investigative subpoena on MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= by leaving the

subpoena with an employee of MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= at MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s office.

The subpoena was directed to MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= and to an associate of

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= who is not involved in this proceeding. The subpoena

cited the following authority for the subpoena: sections

624.307, 624.310, 624.317, 624.318, 624.321, 626.561, 626.601,

626.748, and 626.9561. The subpoena demanded that MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM=

produce to the Department: the complete claim files for sev en

named consumers " including the contracts entered with each of

these consumers, communications with these consumers and or

their insurers, the request for appraisal for each of these

consumers, the companies settlement checks, the consumer check

made pay able to MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= or Professional Insurance Estimating &

Appraisals, and the bank account name and number for

Professional Estimating & Appraisals ' bank account. "

10. MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= did not comply with the subpoena. Instead,

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= filed " Motion for a Prote ctive Order and to Quash

Subpoena " (Motion to Quash ) in Broward circuit court. The

Motion to Quash was heard by a magistrate who denied the M otion

to Q uash as it related " to non - testimonial production of files,

records, documents, etc. " The magistrate 's report ordered

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= and his associate to comply with the subpoena within

30 days unl ess they file d an objection and request ed a hearing

before the circuit judge within the 30 - day period . On

February 18, 2009 , the circuit judge denied the Mo tion to Q uash

and also denied th e exceptions to the m agistrate's report that

had been filed on behalf of MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= . The circuit judge

ratified and " approved in all respects " of the magistrate's

report.

11. On March 10, 2009, MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= , through counsel,

offered to produce two of the seven consumer files demanded by

the subpoena and asserted that the other five consumer files had

been shredded before the subpoena was issued. No offer was made

as to the banking information demanded by the subpoena. The

Departmen t rejected that offer.

12. MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= appealed the order denying the Motion to

Quash to the Fourth District Court of Appeal. On May 19, 2010,

the court affirmed the order denying the Motion to Quash.

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= filed a motion for re - hearing, which was d enied by

the court on June 16, 2010.

13. During the course of the formal hearing before the

undersigned MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= repeated the offer to produce two of the

seven consumer files demanded by the subpoena and asserted that

the other five consumer files had b een shredded before the

subpoena was issued. No offer was made as to the banking

information demanded by the subpoena. The Department rejected

that offer.

14. MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s action in litigating the subpoena impeded

the Department ' s investigation into his alleged wrongdoing.

15. MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= has paid the fee and passed a pre - licensure

examination , which are pre - requisites for the license he seeks.

CONCLUSIONS OF LAW

16 . DOAH has jurisdiction over the subject matter of and

the parties to this proceeding pursuant to sections 120.569 and

120.57(1).

17 . This is a de novo proceeding designed to formulate

final agency action. See Hamilton Cnty Bd. of Cnty. Comm ' rs v.

Dep ' t Envtl. Reg. , 587 So. 2d 1378 (Fla. 1st DCA 1991) and

section 120.57(1)(k).

18 . As the applicant, MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= has the burden of proving

his entitlement to the relief he seeks by a preponderance of the

evidence. See Dep ' t of Banking and Fin. v. Osborne Stern , 670

So. 2d. 932 (Fla. 1996) and Dep ' t of Transp. v. J. W. C. Co.,

Inc. , 39 6 So. 2d 778 (Fla. 1st DCA 1981).

19 . A " preponderance " of the evidence means the greater

weight of the evidence. See Fireman ' s Fund Indemnity Co. v.

Perry , 5 So. 2d 862 (Fla. 1942).

20. The authorit ies relied upon by the Department , which

are recited i n the Amended Denial Letter (Department ' s E xhibit

1 5 ), provide it with the authority to subpoena MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s

files and business bank accounts in order to investigate the

complaints against him. His resistance to the subpoena was

rejected by the magistrate, the circuit judge, and the appellate

court. That resistance impeded the Department ' s investigation.

21. Section 626.611 provides, in relevant part, as

follows:

The department shall deny an application for

. . . license or appointment, if it finds

that as to the application . . . any one or

more of the following applicable grounds

exist:

* * *

(7) Demonstrated lack of fitness or

trustworthiness to engage in the business of

insurance.

* * *

(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.

22. The Department asserts that it has grounds to deny

MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s application pursuant to sub sec tion s 626.11(7) and

(13) . The Department failed to prove that Mr. Pelllet

" demonstrated lack of fitness or trustworthiness to engage in

the business of insurance " when he opted to litigate the

validity of the Department ' s subpoena because that action does

not reflect on his " fitness " or " trustworthiness. "

23. The Department proved that MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= willfully fail ed

to comply with a valid subpoena, which provided grounds to deny

his applicatio n pursuant to section 626.611(13).

24. M oreover, t he Department should deny MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s

application pursuant to t he provisions of section 626.207(3).

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is hereby RECOMMENDED that the Department of

Financial Services enter a final order denying MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= ' s

application for license as a n " All - Lines Public Lines Adjuster. "

DONE AND ENTERE D this 11th day of July , 201 2 , in

Tallahassee, Leon County, Florida.

S

CLAUDE B. ARRINGTON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 11th day of July , 201 2 .

ENDNOTES

1 / T he Department's amended denial referenced MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM='s

criminal plea and recited its statutory authority. The amended

denial letter included the following:

In 2006 several complaints were received by

the Department alleging that you were acting

as a public adjuster without being licensed

as such. The complaints arose from various

sources (Companies and consumers) on claims

stemming from Hurricane Katrina. Y our

defense was that you have always acted as an

appraiser in assisting consumers in the

settlement of claims, not as a public

adjuster. As part of its investigation in

February 2008, the Bureau of Investigation,

acting through Department investigators

Mo ntero and Keegan, served a subpoena on you

at your place of business, Professional

Insurance Estimating & Appraisals (PIE). In

response to that request you retained a

lawyer who moved to quash the subpoena in

the Broward County Circuit Court. After

sever al preliminary pleadings were filed,

the case was initially heard by then

Magistrate Barbara MccCarthy in April 2008.

On May 15, 2008, Magistrate McCarthy issued

a recommendation to Circuit Judge Aleman

upholding the Department's subpoena. A

hearing was held before Judge Aleman on

February 18, 2009, at the conclusion of

which Judge Aleman ruled for the Department.

On March 19, 2009, you took an appeal to the

Fourth District Court of Appeal. That Court

also ruled for the Department, its last

order dated June 16, 2010, denied your

motion for rehearing. As a result, you were

required to comply with the Department's

subpoena but failed to do so. After the

Department had spent two and one - half years

in two courts defending its subpoena, it

filed a seven - cou nt Administrative Complaint

in August 2010, the last count complaining

of your continued failure to comply with its

subpoena. The other counts addressed your

alleged public adjusting activities dating

back to 2002. In October 2010 you

surrendered your in dependent adjuster

license and your apprentice license expired

in February 2011, resulting in voluntary

dismissal of the administrative charges that

sought to discipline licenses you no longer

held. Your failure, as a prior licensee, to

honor the Departme nt's subpoena, upheld as

lawful by both a circuit court and a

district court of appeal, and your plea to

the crime of insurance fraud, requires [sic]

that you not be granted further licensure by

this Department, and that you are

permanently barred from app lying for

licensure in the future.

2 / The undersigned granted the joint motion for an extension of

time to file PROs. The respective PROs were timely filed.

3 / MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= has not had any involvement with the criminal

justice system since he was discharged from probation.

4 / Florida Administrative Code Rule 69B - 211.042(8)(a) was held

invalid by the Amended Final Order entered in Santana v. Dep ' t

of Fin . Servs . , Case No. 09 - 0829RX (Fla. DOAH April 29, 2010),

aff ' d , 61 So. 3d 1116 (Fla. 1st DCA 20 11).

5 / MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= argues that the change in the law should not be

applied to him because he has already " paid " for his criminal

history by waiting the 15 - year period before applying for and

receiving licensure from the Department. That argument is not

p ersuasive because the undersigned has no authority to disregard

the plain meaning of the amended statute.

6 / On August 6, 2010, the Department filed an Administrative

Complaint against MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM= alleging that he engaged in

activities beyond the scope of his license. That proceeding was

referred to DOAH and assigned Case No. 10 - 8909PL. That

proceeding, which included allegations relating to MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM='s

failure to comply with the subpoena, was voluntarily dismissed

after MB4wDQYJKoZIhvcNAQEBBQADDQAwCgIFAKnLuNUCAQM='s licensure expired.

COPIES FURNISHED:

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

David J. Busch, Esquire

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399

[e-mail]

Michael D. Gelety, Esquire

1209 Southeast 3rd Avenue

Fort Lauderdale, Florida 33316

[e-mail]

NOTICE O F 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.