13-003820PL Department Of Financial Services, Division Of Insurance Agents And Agency Services vs. Marta R. De La Paz Status: Closed Recommended Order on Thursday, January 15, 2015.

Summary: Petitioner failed to demonstrate by clear and convincing evidence that Respondent violated sections 626.611(12) and 626.734, Florida Statutes. Recommend dismissal of Administrative Complaint.

STATE OF FLORIDA

PETITIONER OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF

INSURANCE AGENTS AND AGENCY

SERVICES ,

Petitioner ,

Case No. 13 - 3820PL

vs.

MARTA R. DE LA PAZ ,

Respondent .

/

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was

conducted by video teleconference at sites i n Tallahassee and

Miami , Florida, on December 5, 2013 , and January 7, 2014, before

Administrative Law Judge, Mary Li Creasy .

A PPEARANCES

For Petitioner: David J. Busch, Esquire

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

For Respondent: N. Fras er Schuh, Esquire

704 Southeast Third Avenue Extension

Hallandale, Florida 33009

STATEMENT OF THE ISSUE S

Whether Respondent acted as an agent for a membership

organization , Internat ional Water Safety Foundation ( IWSF), a nd

its insurance underwriter, North American Marine (NAM) , that had

been ordered to cease and desist transacting insurance related

business in this state ; if so, wh e ther (and what) discipline

should be imposed on Respondent's license to transact business

a s an insurance agent.

PRELIMINARY STATEMENT

On August 27, 2013, the Department of Financial Services,

Division of Insurance Agents and Agency Services (Petitioner) ,

filed an Administrative Complaint against Marta R. De La Paz

(Respondent). The Administrat ive Complaint, consisting of one

count, alleged a violation of chapter 626, Florida Statutes, and

sought revocation of Respondent's Florida insurance agent

license, No. A182193 (license).

On or about September 19, 2013, Respondent executed an

Election of P roceeding, in which she disputed Petitioner 's

factual allegations and requested a form al administrative

hearing. An A nswer to the A dministrative C omplaint was filed

with Petitioner on September 20, 2013. On September 30 , 2013,

the matter was referred to the Division of Administrative

Hearings (DOAH) for further proceedings. The final hearing was

scheduled for December 5, 2013. Respondent filed a Request to

Reschedul e Hearing (Request) on November 27, 2013 , which was

opposed by Petitioner. The Request w as denied by Order filed

December 2, 2 013.

At the final hearing, on December 5 , 2013 , Respondent's

counsel made an ore tenus motion to postpone the hearing based

upon Respondent's unavailability due to her participation in an

unrelated criminal trial. The motion was denied. However, with

the agreement of both parties, the undersigned ordered that the

hearing would go forward but would remain open and another

hearing date would be scheduled to take the testimony of

Respondent and to permit rebuttal. The s econd day of hearing

occurred as scheduled on January 7, 2014.

During the hearing, Petitioner called the following

witnesses: Marlene Sua rez, Jorge Saez, Carlos Guzman, Od ayl s

Chiul l an , and Matthew Guy . Petitioner's Exhibits 1 through 14

were admitt ed in evidence on December 4, 2013 . Petitioner's

Rebuttal Exhibits 1 through 11 were admitted into evidence on

January 7, 2014. Respondent testified on her own behalf.

Respondent's Exhibits 1 through 15 were admitted.

The final hearing transcript s , consistin g of two volumes,

were filed on December 27, 2013 , and February 12 , 2014 .

Petitioner and Respondent timely filed written post - hearing

closing arguments and proposed recommended orders that have been

considered in the preparation of this Recommended O rder.

Unless otherwise noted, citations to all rule and statutory

references refer to the version in effect at the time of the

alleged misconduct .

FINDING S OF FACT

A. The Parties

1. Petitioner is the state agency charged with the

licensing and regulation of in surance agents in Florida and is

responsible for administrating the disciplinary provisions of

chapter 626, pursuant to section 20.121(2)(g) and (h), Florida

Statutes.

2. At all times material to this case, Respondent was a

licensed general lines insuranc e agent in the s tate of Florida.

Respondent also is a director and officer of the Marta De La Paz

Agency, Inc. (MDLP A) , which she has co - owned with her daughter ,

Jenny Mondaca Toledo , since 2000 .

3. Respondent was a "captive agent" of Allstate Insurance

C ompany (Allstate) for the period of 2000 to 2010 . During this

time, pursuant to an agreement with Allstate, Respondent could

only sell Allstate insurance products. If Allstate did not

carry a particular insurance product line, Respondent was

allowed to s ell the products of other carriers to her clients if

the other carrier was approved by Allstate.

B. The Events Giving Rise to the Recommended Revocation

4 . Insurance agents licensed by the State of Florida are

only permitted to se ll insurance provided by entitie s wh ich have

a "certificate of authority" and which are authorized to sell in

Florida. Agents are fiduciaries of the consumers who use their

services. Sales of insurance through unauthorized entities

place the consumer at risk because unauthorize d entities do not

participate in the Florida Insurance Guarantee Fund (FIGA), a

fund maintained by the State to protect consumers from losses

should a n authorized insurance carrier become insolvent or

unable to pay claims.

5. IWSF is a membership organiza tion which offers various

benefits and services to its members, including watercraft

insurance through a master policy with NAM. NAM, an unlicensed

and unauthorized insurer, through IWSF, solicited Florida

consumers t o purchase insurance from NAM.

6. On October 15, 2003, the Office of Insurance Regulation

issued a cease and desist order ( Order ) against IWSF and NAM

from conducting insurance related activities in Florida ,

including but not limited to, "transacting any new or renewal

insurance business in t his state, and from collecting any

premiums from Florida insureds ." The unlicensed, unauthorized ,

and , therefore, illegal transaction of insurance by IWSF and NAM

was deemed to present an immediate danger to public health,

safety , or welfare o f Florida re sidents.

7. On or about April 14, 2009, Carlos Guzman (Guzman), on

behalf of himself and his brother - in - law, Jorge Saez (Saez),

sought to purchase watercraft insurance f or a boat which they

co - own. Guzman went to MDLPA and met with employee, Odayls

Chiul l an (Chiul l an) . Chiu l lan, who has held a 2 - 20 Florida

general lines insurance license for approximately 15 years,

worked at MDLPA as an agent for approximately three months

during the spring of 2009. Respondent, as the principal agent

of MDLPA, had the r esponsibility to supervise Chiullan during

the period she worked for MDLPA.

8. In April 2009, Allstate was not providing watercraft

insurance for customers in Florida. To determine which carrier,

if any, could provide the insurance sought by Guzman and S aez,

Chiullan referred to a list maintained in the office of MDLPA.

Chiullan found the name of IWSF on the list and assumed that it

was approved by Allstate as a licensed entity with which MDLPA

could do business. Chiullan was unaware of the 2003 Order

a gainst IWSF and NAM.

9. Chiullan contacted IWSF and secured an insurance price

quote for Guzman and Saez. Chiullan arranged for Guzman and

Saez to become members of IWSF, thereby enabling their bo at to

become insured under the m aster policy of IWSF with NAM for the

initial period of May 6, 2009 , through May 6, 2010 , which was

subsequently renewed for an additional year.

10. Chiullan contacted Standard Premium Finance Company

(Standard) on behalf of Saez and Guzman to assist them in

financing the premium payments for their boat insurance.

11 . Respondent was on a cruise and not in contact with

Chiullan during the period when Chiullan assisted Saez and

Guzman with securing boat insurance or the financing for their

premium payments . Although correspondence to and from IWSF and

MDLPA was on MDLPA letterhead and fax transmittal sheets,

Respondent ha d no contact with Saez, Guzman, IWSF , or N AM

regarding this May 2009 transaction.

12. Respondent became aware of the purchase of insurance

from I W S F b y Saez and Gu zman when she was asked by C h i u llan to

sign the premium finance agreement with Standard as the owner of

MDLPA . That was the full extent of Respondent's connection to

this particular transaction which is at issue .

13. Saez and Guzman renewed their policy through MDLPA

with IWSF and NAM for the period of May 6, 2010 , through May 6,

2011. Saez and Guzman made no claims against the policy or

policies in effect from May 6, 2009 , through May 6, 2011.

14 . Prior to receipt of the A dministrative C omplaint,

Respo ndent was unaware of the O rder against IWSF and NAM .

Respondent was also unaware that neither entity was authorized

to transact business in Florida. Respondent received no notice

of the Order from Petitioner , Allstate, IWSF, NAM , or Standard.

15 . While s erving as a captive agent for Allstate,

Respondent did not receive alerts from Petitioner regarding

unauthorized insurers. Although Respondent was aware of her

obligations under Flo r ida to stay apprised of which entities

were authorized to issue insurance in Florida, she did so by

maintaining a list in MDLPA, provided by Allstate, which she

presumed was vetted and approved as state - authorized insurers .

16. In fact, Respondent sold her son, Osmany Mondaca,

insurance for his boat through IWSF and NAM for th e period of

November 26, 2007 , through November 26, 2008 , and this policy

was renewed for two additional years. Respondent also sold boat

insurance through IWSF and NAM for the coverage period of

June 24, 2010 , through June 24, 2011 , to her boyfriend for a

boat which they co - own.

17. P rior to purchasing insurance through IWSF for her

boyfriend and son, Respondent checked with Petitioner regarding

the status of IWSF and was told there was no problem. As

recently as December 2013, Respondent checked again with

Petitioner and was advised there was no problem writing

insurance through IWSF and NAM . Respondent credibly testified

that , had she known about the Order, she certainly would not

have sold policies through IWSF and NAM for a boat she co - owns

with her boyfriend or for her son's boat.

18. Although Petitioner offered evidence that it regularly

provides updates on its website and in newsletters alerting

agents to unauthorized insurers attempting to do business in

Florida, including but not limited to ale rts about IWSF and NAM ,

no evidence was provided that these communications were sent to,

received , or reviewed by Respondent or Chiullan . Further,

Respondent's testimony , that this information was not available

by telephone from Petitioner , was not contra dicted. 1/

CONCLUSIONS OF LAW

19. DOAH has jurisdiction over the parties to and the

subject matter of this proceeding. §§ 120. 569 & 120.57, Fla.

Stat.

20. This is a disciplinary action by Petitioner in which

Petitioner seeks to suspend or revoke Responde nt's license as an

insurance agent . Petitioner bears the burden of proof to

subst antiate the allegations in the A dministrative C omplaint by

clear and convincing evidence. Dep't of Banking & Fin. v.

Osborne Stern & Co. , 670 So. 2d 932 (Fla. 1996); Ferris v.

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

21. As stated by the Florida Supreme Court:

Clear 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 test imony must

be precise and lacking in confusion as to the

facts in issue. The evidence must be of such

a weight that it produces in the mind of the

trier of fact a firm belief or conviction,

without hesitancy, as to the truth of the

allegations sought to b e established.

In re Henson , 913 So. 2d 579, 590 (Fla. 2005) (quoting Slomowitz

v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983)).

22 . Th e Administrative Complaint charges Respondent w ith

violating section 626.611(12 ), which 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 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 . . . licensee, . . .

any one or more of the following applicable

grounds exist:

* * *

(12) Knowingly aiding, assisting, procuring,

advising, or abetting any person in the

violation of or to violate a provision of the

insurance code or any order or rule of the

department, commission, or office.

23. Section 626.734 provides in relevant part that any

general lines insurance agent who is an officer, director, or

stockholder of an incorporated general lines insurance age ncy

shall remain personally and fully liable and accountable for any

wrongful acts, misconduct, or violations of any provisions of

this code committed by such licensee or by any person under his

or her direct supervision and control while acting on behalf of

the corporation.

2 4 . However, i n a proceeding to revoke a license, "the

licensing body cannot rely solely on wrongdoing or negligence

committed by an employee of the licensee; instead, the licensing

body must prove that the licensee was at fault someho w for the

employee's c onduct, due to the licensee's own negligence,

intentional wrongdoing, or lack of due diligence." Bridlewood

Group Home v. Ag . for Pers . with Disab . , __ So. 3d __, Case

No. 2D13 - 43 (Fla. 2d DCA December 20, 2013) citing Ag . for Pers.

with Disab . v. Help is on the Way, Inc. , Case No. 11 - 1620 (Fla.

DOAH Feb. 3, 2012; Fla. APD Apr. 16, 2012 ) ; Ganter v. Dep't of

Ins. , 620 So. 2d 202, 203 (Fla. 1st DCA 1993) .

25. Clearly, Respondent did not personally commit the

misconduct alleged and s he cannot, therefore, be disciplined

under the provisions of s ection 626.611.

26. Respondent, as an officer and director of MDLPA, could

have liability for the wrongful actions of Chiullan pursuant to

s ection 626.734 , if the actions were due to Respondent's own

negligence, intentional wrongdoing, or lack of due diligence.

27. The evidence presented was insufficient to demonstrate

that the failure to know about the Order was as a result of

Respondent's own negligence, intentional wrongdoing , or lack of

dilige nce. To the contrary, as described above, Respondent

contacted Petitioner and reviewed Petitioner 's web site on more

than one occasion (including at the time of selling insurance

through IWSF and NAM to her boyfriend and son) and found no

information to s uggest that IWSF and NAM were not authorized to

provide insurance products in Florida.

28. Consequently, it is concluded that Petitioner failed

to establish by clear and convincing evidence that Respondent

has personal liability for the actions of Chiulla n pursuant to

s ection 626.734.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Financial

Services, Division of Insurance Agents and Agency Services,

enter a final order which dismisses the A dministrative C omplaint

filed against Respondent.

DONE AND ENTERED this 2 8 th day of March , 2014 , in

Tallahassee, Leon County, Florida.

S

MARY LI CREASY

Administrative Law Judge

Division of Administrative Hearings

T he 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 2 8 th day of March , 2014 .

ENDNOTE

1/ Petitione r offered rebuttal testimony and exhibits that it

engaged in some form of communication to insurers with captive

agents or those agents regarding unauthorized companies

attempting to do business in Florida. However, only one such

communication, admitted a s R ebuttal Exhibit 6, mentioned IWSF by

name or disclosed the fact that IWSF had been prohibited from

transacting insurance business in Florida. There is no record

evidence that any of Petitioner's R ebuttal Exhibits 1 through 6

were actually provided to t he agent or the agency. Rebuttal

Exhibit 7 is a press release regarding the Order, but it was

placed online in 2011. Rebuttal Exhibit 8 contained a link to

an entry regarding the Order. Rebuttal Exhibit 9 was dated

June, 2010, after the renewal of the s ubject policy. Rebuttal

E xhibit 10 was dated March 2011 Ï ten months after the renewal of

the policy. Rebuttal E xhibit 11 was released in November 2013 Ï

three and one - half years after the issuance of the subject

policy. None of the rebuttal exhibits demons trate whether the

a gent knew or should have known that IWSF was prohibited from

transacting insurance business in Florida, when or how the a gent

could have known it, and whether she should have known it at any

relevant time.

C OPIES FURNISHED:

David J. B usch, Esquire

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

N. Fraser Schuh, Esquire

704 Southeast Third Avenue Extension

Hallandale, Florida 33009

Julie Jones, CP, FRP, Agency Clerk

Divisio n of Legal Services

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 Or der. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.