19-001622F Jean-Ann Dorrell And Senior Financial Security, Inc. vs. Department Of Financial Services Status: Closed DOAH Final Order on Wednesday, November 20, 2019.

Summary: Respondent was substantially justified in pursuing charges against Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JEAN - ANN DORRELL AND SENIOR

FINANCIAL SECURITY, INC. ,

Petitioners ,

vs. Case No. 1 9 - 1622F

DEPARTMENT OF FINANCIAL

SERVICES ,

Respondent .

/

FINAL ORDER

Pursuant to notice, a formal administrative hearing was

conducted before Administrative Law Judge Garnett W. Chisenhall

of the Division of Administrative Hearings (ÐDOAHÑ), in

Tallahassee, Florida, on August 8, 2019.

APPEARANCES

Fo r Petitioner: Jed Berman, Esquire

Infantino and Berman

Post Office Box 30

Winter Park, Florida 32790

For Respondent: David J. Busch, Esquire

Marshawn Michael Griffin, Esquire

Department of Financial Services

Di vision of Legal Services

612 Larson Buildi ng

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

STATEMENT OF THE ISSUE

The issue to be determined is whether Petitioner (Ð Senior

Financial Security Ñ) 1/ i s entitled to an award of attorneyÓs fees

and costs pursuant to section 57.111, Florida St atutes (2019). 2/

Senior Financial Security is entitled to such an award if:

(a) the Department of Financial Services Ó (Ðthe DepartmentÑ)

actions were not substantially justified; or (b) no special

circumstances exist that would make an award of fees and costs

unjust.

PRELIMINARY STATEMENT

The Department issued a 10 - count Administrative Complaint

on April 25, 2017, alleging that Jean - Ann Dorrell and/or Senior

Financ ial Security committed multiple violations of authorities

governing the insurance industry : (a) willfully deceiv ing four

annuity consumers; (b) demonstrating a lack of trust worthiness;

(c) demonstrating a lack of technical competenc e; (d) conducting

fraudulent or dishonest practices; (e) failing to comply with

rules promulgated by the Departme nt; (f) failing to place

policyholdersÓ interests first; (g) engaging in deceptive acts;

(h) violating an applicable code of ethics; (i) knowingly aiding

and abetting unlawful insurance transactions; (j) selling

unsuitable annuities to senior consumers; (k ) using unlicensed

employees to sell insurance products; and (l) making misleading

statements intended to induce clients to surrender one policy

and p urchase another when the transaction s w ere not in their

best interests.

After a final hearing conducted ov er a total of seven days

in November of 2017, and February of 2018, the undersigned

issued a Recommended Order concluding that the Department failed

to prove any of its allegations by clear and convincing

evidence. The proceeding that resulted in the afor ementioned

Recommended Order will hereinafter be referred to as Ð the

underlying proceeding. Ñ

Senior Financial Security filed an Ð Application for an

Award of AttorneyÓs Fees and Costs Ñ on March 13, 2019, pursuant

to section 57.111, the Florida Equal Acces s to Justice Act

( ÐFEAJAÑ ) .

The parties filed a Pre - hearing Stipulation on July 31,

2019, stating there was no dispute that Senior Financial

Security was a Ðprevailing small business party Ñ within the

meaning of section 57.111(3 ) . The parties also indic ated that

there was no dispute that Senior Financial Security would be

entitled to attorneysÓ fees of $50,000 .00 and costs of

$18,395.51 if it prevailed in the instant case.

After one continuance, the final hearing was convened

on August 8, 2019, and compl eted that day. Rather than

calling witnesses, Senior Financial Security sou ght to introduce

the deposition testimony of Elmer Sanchez. In res ponse to an

objection from the Department, the undersign ed issued a ruling

on September 5, 2019, accepting Mr. Sa nchez as an expert in

the area of investigations. See Am. Gen. Life Ins. Co. v.

Schoenthal Family, LLC , 555 F.3d 1331, 1338 (11th Cir.

2009)(noting that Ð[a] district court may decide that

nonscientific expert testimony is reliable based upon personal

kno wledge or experience.Ñ). However, the undersigned ultimately

found that Mr. SanchezÓs testimony was not particularly relevant

to the issue of whether the Department was substantially

justified when it issued the Administrative Complaint.

Moreover, the un dersigned gave no weight to Mr. SanchezÓs

testimony to the extent that he was making a legal conclusion

that there was no substantial justification supporting the

Administrative Complaint. See Seibert v. Bayport B ch . & Tennis

Club AssÓn , 573 So. 2d 889, 8 91 (Fla. 2d DCA 1990)(noting that

Ð[a]n expert should not be allowed to testify concerning

questions of law.Ñ); Cnty . of Volusia v. Kemp , 764 So. 2d 770,

773 (Fla. 5 th DCA 2000)(noting that Ðan expert should not be

allowed to render an opinion which applie s a legal standard to a

set of facts.Ñ).

PetitionerÓs E xhibits A, Bii, Biii, Biv, Bv, C, and E were

accepted into evidence during the final hearing. The video

deposition and transcript of Elmer Sanchez was marked for

identification as PetitionerÓs E xhib it D and ultimately accepted

into evidence as discussed above. The undersigned officially

recognized the Administrative Complaint that initiated the

underlying proceeding.

The Department presented the testimony of Susan Alexander

and the following E xhib its from the Department were accepted

into evidence: 8 through 13, 15 through 22 , 49, 50, 55, 56, 59

through 68, 70 through 97, 99 through 174, 185, 188 through 196,

200 through 220, 223, 290 through 30 3, 379 through 384, 391,

393, 394, 434, 436, and 464.

After one extension, the parties filed timely proposed

final orders, and those proposed final orders were considered in

the prep aration of this Final Order.

FINDING S OF FACT

Based on the oral and documentary evidence adduced at the

final hearing, mat ters subject to official recognition, the

Recommended Order and the Final Order from the underlying

proceeding, and the entire record in the instant case, the

following Findings of Fact are made:

The Parties

1. The Department is the state agency responsib le for

regulating and licensing insurance agents and agencies. That

responsibility includes disciplining licensed agents and

agencies for violations of the statutes and rules governing

their industry.

2. At all times relevant to the instant case, Jean - Ann

Dorrell was a Florida - licensed insurance agent selling fixed

annuities and fixed index annuities. She owns Senior Financial

Security , a licensed insurance agency located in The Villages,

Florida. Ms. Dorrell is not licensed to conduct securities

bus iness.

The Initiation of the DepartmentÓs Investigation

3 . At all times relevant to the instant case, Susan

Alexander was the regional administrator for the DepartmentÓs

Jacksonville field office.

4. Prior to becoming a Department employee in 1998,

M s. Alexander had been an insurance agent and financial advisor

who held insurance licenses perta ining to life, health,

variable annuities, and property and casualty. She also held

a Series 6 investment license. At the time of the final hearing

in the ins tant case, she still possessed the aforementioned

licenses, but they were Ðon hold.Ñ

5. On July 1, 2014, Ms. Alexander received a complaint

forwarded to her from the DepartmentÓs Division of Insurance

Fraud. The complaint was from Laura Wipperman who h ad recently

worked for Ms. Dorrell at Senior Financial Security.

Ms. WippermanÓs complaint alleged that Ms. Dorrell regularly

engaged in the following practices: (a) participating in the

sale or delivery of annuities onl y for new clients, clients

with mo ney to move, or existing clients who insisted on meeting

with her; (b) giving investment advice without having the

necessary licensure; (c) instructing clients to procure reverse

mortgages and use the resulting funds to purchase annuities;

(d) instructing clients to surrender annuities and replace them

with ones that are less suitable for them; and (e) encouraging

clients to engage in financially disadvantageous transactions so

that Ms. Dorrell would receive commissions.

6. M s. Wipperman executed an affida vit on July 29, 2014,

alleging that Ms. Dorrell had her acting as an agent for Senior

Financial Security clients between July of 2010 and March of

2013 despite the fact that she lacked the required licensure.

7 . Diana Johnson, another former employee of Senior

Financial Security, also provided the Department with an

affidavit on July 29, 2014, stating that:

I began working for Jean - Ann Dorrell at

Senior Financial Security about June of

2010, and I was the receptionist at that

time. In the first part of 2 013, I was

promoted to [] office manager. I do not

have and have not been licens ed to sell

insurance in Florida . . . . When I was

promoted to the position of [] office

manager, agent Dorrell expanded my duties to

include, meeting with clients to review t he

clientÓs insurance cove rage . . . . Agent

Dorrell had a motto, ÐDonÓt leave any

money on the table.Ñ If a client had an

annuity that had a penalty free withdrawal

available, I was instructed to contact the

client to have them come in for a review.

I would then solicit the sale of either

another annuity or a life insurance policy

and tell the client that funds are available

and they will not incur a penalty to

withdraw the funds from their policy. If

the client made the decision to purchase a

policy t hat I recommended, I would complete

the application and have the client sign the

paperwork along with the forms to have the

funds withdrawn from the existing policy.

Agent Dorrell instructed me to explain

policies and the benefits. When a policy

was issu ed, I would have the client come to

the office and I would deliver the contract

to them . . . . I would also answer any

questions the client may have [had] about

the insurance policy. Many times an

appointment was made for agent Dorrell to

meet with the c lient and when the client

arrived at the scheduled time, agent Dorrell

would make an excuse that she was not able

to meet with the client and I was instructed

to handle the sale of the policy and then

complete the application. I am aware of

certain situat ions where a client passed

away and agent Dorrell would have me contact

the relatives or beneficiaries to complete

the paperwork to receive the death benefits.

Agent Dorrell told [me] to sell some type of

an insurance policy to the beneficiary using

the p roceeds from the death benefits. Janet

Barbuto was a client who passed away that I

remember. I sold an annuity policy to each

of her two daughters, Elizabeth Barbuto and

Maria Erb, using the proceeds from JanetÓs

policy . . . . Agent Dorrell would also h ave

me review any clientÓs brokerage account

they may have. Agent Dorrell would have me

convince the client to either liquidate

their account to cash or transfer the funds

to her brokerage house account . . . . Agent

DorrellÓs ultimate goal is to use fund s from

the clientÓs brokerage account to sell the

client an annuity or life insurance

policy . . . . I have prepared several Lady

Bird deeds at the instruction of agent

Dorrell . . . . I have taken several

insurance company product training classes

online for agent Dorrell. Agent Dorrell

would send an email to me instructing me to

take a particular product training course

online. I would log onto the companyÓs

website as agent Dorrell and complete the

training course. Agent Dorrell would

consistently ber ate me for not selling life

insurance policies because the client would

not want to purchase one after I had asked

the client if they would be interested in a

policy. Agent Dorrell told me that the

client does not know what they want and that

I needed to learn how to sell policies.

Agent Dorrell would say that if I did not

learn how to sell, our door would not be

open if all the clients said no to my

recommendations.

8 . Matthew Plunkitt, another former employee of

Ms. Dorrell, executed the followin g affidavit on December 11,

2014:

During the time that I worked in agent

DorrellÓs office there were a number of

issues and regular business practices which

made me decide to find a new job . . . .

I sat in on several appointments at agent

DorrellÓs dir ec tion where she would tell

the consumer that they should be concerned

about the stock market, that a stock market

correction was coming, that they were going

to lose a lot of money, and that they needed

to get out of the market right away. Agent

Dorrell wa s absolutely talking about

investments which I knew that she was not

licensed to talk to the consumer about.

Agent Dorrell would then suggest that if the

consumer would transfer their account to Van

Guard Capital, the funds could then be

turned into cash to purchase annuities,

which would make the money safe and the

consumer would not lose anything when the

market made the correction which was

coming . . . . When new clients would come

into the office, agent Dorrell would sit

with them for usually the fir st two

appointments. Afterwards clients would then

meet with usually Diana Johnson, the office

manager and sometimes myself. Agent Dorrell

was not in the office often, so Diana

Johnson, as the office manager was required

to handle everything in agent Dor rellÓs

absence . . . . I remember that on the

appointments that I sat in on, everyone was

sold an income rider on their annuity

whether it was necessary or not. I do not

know what the reasoning was behind the

rider . . . . Being employed in agent

DorrellÓ s office was extremely stressful and

she was frequently verbally abusive to her

staff, threatening to fire them for not

following her exact instructions. When

objections would be raised about her

instructions or office procedure, they would

be told that w e need to listen to her and

not the clients or the insurance companies

or the rules. I canÓt remember the name of

the client, but I remember that at one point

she instructed me to pretend to be someoneÓs

grandson to get the information she needed

on a sto ck account. Her attitude made it

impossible to discuss many of the issue s in

the office with her.

9 . Ms. Alexander supervised Ruth Williams, the

DepartmentÓs lead investigator for this matter. Prior to her

employment with the Department, Ms. Williams spent 10 years in

the insurance industry and had acquired life insurance, health

insurance, and variable annuity licenses. She also dealt with

indexed annuities. The investigation of Ms. Dorrell was

assigned to Ms. Williams, and Ms. Alexander received r egu lar

updates on the status of Ms. WilliamsÓ s investigation.

1 0 . At the close of a typical investigation, Ms. Alexander

would review the evidence and the investigatorÓs recommendation.

She could then decide that a case should be closed without any

dis ciplinary action or that the case should be forwarded to the

Legal Processing Unit in Tallahassee for an assessment of the

allegations and evidence. If the Legal Processing Unit did not

close the case, then the case would be forwarded to the

DepartmentÓ s General CounselÓs Office.

Count I Î Frederic Gilpin

1 1 . Frederic Gilpin was born in 1940 and worked in the

automobile industry, primarily as a service manager in

dealerships, for 44 years before retiring in 2006.

1 2 . Mr. Gilpin purchased a Prudential v ariable annuity in

2006 through Bryan Harris, an investment advisor in Maryland,

for $260,851.14.

1 3 . On December 31, 2008, Mr. GilpinÓs Prudential variable

annuity was worth only $200,989.32. By March 31, 2009, its

value had fallen to $183,217.37. T he decrease in the annuityÓs

underlying value coincided with the precipitous declines

experienced by the stock market in 2008 and 2009.

1 4 . On May 1, 2009, Mr. Gilpin exercised a rider in the

Prudential annuity contract that guaranteed a yearly income of

$15,625 .00 . That annual income would continue for the rest of

his life regardless of the stock marketÓs performance.

1 5 . The guaranteed income stream would only be destroyed

if Mr. Gilpin withdrew from the annuityÓs principal.

1 6 . Mr. Gilpin and his wi fe met with Ms. Dorrell in

2012 to discuss their financial si tuation. As recommended by

Ms. Dorrell, Mr. Gilpin surrendered the Prudential annuity and

used the proceeds to purchase a fixed index Security Benefit

annuity. The purchase price of appro ximately $205,000 .00 for

the Security Benefit annuity was allocated between two accounts

whose performance was tied to the Standard and PoorÓs 500.

1 7 . Ms. Alexander obtained a letter that Mr. Gilpin wrote

to Security Benefit on April 22, 2013, asking tha t the

aforementioned purchase be rescinded:

Please accept this letter as indication

that I would like my annuity that was rolled

over from Prudential and into Security

Benefit on January 4 th , 2013 rescinded and

put back into the contract that we rolled it

over from . . . . My agent, Jean Dorrell

misrepresented the facts and did not

disclose to me the guarantee that I would be

giving up when I moved the money over . . . .

I put my trust in Ms. Dorrell, and I believe

that she did not do what was in my best

in terest and was simply looking to get paid

by moving my annuity contract over. She

listed in a letter to me that I was paying

$15,000 per year in fees, as a big reason

why I should move the money. I have since

discovered that was a gross overstatement of

the fees that I was pay ing in my Prudential

contract. Upon closer examination, it looks

more like my fees were closer to $7,000 per

year, not $15,000 and my Management and

Expense fee was set to drop from 1.65% to

0.65% when I hit my 10 year marker in 201 6

(also not disclosed by Jean). I also paid a

$13,077 surrender charge when I moved the

contract. Jean told me not to worry about

it because with the 8% bonus it would offset

the fee that I was paying to move the money.

While it appears that this is tru e, she

didnÓt take i nto consideration that I now

am in a new contract with a new 10 year

surrender charge both on my contract and the

bonus I received with not as much liquidity

on my money after the move. Probably the

most egregious representation is tha t she

stated to me that the old Prudential

contract had no guarantees, and I have

since come to understand that I had a very

valuable lifetime income guarantee that gave

me protected income for life based on a

protected income base of $312,513.80,

which g uaranteed lifetime income of

$15,625.69 . . . . Now that I have moved

the funds over, I have forfeited that

guarantee . . . .

1 8 . The DepartmentÓs April 25, 2017, Administrative

Complaint alleged that Ms. Dorrell violated multiple provisions

of the Flo rida Insurance Code and the Florida Administrative

Code by using misleading and/or false assertions to induce

Mr. Gilpin to purchase an unsuitable annuity.

19 . The F indings of F act from the Recommended Order

demonstrate that the Department had valid rea sons to question

the suitability of the Security Benefit annuity. At the time of

the exchange, the Prudential annuity only had four more years of

surrender charges, and Mr. Gilpin started a new 10 - year period

of surrender charges with the Security Benefit annuity.

Mr . Gilpin incurred a surrender charge of $13,077.56 for

surrendering the Prudential annuity. While that surrender

charge was more than offset by an ei ght percent bonus (i.e.,

$16,000 .00 ) he earned by purchasing the Security Benefit

annuity, th at eight percent bonus was subject to recapture for

the first six years. T he Security Benefit annuity had a 100 -

percent participation rate, and a seven percent roll - up rate.

In contrast, the Prud ential annuity only offered a five percent

roll - up rate. A lso, Mr. Gilpin and his wife experienced

significant health issues during the relevant time period and

were fortunate to be well - insured. However, they would have

likely incurred substantial penalties if they had been forced to

use funds from the relative ly illiquid Security Benefit annuity

to finance their treatment. In addition, moving Mr. GilpinÓs

funds from a variable Prudential annuity to the fixed index

Security Benefit annuity cost Mr. Gilpin when the stock market

rebounded from the lows of the mos t recent recession.

2 0 . Finally, a significant factor in assessing the

suitability of the two annuities was whether Mr. Gilpin

destroyed his guaranteed lifetime income stream of $15,625.69 by

taking an excess withdrawal from the Prudential annuity. If he

had not, then it becomes much easier to argue that the Security

Benefit annuity was not a suitable replacement for the

Prudential annuity.

2 1 . At the time it issued the Administrative Complaint,

the Department possessed statements from Prudential ind icating

that Mr. GilpinÓs guaranteed income stream was intact as late as

September 30, 2012. However, Mr. GilpinÓs hearing testimony,

his 2010 and 2011 income tax returns, and Ms. DorrellÓs

testimony called that into question.

2 2 . While the totality o f the evidence presented at

the final hearing did not clearly and convincingly demonstrate

that Ms. Dorrell committed the violations alleged in Count I,

Mr. GilpinÓs letter to Prudential, the Prudential statements,

and a comparison of the Prudential and Se curity Benefit

annuities provided the Department with a reasonable basis for

pursuing Count I. This analysis is further discussed in

paragraphs 8 1 through 8 4 in the Conclusions of Law.

Counts II and III Î Elizabeth Barbuto and Maria Erb

2 3 . Elizabeth B arbuto executed the following affidavit on

November 10, 2014:

My mom, Jan et Barbuto passed away on

April 16, 2014. My aunt, Marlene Brisco and

my mom were both clients of agent Jean Ann

Dorrell and Senior Financial Security.

After the funeral, my aunt, M arlene Brisco,

set up an appointment for my sister Maria

Erb and me to meet with agent Dorrell to

review my momÓs investments with agent

Dorrell. When we got to the appointment,

Diana Johnson and Matthew Plunkitt were

waiting to meet with us. Agent Dorre ll came

in for a few moments and then left to meet

with other clients. When I went into this

appointment, I did not realize that I would

be making any major decisions that day. I

thought that I was going over my momÓs

things, and that I would have time t o make

any major decisions afterwards. In the

meeting, I was sitting next to Matthew and

my sister Maria was sitting next to Diana.

Diana did the majority of the talking. If

there was something that I didnÓt understand

or needed to read Matthew would he lp me out,

but he did not really explain anything about

what we were seeing or signing. I remember

filling out a form which appeared to be a

new client form, asking about my risk

tolerance and things. I thought that I

would be signing some paperwork to h ave

MomÓs policies placed into my name. Instead

I now know that the paperwork, which Diana

already had prepared, was paperwork to have

new annuity contract[s] issued in my name,

not transferring the contracts m om had [set]

up into my name. The only thing I remember

is that I was told that I would need to keep

one for 10 years. I believe that one of the

policies was placed with Athene and one was

placed with Equitrust. I received a huge

packet from Athene, but by the time that I

opened it, it was too la t e to free look the

policy. Since that time, I have paid more

attention and have spoken to a family

friend and financial advisor, David Hodge,

who explained to me that I could have made

different choices with my inheritance. In

looking back on that day, I was still

grieving the loss of my mother and cannot

believe that paperwork was already prepared

to move my financial future without anyone

ev er having talked with me before hand to see

what I was thinking about doing.

2 4 . At the DepartmentÓs request, EquiTrust and Athene

offered refunds to Ms. Barbuto.

2 5 . Ms. Erb executed an affidavit on October 30, 2014,

that mirrored her sisterÓs:

My mom, Janet Barbuto, passed away in

Florida in April, 2014. She was a client of

agent Jean Ann DorrellÓs. Whil e I was in

Florida a few days after my momÓs passing,

my sister Elizabeth Barbuto and I went to

agent DorrellÓs office to discuss my momÓs

estate. We had a meeting with two people,

Diana and Matthew. I do not know either of

their last names. Diana did m ost of the

talking. Matthew did not say much. She

explained to us that Mom had several Roth

and IRA accounts. At sometime during that

meeting agent Dorrell came into the office,

talked for a few minutes, offered her

sympathy, and then left. Agent Dorre ll did

not discuss any of the policies or accounts

with us. Shortly after that one meeting, I

returned to Oregon and havenÓt been back to

Florida to see agent Dorrell since. I think

at that first meeting, I may have signed

some papers, but I was still in shock, so I

am not sure what I signed. At that point,

the office of agent Dorrell emailed me some

documents to be signed. I know that MomÓs

two IRAÓs needed to have mandatory

withdrawals taken from them, before we could

proceed with anything else. Most of MomÓs

annuities were with American Equity and I

remember at some point either Diana or

Matthew informed me that American Equity did

not do inherited IRA annuities for people

who lived outside Florida, so it would be

necessary for me to place my inherit ance

with another company. My sister is a

Florida resident so this problem did not

pertain to her. I am not sure if my sister

is doing business with agent DorrellÓs

office or not. I did receive two packages

with contracts from agent DorrellÓs office

and I signed where I was instructed to sign

and returned everything to the office as

instructed. The annuity policies which

agent Dorrell selected for me were with

Athene. After thinking about it, I

contacted my financial planner in

Pennsylvania, and found out that the

paperwork I had signed was for a 10 year

annuity, which I did not want to keep.

2 6 . A portion of Diana JohnsonÓs July 29, 2014, affidavit

corroborated the affidavits from Ms. Barbuto and Ms. Erb:

I am awar e of certain situations where

a cl ient pass ed away and agent Dorrell

would have me contact the relatives or

beneficiaries to complete the paperwork to

receive the death benefits. Agent Dorrell

told [me] to sell some type of an insurance

policy to the beneficiary using the proceeds

from th e death benefits. Janet Barbuto was

a client who passed away that I remember. I

sold an annuity policy to each of her two

daughters, Elizabeth Barbuto and Maria Erb,

using the proceeds from JanetÓs policy .

2 7 . Counts II and III of the DepartmentÓs Admi nistrative

Complaint alleged that Ms. Dorrell violated the Florida

Insurance Code and the Florida Administrative Code by:

(a) directing an unlicensed person, Dian a Johnson, to sell

annuities to Ms. Barbuto and Ms. Erb ; (b) failing to perform

any insurance agent services for Ms. BarbutoÓs transactio ns;

(c) falsely informing Ms. Barbuto that it was necessary to

exchange her late motherÓs IRA contracts for new financial

instruments so that Ms. Dorrell could obtain a commission; and

(d) falsely stating to Ms. Erb that her non - Florida residency

made it necessary for her motherÓs IRA contracts to be

liquidated with the resulting funds being used to purchase an

annuity from Athene.

2 8 . The Department noted in the pre - hearing stipulation

submitted prior to the fin al hearing in the underlying case that

it would be dropping Counts II and III. Nevertheless, the

affidavits from Ms. Barbuto, Ms. Erb, and Ms. Johnson provided a

reasonable basis to support the D epartmentÓs allegation that

Ms. Dorrell utilized unlicensed personnel to sell annuities.

Ms. JohnsonÓs affidavit described how she would engage in the

unlicensed sale of insurance products, and she specifically

named Ms. Barbuto and Ms. Erb as examples of how Ms. Dorrell

instructed her to sell products to the bene ficiaries of death

benefits. A s explained in paragraphs 8 5 and 8 6 , under the

Conclusions of Law, the Department Ós action against Petitioner

as set forth in Counts II and III was, at the time that action

was taken, substantially justified.

Count IV Î De borah GartnerÓs Annuities

29 . At the time of the final hearing in the underlying

case , Deborah Gartner was a 71 - year - old widow who met

Ms. Dorrell at a Senior Financial Security seminar in 2007.

Ms. Gartner filled out a form indicating that her net worth was

between $500,000 .00 and $1 million.

3 0 . In January of 2008, Ms. Gartner met with Ms. Dorrell

in order to seek financial advice. Ms. Gartner had $201,344.14

in a Guardian Trust account and $195,182.44 in a Guardian Trust

IRA. In addition, Ms. Gartne r owned an $80,000 .00 certificate

of deposit. On a monthly basis, Ms. Gartner was receiving

$1,381 .00 from social security, $786.15 from a pension, and

$4,500 .00 from investment withdrawals. The latter came from

depleting principal rather than interest.

3 1 . At the time of the January 2008 meeting, the stock

market was declining, and Ms. Gartner was adamant about getting

out of equities. Ms. Dorrell told Ms. Gartner that annuities

would be appropriate if she was interested in principal

protection and g uaranteed income. Because she lacked a

securities license, Ms. Dorrell could not legally recommend or

instruct Ms. Gartner to liquidate her equity investments.

3 2 . On June 24, 2014, Ms. Gartner requested assistance

from ÐSeniors vs. Crime,Ñ a special pro ject of the Florida

Attorney General. Jon Ha rtman handled her case, and Mr. Hartman

had extensive experience in finance. For example, he previously

worked as the director of investments for the K - Mart

CorporationÓs pension savings pl an and managed approx imately

$2 billion in ass ets. After leaving K - Mart, Mr. Hartman worked

as the chief financial officer for a retail telecommunications

company. His last position , prior to retiring from full - time

employment , involved advising high net worth individuals on

their investments. While Mr. Hartman has never sold insurance

or held a brokerage license, he is a chartered financial

analyst, and he described that credential as Ðthe gold standard

for people who wish to manage money on a professional level.Ñ

His Nove mber 20, 2014, investigative report from Ð S eniors vs.

Crime Ñ states that on December 31, 200 7, Ms. Gartner had

$ 394 ,8 14 invested in relatively liquid assets such as stock

mutual funds, a short term bond s , and one or more money market

fund s . The report sug gests that Ms. Dorrell arranged for the

vast majority of the aforementioned money to be transferred into

relatively illiquid annuities.

3 3 . The following paragraph from the report questions the

wisdom behind transferring Ms. GartnerÓs fund s to annuities and

whether subsequent annuity purchases enriched Ms. Dorrell at the

expense of excessively limiting Ms. GartnerÓs liquidity:

While some investments in annuities may be

appropriate, prudent financial management

does not recommend that anyone place 90% o f

their investable assets in annuities or any

other single investment. All investors

should maintain a well - diversified portfolio

based upon their risk tolerances and

liquidity needs. Further, we are troubled

by the fact that annuities typically carry

hi gh commission rates for agents.

Information that we obtained from the

insurance company web sites indicates that

the commission rates for these types of

annuities are 7 - 9% . . . . Further, we are

curious to know the reasoning behind the

transfer of the Re liance Standard annuities

to different insurance companies [in] 2011.

It appears that these transactions were

motivated by additional commissions for

Ms. Dorrell. It is our understanding that

the current surrender charge for the two

Allianz MasterDex 10 contracts is 7.50%,

decreasing by 1.25% per year. The surrender

charge will not drop to zero until February,

2019. For the two American Equity

contracts, the current surrender charge is

16% and will not drop t o zero until

February, 2024. However, withdr awals

limited to 10% annually from Allianz and

American Equity may be taken without

incurring a surrender charge on the

anniversary date of the policies. Thus, the

annuities severely restrict Ms. GartnerÓs

liquidity position.

3 4 . One of the conclusion s in Mr. HartmanÓs report stated

that :

I t is our opinion that Ms. Dorrell ÐchurnedÑ

Ms. GartnerÓs investment portfolio for her

benefit to earn commission income. As

evidenced by the Guardian Trust statemen ts

as of December 31, 2007, Ms. Gartner had two

di fferent accounts totaling $394,814 that

were invested approximately two - thirds in

different equity mutual funds and the

remaining one - third in short bond funds and

money market funds. As stated on page 2 of

this report, it is our opinion that no

reputable financial advisor would place 90%

or more of any clientÓs assets in any single

investment vehicle.

3 5 . Ms. Gartner executed an affidavit on October 7, 2014,

indicating that she completely relied on Ms. Dorrell to manage

her finances after her husbandÓs death:

To the best of my knowledge, everything that

my husband had set up was in the stock

market. Most of the funds were in IRAÓs in

his name. Nothing was in my name until he

passed away. After Agent Dorrell had my

portfolio transferred , everything was placed

into Van Guard Capital Account number 5XG -

153754. . . . When I did meet with Agent

Dorrell in the beginning when the accounts

were fresh, Agent Dorrell would get out her

chalkboard and explain and [] I didnÓt

understand what she was talking about, but

it sounded good. So I would do what Agent

Dorrell suggested. I trusted her like she

was my sister, and so whatever Agent Dorrell

suggested, I would go along with. I had no

reason to question what was happening with

my accounts. I was getting a mon thly

allowance of $2500.00 and I thought

everything was fine . . . . Pretty soon,

after I had some questions, and I would make

an appointment with Agent Dorrell, and in

would walk Goldie and she would take over.

This went on for about two years. It was

a lways Goldie. IÓm not sure where the money

was coming from. I am assuming that the

money came from one of my annuities or my

other accounts. I trusted Agent Dorrell to

take care of everything and Goldie and Diana

worked for her. They were getting

instr uctions fro m Agent Dorrell on my

behalf.

3 6 . In Count IV of the Administrative Complaint, the

Department alleged that Ms. Dorrell: (a) operated without a

brokerage registration and gave investment advice that led to

the depletion of Ms. GartnerÓs fund s via the conversion of

liquid brokerage assets into illiquid annuities; (b) recommended

the liquidation of an annuity that caused Ms. Gartner to incur a

substantial loss due to surrender charges; and (c) falsified

information on annuity application forms. Thus, the Department

accused Ms. Dorrell of violating the Florida Insurance Code and

the Florida Administrative Code by disseminating false

information and by demonstrating a lack of trustworthiness and

expertise.

3 7 . Ms. GartnerÓs asserti ons about ho w she relied on

Ms. Dorrell to manage her money corroborated the portion of

Mr. PlunkittÓs affida vit in which he stated that Ms. Dorrell

gave investment advice without having the proper licensure.

While the Recommended Order from the underlying proceeding

indicates that the allegation that Ms. Dorrell gave investment

advice turned on a credibility determination, the affidavits

from Ms. Gartner and Mr. Plunkitt provided a reasonable basis

for Count IV. Also, the report from ÐSeniors vs. CrimeÑ

presented a soli d basis for concluding that Ms. Dorrell had

mishandled Ms. GartnerÓs funds. The substantial justification

for pursuing Count IV is dis cussed further in paragraphs

8 7 through 89 , under the Conclusions of Law.

Count V Î Deborah GartnerÓs Real Estate Transactions

3 8 . Ms. Gartner and Ms. Do rrell became friends, and

Ms. Gartner sought Ms. DorrellÓs advice in 2012 about selling

her home in Summerfie ld, Florida. At that time, Ms. Gartner

wanted to acquire a smaller home in The Villages, Florida.

Howeve r, Ms. Gartner was having difficulty selling the

Summerfield home.

39 . Along with referring Ms. Ga rtner to a real estate

agent, Ms. Dorrell allegedly advised her to stop paying the

mortgage on her Summerfield home and to do a short sale.

4 0 . Ms. Gartne r and Ms. Dorrell informally agreed that

Ms. Gartner would sele ct a house in The Villages, Ms. Dorrell

would purchase it, and Ms. Gartner would then buy the house from

her. Ms. Dorrell made t he initial purchase because Ms. Gartner

lacked funds and/or a go od credit rating following the short

sale.

4 1 . Ms. Gartne r and Ms. Dorrell discussed Ms. Gartner

purchasing the villa from Ms. Dorrell, but they never reached a

formal agreement on terms.

4 2 . Because a short sale would have a negative impact on

her credi t rating, Ms. Dorrel l allegedly advised Ms. Gartner to

buy a new car prior to executing the short sale.

4 3 . Ms. Gartner sol d her 2003 Mazda Tribute to Ms. Dorrell

for $10,000 .00 , and Ms. Gartner purchased a new car.

4 4 . Ms. Gartner selected a villa in Th e Villages, and

Ms. Dorrell purchased it for $229,310.78 on November 1, 2012.

Of the aforementioned amount, Ms . Gartner paid $10,000 .00 and

Ms. Dorrell paid the remaining $219,3 10.78. At this point in

time, Ms. Dorrell was the legal owner of the villa.

4 5 . Ms. Gartner could not move into the villa immediately

after the sale because it was being rented, and the tenantsÓ

lease extended through April of 2013.

4 6 . Ms. Dorrell received the rental payments of $1,800 .00

per month and paid the expenses associat ed with the villa

between November of 2012 and April of 2013. Those expenses

included items such as home insurance, cable television, lawn

maintenance, and utilities.

4 7 . By May of 2013, Ms. Gartner had completed a short sale

of her Summerfield home. Sh e received a short sale benefit of

$36,775.00 and a seller assistance payment of $3,000.00 .

4 8 . Ms. Gartner moved into the villa in May of 2013.

At that point in time, there was no formal agreement between

Ms. Gartner and Ms. Dorrell about when Ms. Do rrell would sell

the villa to Ms. Gartner o r how Ms. Gartner would pay

Ms. Dorrell for it.

49 . Ms. Gartner paid no rent to Ms. Dorrell from May of

2013 through April of 2014.

5 0 . In November of 2014, Ms. Dorrell sold the villa to

Ms. Gartner for approxim ately $21 9,000 .00 , the same price that

Ms. Dorrell had paid for it.

5 1 . In order to finance t he sale, Ms. Gartner executed

a promissory note that would pay Ms. Dorrell $100,000 .00 with

four percent interest. Ms. Dorrell did not record that

promissory no te. In order to finance the remai nder of the

purchase price, Ms. Gartner obtained a reverse mortgage.

5 2 . Ms. Gartner stated in her October 7, 2014, affidavit

that Ðall of a sudden I received paperwork from Agent Dorrell

stating that I owed her all kinds of money and if I did not pay

up she could take my home.Ñ Mr. HartmanÓs report also covered

the aforementioned transactions and reached the following

conclusions:

It is our op inion that Ms. Dorrell gave

Ms. Gartner very poor investment advice in

that she convinced Ms. Gartner to enter into

a short sale without investigating other

alternatives. Second, Ms. Dorrell either

kept very poor records or deliberately kept

Ms. Gartner Ðin the darkÑ regarding her

fin ancial obligations. Third, Ms. Dorrell

did not f ormulate a reasonable exit strategy

for Ms. Gartner to pay off her obligations

to Ms. Dorrell. Apparently, her strategy

was to force Ms. Gartner into applying for a

reverse mortgage, using those proceeds to

pay off the promissory note, and then get

the re st of her money from Ms. GartnerÓs IRA

account [when] Ms. Gartner turned 70 and ½.

That strategy would have a negative impact

on Ms. GartnerÓs income tax situation as it

would increase her adjusted gross income,

making h er social security payments

85% tax able.

It is our opinion that Ms. Dorrell has

willfully and deliberately overstated her

claims for monies due from Ms. Gartner.

Further, we documented that Ms. Dorrell was

not being truthful with us regarding her

relationship with Ms. Gartner during our

m eeting on August 14, 2014.

The true amount of the financial obligation

that Ms. Gartner has to Ms. Dorrell is

unknown. Ms. Gartner had signed a

promissory note for $100,000. Beyond that,

some amount is due Ms. Dorrell. However, we

do not have sufficient information to make

an accurate determination of the additional

amount due.

5 3 . The DepartmentÓs Administ rative Complaint alleged

that Ms. Dorrell committed several wrongful acts such as:

(a) advising Ms. Gartner to stop making mortgage payments on

t he Summerfield home; (b) arranging for the purchase of the

villa and accepting a $10,000 .00 deposit from Ms. Gartner

without giving her credit for that payment; (c) failing t o

record the promissory note; and (d) pressuring Ms. Gartner to

apply for a revers e mortgage and arranging to obtain the balance

from Ms. GartnerÓs IRA account in order to pay off the

promissory note. According to the Department, the

aforementioned allegations amounted to a violation of Florida

Administrative Code R ule 69B - 215.210 whic h declares that all

life insurance agents must always place the policyholderÓs

interests first. The Department also concluded that the

aforementioned allegations demonstrated a lack of

trustworthiness to engage in the business of selling insurance.

5 4 . Ms. GartnerÓs affidavit along with the report from

Ð Seniors vs. Crime Ñ provided a reasonable basis for the

Department to pursue the allegations under Count V. The

substantial justification for pursuing Count V is discussed

further in paragraphs 9 0 and 9 1 u nder the Conclusions of Law.

C ount VI Î Earl Doughman

55 . Earl Doughman was born in 1934 and was a client of

Ms. DorrellÓs. He wrote the following letter to the Security

Benefit Life Insurance Company on April 14, 2014:

This letter is to file a for mal complaint

concerning the Total Value Annuity dated

9/30/2013. Jean A. Dor r ell is the listed

agent on my annuity.

After a recent phone call to [acquire]

information regarding my annuity, I

discovered that I was extremely misled and

all the important d etails of this contract

were never disclosed to me. This links to

Elder Financial Abuse.

Jean A. Dorre ll was never present during

the presentation and sale of my annuity.

Jean A. Dorrell was not present during the

delivery of my annuity. Jean A. Dorrel l

never witnessed any process involved with my

annuity. Diane Johnson did everything

involved with the sale, presentation and

delivery of my annuity. Why is Jean A.

Dorrell the listed agent on my contract?

Why did Jean A. Dorrell sign as agent on

8/28/2 013? I never sa w Jean A. Dorrell on

8/28/2013. I thought Dian e Johnson was my

agent.

During the presentation, I asked

Diane Johnson, ÐWhy should I move from

Midland Nat ional? Midland is paying me

3% guaranteed fixed interest.Ñ Diane told

me, ÐYou are going from 3% to 4%.Ñ Diane

NEVER disclosed to me that this is a Rider

with an ANNUAL initial charge of 0.95% and

[a] maximum charge of 1.80%. Diane

presented the 4% interest as fixed

guaranteed. This makes me very upset!

The initia l current interest r ate is

1.5% with the Security Benefit Total Value

Annuity. As I mentioned before, my Midland

National annuity was earning 3% guaranteed.

Also, the cap on my index with Midland was

5.25%. The cap with the Total Value Annuity

is only 3.25%. This is not a good

replacement from an annuity to annuity.

Selling the Total Value Annuity to me was

never suitable. This appears to be illegal

and is definitely Elder Financial Abuse.

It is my hope that this contract be

terminated and my initial Purchase Payment

of $29,492.30 be paid out immediately, with

no penalties, because I was misled into

purchasing this contract under false details

regarding the Total Value Annuity.

5 6 . Security Benefit responded to Mr. DoughmanÓs letter on

May 13, 2014, by notifying him t hat it would cancel the contract

and refund the purchase price.

5 7 . The DepartmentÓs Administra tive Complaint alleged that

Ms. Dorrell violated numerous provisions governing insurance

agents by having an unlicensed employee sell an unsuitable

annuity to Mr. Doughman.

5 8 . Mr. DoughmanÓs letter describing how an unlicensed

employee, Diana Johnson, sold him an annuity corroborated the

affidavits of former employees of Senior Financial Se curity as

to how Ms. Dorrell facilitated unlicensed activities.

T he aforementioned documents were a reasonable basis for

pursuing Count VI, and the substantial justification for

pursuing Count VI is discussed further in paragraph 9 2 u nder the

Conclusions of Law.

Count VII Î Margaret Dial

59 . Margaret Dial was born in 1950. Ms. Dial met

Ms. Dorrell in July of 2007 and purchased multiple annuities

from her. One of those annuities was an Old Mutual annuity that

she purchased on November 11, 2007.

6 0 . In 2013, Ms. Dorrell advised Ms. Dial to surrender the

Old Mutual annuity and use the proceeds to purchase a Security

Benefit annuity. After incurring $16,560.39 in surrender

charges, Ms. Dial received $129,901.2 1 in the form of a check

mailed to her home.

6 1 . On March 12, 2013, Ms. Dial signed an application to

purch ase the Security Benefit annuity recommende d by Ms. Dorrell

for $130,000 .00 .

6 2 . The application associated with the Security Benefit

annuity was incorrect because it did not show that it was a

replacement for the Old Mutual annuity.

6 3 . Ms. DialÓs surre nder of the Old Mutual annuity and

purchase of the Security Benefit annuity was problematic for

multiple reasons. For instance, Ms. Dorrell sold the Old Mutual

annuity to Ms. Dial and then encouraged her to surrender it and

use the proceeds to acquire the Security Benefit annuity. In

effect, Ms. Dorrell earned two commissions on the same money.

Also, the manner in which the Security Benefit annuity was

purchased could have potentially prevented Old Mutual from

engaging in conservation efforts. ÐConserva tionÑ is the term

used to describe an insurance companyÓs effort to retain

existing business.

6 4 . Ms. Dial filed a complaint with Security Benefit in

April of 2016 stating that ÐJean Dorrell had me CLOSE the

account to transfer my monies with a great LOSS to Security

Benefit.Ñ Security Benefit responded with a June 8, 2016,

letter offering to cancel the Security Benefit annuity and

return Ms. DialÓs purchase payment.

6 5 . Security Benefit then iss ued the following letter to

Ms. Dorrell on June 20, 2016:

Security Benefit Life Insurance Company

(ÐSecurity BenefitÑ) recently received and

addressed a complaint from Margaret Dial, to

whom you presented a Secure Income Annuity

for sale in 2013. As part of our

investigation, Security Benefit directed

that you provide a statement addressing the

complaint, which you furnished through your

attorney.

In the course of investigating Ms. DialÓs

complaint, Security Benefit learned that

despite the application and Annuity

Suitability form for the Contract indicating

ot herwise, Ms. DialÓs purchase of the

Contract had in fact involved the

replacement of an existing annuity contract

she owned (said contract was issued by

Fidelity & Guaranty Life Insurance Company).

Your statement indicated that the

transaction was not dis closed to Security

Benefit as a replacement due to clerical

error on the part of your office staff.

As you should know, the proper handling of

proposed annuity replacements is a

continuing focus of insurance regulators,

including the Florida Office of I nsurance

Regulation. As such, the failure to

disclose that a replacement will occur is a

very serious matter and one that Security

Benefit does not take lightly whether due to

clerical error or otherwise.

By this letter, Security Benefit is

notifying y ou that any further failure to

disclose replacement activity will result in

the termination of your appointment and the

enforcement of any other remedies available

to Security Benefit under the terms of your

Producer Agreement. (emphasis added)

6 6 . The DepartmentÓs Administrative Complaint generally

alleged that Ms. Dorrell violated several governing statutes by

transmitting false information and displaying a lack of

trustworthiness.

6 7 . In addition to the fact that Ms. Dorrell had admitted

to Security Benefit that she had failed to disclose the source

of the funds that would be used to purchase the annuity, the

Department knew that Ms. Wippe rman had specifically named

Ms. Dial as a client who had been misinformed about the amount

of their surrender char ges. That information provided a

reasonable basis for pursuing C ount VII against Ms. Dorrell.

The substantial justification for pursuing Count VII is

discussed further in paragraphs 9 3 and 9 4 under the Conclusions

of Law.

Count VIII Î Unlicensed Activit ies

6 8 . The Department alleged under Count VIII of the

Administrative Complaint that Ms. Dorrell and/or her employees

performed work without having the proper licensure.

Specifically, the Department alleged that Ms. DorrellÓs

employees wrote Lady Bird de eds 3/ and wills without being

licensed attorneys. The D epartment also alleged that

Ms. Dorrell and/or her employees encouraged clients to liquidate

security holdings without being licensed investment

professionals.

69 . The affidavits from Laura Wipperm an, Diana Johnson,

and Matthew Plunkitt provided a reasonable basis for the

Department to pursue Count VIII. The substantial justification

for pursuing Count VIII is dis cussed further in paragraphs 9 5

through 10 0 under the Conclusions of Law.

Count IX Î Performance of Unlicensed Insurance Activities

7 0 . The Departme nt alleged in Count IX that Ms. Dorrell

had Ms. Wipperman and Ms. Johnson perform acts that could only

be performed by a licensed insurance agent. Those allegations

were reasonably suppor ted by the affida vits of Ms. Wipperman,

Ms . Johnson, and Mr. Plunkitt. The substantial justification

for pursuing Count IX is discussed further in paragraph 10 1

under the Conclusions of Law.

Count X Î Failure to Report Administrative Actions

7 1 . The De partment dismissed Count X , but alleged in the

Administrative Complaint that Ms. Dorrell violated Florida Law

by failing to report to the Department two administrative

actions taken against her by the states of Nevada and Wisconsin.

This allegation was su pported by a March 14, 2008, letter from

Ms. Dorrell to Reliance Stan dard Life Insurance Company. That

letter provided a reasonable basis for pursuing Count X, and the

substantial justification for pursuing Count X is discussed

further in paragraphs 10 2 a nd 10 3 under the Conclusions of Law.

CONCLUSIONS OF LAW

7 2 . DOAH has personal and subject matter jurisdiction

in this proceeding pursuant to sections 57.111(4), 120.569,

and 120.57(1), Florida Statutes. The Administrative Law Judge

has final order author ity in this matter. § 57.111(4)(d), Fla.

Stat.

7 3 . The Florida Legislature has found that small business

parties Ðmay be deterred from . . . defending against,

unreasonable governmental action because of the expense of . . .

administrative proceedings. Because of the greater resources of

the state, the standard for an award of attorneyÓs fees and

costs against the state should be different from the standard

for an award against a private litigant.Ñ £ 57.111(2), Fla.

Stat.

7 4 . Accordingly, the Florida Legislature enacted

section 57.111 to Ðdiminish the deterrent effect of seeking

review of, or defending against, governmental action by

providing in certain situations an award of attorneyÓs fees and

costs against the state.Ñ £ 57.111(2), Fla. Stat.

7 5 . Section 57.111 directs that unless otherwise provided

by law, a reasonable sum for ÐattorneyÓs fees and costsÑ shall

be awarded to a private litigant when all five of the following

predicate findings are made:

1. An adversarial proceeding was Ðinitiated

by a state agency.Ñ

2. The private litigant against whom such

proceeding was brought was a Ðsmall business

party.Ñ

3. The small business party Ðprevail[ed]Ñ

in a proceeding initiated by a state agency.

5. The agencyÓs actions were not

substantially j ustified.

4. No special circumstances exist that

would make an award of fees unjust.

7 6 . In the instant case, the only issues to be resolved

are the following: (a) was the DepartmentÓs decision to

prosecute substantially justified and ( b ) do any spe cial

circumstances exist that would make an award of attorneyÓs fees

and costs unjust . Each of those issues will be separately

addressed below. Section 57.111(4)(a) provides that a party

seeking an award of fees and costs is not entitled to an award

if t he agency can demonstrate that its actions were

Ðsubstantially justified.Ñ

De scription of the Substantial Justification Standard

7 7 . In order to be Ðsubstantially justified,Ñ the agencyÓs

action must have Ðhad a reasonable basis in law and fact at the

t ime it was initiated by a state agency.Ñ £ 57.111(3)(e), Fla.

Stat.

7 8 . The agency has the burden of proving by a

preponderance of the evidence that its actions were

Ðsubstantially justified.Ñ See DepÓt of HRS v. South Beach

Pharmacy , 635 So. 2d 117, 12 1 (Fla. 1st DCA 1994)(noting that

Ðonce a prevailing small business part y proves that it qualifies

as such under section 57.111, the agency that initiated the main

or underlying proceeding has the burden to show substantial

justification or special circums tances.Ñ); £ 120.57(1)(j), Fla.

Stat. ( providing that Ð[f]indings of fact shall be based upon a

preponderance of the evidence, except in penal or licensure

disciplinary proceedings or except as otherwise provided by

statute, and shall be based exclusively on the evidence of

record and on matters officially recognized.Ñ).

79 . The First District Court of Appeal has described the

Ðsubstantial justificationÑ standard as follows:

An action is Ð substantially justified Ñ

if the state agency had a Ð reasonable

bas is i n law and fact Ñ to initiate it.

§ 57.111(3)(e), Fla. Stat. (2010). This

Court has found an agency cannot satisfy the

Ð substantial justification Ñ standard simply

by showing an action was Ð not frivolous. Ñ

This is because Ð while governmental action

may not be so unfounded as to be frivolous,

it may nonetheless be based on such an

unsteady foundation factually and legally as

not to be substantially justified. Ñ DepÓt

of Health & Rehab. Servs. v. S.G. , 613 So.

2d 1380, 1386 (Fla. 1st DCA 1993). On the

ot her hand, t he standard is not so strict

as to require the agency to demonstrate that

its action was correct. Id . , quoting

McDonald v. Schweiker , 726 F.2d 311,

316 (7th Cr. 1983)(stating the government

need not have a Ð necessarily correct basis

[] f or the position that it took Ñ ). The

Ð substantial justification Ñ standard lies

between these two extremes. The closest

approximatio n is that if a state agency

can present an argument for its action

ÐÒ that could satisfy a reasonable

person[,] ÓÑ then that action s hould be

considered Ð substantially justified. Ñ

Helmy , 797 So. 2d at 368, quoting Pierce v.

Underwood , 487 U.S. 552, 565, 108 S. Ct.

2541, 101 L. Ed. 2d 490 (1998).

Ag. for Health Care Admin. v. MVP Health, Inc. , 74 So. 3d 1141,

1143, 11 44 (Fla. 1 st DCA 2 011) ; s ee also Helmy v. DepÓt of Bus.

& ProfÓl Reg. , 707 So. 2d 366, 368 (Fla. 1st DCA 1998)(noting

that Ðin terms of Florida law, the Òsubstantially justifiedÓ

standard falls somewhere between the no justiciable issue

standard of section 57.105, Florida S tatutes (1991), and an

automatic award of fees to a prevailing party.Ñ); Fish v. DepÓt

of Health, Bd. of Dentistry , 825 So. 2d 421, 423 (Fla. 4th DCA

2002)(noting that Ð[t]o sustain a probable cause determination

there must be some evidence considered by t he panel that would

reasonably indicate that the violation had indeed occurred. See

Kibler , 418 So. 2d at 1084. The evidence, however, need not be

as compelling as that which must be presented at the formal

administrative hearing on the charges to suppor t a finding of

guilt and the imposition of sanctions.Ñ).

8 0 . In evaluating whether an agencyÓs prosecution was

substantially justified, the inquiry is limited to whether the

agency had Ða reasonable basis in law and fact at the time it

was initiated by a state agency.Ñ £ 57.111(3)(e), Fla. Stat.

ÐThe reviewing body Î whether DOAH or a court Î may not consider

any new evidence which arose at a fees hearing, but must focus

exclusively upon the information available to the agency at the

time that it acted .Ñ MVP Health, Inc. , 74 So. 3d at 1144.

ÐSubstantial justification must exist at the time the agency

initiates the action as subsequent discoveries do not vitiate

the reasonableness of the actions of the agency at the time they

made their probable cause determinations.Ñ McCloskey v. DepÓt

of Fin. Servs. , 172 So. 3d 973, 976 (Fla. 5th DCA 2015).

Count I Î Frederic Gilpin

8 1 . Petitioner argues that the Department should have

retained an expert to evaluate the suitability of the annuity

Ms. Dorrell sold to Mr. Gilpin prior to issuing the

Administrative Complaint. By doing so, Petitioner advocates for

a requirement that the Florida Legislature has not chosen to

impose on the Department.

8 2 . Despite the lack of a retained expert, the facts

suggest that p eople experienced with annuities evaluated the

facts before them and concluded t hat a charge was justified.

As discussed above, Ms. Alexander and Ms. Williams were licensed

to sell annuities prior to their employment with the Department.

Because Ms. Alex ander elected not to exercise her discretion

and close the DepartmentÓs case file upon the completion of

Ms. WilliamsÓ s investigation, it is reasonable to infer that she

concluded Ms. Dorrell should be prosecuted based on her dealings

with Mr. Gilpin.

8 3 . Petitioner also argues that information on a

Prudential statement covering the period from January 1, 2012,

through March 31, 2012, should have alerted the Department that

there was a need to verify , via Mr. GilpinÓs income tax returns

or direct communi cation with Prudential , that Mr. Gilpin had not

destroyed his guaranteed income by taking an excess withdrawal.

8 4 . The Prudential statements were enough to lead a

reasonable person to conclude that Mr. Gilpin had not destroyed

his guaranteed income by taking an excess withdrawal.

Florida l aw did not require the Department to verify the

Prudential information via another source prior to issuing the

Administrative Complaint. Rather, it is only necessary that

there is evidence considered in the develo pment of the

Administrative Complaint that would reasonably support the

alleged violation. Fish , 825 So. 2d at 423 (2002 ) .

Counts II and III Î Elizabeth Barbuto and Maria Erb

8 5 . PetitionerÓs defense to Counts II and III is set forth

in the following p aragraphs from its Proposed Final Order:

33. Neither Barbuto nor Erb testified.

Alexander did not know when they notified

the Department that they would not appear

nor the reason for their non - appearance.

34. There was no apparent investigation or

evid ence whether the decedentÓs annuities

were transferable upon her death to Barbuto

or Erb. The affidavits alone, without any

evidence as to the suitability of the

transaction, in addition to the failure of

the parties to have their experts review the

trans action due to the DepartmentÓs

dismissal of these counts, are not

sufficient to prove that these counts were

substantially justified.

8 6 . This criticism overlooks that Counts II and III of

the DepartmentÓs Administrative Complaint alleged , in part , tha t

Ms. Dorrell violated the Florida Insurance Code and the

Florida Administrative Code by: (a) dir ecting an unlicensed

person, Diana Johnson, to sell a nnuities to Ms. Barbuto and

Ms. Erb and (b) failing to perform any insu rance agent services

for Ms. Barbu toÓs transactions. In light of the fact that

Ms. Barbuto and Ms. Er bÓs affidavits corroborated Ms. JohnsonÓs

assertions regarding unlicensed activity and the targeting of

those receiving death benefits, the Department had substantial

justification for pur suing Counts II and III.

Count IV Î Deborah GartnerÓs Annuities

8 7 . Petitioner a rgues in its Proposed Final Order that the

DepartmentÓs decision to proceed with Count IV was not

substantially justified because Ms. Gartner was supposedly not a

credible w itness:

36. Williams interviewed Gartner who

signed a typed affidavit on October 7, 2014.

In her affidavit [], she averred with

respect to her house in Summerfield, Florida

that ÐI was s till making my payments and

was not having money issues.Ñ Alexander

testified that the Department relied on

GartnerÓs s tatement that ÐI was current

on the payments . Ñ . . . However, as

Mr. Sanchez testified regarding

investigative techniques, if the Department

had made an online search of forfeiture

actions in Marion Coun ty, Florida it would

have discovered that a foreclosure action

had been filed against Gartner on April 16,

2013 and was still pending on October 7,

2014. That information alon e should or

would have caused the Department to question

GartnerÓs credibility a nd memory, especially

as to events 6 and 9 years in the past.

Petitioner also argues that the Department should have been

aware of pending circu it court litigation between Ms. Gartner

and Ms. Dorrell and implies such knowledge would have also

caused the Department to question Ms. GartnerÓs credibility.

8 8 . These arguments are not persuasive. Moreover, doubts

about a witnessÓs credibility do not necessarily undermine a

decision to prosecute. See generally Temp Tech Indus . , Inc. v.

NLRB , 756 F.2d 586 (7 th Cir 1985)(noting that a decision to

litigate an issue that turned on a credibility assessment was

not itself unreasonable.).

89 . As for the D epartmentÓs allegation that Ms. Dorrell

induced Ms. Gartner to purchase unsuitable annuities, Petitioner

ass erts that the Department failed to account for the fact that

as of March 11, 2014, Ms. Gartner continued to own all of the

annuities at issue. However, given the testimony during the

final hearing from the underlying proceeding regarding the

significant s urrender charges associated with annuities, it is

not surprising that Ms. Gartner would still own annuities that

may not have been suitable for her.

Count V Î Deborah GartnerÓs Real Estate Transactions

9 0 . Petitioner argues that the Department was not

s ubstantially justified in brin g ing Count V because Ms. Gartner

lived rent - free in the villa for a year before it was

transferred to her and this suppo sedly undermines any allegation

that Ms. Dorrell was atte mpting to take advantage of

Ms. Gartner. Petitio ner also points out tha t Ms. Gartner

supposedly admitted in her affidavit that sh e owes Ms. Dorrell

$229,000 .00 .

9 1 . The greater weight of the evidence demonstrates that

the Department had substantial j ustification for pursuing

Count V. The un usual dea lings described in Ms. GartnerÓs

affidavit and the Ð Seniors vs. Crime Ñ report (especially the

encouragement for Ms. Gartner to go into default on the

mortgage) were more than sufficient to cause the Department to

question Ms. DorrellÓs trustworthiness.

C ount VI Î Earl Doughman

9 2 . Petitioner uses its Proposed Final Order to point out

evidence contrary to the DepartmentÓs. However, the existence

of contrary evidence does not equate to no substantial

justification. See generally Fish , 825 So. 2d at 423 (noting

that Ð[t]he evidence, however, need not be as compelling as that

which must be presented at the formal administrative hearing on

the charges to support a finding of guilt and the imposition of

sanctions.Ñ). The greater weight of the evidence demon strates

that the Department was substantially justified in pursuing

Count VI.

Count VII Î Margaret Dial

9 3 . Petitioner argues in its Proposed Final Order that

Ð[i]n a situation where a licensee has acknowledged an error to

the Department, but the Depar tment does not pursue inquiry of

the licensee, the Department cannot be substantially justified

in filing an administrative complaint accusing the licensee of

such misconduct.Ñ In making this argument, Petitioner attempts

to add a requirement to pursuing charges that is not currently

in Florida Law.

9 4 . While Ms. Dorrell sta ted that the false statement

on the annuity application was a mistake or clerical error,

the circumstances of the Security Benefit purchase and the

affidavits from Ms. DorrellÓs form er employees provided the

Department with substantial j ustification for pursuing

Count VII.

Count VIII Î Unlicensed Activities

9 5 . Petitioner argues , in part , that the Department had no

substantial justification for pursuing Count VIII by asserting

that :

WippermanÓs affidavit is suspicious in its

wording compared to the wording of WilliamsÓ

questions and notes. Whether these were

WippermanÓs words, or the words of other

affiants, i s questionable in view of

AlexanderÓs testimony that affidavits are a

com bination of consumers telling the

Department what happened and then the

Department asking questions. Afterw a rd,

Williams types up an affidavit for review

and signature. Affidavits are also

questionable because the Department never

takes recorded statemen ts.

9 6 . This argument is unpersuasive. While an affidavit is

not word - for - word testimony, the Department had no reason to

doubt that the sworn affidavits of Ms. Wipperman, Ms. Johnson ,

and Mr. Plunkitt were not accurate recitations of what they

reported .

9 7 . Petitioner also argues that if the Department had

investigated the backgrounds of the affiants, then it would have

discovered that they were biased against Ms. Dorrell. For

example, Petitioner argues that the Department could have

learned that Ms . Dorrell fired Ms. Wipperman and Ms. Joh n son,

and that the Department should have then inquired of Ms. Dorrell

about the circumstances associated with those firings.

Petitioner also argues that the Department should have

discovered that Ms. Johnson had b een unsuccessful in an

unemployment compensation claim against Ms. Dorrell.

9 8 . PetitionerÓs arguments pertain to the credibility of

the three affiants. Even if the Department had been aware of

the biases noted above, it could have reasonably pursued

Count VIII. See generally Natchez Coca - Cola Bottling Co. v.

NLRB , 750 F.2d 1350 (5 th Cir. 1985)(noting that any lack of

credibility of witness testimony was not so clear that no

reasonable general counsel would have prosecuted the claim).

99 . In additi on to the affidavits, the Department received

from Ms. Wipperman co untless e - mails authored by Ms. Dorrell.

Taken together, the affidavits and the e - mails demonstrate that

Ms. Dorrell is hard on her employees. Therefore, any bi ases

against Ms. Dorrell by Ms. W ipperman, Ms. Johnson, and

Mr. Plunkitt would not have been a surprise.

10 0 . Petitioner also takes the Department to task for not

obtaining any Lady Bird deed s indicating that t hey were not

prepared by an attorney and for not contacting any person for

whom a will was allegedly prepared by Ms. DorrellÓs employees.

These arguments are unpersuasive, and the greater weight of the

evidence demonstrates that the Department had substantial

justification for pursuing Count VIII.

Count IX Î Performance of Unlicensed Insurance Activities

10 1 . Petitioner raises the same argument in response to

Count IX as it did to Count VIII. As noted above, these

arguments are unpersuasive, and the greater weight of the

evidence demonstrates that the Department had su bstantial

justification for pursuing Count IX.

Count X Î Failure to Report Administrative Actions

10 2 . PetitionerÓs argument in relation to Count X is

limited to the following from its Proposed Final Order:

59. The Department presented minimal

evidenc e with respect to this count.

PetitionerÓs main argument against this

count is its timeliness or lack thereof.

The allegations go back to 2004, 13 years

prior to filing the administrative

complaint. At the hearing, Alexander was

questioned regarding Dep artmentÓs Exhibit R

55, DorrellÓs application for appointment by

Reliance Standard. It appears from the

exhibit that Dorrell acknowledged that she

had been fined or had other administrative

action imposed on her by a licensing

authority.

60. Alexander further testified that a

licensee would notify the Department of

administrative action, and the Department

would keep communication logs. (TR131/19).

However, she did not personally at any time

in this case review the communication logs,

and they were n ot offered into evidence.

(TR132/1). There can be no finding that the

Department was substantially justified in

filing Count X.

10 3 . PetitionerÓs argume nt negle cts to me ntion that ,

regardless of the reasoning behind the DepartmentÓs decision to

dismi ss Count X subsequent to the filing of the Administrative

Complaint, Ms. Williams confirmed that the administrative

actions at issue were not reported to the Department. Thus,

PetitionerÓs argument does not dissuade the undersigned from

concluding that th e greater weight of the evidence demonstrates

that the Department had substantial justification for pursuing

Count X .

Do Special Circumstances Make an Award of Fees Unjust?

10 4 . In addition to demonstrating that its actions were

Ðsubstantially justified ,Ñ a state agency can avoid paying fees

and costs under section 57.111 if it can demonstrate that there

are special circumstances that would make an award of fees and

costs unjust. See § 57.111(4)(a), Fla. Stat.

10 5 . Section 57.111 does not define the t erm Ðspecial

circumstances.Ñ However, Ðthe use of the word ÒspecialÓ connotes

something unusual or unique.Ñ Brown v. Bd. of Psychological

ExamÓr , Case No. 92 - 6307F, 1993 Fla. Div. Admin. Hear. LEXIS

5362 (Fla. DOAH Aug . 24, 1993)(concluding that Ðnone of these

circumstances rises to a level of being so special or unique as

to excuse respondentÓs actions.Ñ).

10 6 . As noted above, the FEAJA is modeled after the Federal

Equal Access to Justice Act, and federal case law provides some

guidance regarding the proper interpretation of Ðspecial

circumstancesÑ in the state statute. For instance, federal case

law states that Ð[t]he EAJAÓs Òspecial circumstancesÓ exception

is a Òsafety valveÓ that gives Òthe court discretion to deny

awards where equitable considera tions dictate an award should not

be made. Ó Ñ Vincent v. CommÓr of Soc. Sec. , 651 F.3d 299, 303

(2d Cir. 2011). However, what amounts to a Ðsafety valveÑ is

indistinct because federal case law also states that Ðif the

Òspecial circumstancesÓ exception is to function as an equitable

Òsafety valve,Ó its contours can emerge only on a case - by - case

basis.Ñ Vincent , 651 F.3d at 303.

10 7 . The Department made no argument in its Proposed Final

Order that special circumstances exist that would make an award

to Pe titioner unjust. Given that its decision to issue the

Administrative Complaint was substantially justified, the

failure to argue special circumstances is of no consequence.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is OR DERED that Senior Financial Security, Inc.Ós

ÐVerified Application for Award of AttorneyÓs Fees and Costs Ñ is

DENIED.

DONE AND ORDERED this 20th day of November, 2019 , in

Tallahassee, Leon County, Florida.

S

G. W. CHIS ENHALL

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 Administr ative Hearings

this 20th day of November, 2019 .

ENDNOTE S

1/ At the outset of the final hearing, the attorney for Jean - Ann

Dorrell and Senior Financial Security stated that Ðthe testimony

will be that Senior Financial Security is the only qualified

Pet itioner in this case and is also the party that actually paid

the fees and costs.Ñ The Pre - hearing Stipulation identifies

Petitioner as Ða corporation with not more than 25 full - time

employees and a net worth of not more than $2,000,000.00.Ñ

In additi on, Respondent stipulated that Petitioner was the

prevailing party in the underlying proceeding and a small

business party within the meaning of section 57.111(3) , Florida

Statutes . Therefore, the term ÐPetitionerÑ in this Final Order

refers to Senior Fin ancial Security, Inc.

2/ Section 57.111, the statute pursuant to which Petitioner is

seeking attorneysÓ fees and costs, has not been amended since

2011. Accordingly, all statutory references will be to the 2019

version of the Florida Statutes .

3 / A Lady Bird deed enables a person to designate a child or

some other beneficiary as the person who will take possession of

the designatorÓs property after death.

COPIES FURNISHED:

Jed Berman, Esquire

Infantino and Berman

Post Office Box 30

Winter Park , Florida 32790

(eServed)

David J. Busch, Esquire

Department of Financial Services

Room 612, Larson Building

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

Marshawn Michael Griffin, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

(eServed)

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party w ho is adversely affected by this Final Order is

entitled to judicial review pursuant to section 120.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing the original n otice of administrative appeal with the

agency clerk of the Division of Administrative Hearings within

30 days of rendition of the order to be reviewed, and a copy of

the notice, accompanied by any filing fees prescribed by law,

with the clerk of the Distr ict Court of Appeal in the appellate

district where the agency maintains its headquarters or where a

party resides or as otherwise provided by law.