20-003993 Project Medicare, Inc. vs. Department Of Financial Services, Division Of Insurance Agent And Agency Services Status: Closed Recommended Order on Tuesday, December 22, 2020.

Summary: Petitioner demonstrated entitlement to issuance of a non-resident agency license. The Department's policy to deny license for agencies with "Medicare" in their names is an unadopted rule under section 120.57(1)(e)1.

P RELIMINARY S TATEMENT

On April 20, 2020 , Respondent, Department of Financial Services,

Division of Insurance Agent and Agency Services , Bureau of Lic ensing

(Department), e ntered a Notice of Agency Denial info rm ing Petitioner,

Project Medicare, Inc. (Project Medicare or Petitioner) , that the name of the

agency contains one or more words that may mislead the public regarding the

purpose of the agency , and denying the application for a nonresident agency

license on the grounds set forth in sections 626.602 and 626.6115(1), Florida

Statutes.

On Ma y 15, 2020 , Respondent filed its Petition for Formal Administrative

Hearing by which it requested a formal hearing.

On September 3, 2020 , this case was referred to D OAH for a formal

administrative h earing. The final hearing was noticed for November 3, 2020 .

On October 30, 2020, the parties filed their Joint Prehearing Stipulation

(“JPS”). The JPS contained 11 stipulations of fact, each of which are adopted

and incorporated herein. The JPS also identified disputed issues of fact and law remaining for disposition. The final hearing was , thereafter , held as

scheduled.

At the fin al hearing , official recognition was taken of all statutes, rules,

judicial opinions, and agency final orders. Petitioner offered the testimony of

Michael Krantz, its owner . Petitioner’s Exhibit 1 was received in evidence.

Respondent offered the testimony of Gregory Thomas, Director of the

Division of Insurance Agent and Agency Services and the Division of

Consumer Services; and Matthew Tamplin, Assistant Director of the Division

of Insurance Agent and Agency Services . Respondent’s Exhibits 1 thr ough 11

were received in evidence.

A one - volume T ranscript of the proceedings was filed on November 30,

2020 . On December 8, 2020, the parties filed a Joint Motion for Extension of

Time to File Proposed Recommended Orders , by which they requested that

the time for filing post - hearing submittals be extended to December 21, 2020.

The motion was granted. B oth parties thereafter timely filed P roposed

Recommended O rder s, which ha ve been duly considered by the undersigned

in the preparation of this Recommended Or der.

Petitioner's application for licensure is governed by the law in effect at the

time the final licensure decision is made. See Lavernia v. Dep’t of Prof’l Reg. ,

6 16 So. 2d 53 , 54 (Fla. 1st DCA 199 3 ). Therefore, all statutory references

shall be to Florida Statutes (20 20 ) , unless otherwise indicated.

F INDINGS O F F ACT

Stipulated Facts

1 . On or about January 8, 2020, Petitioner submitted an Application to

the Department for a nonresident agency license.

2 . On the Application, Mr. Krantz listed the agency’s name as Project

Medicare , Inc.

3 . On or about January 13, 2020, the Department issued an official

notification informing Petitioner that the name of the agency contains one or

more words that may mislead the public regarding the purpose of the age ncy

and requiring that the agency name be changed in accordance with the

Florida Insurance Code.

4 . Petitioner failed to comply with the request and change the name of the

agency .

5 . Based on Petitioner’s failure to change its name in accordance with the

F lorida Insurance Code, the Department denied Petitioner’s Application .

6 . The Notice of Agency Denial cites section s 626.602 and 626.6115 as

legal grounds for the denial of Petitioner’s nonresident agency license .

7 . Section 626.602 sets forth the statutor y criteria at issue in these

proceedings. The parties agree that the subparagraph (1) of that section is

either not applicable or not at issue to consideration of the application.

8 . Under section 626.602(2), the D epartment may disapprove the use of

any true or fictitious name, other than the bona fide natural name of an

individual, by any insurance agency if the use of the name may mislead the

public in any respect.

9 . Under section 626.602(3), the D epartment may disapprove the use of

any true or fictiti ous name, other than the bona fide natural name of an

individual, by any insurance agency if “ the name states or implies that the

agency is an insurer, motor club, hospital service plan, state or federal

agency, charitable organization, or entity that prim arily provides advice and

counsel rather than sells or solicits insurance, or is entitled to engage in

insurance activities not permitted under licenses held or applied for. ... ”

10 . Petitioner requested a hearing pursuant to section 120.57(1), Florida

Sta tutes, challenging the Department’s denial.

11 . There are currently 89 agencies licensed in the state of Florida with

the word “Medicare” in their name.

Facts Adduced at Hearing

1 2 . Michael Krantz is a licensed insurance agent, and owns the Project

Medicar e agency. Project Medicare offers advice on Medicare plans and

policies, and is licensed under that name in New York, New Jersey,

Connecticut, and Pennsylvania. Petitioner testified to a financial

commitment and an established website under the Project Medicare name.

1 3 . Prior to 2006, insurance agencies were not required to be separately

licensed in Florida, though the agents were.

1 4 . In 200 5 , the Florida Insurance Code was amended to require that

insurance agencies be separately licensed , with applications for licensure

required no later than October 1, 2006. Ch. 2005 - 257, §§ 7 and 9, Laws of Fla.

The 2005 legislation also created section 626.602, and the restriction aga inst

licensing agencies with names that “mislead the public in any respect,” or

impl y that “ the agency is [a] state or federal agency .” Ch. 2005 - 257, § 21 ,

Laws of Fla.

15 . Mr. Thomas testified that when the licensing requirement became

effective in 2006 , “ all of the agencies that existed were pretty much

grandfathered and brought in as is. So whatever name they had is what they

became . There were too many of them for the Department to vet them based

on staffing, so they just massed licensed a bun ch of them.” Some of the

89 Florida insurance agencies that currently have the term Medicare in their

name were part of that initial group of agency licenses.

16 . Neither Ch apter 2005 - 257, Laws of Fl orida, nor c hapter 626 , contain

authorization for grandf athering otherwise non - compliant agency names.

17 . The Department has not adopted rules to govern its decision - making

process regarding insurance agency names.

18 . After 2006, and continuing for a period of 13 years, the Department

approve d licenses for insurance agencies using the word Medicare in their

names. The last license for an insurance agency w ith Medicare as part of its

name was issued on September 16, 2019.

19 . With regard to the decision to deny Petitioner’s license, Mr. Thomas

testified that the Department “refined” its position . He further testified that

“the name [Project Medicare] clearly to me could be misleading to a senior

consumer.”

20. The Department claimed to have reached its decision to deny

Petitioner’s Application because custom ers were misled by the use of

Medicare in the name of the agency . T here was no competent, substantial

evidence introduced that any customer has been misled by any of the

89 insurance agencies that currently have Medicare in their names.

21 . Despite hearsa y testimony that the Department had received

complaints from consumers, the Department produced no copies of any such

complaints, and did not quantify the number of complaints . The Department

could not state whether the alleged complaints were the result o f the name of

the agency or of advertising by the agency. Though the Department offered

no evidence of the alleged complaints , the following was elicited during

Mr. Thomas’ s testimony: “Q. Now is it possible that any of those complaints,

the confusion was the result of something done by the agency, not necessarily

by the name? A. Sure.” (Tr. 32:9 - 12) .

22 . Mr. Thomas testified that use of the term Medicare in Petitioner’s

nam e “could lead a consumer to the opinion” that the insurance agency is

affiliated with a state or federal agency. However, t he Department

introduced no evidence of any consumer having drawn the opinion that

having the word Medicare in a name implies that th e insurance agency is

affiliated with a state or federal agency , despite 13 years of the D epartment

having approved such names.

23 . Among the 89 approved “Medicare” insurance agencies are : Florida

Medicare Advisors, Inc.; Medicare Advantage Plan Services, LLC; Medicare

Benefits Plus, LLC; Medicare Health Benefits, Inc.; Medicare Insurance

Plans; Medicare Insurance Services, LLC; Medicare Plus, Inc.; Medicare

Solutions, LLC; Plan Medicare, LLC; Senior Saving Strategies, LLC, d/b/a

Medicare Review Agency; US A Medicare Advisors Insurance Agency; and

YourMedicare.com, LLC. These companies serve as examples of the agencies

that the Department licensed as being compliant with the Florida Insurance

C ode prior to the “refinement” of its non - rule decision - making pol icy. There

was no evidence that any of these “Medicare” companies, or any of the other companies among the 89 approved “Medicare” insurance agencies, were the

subject of any complaint of a consumer having been misled by the name of

the agency , or any compl aint of a consumer having been led to believe, by

implication, that the agency was a state or federal agency.

24 . Between October 14, 2019 , and October 15, 2020 , 4 5 prospective

agencies with Medicare as part of the agency name have applied for

licensure. The Department asserted that since n one of them had received

licenses , its new “no Medicare” policy was firmly established.

25 . Insurance agency license applications must include fingerprints and

background checks of any number of persons involved in the ownership,

management, and control of the agency, and “[s]uch additional information as

the department requires by rule to ascertain the trustworthiness and

competenc e of persons required to be listed on the application and to

ascertain that such persons meet the requirements of this code.”

§ 626.172(2)(a), (f), and (g), Fla. Stat. The Department also checks for prior

administrative actions.

26 . Of the 4 5 applications filed between October 14, 2019 , and October 15,

2020 (the 45 applications) , 18 have an application status of “ application only -

application - in process - deficient. ” No evidence was provided as to the

nature of any such deficiencies , or whether the deficiency related to the

proposed use of the term Medicare in the agency name .

27 . Of the 4 5 applications, 1 7 have an application status of “application

only - application - closed - deficient.” No evidence was provided as to the

nature of any such deficiencies , or whether the deficiency related to the

proposed use of the term Medicare in the agency name .

28 . Of the 4 5 applications, 8 have an application status of “application

only - application - closed - withdrawn .” No evidence was provide d as to the

reason for any application withdrawal , or whether the reason related to the

proposed use of the term Medicare in the agency name .

29 . Open applications currently subject to unidentified deficiencies ;

applications closed for unidentified deficie ncies ; and applications withdraw n

for unidentified reasons, which account for 43 of the 45 applications, none of

which have been subject to proposed agency action on those applications ,

provide no evidence that the proposed use of Medicare in their names was

misleading to consumers , or even that the proposed use of Medicare in their

names was the basis of any deficiency notice or withdrawal . S ince the

Department took no agency action on the m , the 4 3 applications do not

amount to evidence of any “refinement ” of a Medicare non - rule application

policy.

30 . The remaining two applications among the 45 applications were

denied by the Department. One , Medicare Insurance Consultants of Texas 1 ,

chose not to challenge , and neither the basis for the denial nor the re ason for

declining to challenge the denial were disclosed. The other is that of

Petitioner in this case.

31 . Department witnesses indicated that, even though the Department

had purportedly come to the conclusion that the use of the term Medicare in

an agency licen s e is misleading to consumers, the Department could not, or

would not, take any action to require the removal of Medicare from the

agency names . Rather, Mr. Thomas indicated that “ our attorneys ” advised

against the Department taking action to p rotect the citizens of the state of

Florida from the allegedly misleading effects of the term Medicare.

32 . The Department based its denial of the application at issue in part on

s ection 626.6115, entitled “Grounds for compulsory refusal, suspension, or

r evocation of insurance agency license , ” (emphasis added) which directs that

the Department “ shall deny, suspend, revoke, or refuse to continue ” the

license of any insurance agency that does not meet the qualifications for the

license specified in the Flori da Insurance Code (emphasis added). Section

626.602, also cited as a basis for the denial of the application at issue,

provides that the Department “ may disapprove the use of any true or fictitious name, by any insurance agency [if] (2) The use of the name may

mislead the public in any respect [, or] (3) The name states or implies that

the agency is [a] state or federal agency .”

1 It is not incons equential that the Department has licensed an agency with the same name ,

Medicare Insurance Consultants, LLC ( though not “of Texas ” ) , in addition to similarly named

agencies including Medicare Insurance Advisors; Medicare Insurance Associates, LLC;

Medicare Insurance Plans; Medicare Insurance Services, LLC; and Medicare Insurance

Solutions, Inc. , all seemingly without concern that those very similar names might be

misleading or causing confusion among consumers.

33 . If, in fact, the Department has evidence that using Medicare in the

names of insurance agencies is misleading, and the Depart ment has

determined that consumers are being misled, there is no legitimate reason for

the Department’s attorneys to recommend against the enforcement of a

mandatory statutory directive. That, along with 13 years of licensing

“Medicare” insurance agencies, and lack of evidence that any member of the

public has been misled by any of the 89 existing “Medicare” insurance

agencies , compels a conclusion that the name Medicare in an agency name is

not a valid basis for denial of the application in this case.

34 . Mr. Thomas also testified to a 2020 legislative proposal (2020 Senate

Bill 1492 , 2020 House Bill 1137) that would have prohibited the use of the

term “Medicare” in an insurance agency’s name. That bill failed , and has no persuasive effect on the issues in this case.

C ONCLUSIONS O F L AW

A. Jurisdiction .

35 . The Division of Administrative Hearings has jurisdiction over the

subject matter of this proceeding and of t he parties thereto . §§ 120.569 and

120.57(1), Fl a. Stat.

36 . The Department is the state agency responsible for licensure of

insurance agents and agencies in the state of Florida . § 626.112 , Fla. Stat.

B. Burden of Proof

37 . As the party seeking issuance of a nonresident agency license ,

Petitioner has the burden of proving by a preponderance of the evidence that

it satisfies the applicable standards and requirements. Dep't of Banking &

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

38 . Petitioner’s ultimate burden notwithstanding, Respondent has the

burden of presenting evidence of any statutory or regulatory violations that

warrant denial of the application. Osborne Stern & Co. , 670 So. 2d at 934;

Comp . Med . Access, Inc. v. Off. of In s. Reg. , 983 So. 2d 45 (Fla. 1st DCA 2008).

C . Analysis

39 . The criteria for a nonresident agency license that are applicable in this

proceeding are established in section s 626.602 and 626.6115 . Except for the

name of the agency, there has been no allegation that Petitioner does not

meet other basic requirements for licensure .

40 . Section 626.602, entitled “Insurance agency names; disapproval ,”

provides, in pertinent part, that:

The department may disapprove the use of any

true or fictitious name, other than the bona fide

natural name of an individual, by any insurance agency on any of the following grounds:

* * *

(2) The use of the name may mislead the public

in any respect.

(3) The name states or implies that the agency is

an insurer, motor club, hospital service plan, state

or federal agency, charitable organization, or entity that primarily provides advice and counsel rather than sells or solicits insurance, or is entitled to

engage in insurance activities not permitted unde r

licenses held or applied for. This provision does not prohibit the use of the word “state” or “states” in the name of the agency. The use of the word “state” or “states” in the name of an agency does not in and

of itself imply that the agency is a state agency.

41 . Section 626.6115, entitled “ Grounds for compulsory refusal,

suspension, or revocat ion of insurance agency license , ” p rovides, in pertinent

part, that:

The department shall deny, suspend, revoke, or

refuse to continue the license of any insurance agency if it finds, as to any insurance agency or as

to any majority owner, partner, manager, director,

officer, or other person who manages or controls such agency, that any of the following applicable grounds exist:

(1) Lack by the agency of on e or more of the

qualifications for the license as specified in this

code.

42 . Section 120.57(1)(e) provides, in pertinent part, that:

(e)1. An agency or an administrative law judge may

not base agency action that determines the substantial interests of a party on an unadopted

rule or a rule that is an invalid exercise of delegated legislative authority. This subparagraph does not preclude application of valid adopted rules

and applicable provisions of law to the facts.

* * *

4. The recommended and final orders in any

proceeding shall be governed by paragraphs (k) and (l), except that the administrative law judge’s determination regarding an unadopted rule under subparagraph 1. or subparagraph 2. shall not be

rejected by the agency unless the agency first

determines from a review of the complete record,

and states with particularity in the order, that such

determination is clearly erroneous or does not comply with essential requirements of law.

43 . The evidence established that the Department licensed age ncies with

the word Medicare in their names for at least 13 years. It then changed its

position, citing concerns with consumer protection, though no competent

substantial evidence was offered to substantiate specific instances of such.

44 . The Department’ s newly created and implemented policy to deny all

insurance agency applications if the proposed name includes the term “Medicare” is, according to Mr. Thomas and Mr. Tamplin, to be applied

uniformly after September 16, 2019, to all applications, without d eviation.

45 . The Department’ s newly created policy of determining that the term

“Medicare , ” without more, “ may mislead the public in any respect ,” has been

applied without any competent, substantial evidence to establish that any

person was, in fact, misled by its use .

46 . T he Department’s newly created policy of determining that the term

“Medicare,” without more, implies that the insurance agency is a state or

f ederal agency, has been applied without any competent, substantial evidence

to substantiate that implication .

47 . The Department’s newly created policy , which the Department intends

to apply uniformly across - the - board, replaces a decision - making process that

had been applied no fewer than 89 times over a period of 13 years to allow the

use of the term Medicare in insurance agencies names. This new policy is a

statement of general applicability designed to prohibit that which was

previously allowed, without a factual ba sis for doing so.

48 . An “ unadopted rule ” is “ an agency statement that me ets the

definition of the term ‘ rule, ’ but that has not been adopted pursuant to the

requirements of s. 120.54. ” § 120.52(20), Fla. Stat. The term “ rule ” means ,

each agency statement of general applicability that

implements, interprets, or prescribes law or policy

or describes the procedure or practice r e quirements of an agency and includes any form which imposes

any requirement or solicits any information not

specifically required by statute or by an existing

rule. The term also includes the amendment or

repeal of a rule.

§ 120.52(16), Fla. Stat.

49 . To be a rule,

a statement of general applicability must operate in

the manner of a law. Thus, if the statement's effect

is to create stability and predictability within its

field of operation; if it treats all those with like cases equally; if it req u ires a ffected persons to

conform their behavior to a common standard; or if it creates or extinguishes rights, privileges, or

entitlements, then the statement is a rule.

Fla. Quarter Horse Racing Ass'n, Inc. v. Dep't of Bus. & Prof'l Reg. , Case

No. 11 - 5796RU (F la. DOAH May 6, 2013), aff'd, Fla. Quarter Horse Track

Ass'n v. Dep't of Bus. & Prof'l Reg . , 133 So. 3d 1118 (Fla. 1st DCA 2014).

50 . As established by the First District Court of A ppeal:

... if an agency changes a non - rule - based policy, it

must either explain its reasons for its discretionary

action based upon expert testimony, documentary opinions, or other appropriate evidence, Health Care and Retirement Corp. of America, Inc. v.

Department of Health and Rehabilitative Services ,

559 So. 2d 665, 667 – 68 (Fla. 1st DCA 1990), or it

must implement its changed policy or

interpretation by formal rule making. [ Cleveland

Clinic Florida Hospital v. Agency for Health Care

Administration , 679 So. 2d 1237 , 1242 (Fla. 1st

DCA 1996)] .

We believe that our holdings in Cleveland Clinic

and [ Brookwood – Walton County Convalescent

Center v. Agency for Health Care Administration ,

845 So. 2d 223, 229 (Fla. 1st DCA 2003) ] , are

consistent with the legislature's limita tion on

agency flexibility and discretion and enhancement of agency accountability and regulatory certainty underlying the 1996 amendments to chapter 120.

§ 120.54(1)(a), Fla. Stat. (2005)(requiring rule

making whenever it is “feasible and practical”); s ee

Dep't of Highway Safety & Motor Vehicles v.

Schluter , 705 So. 2d 81, 86 (Fla. 1st DCA 1998); see

generally W. Hopping, L. Sellers & K. Wetherall, Rule Making Reforms and Non – Rule Policies: A

Catch 22 for State Agencies? , 71 Fla. Bar. J. 20, 24 – 26 (1997) . In short, under chapter 120 “an agency

cannot change its standards at the personal whim of a bureaucrat.” James P. Rhea & Patrick L.

Imhof, An Overview of the 1996 Administrative

Procedure Act , 48 U. Fla. L.Rev. 1, 4 (1996).

As appellant argues, there i s nothing in the record

here which indicates that either the Medicaid law or regulations have changed with regard to the

definition of companion care. ... It is clear that

AHCA's decision in 2005 to deny the appellant's

benefits, when it had approved those same benefits

since 2002, was simply a change in its established policy. Further, it is undisputed in this record that

this policy change was made withou t rule - making

or explication in the record. See Cleveland Clinic ,

679 So. 2d at 1241 – 42 (absent a “good reason why

the agency's abrupt change of established policy, practice and procedure should be sanctioned,” the

agency must implement changed interpretat ions through rule - making) (citation omitted); Exclusive

Inv. Mgm't & Consultants, Inc. v. Agency for Hea l th

Care Admin. , 699 So. 2d 311 (Fla. 1st DCA

1997)(refusing to uphold AHCA's requirement that Medicaid providers contract with the Alcohol, Drug Abuse and Mental Health (ADM) program because,

among other grounds, such construction was an

unpromulgated change from AHCA's prior policy).

AHCA's failure to explicate its unpromulgated policy at the hearing is even more egregious when AHCA changes the applicat ion of its policy in a

particular case. Brookwood – Walton County , 845 So.

2d at 229.

Courts v. Ag. for Health Care Admin. , 965 So. 2d 154, 159 - 60 (Fla. 1st DCA

2007).

51 . This case is remarkably similar to the scenario presented in Courts . To

paraphrase Courts , there is nothing in the record here which indicates that

either the Florida Insurance Code or regulations have changed with regard to

insurance agency names . ... It is clear that the Department’s decision in 20 20

to deny Petitioner’s choice of a name , when it had approved similar names

since 2006 , was simply a change in its established policy. Further, it is

undisputed in this record that this policy change was made without

rulemaking or explication in the record.

52 . As such, the pol icy is an agency statement of general applicability that

implements, interprets, or prescribes law or policy that has not been adopted

by rule. It meets the definition of an unadopted rule and, pursuant to section 120.57(1)(e), cannot be applied in this pr oceeding.

D. Conclusion

53 . But for the proposed name of Petitioner’s insurance agency , Petitioner

met all of the requirements for a nonresident agency license .

54 . The denial of Petitioner’s insurance agency application was based

solely on the Department’ s determination that Petitioner’s name is

misleading or that it implies that Petitioner is a state or federal agency .

55 . The denial of Petitioner’s insurance agency application was the result

of the unlawful application of an unadopted rule formulated sometime after

September 16, 2019 .

56 . Given the lack of any evidence to establish a factual basis upon which

to find Petitioner’s name to be misleading or to imply that Petitioner is a

state or federal agency, the application for a nonresiden t agency license does

not fall within the limitations established in s ections 626.602(2) and (3) and

626.6115.

57 . For the reasons set forth herein, Petitioner has proven its entitlement

to issuance of a nonresident agency license in the name of Project Me dicare,

Inc.

R ECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

R ECOMMENDED that the Department of Financial Services enter a final order

granting Petitioner, Project Medicare, Inc. ’s , application for a nonr esident

agency license .

D ONE A ND E NTERED this 22nd day of December , 20 2 0 , in Tallahassee,

Leon County, Florida.

E. G ARY E ARLY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 22nd day of December , 20 2 0 .

C OPIES F URNISHED :

Danijela Janjic, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

Dwight Oneal Slater, Esquire

Cohn Slater, P.A.

3689 Coolidge Court , Unit 3

Tallahassee, Florida 32311

(eServed)

Diane Wint, Agency Clerk

Division of Legal Services

Department of Finan cial Services

Room 612.14, Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

(eServed)

N OTICE O F R IGHT T O S UBMIT E XCEPTIONS

All parties have the right to submit written exceptions within 15 days from

the date of this Recommended Order. Any exceptions to this Recommended

Order should be filed with the agency that will issue the Final Order in this case.