ALJDEC decisions subject to certification as final

06A-228-INS · Department of Insurance · 2007-02-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 22, 2007 at 9:00 a.m. APPEARANCES: Complainant Shanetha Renee Buchanan did not appear; the Arizona Department of Insurance appeared through Jennifer A. Boucek, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _________________________________________________________________ ____

The sole issue in this matter is whether Respondent Shanetha Renee Buchanan’s non-resident insurance producer’s license should be disciplined. Based on the evidence presented by the Department of Insurance (“the Department”) and Ms. Buchanan’s failure to appear for the duly noticed administrative hearing, the Administrative Law Judge recommends that the Director of the Department revoke Ms. Buchanan’s license, for the reasons set forth in the following Findings of Fact and Conclusions of Law. FINDINGS OF FACT 1. Ms. Buchanan was issued non-resident Casualty and Property Insurance Producer’s License No. 162165 on October 6, 2003. This license expired on January 31, 2007. 2. Ms. Buchanan’s addresses of record with the Department are: c/o GEICO, 14111 Danielson St., Poway, CA 92064 (business/mailing) and 264 Cedaridge Dr., San Diego, CA 92114 (residence). The Department’s Investigation 3. Initially, Ms. Buchanan’s employer, GEICO, informed the Department that the California Department of Insurance (“California Department”) had revoked her insurance license. The Department opened an investigation. 4. The Department obtained a copy of the information that established that, on July 7, 2004, Ms. Buchanan had been charged in Case No. CD182302 in the Superior Court of California, County of San Diego Central Division with three felonies, based on her receipt of public aid, while she received income from her employment with three different employers, based on her income reports that she had no income. 5. The Department also obtained a copy of Ms. Buchanan’s November 2004 plea agreement in Case No. CD182302, which led to her conviction of violating Welfare and Institutions Code § 10980(c)(2) (obtaining public aid by misrepresentation), which is a felony involving dishonesty and moral turpitude. 6. The Department also obtained a copy of the California Superior Court’s March 16, 2005 order in Case No. CD182302, in which it reduced Ms. Buchanan’s conviction to a misdemeanor and sentenced her to 3 years’ summary probation, one day in county jail, 80 hours’ volunteer work, and payment of fines and restitution in the amount of $9,715.00. 7. The Department also obtained copies of the California Department’s March 17, 2006 First Amended Accusation, May 10, 2006 Proposed Decision, and May 25, 2006 Decision, which revoked Ms. Buchanan’s California license, in Case No. LBB 2740-Applicant (OAH No. L2005100142). 8. These documents indicated that, during the April 3, 2006, hearing on the California Department’s Amended Accusation, Ms. Buchanan had acknowledged her wrongdoing but had no real explanation for her dishonesty in accepting public aid under false pretenses. Since her conviction, Ms. Buchanan testified that she had paid back approximately $8,900 in restitution to the State of California, that she was the sole support of her two children, and that she was working for GEICO, answering phone and processing accident claims. 9. These documents indicated further that, during the April 3, 2006 hearing, the California Department took the position that licensees must be honest and forthcoming and that Ms. Buchanan had failed to demonstrate that she could be trusted. The California Department also noted that Ms. Buchanan would not complete her sentence of probation until November 2007. 10. These documents indicated that, effective May 26, 2006, the Commissioner of the California Department ordered that Ms. Buchanan’s Fire and Casualty Broker-Agent License be revoked. Ms. Buchanan’s Requested License Renewal 11. On October 25, 2005, the Department received Ms. Buchanan’s renewal application, in which she disclosed that she had been convicted of a felony that she had not previously disclosed. Ms. Buchanan explained, in relevant part: I . . . was convicted of a misdemeanor crime on 3/16/05. The charge was receiving state aid money that I was not eligible for.

I was on welfare in June 2002. I began a new job at Geico in September 2002. After beginning my new job, I did not report to the State Welfare Bureau that I had an income and medical coverage. I was charged with three felony counts of Welfare Fraud on 7/7/04 and sentenced 11/10/04.

Ultimately, my charges were dropped to one misdemeanor count of Welfare Fraud and I was ordered to repay the state $9515.00 plus legal and penalty fees and complete 80 hrs of volunteer work. I have completed all 80 hours of volunteer work. I have repaid the state $8,250.00 and have $1265.00 left to repay per my arrangements made with the Revenue & Recovery Department.

12. On January 12, 2007, the Department issued a Notice of Hearing on its intent to penalize Ms. Buchanan’s non-resident insurance producer’s license under A.R.S. §§ 29-295(A)(2), (8), and (9), 20-287(A)(1), 20-301(B), and 20-295(H). 13. The Department mailed the Notice of Hearing via certified mail to Ms. Buchanan at her business and residence addresses of record. 14. Although the beginning of the duly noticed hearing was delayed fifteen minutes to allow Ms. Buchanan additional travel time, she neither appeared personally or through a duly authorized representative, contacted the Office of Administrative Hearings to request a continuance or that the time for the hearing be further delayed, nor presented any evidence at the hearing to defend her non-resident insurance producer’s license. 15. The Department appeared through its attorney and presented the testimony of its investigator, Mark Denman, who testified and provided foundation for admission of the documents establishing the Findings of Fact set forth above. CONCLUSIONS OF LAW 1. This matter lies within the jurisdiction of the Department.[1] 2. The expiration of Ms. Buchanan’s license does not deprive the Director of the Department of jurisdiction.[2] 3. The Department bears the burden of proof and must establish cause to revoke or otherwise penalize Ms. Buchanan’s non- residence insurance producer’s license by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[5] 4. When Ms. Buchanan fraudulently accepted welfare payments, even though she also received income from employment by GEICO and other employers, and when her California license was revoked, Ms. Buchanan provided cause under A.R.S. § 20- 295(A)(2), (8), and (9)[6] for the Director of the Department to sanction her non-resident insurance producer’s license. 5. Because Ms. Buchanan’s California license was revoked, the Director of the Department has no discretion but to also revoke her Arizona non-resident insurance producer’s license under 20-287(A)(1).[7] 6. The Department therefore has borne its burden to establish cause to revoke Ms. Buchanan’s non-resident insurance producer’s license. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Director of the Department revoke Respondent’s non-resident insurance producer’s license no. 162165. Done this day, February 26, 2007.

__________________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of February, 2007, to:

Department of Insurance Christina Urias, Director 2910 North 44th Street, Ste. 210 Phoenix, AZ 85018

By ___________________________ ----------------------- [1] See A.R.S. §§ 20-281 to -302. [2] See A.R.S. § 20-295(H), which provides that “[t]he director shall retain the authority to enforce this title and impose any penalty or remedy authorized by this title against any person who is under investigation for or charged with a violation of this title even if the person's license has been surrendered or has lapsed by operation of law.”

[3] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952).

[4] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

[5] Black’s Law Dictionary at page 1220 (8th ed. 1999).

[6] This statute provides that:

A. The director may deny, suspend for not more than twelve months, revoke or refuse to renew an insurance producer's license or may impose a civil penalty in accordance with subsection F of this section or any combination of actions for any one or more of the following causes: . . . .

2. Violating any provision of this title or any rule, subpoena or order of the director. . . . .

8. Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere.

9. Having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory.

[7] This statute provides in that the Director of the Department shall issue a nonresident producer’s license if “[t]he person is currently licensed as a resident and in good standing in the person's home state.”

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826