ALJDEC decisions subject to certification as final

18A-092-INS · Department of Insurance · 2018-10-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 10, 2018 at 1:00 PM. APPEARANCES: Michael Rhett Underwood (“Appellant”) appeared on his own behalf. Assistant Attorney General Deian Ousounov, Esq. appeared on behalf of the Arizona Department of Insurance (“Department” or “Respondent”) with Aqueelah Currie as a witness. Grant Pearson and Sarah Ax observed. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Department. FINDINGS OF FACT Background and Procedure 1. On or about July 06, 2016, the Superior Court of Arizona, Yavapai County, convicted Petitioner of Attempted Misconduct Involving Simulated Explosive Device, a class 6 undesignated felony, and Obstructing Governmental Operations, a class 2 misdemeanor.[1] Petitioner was placed on supervised probation for three years.[2] 2. On or about July 03, 2018, Petitioner submitted an application for an Individual Producer License to the Department.[3] 3. Petitioner answered “Yes” to Questions #1a and #1b of the Background Questions section of the application[4], which ask: 1a) Have you ever been convicted of a misdemeanor, had a judgement withheld or deferred, or are you currently charged with committing a misdemeanor? 1b) Have you ever been convicted of a felony, had a judgment withheld or deferred, or are you currently charged with committing a felony?

4. On or about July 27, 2018, the Department mailed Petitioner a notification that his application for licensure had been denied.[5] 5. On or about August 13, 2018, the Department received an appeal from Petitioner regarding the denial of his licensure application.[6] 6. The Department referred the matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing to determine whether grounds exist to deny Petitioner an Insurance Producer’s License. 7. On September 04, 2018, the Department issued a Notice of Hearing, setting a hearing on October 10, 2018, at 1:00 p.m. A hearing was held on October 10, 2018. The Department presented the testimony of Aqueelah Currie, its Licensing Supervisor, and submitted fourteen exhibits. Petitioner testified on his own behalf. Petitioner did not submit any exhibits. Hearing Evidence 8. Ms. Currie testified that she is a Licensing Supervisor for the Department. Ms. Currie testified that protecting consumers and businesses in the statewide insurance marketplace is paramount to the Department. 9. Regarding the case at bar, Ms. Currie testified that Petitioner provided two letters to the Department regarding his felony conviction, submitted on July 06, 2018, and July 22, 2018, respectively.[7] In his letters Petitioner gave several conflicting reasons for his conviction. Petitioner argued that he was convicted of a crime that he did not commit, even though he accepted a guilty plea and was represented by an attorney during his criminal proceedings. Petitioner blamed his ex-spouse for the underlying acts that resulted in his arrest and subsequent criminal convictions. Petitioner alleged that that he had become sick in custody and accepted the guilty plea so that he could seek medical attention. Petitioner also alleged that he accepted the guilty plea to return to his children’s lives, even though his parental rights had been terminated years prior to his arrest and he had been barred from seeing them. Ultimately, Petitioner argued that because he paid all of his court fines and participated in court-ordered “moral recognition” therapy, resulting in his probation being modified from supervised to unsupervised status, that he should be granted a license. 10. Ms. Currie testified that DNA evidence was recovered from the underlying simulated explosive device which linked Petitioner to the crime scene. Moreover, Ms. Currie noted that the building Appellant had targeted was a state government building, the Department of Child Safety (“DCS”), which had to be evacuated as a result. 11. Per Ms. Currie, the Department has concerns regarding Petitioner’s temperament ability to be truthful. Ms. Currie opined that because Petitioner had not taken full responsibility for the underlying acts that resulted in his felony conviction, and because he was still on probation, the Department believed he could not yet be regulated. Hence, why the Director declined to issue Petitioner a license. Ms. Currie also noted that Petitioner appeared to not realize or have concern that employees and families, including children, could have been hurt during DCS’ evacuation. 12. Regarding his criminal convictions, Petitioner testified that “a friend” set him up. Per Petitioner, he entered into guilty plea agreements with the State against his attorney’s advice so that he could get out of jail. Petitioner also testified that he received advice not to “over answer” the Departments questions, which is why he issued a second statement to provide more clarity and detail regarding the underlying acts resulting in his arrest and his subsequent convictions. 13. Petitioner admitted that he omitted an August 2014 arrest for Assault from his application in error, because he had forgotten about it. 14. Petitioner did not disagree with any of the Department’s evidence, or provide additional evidence to refute any of it. CONCLUSIONS OF LAW 1. This matter lies with the Department’s jurisdiction and was properly brought before OAH for adjudication.[8] 2. Petitioner bears the burden of proof to establish that he is rehabilitated and qualified to receive an insurance license.[9] The standard of proof on all issues in this matter is that of a preponderance of the evidence.[10] 3. A preponderance of the evidence is: The 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.

Black’s Law Dictionary 1373 (10th ed. 2014). 4. Ariz. Rev. Stat. § 20-285(B)(2) provides that “[b]efore the director approves the application of the individual, the director shall find that the individual has not committed any act that is a ground for denial, suspension or revocation prescribed in section 20-295.” 5. Ariz. Rev. Stat. § 20-285(E)(1) provides that “[b]efore the director grants a license, the director may require the applicant to provide any document that is reasonably necessary to verify the information that is contained in an application and other information including prior criminal records.” 6. Ariz. Rev. Stat. § 20-295(A)(6) provides, in pertinent part, that the director may deny to issue an insurance producer's license is an applicant has been convicted of a felony. 7. In the case at bar, Petitioner has admitted that the felony conviction that appears on his criminal record is correct, and that by the date of the underlying hearing he was still on probation for that offense. Petitioner’s refusal during his testimony to acknowledge and take responsibility for the underlying acts that resulted in his felony conviction establish that he is unregulatable at this time. 8. Pursuant to the above-captioned statute(s), the Director of the Department is entitled to deny licensure to any applicant that has been lawfully convicted of a felony offense. 9. While the tribunal applauds Petitioner for attempting to secure gainful employment, Petitioner provided no binding authority or statute under which the tribunal or Department would be bound to accept and approve his application for licensure. 10. Based on the relevant and credible evidence in the record, the undersigned Administrative Law Judge holds that the Department has sustained its burden of proof in this matter. As such, the Appellants appeal should be denied. RECOMMENDED DECISION Based upon the foregoing findings of fact and conclusions of law, IT IS RECOMMENDED that Appellant’s Individual Producer License application be denied pursuant to Ariz. Rev. Stat. §§ 20-285(B)(2) and 20- 295(A)(6). In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five (5) days from the date of that certification. Done this day, October 30, 2018.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Keith A. Schraad, Interim Director Arizona Department of Insurance ----------------------- [1] See Department Exhibits 4-12. [2] See Department Exhibit 5. As of the date of the hearing, Petitioner was still on probation. [3] See Department Exhibit 1. [4] Id. [5] See Department Exhibit 13. [6] See Department Exhibit 14. [7] See Department Exhibits 2-3. [8] See Ariz. Rev. Stat. §§ 20-282 and 41-1092 et seq. [9] See Ariz. Rev. Stat. § 41-1092.07(G)(1). [10] See Ariz. Admin. Code R2-19-119; see also Vazanno v. Superior Court, Ariz. 369, 372, 249 P.2d 837 (1952).

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826