ALJDEC

98A-018-INS · Department of Insurance · 1998-03-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 16, 1998

APPEARANCES: Terry F. Hall, Esq. for the Petitioner; Assistant Attorney General Shelby L. Cuevas for the Arizona Department of Insurance

ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________ Based on the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. On December 4,1997, Douglas E. Frank (“Mr. Frank”) filed an application for a life agent’s license (the ”Application”) with the Arizona Department of Insurance (the “Department”). 2. Mr. Frank disclosed in the Application that he previously had an insurance agent’s license revoked by the Department based upon a determination of fraud or misrepresentation. 3. Mr. Frank attached to the Application an explanation relating to his prior revocation which is more fully described below. 4. On January 7, 1998, the Department issued a letter to Mr. Frank denying the Application. 5. On January 21, 1998, Mr. Frank timely filed with the Department a request for a hearing regarding the Department’s denial of the Application. 6. On July 30, 1992, the Director of the Department entered an Order In the Matter of Douglas E. Frank, Docket No. 7692, revoking the insurance licenses held by Mr. Frank. In that Order, the Director found that Mr. Frank made representations to a policyholder for the purpose of inducing the policyholder to lapse, forfeit, surrender, retain or convert an insurance policy in violation of A.R.S. §§20-443(5) and 20- 443.01.The Director also found that Mr. Frank’s conduct constituted high pressure tactics having the effect of or tending to induce the purchase of insurance through force, fright, or threat, expressed or implied, or undue pressure to purchase or recommend the purchase of insurance in violation of A.A.C. R4-14-606(J)(2)(b) which has been recodified as A.A.C. R20-6-116(B)(2). 7. On January 3, 1996, the Director of the Department entered an Order In the Matter of Douglas E. Frank, Docket No. 95-225, denying Mr. Frank’s application for an individual disability insurance agent’s license finding that Mr. Frank has: a) a record of dishonesty in business or financial matters within the meaning of A.R.S. §20- 290(B)(2); b) has a record under an insurance license in Arizona showing him to be a source of injury and loss to, or repeated complaint by, the public or any insurer within the meaning of A.R.S. §20-290(4); and c) has a record of suspension or revocation of an insurance license in any jurisdiction within the meaning of A.R.S. §20-290(B)(5). 8. During the hearing, the Department contended that the prior licensing history of Mr. Frank as set forth above in the prior license denial and revocation, establish that Mr. Frank has a record of dishonesty in business or financial matters, a record of conduct under an insurance license issued in Arizona showing him to be incompetent or a source of injury and loss to, or repeated complaints by the public or any insurer, and has a record of suspension or revocation of an insurance license in any jurisdiction. 9. David Friend, the pastor at Mr. Frank’s church and Mr. Frank’s friend, testified that he has known Mr. Frank for about 8 years and considers him to be trustworthy and of good moral character. Although Mr. Friend is aware of Mr. Frank’s prior license revocation, he is unfamiliar with the details that led to the revocation. Mr. Friend testified that Mr. Frank is active in the church, has been an usher for the church and a role model and leader for young men. Both of the latter activities require adult participants to be of good moral character. 10. John Allums testified that he met Mr. Frank in October 1997, when his sister met with and ultimately engaged the services of Mr. Frank in arranging for a living trust. Mr. Allums did not have any business relationship with Mr. Frank but observed Mr. Frank’s dealings with his sister. Mr. Allums testified that Mr. Frank was honest , of good moral character and dealt paitently and fairly with his sister. 11. Dennis Lawrence, who owns and operates a business and estate planning business, testified that he has known Mr. Frank since early 1991 or 1992 and has hired him as an independent contractor to service clients and potential clients of his business. Mr. Frank presently performs such work for Mr. Lawrence. 12. Mr. Lawrence testified that he has never had any complaints regarding M4r. Frank and has received complimentary remarks about Mr. Frank’s work performance. Mr. Lawrence trusts Mr. Frank and considers him to be of good moral character. At or about the time of Mr. Frank’s license revocation, Mr. Frank was performing work for Mr. Lawrence. Mr. Lawrence learned of the license revocation and the events that led up to that action. However, that did not affect Mr. Lawrence’s business relationship with Mr. Frank. 13. Alice Bosold, an individual who purchased insurance from Mr. Frank when he was licensed, testified that she has known Mr. Frank for about 10 years. Ms. Bosold believes Mr. Frank to be honest and ethical. Over the past 10 years, even after his license revocation, Mr. Frank visited Mss. Bosold to inquire how she was. Ms. Bosold recently learned of Mr. Frank’s license revocation through Mr. Frank. 14. Mr. Frank testified that since the license revocation, he sold new and used medical equipment for about 2 months and then became involved in the living trust business mainly with Mr. Lawrence. Mr. Frank testified that the bulk of his business is through Mr. Lawrence and that , on occasion, Mr. Frank works for other individuals in that field. Mr. Frank testified as to his involvement with his church, that from October 1992 to November, 1995, he was the president of the homeowner’s association where he used to live and that since the date of his license revocation, he has not been convicted of any felonies. 15. Mr. Frank recognized his prior conduct as being a violation of the insurance laws and expressed remorse that it occurred. 16. John Allum’s testimony concerning the character of Mr. Frank is discounted due to the minor level of interaction Mr. Allums had with Mr. Frank as well as the nature of such contact. 17. Taking into consideration that Mr. Friend is a personal friend of Mr. Franks, and that Mr. Lawrence has a financial stake in the licensing status of Mr. Frank in that Mr. Frank’s licensure as an insurance agent may be of benefit to Mr. Lawrence’s business, it is determined that the testimony of Mr. Friend and Mr. Lawrence as set forth above is determined to be credible. 18. The testimony of Ms. Bosold and Mr. Frank as set forth above is determined to be credible. 19. Mr. Frank and his witnesses were sincere and credible and the Department did not present credible evidence to refute their testimony. CONCLUSIONS OF LAW 1. Mr. Frank’s insurance agent license revocation as set forth above in the Findings of Fact constitutes a record of revocation of an insurance license in any jurisdiction within the meaning of A.R.S. §20-290(B)(5). 2. Mr. Frank has a record of dishonesty in business and financial matters within the meaning of A.R.S. §20-290(B)(2). 3. Mr. Frank has a record of conduct under an insurance licensed issued in Arizona showing him to be incompetent or a source of injury and loss to, or repeated complaints by the public, or any insurer, within the meaning of A.R.S. §20-290(B)(4). 4. Pursuant to A.R.S. §§20-290(B)(2) 20-290(B)(4 and 20-290(B)(5), the Director has discretionary authority to grant or deny the Application. 5. Notwithstanding the prior revocation and the determinations made in support of that revocation and subsequent license application, which include a finding that Mr. Frank has a record of dishonesty in business and financial matters, and that Mr. Frank’s part conduct constituted a record of showing him to be incompetent or a source of injury and loss, or repeated complaints by the public or any insurer, Mr. Frank sustained his burden of proving that he possesses the requisite qualifications to be licensed by the Department as a life insurance agent. RECOMMENDED ORDER Under the particular facts and circumstances of this case and the evidence presented, including but not limited to the duration of time that has elapsed since the prior insurance agent license revocation, , Mr. Frank’s remorse as to having committed the violation of the insurance laws, Mr. Frank’s employment history and involvement in the community since the prior license revocation, Mr. Frank’s establishment of good character and trustworthiness, the Administrative Law Judge recommends that Frank E. Douglas’ application for a life insurance agent’s license submitted to the Department on December 24, 1997 be granted. Done this day, April 3, 1998.

______________________________________ Lewis D. Kowal Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 1998, to:

Mr. John A. Greene, Director Department of Insurance 2910 North 44th Street, #210 ATTN: Curvey Burton Phoenix, AZ 85018-7256

By ___________________________ -----------------------

Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826