ALJDEC

99A-127-INS-res2 · Department of Insurance · 2000-05-16

STATE OF ARIZONA N THE OFFICE OF ADMINISTRATIVE HEARINGS

This matter came on for hearing on May 16, 2000. The Arizona Department of Insurance (herein called “the “Department”) was represented by Assistant Attorney General, Michael J. De La Cruz, and the Respondent failed to appear. Evidence and testimony were presented, and based upon the entire case record, including all filed pleadings, the following Findings of Fact, Conclusions of Law and Recommended Order have been prepared and are hereby submitted by the Administrative Law Judge for review, consideration, approval and adoption by the Director of the Department (herein called the “Director”).

FINDINGS OF FACT

1. The start of the scheduled hearing was delayed for approximately twenty minutes so as to afford additional time for Respondent to appear. However, Respondent did not appear individually or through any proper legal representative.

2. Respondent, Gary Stuart Miller, customarily using the “D.B.A.” of American Alternative Consumer Concepts, a name that was registered with the Department, had been the holder of life and disability and also property and casualty insurance agent licenses issued by the Department (Number 782258).

3. The above-described insurance licenses were allowed to expire on March 31, 2000 after not being timely renewed. However, the instant disciplinary proceedings had been commenced prior to such expiration date and are expressly authorized pursuant to the provisions of A.R.S.§20- 316.01.

4. The Department’s uncontroverted evidence revealed that on or about March 6, 1996, while serving as a producer/agent for North American Company for Life and Health Insurance, Respondent undertook to obtain life insurance policies for Ronald Taylor and his fiancee, Pamela Legault. The required applications were completed and Respondent collected from these clients their cash payments in the respective sums of $134.93 and $75.00 representing the first premium amounts.

5. The communicated objectives of the cash payments, confirmed by separate written receipts given for each such payment, were to support and accompany the submission of applications for separate life insurance policies. When issued, these policies were believed to serve as a helpful factor in the ability of these applicants to more easily qualify for a home mortgage as part of a contemplated residential purchase.

6. Although both the applications and the payments given to Mr. Miller were to have been promptly submitted by Respondent to the company for approval and policy issuance, in accordance with his producer’s agreement, neither the completed applications nor any portion of the collected funds were forwarded to the insurance company. Instead, as subsequently admitted by Respondent to his clients, Mr. Miller used the cash payment proceeds for his own use, reportedly to satisfy bail for himself following some criminal problems. As a direct consequence of Respondent’s failure to transmit these applications and monies, no policies were ever issued. (Mr. Miller’s agreement with North American Company for Life and Health Insurance was terminated on September 20, 1996 for not meeting minimum production level expectations).

7. In June, 1996, more than three months after having collected the cash payment, Mr. Miller did utilize his own funds to obtain money orders in the respective amounts of $156.00 and $54.00 which were to accompany new applications for insurance policies from another potential insurer, First Penn Pacific, a company with whom Respondent had signed an appointment agreement on April 10, 1996 enabling the placement of insurance policies through GFSC, Inc., the general agent.

8. It was shown that although on June 6, 1996, Respondent had his clients complete new applications to First Penn Pacific and was holding the money orders for the required initial payments, another unreasonably long period once again ensued before the Mr. Miller’s actual submission of these items to the insurer on or about August, 19, 1996. This lack of timely action and follow-up on the part of Respondent proved costly, because Mr. Rogers suffered a stroke on August 25, 1996 that ultimately became the basis for a rejection of his application. The application for Ms. Legault was also rejected for another medical reason. Although a refund of the advance payment amounts was eventually received by Mr. Rogers and Ms. Legault directly from First Penn Pacific, both individuals are effectively uninsurable at this time, traceable in some degree to Respondent’s unprofessional and dilatory course of conduct, reflecting a reckless disregard of his obligations as a licensed insurance agent as well as of the welfare and entitlements of his clients.

9. Documentary evidence was introduced at the hearing demonstrating that Mr. Miller had been charged on March 18, 1997 with a Class 6 felony, “False Insurance Claim,” based upon acts committed on November 25, 1996, and an arrest warrant for this charged offense was issued on March 19, 1997.

10. The above-described outstanding arrest warrant was noticed by law enforcement authorities who had detained Mr. Miller on February 5, 1998 for a D.U.I. offense.

11. A guilty plea agreement by Respondent resulted in the transfer of the pending criminal action from the Superior Court to the Lake Havasu Justice Court. Under the agreement, the felony charges were dismissed, and Mr. Miller was instead convicted of a Class I misdemeanor, “False Insurance Claim,” for which he received a sentence of unsupervised probation for two years plus a duty to pay restitution of $4,367.70 commencing December 10, 1998. It was not shown that Respondent complied or is still complying with his obligation to remit monthly payments. However, the evidence did tend to indicate that separate warrants for Mr. Miller’s arrest were issued based purportedly upon his failure to appear for formal sentencing by the Court and for failing to comply with required fine payments.

12. None of the foregoing criminal history was disclosed by Respondent to the Department on the last renewal application form filed by Mr. Miller in mid-February, 1998 despite the clear contents of specific questions on the application form as to the pendency or conclusion of any criminal proceedings against the licensee who was seeking renewal. These questions sought disclosure of any allegations or convictions of crimes involving (a) dishonesty in business or financial matters, (b) fraud or misrepresentation, or (c) any cause arising out of an insurance transaction. Disclosure

by Respondent of the charged offenses that led to the guilty plea agreement and ultimate conviction was expressly required under the Department’s renewal form language.

13. Although it appeared that Respondent was or should reasonably have been aware of the above-described criminal allegations and charges, all questions on the submitted renewal application pertaining to any criminal proceedings since the last renewal date or the date of license issuance were answered in the negative by Respondent.

14. By his failure to attend and to participate in the scheduled hearing, Mr. Miller presented no evidence in defense or in mitigation of the charges of wrongdoing in this case.

CONCLUSIONS OF LAW

1. The undisputed evidence of record adequately established that Gary Stuart Miller, acting in his capacity of an insurance agent, collected two separate cash payments from individuals and thereafter failed to timely transmit any portion of such payments or the accompanying applications for insurance policies to the company with whom he had a producer’s agreement. The evidence further demonstrated that a subsequent effort was made to obtain insurance for these same individuals through another insurer, but that Mr. Miller’s tardy, careless and disorganized actions resulted in the inability to secure the desired policies.

2. The overall course of conduct exhibited by Respondent, as proven by credible evidence, constitutes the conducting of affairs under his insurance license in a

manner showing the licensee to be incompetent or a source of injury and loss to a member of the public or any insurer in violation of A.R.S.§20- 316(A)(7).

3. Respondent’s conduct further constituted the misappropriation or conversion to his own use, or the illegal withholding of monies belonging to others, and received in or during the conduct of business under or through the use of his license in violation of A.R.S.§20-316(A)(4).

4. Mr. Miller’s conduct, including his criminal history record, also constitutes a record of dishonesty by him as a licensee in business or financial matters in violation of A.R.S.§20-316(A)(8), and his failure to properly disclose the pendency of those criminal proceedings on his renewal application filed with the Department constituted a wilful misrepresentation of a fact required to be disclosed in the application, thereby violating A.R.S.§20-291(G). Additionally, such non-disclosure constituted non-compliance with the provisions of Title 20 or any lawful rule, regulation or order of the director, as well as constituting the existence of misrepresentation or fraud in obtaining or attempting to obtain or renew any insurance license in violation of A.R.S.§20-316(A)(2) and (3)

5. The acts and/or omissions of Respondent provide more than sufficient grounds, pursuant to A.R.S.§20-316(A) and (C) for the Director to suspend, revoke or refuse to renew Respondent’s license and also to impose a civil penalty or to order that Respondent provide restitution to any party injured by the licensee’s actions.

6. Under the proven facts and circumstances of this case, including the presently expired status of Respondent’s license and his default in appearance at the scheduled disciplinary hearing, the imposition by the Director of a license revocation appears to be fully warranted based upon the totality of the evidence of record.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the Director enter an Order revoking the life and disability and also the property and casualty insurance agent licenses held by Gary Stuart Miller, doing business as American Alternative Consumer Concepts.

Dated: May 31, 2000.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Charles R. Cohen, Director Arizona Department of Insurance 2910 North 44th Street (Suite 210) Phoenix, AZ 85018

ATTN: Curvey Burton -----------------------

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