South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550 Fax: (803) 734-6400

SC Administrative Law Court Decisions

CAPTION:
Ernest M. Gause vs. SCDOI

AGENCY:
South Carolina Department of Insurance

PARTIES:
Petitioner:
Ernest M. Gause

Respondent:
South Carolina Department of Insurance
 
DOCKET NUMBER:
07-ALJ-09-0233-CC

APPEARANCES:
For the Petitioner:
Pro se

For the Respondent:
David E. Belton, Esquire
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This matter is before the Administrative Law Court (“ALC”) for a final order and decision following a contested case hearing pursuant to S.C. Code Ann. § 38-43-130(G) (Supp. 2006). Petitioner Ernest M. Gause (“Gause”) challenges the decision of Respondent South Carolina Department of Insurance (“Department”) denying his application for an insurance producer’s license pursuant to S.C. Code Ann. § 38-43-100 (Supp. 2006) and § 38-43-130(A), (C)(1). The Department found that Gause provided “incorrect, misleading, incomplete, or materially misleading information” in his license application. After notice to the parties, the court held a hearing on this matter on September 12, 2007. After carefully weighing all of the evidence, the court finds that Gause’s application for an insurance producer’s license should be denied.

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, and taking into consideration the burden of persuasion by the parties, the court makes the following Findings of Fact by a preponderance of the evidence.

In February 2007, Gause applied for a license to work as an insurance producer at World Finance in Kingstree, South Carolina. The Department denied Gause’s application because the
Department’s records indicated that Gause had an insurance producer’s license permanently revoked


in 1986 because Combined Insurance Company of America, the insurance company he worked for at the time, “reported that [Gause] had forged two checks issued by Combined’s policyholders.” Gause failed to disclose this information on his application to the Department. On the last page of the application, Gause certified that “under penalty of perjury, all of the information submitted in this application and attachments is true and complete. I am aware that submitting false information or omitting pertinent or material information in connection with this application is grounds for license revocation or denial of the license . . . .”

At the hearing, Gause fully accepted culpability for those actions and the failure to disclose them in response to specific questions on the application. Question Two asked whether Gause had “ever been involved in an administrative proceeding regarding any professional or occupational license” and defines “involved” to include having a license revoked. Question Six asked whether Gause had ever had a “business relationship with an insurance company terminated for any alleged misconduct.” Upon reviewing the questions, Gause agreed that he answered these questions untruthfully. However, in his defense, he testified that the misconduct occurred over twenty-two years ago and that he was young and made a mistake.

Gause further stated that he did not realize he was being untruthful at the time because he relied upon another individual’s advice that he need not disclose incidents that took place that long ago. However, the Department presented evidence that Gause had initially submitted his application through the Department’s on-line application website and received a message informing him that he must submit a paper application to the Department because he had a previous license revoked.

In support of his application, Gause further testified that since 1986, he attended the criminal justice academy, worked for the sheriff’s department and police department in Winnsboro, South Carolina, and has worked as a private investigator for GIS Services. Gause feels that he has paid the price for his mistakes in the past and would like another opportunity to work in the insurance industry.

Glenn Harrell testified in support of Gause’s application. Harrell employed Gause as a private investigator and believes him to be trustworthy. Harrell stated that he has trusted Gause with his credit cards and keys to his home and office. Harrell further testified that Gause is hardworking and diligent and that by knowing Gause, he could understand how Gause could misunderstand the application’s questions and answer them incorrectly.

LAW

Based upon the foregoing Findings of Fact, the court concludes the following as a matter of law.

1. Jurisdiction

Jurisdiction over this case is vested with the South Carolina Administrative Law Court pursuant to S.C. Code Ann. § 38-43-130(G) (Supp. 2006) and S.C. Code Ann. § 1-23-600(B) (Supp. 2006). The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See S.C. Cable Television Ass’n v. S. Bell Tel. & Tel. Co., 308 S.C. 216, 222, 417 S.E.2d 586, 589 (1992). Furthermore, a trial judge who observes a witness is in the best position to judge the witness’s demeanor and veracity and to evaluate the credibility of his testimony. See, e.g., Woodall v. Woodall, 322 S.C. 7, 10, 471 S.E.2d 154, 157 (1996); Wallace v. Milliken & Co., 300 S.C. 553, 556, 389 S.E.2d 448, 450 (Ct. App. 1990).

In presiding over this contested case, the court serves as the finder of fact and makes a de novo determination regarding the licensing matters at issue. See S.C. Code Ann. § 1-23-600(B) (Supp. 2006); Marlboro Park Hosp. v. S.C. Dep’t of Health & Envtl. Control, 358 S.C. 573, 577-79, 595 S.E.2d 851, 853-54 (Ct. App. 2004); Brown v. S.C. Dep’t of Health & Envtl. Control, 348 S.C. 507, 512, 560 S.E.2d 410, 413 (2002).

2. Insurance Producer’s License Requirements

To be licensed as an insurance producer, an applicant must be at least eighteen years of age, must have completed a prelicensing course of study for the lines of insurance for which the person has applied, must paid the fees required by § 38-43-80, and must have passed the applicable examination unless exempted pursuant to § 38-43-100(A). § 38-43-100(F). Further, before issuing a license to an insurance producer, the Department must find that the applicant “is a person of good moral character and has not been convicted of a felony or any crime involving moral turpitude within the last ten years that is a ground for denial, suspension, or revocation as provide for in Section 38-43-130.” § 38-43-100(F)(2). Section 38-43-130 provides that “[t]he director or his designee may . . . refuse to issue or reissue a license when it appears that a producer . . . has willfully deceived or dealt unjustly with the citizens of this State.” § 38-43-130(A).

“[D]eceived or dealt unjustly with the citizens of this State” is defined in the statute to include, among other things:

(1) providing incorrect, misleading, incomplete, or materially untrue information in the license application;

(2) violating any insurance laws, or violating any regulation, subpoena or order of the director or of another state’s director or his designee;

(3) obtaining or attempting to obtain a license through misrepresentation or fraud;

(4) improperly withholding, misappropriating, or converting any monies or properties received in the course of doing insurance business;

* * *

(7) having admitted or been found to have committed any insurance unfair trade practice or fraud; [or]

* * *

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

§ 38-43-130(C).

3. Conclusions

After carefully weighing the evidence and applying the law as discussed above, the court finds that Gause’s application for an insurance producer’s license should be denied.

Gause has presented insufficient evidence to the court to overcome the fact that he answered material questions on his application untruthfully. Gause testified that he misunderstood Questions Two and Six and relied on another individual who stated that since the revocation was twenty-two years ago, he did not need to disclose it. However, Gause was put on notice that his prior revocation would be considered when he initially applied on-line and received a message informing him that he must submit a paper application to the Department because he had a previous license revoked. Additionally, by using the word “ever,” Questions Two and Six very clearly encompass any prior revocation or termination and are not limited as to time period in any way. Accordingly, Gause was required to disclose all responsive information, no matter how remote in time.

The court is impressed with Gause’s efforts following the revocation of his insurance producer’s license in 1986 in attending the criminal justice academy and serving in law enforcement. The court is also mindful of the support and favorable recommendation offered by his former employer. Nonetheless, even if Gause had completed his application accurately, it is questionable whether Gause should be granted a license in light of the fact that he has had an insurance producer license permanently revoked and the underlying cause of the revocation, which involved altering the checks of two policyholders. Even though this misconduct occurred a very long time ago, it was directly related to his activities as an insurance producer. The Department, which is charged with the duty of protecting insurance consumers by enforcing the licensing statutes enacted by the General Assembly, saw fit at that time to bar him permanently from the insurance industry. Gause failed to prove to the court by a preponderance of the evidence that he should now be granted an insurance producer’s license. Under these circumstances, the court finds that the Department’s decision to deny Gause’s license should be upheld.

ORDER

Based upon the Findings of Fact and Conclusions of Law stated above, it is

ORDERED that the Department’s decision to deny Petitioner’s application for an insurance producer’s license pursuant to §§ 38-43-100 et seq. is upheld.

IT IS SO ORDERED.

______________________________

PAIGE J. GOSSETT

Administrative Law Judge

October 23, 2007

Columbia, South Carolina


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