SC Administrative Law Court Decisions

This matter comes before me pursuant to the denial by the South Carolina Department of Insurance (Department) of Petitioner's application for an insurance agent's license. The Department denied the Petitioner's application pursuant to S.C. Code Ann. §§ 38-7-140, 38-43-50, and 38-43-100 (Supp. 1997) for providing false information on her application. After notices to the parties, a hearing was conducted on June 2, 1998. Any issues presented during the hearing of this matter that are not addressed in this Order are deemed denied. ALJD Rule 29B.

I make the following Findings of Fact, taking into consideration the burden on the parties to establish their respective cases by a preponderance of the evidence and taking into account the credibility of the witnesses:

1. Respondent, Betty S. Buskey, was first licensed as an insurance agent by the Department in January, 1986. She was sponsored by various insurance companies and was re-licensed by the Department to represent these companies through July, 1991.

2. In July of 1991, Respondent allowed her license to lapse because she was no longer in the insurance business.

3. Respondent submitted a State of South Carolina Application for Individual Insurance Agent's License to the Department on October 29, 1997. She was sponsored by Pre-Paid Legal, Inc.

4. On the application, Respondent responded "No" to question #4 which asked if she had ever been convicted, pled guilty, or pled no contest in a criminal proceeding. Respondent then signed a statement affirming that "all information and answers contained in this application are true and complete."

5. A criminal background investigation by SLED revealed that Respondent had been convicted of two counts of fraudulent checks on May 16, 1986.

6. The Department notified Respondent on December 30, 1997, that her license was denied for failure to disclose two prior criminal convictions on her application. In addition, the Department also claims that denial of the license is authorized because the convictions relate to crimes involving moral character.

7. Respondent wrote Department that she answered "No" to question #4 in reliance on the sentencing judge's representation that the fraudulent check convictions would not appear on her record since she paid the restitution and fine and this was her first offense.

8. Thereafter, Respondent sought and received an expungement order on December 11, 1997, removing the fraudulent check convictions from her record.

9. Although Respondent was convicted in 1986, her insurance license was renewed several times before it was surrendered in 1991. The Department did not conduct criminal records investigations until 1988. Beginning in 1988, a criminal records report from the South Carolina Law Enforcement Division was required for all new insurance agent applications. Applications for license renewal do not require a SLED report. Therefore, Respondent's criminal record was not detected until she filed a new application in 1997.

10. In January of 1998, the Department offered Respondent a Consent Order in which an individual insurance agent license would be issued after paying a $600 administrative fine for failing to disclose the convictions on the application and submitting a properly-completed application for an individual insurance agent license.

11. Respondent declined the proposed Consent Order and requested a contested case hearing before the Division.

12. The Department maintains that Respondent did not complete her agent application truthfully and should either not be granted an insurance license or be required to pay a $600 administrative fine.

Based upon the foregoing Findings of Fact, I conclude, as a matter of law, the following:

1. Jurisdiction is vested in the Division pursuant to S.C. Code Ann. § 1-23-600(B) (Supp. 1997).

2. "No person may act as agent for an insurer or for a fraternal benefit association unless an agent's license has been issued to him by the director of his designee." S.C. Code Ann. § 38-43-20 (Supp. 1997).

3. "Before being issued a license to do business as an agent in this State for an insurer, each applicant shall make written application for the license upon forms to be furnished by the department, and all information on the forms required by the director or his designee must be subscribed to by the applicant under oath. ...[T]he license may not be issued until the director or his designee has determined that the applicant is qualified as an insurance agent..." S.C. Code Ann. § 38-43-100 (Supp. 1997).

4. The Director of Insurance has the discretion to deny an insurance agent's license to an applicant who has been convicted of a crime involving moral turpitude. See S.C. Code Ann. § 38-43-130 (Supp. 1997) and 25A S.C. Code Ann. Reg. 69-23 (1989).

5. Issuing a fraudulent check is a crime of moral turpitude in South Carolina. State v. Harrison, 298 S.C. 333, 380 S.E.2d 818 (1989). Therefore, since the Petitioner had been convicted of a crime of moral turpitude, the decision to deny the Petitioner's application for a resident agent's license was within the Director of Insurance's discretion.

6. Under S.C. Code Ann. § 38-43-130 (Supp. 1997), if the director finds that one or more grounds exist for the revocation or suspension of, or the refusal to issue or reissue a license, the director, in his discretion, in lieu of revocation, suspension, or refusal, may impose upon the agent or applicant an administrative penalty as provided in Section 38-2-10 for each offense or ground. One of the offenses listed is "misstating the facts in an application for insurance or aiding in the misstatement of the facts". S.C. Code Ann. § 38-43-130 (Supp. 1997).

7. The administrative penalty which may be imposed on an individual pursuant to S.C. Code Ann. § 38-2-10 (Supp. 1997) shall not exceed $2500.

8. Mrs. Buskey did not intend to deceive or mislead the Department. In addition, she was licensed by the Department for several years after her conviction without any irregularities in her business transactions or disciplinary action by the Department. She has taken steps to correct her criminal record and has disclosed all information and cooperated fully with the Department. Based upon the facts presented, an appropriate fine is $300.

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

ORDERED that the Department of Insurance shall issue a license to Respondent Betty S. Buskey upon submission, through a sponsoring insurance company, of a correctly completed State of South Carolina Application for Individual Insurance Agent's License and upon the payment of an administrative fine of $300.

It is FURTHER ORDERED that Respondent pay an administrative fine of $300 to Department within thirty days from the date the completed application is submitted to the Department.

AND SO IT IS ORDERED.

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ALISON RENEE LEE

Administrative Law Judge

June 15, 1998

Columbia, South Carolina.