SC Administrative Law Court Decisions

This is a contested licensing case. The South Carolina Department of Insurance (the Department) denied the Petitioner's applications to become licensed as a surety bail bondsman and runner. The Petitioner appealed that decision.

FINDINGS OF FACT

Based upon the arguments of counsel and the pleadings before me, I find the following:

• The Court has jurisdiction over this matter and the parties.
• The Petitioner carried a surety bail bondsman license from August 4, 1994 until March 9, 1998, when that license was revoked via an order (the Revocation Order) from the Administrative Law Judge Division (ALJD). The Revocation Order was upheld on appeal.
• Because the Petitioner had his license revoked, he could not reapply to become licensed for at least two years. S.C. Code Ann. § 38-43-130 (Supp. 2000). On July 10, 2000 the Petitioner filed an application to become licensed again as a surety bail bondsman.
• Section 38-43-130 of the South Carolina Code, in pertinent part, provides the Director or his designee with the discretion to "refuse to reissue a license when it appears that an agent has been convicted of a crime involving moral turpitude, has violated this title or any regulation promulgated by the Department, or has willfully deceived or dealt unjustly with the citizens of this State." The Department automatically denied the application based essentially on three grounds:
• The prior license revocation itself and the language of the Revocation Order;
• The evidence obtained in the investigation that led to the Revocation Order; and
• Several allegations the Department had received after the Revocation Order had been issued, indicating that the Petitioner continued to transact business as both a surety bail bondsman and a runner without being licensed to do so.
• The Petitioner requested the Department to review its initial denial. The Department did so and affirmed the initial decision, whereupon the Petitioner filed this appeal.
• A hearing on the merits was scheduled for March 8, 2001. Surprisingly, neither the Petitioner nor his attorney at that time appeared at that hearing. The Court granted the Department's motion to dismiss the appeal with prejudice.
• Immediately thereafter, the Petitioner moved to reopen his case based on the ineffective assistance of his attorney. The Petitioner also indicated he desired to be represented henceforth by Robert G. Rikard, Esquire. The Court granted the Petitioner's motion in a hearing on April 24 and scheduled a new hearing on the merits for August 14, 2001.
• On August 14, 2001, the Court finally heard arguments on the merits of this matter in chambers by consent of the parties, since the only witness to appear for the hearing was the Department's investigator. Present in chambers were Robert G. Rikard, counsel for the Petitioner, T. Douglas Concannon, counsel for the Department, and Joenathan S. Chaplin, representing C.E. Parrish, the Managing General Agency for the Petitioner's sponsoring insurer, Ranger Insurance Company (Ranger).
• In chambers, the parties presented the uncontested facts in this case. The attorney for the Petitioner stressed that the Petitioner freely admits certain prior wrongdoing and has attempted to correct his errors to the best of his ability. It also appears that many of the allegations the Department has received against the Petitioner since the Revocation Order have been investigated and determined to be unfounded or unprovable. Similarly, the attorney for C.E. Parrish represented his client and Ranger both still wish to sponsor the Petitioner as a surety bail bondsman.
• Since filing his initial appeal, the Petitioner also filed with the Department an application to be licensed as a runner under Chapter 53 of the state's insurance laws. The Department has held this application in abeyance pending the resolution of this matter.

CONCLUSIONS OF LAW

The Department was Within its Authority to Deny the Application

The approval or denial of a surety bail bondsman license application is within full discretion of the Director of Insurance. After a thorough review of the record, and pursuant to my findings of fact, I hereby concur with the findings in the Revocation Order that the Petitioner had violated the insurance laws of the State of South Carolina. Moreover, when the Department denied the Petitioner's application, it was informed and believed the Petitioner continued to violate South Carolina's insurance laws. Therefore, the Department did not exceed or abuse its authority per se in denying the application.

In This Case, Automatic License Denial is an Inappropriate Penalty

The Department's automatic denial of applications based strictly on the language of § 38-43-130 could result in application denials without regard to the nature of the violation and without regard to the circumstances presented by a particular case and actually defeat the intent of § 38-43-130. In this case, the Petitioner appears remorseful and already has undergone punishment for his prior wrongful conduct. Many of the problems the Petitioner has suffered, and is suffering, from the prior revocation of his license also appear to be due as much to his earlier choice of counsel as to any unlawful conduct. It also is very significant that no independent witnesses came forward to corroborate either party's version of events. Therefore, it appears that granting a temporary license to the Petitioner, like that mentioned in § 38-43-100, would not immediately or irreparably harm the public interest, if such a license were coupled with sufficiently strict safeguards and conditions.

ORDER

It is, therefore, ordered that the Department shall not deny the Petitioner's license application in this case. Rather, the parties are hereby ordered to comply with the following temporary licensing arrangement, which the parties have reached through long negotiation and in a spirit of compromise.

• The Department will issue a 6-month probationary license to the Petitioner.
• As a precondition to receiving a license, the Petitioner must resolve any and all currently outstanding complaints, escheatment, and other matters against him, whether at the Department or at the Richland County Clerk of Court.
• As a precondition to receiving a license, the Petitioner must file a bond with the Department in favor of the Department for $10,000 executed by a corporate surety licensed to transact surety insurance in this state and personally countersigned by a licensed resident agent of the surety. The purpose of the bond is to assist the Department in resolving complaints raised against the Petitioner. As such, the bond must be conditioned to pay a person insured or seeking insurance through the Petitioner who sustains loss as a result of:
• The Petitioner's violation of or failure to comply with an insurance law or regulation of this state or an order issued by the Director of Insurance or his designee;
• The Petitioner's failure to transmit properly a payment received by him, cash or credit, for transmission to an insurer or to an insured;
• The Petitioner's failure properly to refund where appropriate a payment received by him, cash or credit; or
• An act of fraud committed by the Petitioner in connection with the bail bonding business.

In lieu of a bond, the Petitioner may file with the Department notice of certificates of deposit of $5,000.00 of building and loan associations or federal savings and loan associations located within the state in which deposits are guaranteed by the Federal Savings and Loan Insurance Corporation, or of banks located within the state in which deposits are guaranteed by the Federal Deposit Insurance Corporation. An aggrieved person may institute an action in the county of his residence against the Petitioner or his surety, or both, to recover on the bond or against the Petitioner to recover from the certificates of deposit, and a copy of the summons and complaint in the action must be served on the Department, which is not required to be made a party to the action. Petitioner shall maintain this certificate of deposit during the entire temporary licensing period. After that period has expired, Petitioner may withdraw whatever principle and interest remains in the account.

• As a condition of his temporary licensure, the Petitioner will work in a highly structured work environment under a licensed surety agent to provide guidance, mentoring, and proper supervision for the Petitioner. The specific arrangements of the Petitioner's employment will be set forth in a contract to be reviewed and approved by the Department. As a condition of the Petitioner's continued licensure, six months after the date of this order, the supervising surety agent must submit to the Department a sworn affidavit stating relevant facts and circumstances the agent observed regarding the Petitioner's abilities and recommending the Petitioner be allowed to operate unsupervised as a bail bondsman.
• The Petitioner must retain a private attorney to advise and assist him in the transaction of his business. Should any questions or concerns arise about the legality of a particular course of dealing, the Petitioner must, through his attorney, consult with the Department before pursuing any other action on that issue.
• As a condition of his continued licensure, the Petitioner will prepare monthly reports of bonds issued, as is required of Professional Bail Bondsmen under § 38-53-310 of the South Carolina Code for a period of twelve months. A copy of these reports must be filed with the Department by the 15^th of each month.
• As condition of his temporary licensure, the Petitioner must undergo 12 classroom hours of surety continuing insurance education courses beyond the statutory requirement of S.C. Code Ann. §§ 38-43-106 and 38-53-85 (Supp. 2000) and provide to the Department the original certificates of attendance proving his completion of this requirement within three months of the date of this Order. These CE hours may not be fulfilled via correspondence courses and will not be eligible for the carry-over pursuant to § 38-43-106(C). If the Petitioner does not provide the required proof of his timely having taken the additional continuing insurance education courses, his surety bail bondsman's license will be revoked without any further disciplinary proceedings.
• Ranger must examine the Petitioner's business at least once in the six months following the date of this Order and report its findings to the Department.
• The Department must examine the Petitioner's business at least once in the six months following the date of this Order and at the and of each year thereafter.
• If the Department obtains uncontroverted evidence through its examination or elsewhere that the Petitioner has committed any violation of the state's insurance laws, particularly laws involving the advancing or refund of premium to consumer, the use of unlicensed bail bondsmen and/or runners, or the unlawful solicitation of business, the Department has the authority to revoke his surety bail bondsman's license without any further disciplinary proceedings during the six month temporary licensure period, and the Department will not unreasonably exercise this discretion. Afterward, the Petitioner shall be afforded all the due process rights available to him under the South Carolina Code and Rules of the Administrative Law Judge Division regarding alleged violations.
• Prior to the end of the 6-month temporary licensing period, the Petitioner will file with the Department applications for standard surety bail bondsman and runner licenses. In reviewing those applications, the Department shall consider the Petitioner's conduct during the 6-month temporary licensing period and comply with the statutory scheme in determining whether the petitioner may continue to be licensed as a surety bail bondsman.

IT IS FURTHER ORDERED that this case is dismissed with prejudice.

AND IT IS SO ORDERED.

__________________________________

MARVIN F. KITTRELL

Chief Administrative Law Judge

January 16, 2002

Columbia, South Carolina

We consent:

_______________________________ _______________________________

Robert G. Rikard T. Douglas Concannon

Attorney for the Petitioner Associate General Counsel

Bland & Rikard, LLP South Carolina Department of Insurance

Post Office Box 72 Post Office Box 100105

Columbia, South Carolina 29202 Columbia, South Carolina 29202-3105

(803) 256-9664 (803) 737-6132