ORDERS:
ORDER
STATEMENT OF THE CASE
This matter comes before the Administrative Law Judge Division pursuant to S.C. Code
Ann. § 38-43-130 (Supp. 1996) upon the request of Yolanda Adams for a contested case hearing
on the decision by the Department of Insurance to revoke her resident insurance agent license.
After notice to the parties, a hearing was conducted on August 21, 1997. Based upon the evidence
presented, the resident insurance agent license is suspended for a period of six months.
Any issues raised or presented in the proceedings or hearing of this matter not specifically
addressed in this Order are deemed denied. ALJD Rule 29B.
FINDINGS OF FACT
I make the following Findings of Fact, taking into account the burden on the parties to
establish their respective cases by a preponderance of the evidence and taking into consideration
the credibility of the witnesses:
Yolanda Adams is a licensed insurance agent.
Adams is licensed to underwrite insurance for Massachusetts General Life Insurance
Company, Intergon Life Insurance Corporation, and Southwestern Life Insurance Company.
From August, 1993 until the present, Adams has maintained employment with
Wilson & Associates, an insurance agency.
Adams received an authorization code from Investors Consolidated Insurance
Company, which is a requirement for selling insurance policies for that company.
Thereafter, Adams solicited insurance on behalf of Investors Consolidated.
On December 2, 1995, Adams obtained an application for disability insurance from
Marvin Koon.
The monthly premium was calculated to be $32.00.
At the time of the application on December 2, 1995, a bimonthly payroll deduction
in the amount of $16.00 was completed by Koon. No other funds or payment was tendered with
the application.
Koon believed that once the application was accepted by Adams, he only needed to
await confirmation from the company.
Adams lost the application and did not submit it to Investors Consolidated within
30 days from the date of the application as required. The application was found several months
later.
Adams did not provide Koon with another insurance application to complete after
the loss of the original application.
Koon suffered an injury requiring surgery in an accident not related to his
employment in March, 1996.
Koon promptly notified Adams of his accident and his desire to file a claim for
disability under the Investors Consolidated policy after the accident. Adams never sent him a claim
form.
A claim form was not completed by Koon until June 1996.
No premiums were deducted from Koon's paycheck between his application in
December and his accident in March.
Koon did not receive any confirmation from Investors Consolidated about disability
insurance between December 1995 and the date of the injury in March 1996.
Koon never received a policy from Investors Consolidated between the time of the
application in December 1995 and the date of the injury in March 1996.
On April 23, 1996, Koon's application for the disability policy was submitted to
Investors Consolidated.
By letter dated May 2, 1996, Investors Consolidated notified Koon that his disability
policy could not be issued because the application was not submitted within 30 days of the written
date of the policy. The letter suggested he contact another insurance agent at Wilson & Associates.
After receipt of this letter, Koon contacted Wilson & Associates regarding the matter
and was assured that any problems would be resolved. He repeatedly contacted Wilson &
Associates about the problem.
On June 1, 1996, a disability insurance policy was written for Marvin Koon by
Investors Consolidated through Wilson & Associates.
DISCUSSION
The Department of Insurance issued a complaint against Respondent alleging she violated
provisions of S.C. Code Ann. § 38-43-130 (Supp. 1996) by failing to inform promptly the customer
or insured of the correct premium, failing to deliver promptly a policy to an insured, failing to notify
promptly the insured or customer if the agent has been unable to obtain the requested insurance and
failing to maintain adequate records regarding insurance sought. The Department also alleges that
Respondent's license should be revoked because Respondent did not hold a license to sell insurance
as required by S.C. Code Ann. § 38-43-20 (Supp. 1996).
The Department first asserts that the Respondent, Yolanda Adams, failed to inform the
customer, Marvin Koon, of the correct premium. There is little evidence to support this contention.
The Department relies solely on the application for insurance, which in December of 1995 priced
a disability policy at $32.00 per month and in June of 1996 was figured by another agent to be
$35.00. There is nothing in the record to indicate that the initial policy price determination made
by the Respondent in December was an error. The second policy price in June could also have been
an error or based upon a change in circumstances (such as risk factors or price increases).
The Department also contends Adams failed to promptly deliver the policy. The evidence
is undisputed that the policy was never issued prior to the injury. Therefore, simple logic suggests
if the policy was never issued, then it could never be delivered. The Department also maintains that
Adams failed to promptly notify Koon that she had been unable to obtain the insurance. Here the
testimony is contradictory. Koon states he always believed he had the disability insurance and was
covered, while Adams states she informed Koon that he was not covered because she had
inadvertently lost the application and needed to complete another. The testimony also reveals that
Adams and Koon maintained a personal relationship beyond the bounds of strictly agent and
customer. Even if Adams had not informed Koon of the loss of the application, Koon testified that
once he completed the application he had to await confirmation from Investors Consolidated. The
company never provided that confirmation and no premiums were deducted during the four month
period covering December 1995 through March 1996.
The Department spent considerable time trying to establish that a paycheck stub represented
deductions made from Koon's paycheck for the insurance premiums. The Department apparently
overlooked the fact that a disability policy for Koon was issued by Investors Consolidated in June,
1996, to be paid by payroll deductions. The single paycheck stub proffered was dated January of
1997. It would appear the paycheck stub merely confirms that Koon is paying the premiums on his
current policy, and has no bearing or relevance to the issues before this court.
The Department states that Adams also failed to maintain adequate records regarding
insurance sought. By her own admission, Adams states that she lost the application, records
contained in her briefcase were missing and she failed to obtain another application from Koon
when she lost the original.
The Department asserts Adams sold insurance without a license as required by statute.
However, the same statute carves out several exceptions. As a qualified agent who had been
furnished with Investors Consolidated materials, notably the "code" by which an agent can sell
insurance, Adams was acting within an exception in the statute. The statute also clearly expresses
that it is the insurance company's duty to petition the Department for licensure of the agent for the
company upon submission of an application for insurance. Adams was properly acting on behalf
of Investors Consolidated when she solicited business from Koon.
CONCLUSIONS OF LAW
Based upon the Findings of Fact, I conclude as a matter of law the following:
The Administrative Law Judge Division has subject matter jurisdiction over this
contested case hearing.
Proper time and notice of the hearing was given to each party involved.
S.C. Code Ann. § 38-43-20 (Supp. 1996) states in part:
No person may act as agent for an insurer . . . unless an
agent's license has been issued to him by the director or his
designee, except for the following persons:
. . . .
(f) an agent qualified to transact a life, health, or group insurance
business may present a proposal for life, health, or group insurance
to a prospective policyholder on behalf of an insurer for which the
agent is not specifically licensed, and may transmit an application for
insurance to that insurer, if the insurer has previously furnished the
proposal and application materials to the agent. By furnishing the
proposal and application materials to the agent, the insurer is
considered to have authorized the agent to act on its behalf, and the
insurer is responsible for all actions of the agent as if the agent had
been duly licensed for the insurer. . . .
S.C. Code Ann. § 38-43-130 (Supp. 1996) states in part:
The director or his designee may revoke or suspend an
agent's license . . . when it appears that an agent has . . . violated this
title or any regulation promulgated by the department, or has wilfully
deceived or dealt unjustly with the citizens of this State.
. . . .
The words "deceived or dealt unjustly with the citizens of this State"
include, but are not limited to, action or inaction by the agent as
follows:
. . . .
(2) failing to inform promptly the customer or insured of the correct
premium or informing him of an incorrect premium based on the
information furnished the agent by the customer or insured;
. . . .
(5) failing to deliver promptly a policy, endorsement, or rider to any
insured;
(6) failing to notify promptly the customer or insured if the agent has
been unable to obtain the requested insurance for him;
(7) failing to maintain adequate records regarding insurance sought
or obtained from or through the agent which can be examined by the
director or his designee or one of his representatives for and on
behalf of a citizen of this State.
. . . .
In construing statutes, the language used should be given its plain and ordinary
meaning without resort to subtle or forced construction to limit or expand the statute's operation.
Home Health Serv., Inc. v. South Carolina Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994);
Bryant v. City of Charleston, 295 S.C. 408, 368 S.E.2d 899 (1988).
The trier of fact must weigh and pass upon the credibility of evidence presented.
See S.C. Cable Television Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586
(1992).
The trial judge is in the best position to weigh witnesses' demeanor and veracity and
to evaluate their testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay
v. Peay, 260 S.C. 108, 194 S.E.2d 392 (1973); Mann v. Walker, 285 S.C. 194, 328 S.E.2d 659 (Ct.
App. 1985).
The Respondent did not violate S.C. Code Ann. § 38-43-20 (selling insurance
without a license) and was soliciting insurance under one of the provided statutory exceptions.
Respondent's actions in soliciting the insurance fall under the purview of S.C. Code
Ann. § 38-43-130(f) (Supp. 1996). Adams has been a licensed insurance agent since 1993 and was
implicitly authorized by Investors Consolidated to sell their insurance under the statute.
The Respondent did not violate S.C. Code Ann. § 38-43-130 (2) (failure to provide
customer with correct premium amount).
The evidence does not establish any error on Respondent's calculation of the
premium. The two premium amounts may have been different, but the amount of difference is
insubstantial and cannot establish a prima facie showing of wrongdoing.
The Respondent did not violate S.C. Code Ann. § 38-43-130 (5) (failure to deliver
policy).
The evidence established that no policy was written during the time period this court
is concerned with, and therefore this alleged violation must fail.
The Respondent did not violate S.C. Code Ann. § 38-43-130 (6) (failure to notify
customer promptly that insurance was not obtained).
The Department failed to establish by a preponderance of the evidence that Adams
failed to inform Koon that the policy had not been obtained and Koon was uninsured.
Adams did violate S.C. Code Ann. § 38-43-130 (7) (failure to maintain adequate
records).
Adam's negligence in losing the disability insurance application and failing to
promptly supply a replacement application to ensure disability coverage for her customer violates
this provision of the statute and is an "unjust dealing" with a citizen of this state.
This court may revoke, suspend, or impose an administrative penalty for each
offense. S.C. Code Ann. § 38-43-130 (Supp. 1996). Pursuant to S.C. Code Ann. § 38-2-10 (Supp.
1996) the penalty may not exceed $2500.
Based upon the negligence of the Respondent, it is appropriate to suspend her license
for a period of six months.
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby
ORDERED, that the insurance license for Yolanda B. Adams be suspended for six months
from the date of this order.
AND IT IS SO ORDERED.
__________________________________
ALISON RENEE LEE
ADMINISTRATIVE LAW JUDGE
March 4, 1998
Columbia, South Carolina |