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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Yolanda B. Adams

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Yolanda B. Adams
 
DOCKET NUMBER:
97-ALJ-09-0238-CC

APPEARANCES:
Adelaide D. Kline, Esquire, for Petitioner

Yolanda B. Adams, Pro Se, for Respondent
 

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


Brown Bldg.

 

 

 

 

 

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