David v. Commissioner of Insurance, 97-P-254.

• Decision Date: 07 November 2001
• Docket Number: No. 97-P-254.,97-P-254.
• Citation: 757 NE 2d 748,53 Mass. App. Ct. 162
• Parties: GEORGE DAVID v. COMMISSIONER OF INSURANCE.
• Court: Appeals Court of Massachusetts

53 Mass. App. Ct. 162

757 NE 2d 748

GEORGE DAVID v. COMMISSIONER OF INSURANCE.

No. 97-P-254.

Court of Appeals of Massachusetts, Hampden.

March 15, 1999.

November 7, 2001.

Present: ARMSTRONG, C.J., GREENBERG, & LAURENCE, JJ.

Paul M. Stein for the plaintiff.

James S. Whitcomb, Assistant Attorney General, for the defendant.

ARMSTRONG, C.J.

In 1992, George W. David pled guilty in United States District Court to charges of conspiracy to defraud the United States (18 U.S.C. § 371 1994) and tax evasion (26 U.S.C. § 7201 1994). The criminal charges against David arose from his business as an insurance agent and broker.¹ He was sentenced to serve a twelve-month prison term to be followed by a three-year term of supervised release.

The licensure of insurance agents and brokers in Massachusetts is regulated by the Division of Insurance. On October 26, 1994, well after the period of incarceration was over, the division ordered David to show cause why the insurance commissioner should not make a determination that David had failed to maintain the qualifications of trustworthiness and suitability required of insurance agents and brokers by G. L. c. 175, §§ 163 and 166. As grounds therefor, the division cited David's convictions and his failure to disclose that a criminal information was pending against him when he submitted written applications to the division in May and September of 1992 for appointment as agent for various insurance companies doing business in the Commonwealth. The division sought an order revoking all licenses held by him. David filed an answer in which he denied the division's principal allegations, interposing a defense that the amended order to show cause was overly vague and ambiguous.

An adjudicatory hearing was conducted on January 19, 23, and 26, 1995. The division called as its sole witness the director of its special investigations unit, who presented documentary evidence. David testified. He also called fourteen witnesses and introduced affidavits from thirty-five individuals, who all spoke to his good character.

In a written decision dated October 11, 1995, the presiding officer determined that David's felony convictions, based on acts performed in his insurance business, were evidence of his untrustworthiness and that David's failure to disclose his convictions and his incarceration to the division was indicative of a failure of full rehabilitation sufficient to rebut the evidence of untrustworthiness.

The presiding officer ordered, among other things, the revocation of all licenses issued by the division to David.² On that same day (October 11),³ the commissioner affirmed the decision and disposition of the presiding officer.⁴ By a letter dated October 26, 1995, David complained that the commissioner had decided the appeal without waiting for a statement of grounds. The commissioner replied that she was treating the letter as a request for reconsideration and, having reconsidered, she again affirmed the division's decision.

David appealed to the Superior Court pursuant to G. L. c. 30A, § 14, seeking a reversal of the division's decision to revoke his insurance licenses. A Superior Court judge upheld the division's decision but ordered a stay pending appeal.

Substantial evidence. There is substantial evidence to support the division's decision that David was unfit to hold an insurance license measured by the standard mandated by G. L. c. 175, §§ 163 and 166.

Review of an administrative agency's decision pursuant to G. L. c. 30A is not de novo but is limited to the standards of review set forth in § 14(7) of that chapter⁵ and confined to the record of administrative proceedings under § 14(5). Labor Relations Commn. v. University Hosp., Inc., 359 Mass. 516, 521 (1971).

"`Substantial evidence' means such evidence as a reasonable mind might accept as adequate to support a conclusion." G. L. c. 30A, § 1(6), as inserted by St. 1954, c. 681, § 1. "Judicial inquiry under the substantial evidence test is limited to the determination of whether, within the record developed before the administrative agency, there is such evidence as a reasonable mind might accept as adequate to support the agency's conclusion." Seagram Distillers Co. v. Alcoholic Bevs. Control Commn., 401 Mass. 713, 721 (1988). "If there is such evidence, we affirm the agency's action even though we might have reached a different result if placed in the position of the agency." Ibid.

The Commonwealth's insurance laws require that an individual be a "suitable and competent" person in order to act as an insurance agent. See G. L. c. 175, § 163, as appearing in St. 1971, c. 968. § 3. Likewise, to hold a brokerage license, an insurance broker must be a "suitable person" and be "trustworthy and competent." See G. L. c. 175 § 166, as amended through St. 1977, c. 1000, § 4. The term "suitable person" is understood to require "a combination of trustworthiness and competence." Deluty v. Commissioner of Ins., 7 Mass. App. Ct. 88, 91 (1979). "Trustworthiness and competence are thus requirements for the issuance of a broker's license (whether or not they are exhaustive); and where the expectations of conduct in accordance with those requirements are not met, revocation is an obvious sanction." Ibid. The same holds true for an insurance agent under § 163.⁶

Here the crimes of which David was convicted, as the presiding officer found, by their very nature bespoke a lack of trustworthiness and exhibited business and personal conduct that is antithetical to the standard of trustworthiness, suitability, and competence required of an individual holding an insurance license. David committed the crimes in the course of his insurance-related business, and he utilized his knowledge of the insurance industry in furtherance thereof. Both the criminal scheme and the tax evasion were purposeful. Thus, the convictions alone constituted substantial evidence to support the division's conclusion that David was unfit to hold an insurance license. In so concluding, the presiding officer did consider testimonial evidence of David's good character. We are required to accept the presiding officer's assessment both of the credibility of witnesses and the weight to be accorded the evidence. In any event, the determination must be upheld under c. 30A, § 14(7), because the evidence was such as "a reasonable mind might accept as adequate to support a conclusion." G. L. c. 30A, § 1(6).

David argues that there was no substantial evidence to support the idea, referred to both by the presiding officer and by the commissioner in her affirmance, that revocation was necessary to ensure public confidence in the integrity of those licensed by the division to service and sell insurance in the Commonwealth. The record, argues David, refutes that idea, because the fourteen witnesses who testified and thirty-five who filed affidavits all proclaimed their complete confidence in David despite...