Fortune Life Ins. Co. v. State, Dept. of Ins., 90-2948

• Decision Date: 08 November 1990
• Docket Number: No. 90-2948,90-2948
• Parties: 15 Fla. L. Weekly D2740 FORTUNE LIFE INSURANCE COMPANY, a corporation, Petitioner, v. STATE of Florida, DEPARTMENT OF INSURANCE, A State Agency, Respondent.
• Court: Florida District Court of Appeals

Page 1325

569 So.2d 1325

15 Fla. L. Weekly D2740

FORTUNE LIFE INSURANCE COMPANY, a corporation, Petitioner, v. STATE of Florida, DEPARTMENT OF INSURANCE, A State Agency, Respondent.

No. 90-2948.

District Court of Appeal of Florida,

First District.

Nov. 8, 1990.

Jack W. Shaw, Jr., of Osborne, McNatt, Cobb, Shaw, O'Hara & Brown, Jacksonville, for petitioner.

John E. Hale, Tallahassee, and Philip M. Payne, Havana, for respondent.

PER CURIAM.

The petitioner, Fortune Life Insurance Company, shows that on September 20, 1990, the Department of Insurance issued what purports to be an order in the form of a letter signed by David V. Smith, an actuary in the Bureau of Life and Health Rate and Reserve Analysis. This letter was addressed to the president of Fortune and stated that the letter's writer had reviewed a form used by the company to issue policies. The review indicated that less than one percent of the premiums collected under this policy is returned as benefits to the policyholders. The letter announced withdrawal of approval of the policy form and directed Fortune to cease to issue this policy after September 21, 1990. The standard "notice of rights" was attached, advising Fortune of its right to formal or informal administrative proceedings. Fortune requested an extension of the effective date of the order to October 5 and the agency granted that relief. On October 3, a petition for a formal administrative proceeding was filed with the agency. Fortune also moved the agency for a stay, arguing that irreparable harm would result from the loss of authority to issue the policy. Petitioner offered to take certain steps to protect policyholders if the agency would delay enforcement of its order. The motion for stay was denied on October 3.

Petitioner asks for review of the agency's action pursuant to sections 120.68(1) and 120.68(3), Florida Statutes. It is shown that pursuant to F.A.C. Rule 4-38.049, the approval of a policy form is a license issued by the Department of Insurance. Further, Rule 4-38.052 provides for 21 days notice upon disapproval of a policy, but here no advance notice was given. Petitioner contends that irreparable harm will occur as a result of the order, justifying this court's review. Further, the agency's action, according to petitioner, is not in compliance with the applicable provisions of the Florida Administrative Procedure Act.

A show cause order was issued and a temporary stay of the agency's order of September 20 was granted by this court. The agency responds that the life insurance policies at issue only pay a return of premiums, plus interest, if the insured dies within three years of issuance of the policy. The agency states it has reason to believe that rather than renewing policies on an annual basis, Fortune's agents write new policies each year. Therefore, the three-year waiting period is never fulfilled and the insureds never collect full benefits. The agency argues:

Thus it is clear that direct and decisive action was required to remove this product from the marketplace to avoid further harm to the public. The issue then becomes whether the action taken by the petitioner [sic] is the proper legal remedy.

The agency argues that the approval of a policy form is not a license and therefore the automatic stay provisions of section 120.68(3) are inapplicable. Further, the...