MATTER OF KLEIN v. Levin

• Decision Date: 29 May 2003
• Citation: 760 N.Y.S.2d 462,305 A.D.2d 316
• Parties: In the Matter of JOHN KLEIN, Petitioner,<BR>v.<BR>NEIL D. LEVIN, as Superintendent of Insurance of the State of New York, Respondent.
• Court: New York Supreme Court — Appellate Division

305 A.D.2d 316

760 N.Y.S.2d 462

In the Matter of JOHN KLEIN, Petitioner,

v.NEIL D. LEVIN, as Superintendent of Insurance of the State of New York, Respondent.

Decided May 29, 2003.

Concur — Buckley, P.J., Nardelli, Andrias, Rosenberger and Friedman, JJ.

Petitioner was licensed as a public adjuster in June 1975. A public adjuster represents an insured who has made a claim against an insurance company; the adjuster is paid a percentage of the insured's recovery. In the late 1980s and early 1990s, petitioner was caught up in bribery scandals that were plaguing the insurance industry. Some insurance company adjusters demanded bribes from public adjusters in return for processing their clients' claims. Those public adjusters who did not pay the bribes found that their clients' claims would languish in a backlog of unprocessed cases or that unacceptably low settlements would be offered, forcing the insured into expensive litigation. Instead of reporting the unscrupulous insurance company adjusters, petitioner acquiesced in at least three bribery demands and, between 1991 and 1993, deliberately inflated the claims, building in the cost of the bribe.

Federal investigations into suspected insurance fraud prompted petitioner to voluntarily come forward in 1994 with an offer to cooperate in the investigations. In 1996, pursuant to a cooperation agreement, petitioner pleaded guilty to three counts of fraud and was sentenced to three years probation, including two months of home detention, fined $3,000, and ordered to pay $46,342 in restitution to the three insurance companies that he had defrauded.

Despite his conviction, petitioner's public adjuster license was renewed in 1997. However, the Superintendent required petitioner to surrender his license in February 1998. On February 10, 1998, the New York State Parole Board granted petitioner a certificate of relief from disabilities. On January 7, 2000, the Division of Parole, in recognition of his having paid his fine and restitution and having fully served his sentence and successfully completed his probation, granted petitioner a certificate of good conduct, which specifically provided that "the bar to the public office of Public Adjuster under Insurance Law Section 2108d (3) is hereby removed."

Following receipt of the certificate of good conduct, petitioner applied for a new public adjuster license. His application was initially denied based upon his conviction. Petitioner requested and was granted a hearing, as was his right under New York Insurance Law. Following a full day's evidentiary hearing, the Hearing Officer concluded that any statutory bar to petitioner's licensure caused by his conviction had been removed by his certificate of good conduct (see Insurance Law § 2108 [d] [3], [4]) and that, based upon the factors set forth in Correction Law § 753 (1),^[*] which govern an agency's discretionary grant or denial of a license, there was no basis to deny petitioner's application for a license as a public adjuster. He therefore recommended that petitioner's application be granted.

Respondent specifically accepted the Hearing Officer's finding of fact but rejected his recommendation. In the Department's final determination, respondent's stated reasons for rejecting the Hearing Officer's recommendation were that "[petitioner] was a mature individual at the time of his criminal conduct, and had been in the insurance industry for many years. His crimes were serious in nature as [he] participated in a major conspiracy to corrupt the insurance industry. Even though nearly ten years ha[ve] elapsed since he committed the acts for which he was convicted, the offenses occurred over an extended period of time and are directly related to the license sought."

Respondent also rejected petitioner's contention that approval of his application was compelled by the Insurance Department's 1999 decision in Matter of Harold Greenblatt, a case in which the application for a public adjuster's license was granted upon virtually identical facts. Respondent's stated rationale was only that "each application presents different facts and circumstances, hence, that matter is not binding herein."

The decision of an administrative agency to deny a license "cannot be disturbed unless it is arbitrary and capricious." (Matter of Arrocha v Board of Educ., 93 NY2d 361, 363 [1999].) However, "[a] decision of an administrative agency which neither adheres to its own prior precedent nor indicates its reason for reaching a different result on essentially the same facts is arbitrary and capricious" (Matter of Charles A. Field Delivery Serv. [Roberts], 66 NY2d 516, 517 [1985]).

The policy considerations for reaching consistent results on virtually identical facts are "largely the same whether the proceeding be administrative or judicial—to provide guidance for those governed by the determination made * * *; to deal impartially with litigants; promote stability in the law; allow for efficient use of the adjudicatory process; and to maintain the appearance of justice" (Field Delivery Serv., 66 NY2d at 519 [citations omitted]). And, while administrative agencies, like courts, are free to correct prior erroneous interpretations of law or to depart from previously stated policies, they must state their reasons for doing so (id.). "Absent such an explanation, failure to conform to agency precedent will * * * require reversal on the law as arbitrary, even though there is in the record substantial evidence to support the determination made" (id. at 520).

Petitioner contends that respondent's denial of his application should be annulled as arbitrary and capricious under the Field Delivery Service rule because it failed to follow the Insurance Department's precedent in Matter of Harold Greenblatt. A comparison of the facts of petitioner's case with those underlying the Greenblatt decision reveals that the two cases are virtually indistinguishable and that, if anything, the slight factual differences...