Source: http://masscases.com/cases/app/53/53massappct162.html
Timestamp: 2019-04-18 10:29:27+00:00

Document:
GEORGE DAVID vs. COMMISSIONER OF INSURANCE.
Present: ARMSTRONG, C.J., GREENBERG, & LAURENCE, JJ.
Insurance, Agent, Broker, Revocation of broker's license. Administrative Law, Adjudicatory proceeding, Standard of proof, Substantial evidence, Judicial review.
CIVIL ACTION commenced in the Superior Court Department on November 10, 1995.
The case was heard by Judd J. Carhart, J.
Paul M. Stein for the plaintiff.
James S. Whitcomb, Assistant Attorney General, for the defendant.
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.
same day (October 11), [Note 3] the commissioner affirmed the decision and disposition of the presiding officer. [Note 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 set forth in § 14(7) of that chapter [Note 5] 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.
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).
[Note 1] In a charging instrument (criminal information) the government alleged that, in furtherance of a conspiracy with and on behalf of John Verducci, David purchased annuities (insurance products), rare coins, and a condominium in order to conceal Verducci's ownership interest in these assets from the Internal Revenue Service. The government also alleged that David had committed perjury before a Federal grand jury investigating Verducci's assets. David, waiving indictment, pled guilty to a single count of conspiracy and to a single count of wilfully evading his own personal Federal income tax liability by falsifying business deductions on his 1988 Federal income tax return.
[Note 2] The presiding officer also ordered (a) the payment of a fine in the amount of $300 (see note 7, infra) and that David cease and desist from the unlawful and deceptive acts in which he had been found to have engaged; (b) the disposition by David of any interest held by him, as a proprietor, partner, stockholder, officer, or employee of any licensed insurance agent or broker; and (c) that he be prohibited from transacting any insurance business, acquiring any such business, or accepting employment in any insurance business in the Commonwealth, without the prior approval of the commissioner of insurance.
[Note 3] It is not uncommon for the presiding officer's decision and the commissioner's order of affirmance to issue the same day, see, e.g., Blue Cross & Blue Shield of Mass., Inc. v. Commissioner of Ins., 420 Mass. 707 , 708 (1995); Bankers Life & Cas. Co. v. Commissioner of Ins., 427 Mass. 136 , 137 (1998). What is unusual here is that the presiding officer, in her decision, made reference to the commissioner's order of affirmance. In other circumstances, this fact might cast doubt on the validity of the division's decision; however, the presiding officer's findings and conclusions of law here are based on the record evidence and reflect the officer's independent and comprehensive evaluation of that evidence.
[Note 4] In her order affirming the division's decision, the commissioner noted that, pursuant to 18 U.S.C. § 1033(e) (1994), newly enacted at that time, a conviction of a felony involving dishonesty or a breach of trust subjected a person engaged in the business of insurance to restrictions in activities affecting interstate commerce. The commissioner stated: "It is important that the citizens of Massachusetts have confidence that the [d]ivision ensures that only those who meet the requirements of G. L. c. 175, § 163, are permitted to act as insurance agents."
[Note 5] An agency's decision may be overturned only in limited circumstances, namely, if the agency's decision violates a constitutional provision; is in excess of its statutory authority or jurisdiction; is based upon an error of law; is made upon unlawful procedure; is not supported by substantial evidence; is unwarranted by the facts; or is arbitrary, capricious, or an abuse of discretion.
[Note 6] We reject David's suggestion that the statutory provisions require, at a minimum, a finding that the agent or broker pose a harm to the public before the division can revoke an insurance license. "As a general matter, a statute which merely regulates business interests need not specify with great particularity the relevant considerations with respect to whether to revoke a license . . . . It is enough that the [agency] exercise its discretion fairly and not act in an arbitrary and capricious manner." Gurry v. Board of Pub. Accountancy, 394 Mass. 118 , 128 (1985), quoting from LaPointe v. License Bd. of Worcester, 389 Mass. 454 , 462 (1983).

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