Paul A. DYER v. SUPERINTENDENT OF INSURANCE
Docket No. BCD-12-469
Supreme Judicial Court of Maine
June 25, 2013
2013 ME 61
Argued: May 15, 2013
Janet T. Mills, Attorney General, and Jonathan R. Bolton, Assist. Atty. Gen. (orally), Augusta, for appellee Superintendent of Insurance.
Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, JJ.
JABAR, J.
[¶1] Paul A. Dyer appeals from a judgment entered in the Business and Consumer Docket (Horton, J.) pursuant to
I. BACKGROUND
[¶2] Before these proceedings, Paul Dyer had held licenses as an insurance producer and consultant for about thirty years. See
[¶3] Dyer‘s misconduct that ultimately led to these disciplinary proceedings originated from a part of the claimed four-part plan: a tax-free exchange of $39,326.50 from the client‘s Modern Woodmen annuity to a Single Premium Immediate Annuity (SPIA) with Old Mutual Financial Life Insurance Company.1 The Superintendent found that Dyer did not adequately explain the four-part plan to the client and never reviewed the terms of the SPIA with her. Although Dyer testified that he believed the SPIA returned about a 2 to 3% interest rate, the Superintendent found that Dyer had told the client that the SPIA would return a 6 to 7% interest rate. In
[¶4] Dyer attempted to justify his recommendation of the SPIA, arguing that yield was irrelevant because the client‘s interests were in diversifying her assets from her existing annuity, in the event that Modern Woodmen became insolvent, and guaranteeing a stream of fixed payments that the client could use for living expenses. The Superintendent found that these explanations were “either grossly incompetent or fraudulent,” noting that when investing in an annuity like the SPIA, “yield is one of the most important considerations.”
[¶5] Dyer attempted to remedy the shortfall in the SPIA‘s yield after the client brought the issue to Dyer‘s attention in 2007. Dyer contacted Old Mutual by phone and later contacted Old Mutual‘s legal department by email on November 2, 2007, stating that the client “is about to go to the [Bureau of Insurance]” with the subject heading “Legal problem possible in Maine if this issue isn‘t handled soon!!!!” On April 24, 2008, Dyer and the client filed a complaint with the Bureau of Insurance against Old Mutual.2
[¶6] However, during the ensuing investigation, Dyer failed to respond to questions by Old Mutual, instead providing what the representative of Old Mutual called a “dump of his documents that he supposedly collected in the course of selling this product.” In response to the Bureau‘s investigation, Dyer‘s attorney provided a letter explaining Dyer‘s rationale, and Dyer and his attorney met with Bureau staff in October 2008 to answer questions.
[¶7] During his correspondence with Old Mutual and the Bureau, Dyer claimed to have received a voicemail message from a representative of Old Mutual promising the client a full refund of her premium payment. Dyer told the Bureau and representatives of Old Mutual that the voicemail was later deleted or recorded over but said that he played the recorded voicemail for the client twice before deleting it. At the hearing, the client testified that she did not remember hearing the message, and representatives of Old Mutual testified that they had no record of that outgoing call. The Superintendent found that Dyer‘s testimony about the voicemail was not credible and his conduct was “part of a pattern of deception designed to persuade Old Mutual to compensate [the client] so that Mr. Dyer would not be responsible for her losses.”
[¶8] On December 16, 2009, the Bureau of Insurance filed a petition for enforcement against Dyer seeking the revocation of his licenses and requesting civil penalties and restitution for the client. The Bureau alleged that Dyer failed to understand the terms of the SPIA contract, failed to secure a product that would benefit the client, failed to ensure that the client understood the transaction, fabricated promises for a full refund, and failed to provide adequate records of the transaction. According to the Bureau‘s allegations, Dyer‘s conduct violated the following provisions of the insurance code:
[¶9] After a two-day hearing, the Superintendent concluded that Dyer committed all of the alleged violations of the identified provisions of the insurance code, with the exception of
[¶10] On remand, the Superintendent removed all references to
II. DISCUSSION
[¶11] On appeal of a decision entered in the Business and Consumer Docket “act[ing] in its appellate capacity in an action brought pursuant to M.R. Civ. P. 80C, we review a decision of the Superintendent directly for an abuse of discretion, error of law, or findings not supported by the evidence.” Bankers Life & Cas. Co. v. Superintendent of Ins., 2013 ME 7, ¶ 15, 60 A.3d 1272 (quotation marks omitted). With respect to the law, “[w]e accord due consideration to the Superintendent‘s interpretation and application of technical statutes and regulations and will overturn the Superintendent‘s action only if the statute or regulation plainly compels a contrary result.” Anthem Health Plans of Me., Inc. v. Superintendent of Ins., 2012 ME 21, ¶ 13, 40 A.3d 380 (quotation marks omitted). In reviewing factual findings,
A. Factual Findings and Credibility Determinations
[¶12] Dyer argues that the Superintendent should not have found the client‘s testimony credible, pointing to repeated instances in her testimony where the client admitted to having a poor memory and where she did not remember the precise contents or existence of certain documents. “No principle of appellate review is better established than the principle that credibility determinations are left to the sound judgment of the trier of fact.” Weinstein v. Sanborn, 1999 ME 181, ¶ 3, 741 A.2d 459; see e.g., Sprague Elec. Co. v. Me. Unemployment Ins. Comm‘n, 544 A.2d 728, 732 (Me.1988). Dyer contends that the exception to this well-established principle is where the testimony is “so farfetched as to compel its disbelief.” See Merrow v. Me. Unemployment Ins. Comm‘n, 495 A.2d 1197, 1201 (Me.1985) (quotation marks omitted).
[¶13] Although Dyer argues that the client‘s testimony “compels disbelief,” he cites almost no evidence, other than his own testimony, that directly conflicts with the testimony of his former client. The bulk of Dyer‘s argument rests on the client‘s own candid admissions of her memory lapses, which in many instances relate to events that predated the hearing by about six years. When Dyer presented these credibility concerns to the Superintendent at the hearing, the Superintendent explicitly stated that “[the client‘s] testimony on the most important points was clear and consistent, it was corroborated by the written evidence and the credible portions of Mr. Dyer‘s own testimony, and I find it highly credible.” At best, the Superintendent heard conflicting testimony; “[i]t is not our function ... in reviewing an administrative decision, to undertake a fresh determination of credibility.” Id.; see Poole v. Statler Tissue Corp., 400 A.2d 1067, 1068-69 (Me.1979). None of the evidence that Dyer cites compels disbelief of the client‘s testimony and thus we defer to the credibility determinations of the Superintendent.
[¶14] Dyer also challenges several of the Superintendent‘s findings of fact, arguing that they are not supported by substantial evidence in the record. A reviewing court may not substitute its judgment for that of the agency on questions of fact. See
[¶15] First, Dyer argues that the Superintendent erred in finding that Dyer breached the consultant‘s agreement that he created with the client by purchasing an annuity product that he had no reason to believe was suitable for the client and that caused her unnecessary loss. See 6 C.M.R. 02 031 917-1 § 6(A) (2007). Dyer argues that the evidence in the record demonstrated that the SPIA was suited to the client‘s overall needs. Although Dyer argues that the evidence that he presented at the hearing demonstrates that the SPIA diversified her assets and mitigated her risk, there is substantial evidence in the record that supports the Superintendent‘s finding that the product was not suitable for the client. Namely, the product featured fixed monthly payments that resulted in an overall loss for the client—a fact that was easily discernable had Dyer performed even basic calculations. Additionally, a representative of Old Mutual testified that the company offers a separate product specifically designed for seniors to qualify for Medicaid. Finally, the client also repeatedly testified at the hearing that she had no desire to gift her assets to her loved ones and that she was primarily concerned with receiving a high yield on her investment.
[¶16] Second, Dyer argues that the evidence in the record does not support the Superintendent‘s finding that he failed to cooperate with Old Mutual‘s response to the Bureau‘s investigation of this transaction. Dyer does not dispute the allegations that he failed to provide timely answers to Old Mutual‘s list of questions or that he provided “a dump of his documents” without explanation to the representative of Old Mutual. Instead, Dyer argues that because he “did, in fact, respond” to the requests by Old Mutual and the Bureau, the Superintendent‘s finding that he failed to cooperate was unfounded.3 Because Dyer does not challenge the evidentiary support for the Superintendent‘s finding, but rather merely characterizes the evidence differently, we affirm the Superintendent‘s finding.
[¶17] Because the Superintendent did not err in making credibility determinations and the Superintendent‘s factual findings are supported by competent evidence in the record, we defer to the Superintendent‘s findings. See Bankers Life & Cas. Co., 2013 ME 7, ¶ 16, 60 A.3d 1272.
B. Penalties
[¶18] In reviewing the Superintendent‘s decision pursuant to M.R. Civ. P. 80C, the court noted that, although the Superintendent‘s first judgment cited numerous violations of
[¶19] At the outset, we note that our review of the Superintendent‘s judgment with regard to penalties is limited to the appropriateness of the penalties imposed; we do not review the Superintendent‘s choice of whether to reinstate penalties or to follow the court‘s suggestion that the issue of penalties should be reassessed. We review the agency‘s choice of penalty for an abuse of discretion. See, e.g., Zegel v. Bd. of Soc. Worker Licensure, 2004 ME 31, ¶ 19, 843 A.2d 18.
Review for an abuse of discretion involves resolution of three questions: (1) are factual findings, if any, supported by the record according to the clear error standard; (2) did the court understand the law applicable to its exercise of discretion; and (3) given all the facts and applying the appropriate law, was the court‘s weighing of the applicable facts and choices within the bounds of reasonableness.
Pettinelli v. Yost, 2007 ME 121, ¶ 11, 930 A.2d 1074; see also Alexander, Maine Appellate Practice § 418 at 233 (3d ed. 2008). Because the evidence in the record supports the facts as found by the Superintendent, we determine whether the Superintendent‘s choice of penalties is within the bounds of reasonableness and the applicable law.
[¶20] It is undisputed that the penalties were within the bounds prescribed by the relevant statutes. First, the Maine Insurance Code explicitly allows the Superintendent to seek revocation of the consultant‘s license pursuant to
the superintendent may, after notice and opportunity for hearing ... revoke ... any license issued under this chapter ... if the superintendent finds that, as to the applicant or licensee, any of the causes exist that are listed in section 1420-K, and that for purposes of this section apply to ... consultants as well as producers.
Further,
[¶21] Second, the statute also allows the Superintendent to impose civil penalties pursuant to
[i]n his dealings with [the client], and his subsequent responses to inquiries by the
Bureau and by Old Mutual, Mr. Dyer has committed serious violations of the Insurance Code, which demonstrate incompetence and untrustworthiness and warrant ... the maximum civil penalty of $500 ... for each of the eleven wrongful acts ... [that Dyer had committed].
The Superintendent‘s choice of the maximum penalties—$5,500 for eleven separate findings of violations of the insurance code—was clearly within the bounds of the law and is not unreasonable in light of the facts of this case. See Sager v. Town of Bowdoinham, 2004 ME 40, ¶ 11, 845 A.2d 567 (“It is not sufficient [for the purpose of establishing an abuse of discretion] to demonstrate that, on the facts of the case, the decisionmaker could have made choices more acceptable to the appellant or even to a reviewing court.“).
[¶22] Finally, the insurance code also allows the Superintendent to order a licensed insurance producer or consultant who commits violations of the insurance code for which civil penalties may be imposed to pay restitution to his victims.
C. Arbitrary and Capricious Decision
[¶23] Dyer argues that the Superintendent‘s judgment was arbitrary and capricious because it is “unduly harsh” and inconsistent with the Superintendent‘s decisions in factually similar cases. Although we may vacate a Superintendent‘s decision that is arbitrary and capricious because it is “wilful and unreasoning and without consideration of facts or circumstances,” see Kroeger v. Dep‘t of Envtl. Prot., 2005 ME 50, ¶ 8, 870 A.2d 566 (quotation marks omitted), Dyer does not contend that the Superintendent‘s decision was without consideration of the facts or unreasoning. Moreover, when asked to undertake a similar review for consistency among an agency‘s decisions, we have previously noted that this kind of examination “would take us, as a reviewing court, far beyond our well-established role of reviewing the administrative record for substantial evidence to support the agency‘s findings.” See Hall v. Bd. of Envtl. Prot., 498 A.2d 260, 266 (Me.1985). Having already concluded that the imposition of the penalties in this case was not an abuse of the Superintendent‘s discretion, we decline to further examine the Superintendent‘s other decisions.
[¶24] Because the Superintendent did not err in interpreting the statute or making factual findings and did not abuse his discretion by imposing the penalties permitted in the statute, we affirm the judgment entered in the Business and Consumer Docket.
The entry is:
Judgment affirmed.