This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




In the Matter of the Insurance Agent License of Ronald B. Stark,

License No. IN177409.

Filed October 27, 1998


Randall, Judge

Department of Commerce

File No. 4-1004-11139-2

Mark D. Luther, Firstar Bank Building, 8800 Highway 7, Suite 408, St. Louis Park, MN 55426 (for relator Ronald B. Stark)

Hubert H. Humphrey, Attorney General, Michael J. Tostengard, Assistant Attorney General, Stephen K. Warch, Assistant Attorney General, 1200 NCL Tower, 445 Minnesota Street, St. Paul, MN 55101 (for respondent Commissioner of Commerce)

Considered and decided by Huspeni, Presiding Judge, Randall, Judge, and Foley, Judge.[*]



Relator Ronald B. Stark asserts that the Commissioner of Commerce imposed an excessive penalty and civil fine on him by revoking his insurance agent license and fining him $10,000. Relator argues that (a) the commissioner's decision is arbitrary and capricious and not supported by the evidence; (b) statements made in a letter sent to a senior citizen were protected speech; (c) the letter did not give the impression that it was endorsed or sent by a government agency; and (d) he did not intentionally provide inaccurate information in applications to insurance companies. We affirm on all issues.


Stark was licensed as Minnesota insurance agent in 1966. Prior to the action in this case, the Commissioner of Commerce had disciplined Stark three other times and suspended his license each time.

Sometime prior to June 28, 1996, the Marquette Trust Company in Rochester, Minnesota, received a letter addressed to one of its deceased customers, Eleanor Fiddler. The letterhead stated that the letter was from the "Minnesota Senior Citizens Agency," the letter was signed by "D.M. Harms," and the return address was "MSCIA, P.O. Box 5514, Hopkins, MN 55343." The letter made a number of statements about the cost of nursing home care, stated that Fiddler would be provided information on long-term care insurance underwritten by American Travelers, and requested her date of birth and telephone number. Marquette Trust forwarded the letter to the Commerce Department.

After learning that the post office box number on the return address was registered in Stark's name, the commissioner sent Stark a request for information about the letter to Fiddler. The commissioner's letter, dated June 28, 1996, requested a response within 10 days of receipt. On July 16, Stark wrote to the department and requested: (a) a copy of the complaint; (b) information about the post office box listed on the letter's return address; (c) an unaltered copy of the letter (the inside address had been covered); and (d) a copy of related portions of Minnesota Rules. Stark did not provide the commissioner the information the commissioner had requested. The commissioner did not provide Stark with the information Stark requested. On August 6, the department sent Stark a letter requesting his appearance at the department on August 20. Stark replied on August 14, stating he would not be able to appear on August 20 and reiterating the requests he made in his earlier correspondence. An assistant attorney general wrote to Stark about his failure to appear at the August 20 hearing. Stark replied on December 27, by stating that he still needed the information he had previously requested. The commissioner then charged Stark with numerous violations of Minnesota Statutes and Minnesota Rules for sending the subject letter, failing to comply with the commissioner's requests, and failing to disclose past disciplinary actions in agent applications with various companies.

A hearing was held before an Administrative Law Judge (ALJ) on September 3, 1997. The ALJ issued his findings of fact, conclusions, and recommendation on November 7. The ALJ recommended that the commissioner take disciplinary action against Stark's insurance agent's license. Both parties filed exceptions with the commissioner. Acting on the commissioner's behalf, a deputy commissioner issued findings of facts, conclusions of law, and order. The deputy commissioner determined that Stark committed 10 different violations, revoked Stark's license, and fined him $10,000, $1,000 per violation. Stark petitioned this court for writ of certiorari.


I. Penalty

The assessment of penalties and sanctions by an administrative agency is a discretionary power, and an appellate court will set aside that assessment only if the agency abused its discretion. In re Haugen, 278 N.W.2d 75, 81 n.10 (Minn. 1979).

The Commissioner of Commerce may

(1) deny, suspend, or revoke an insurance agent or agency license;

(2) censure the licensee; or

(3) impose a civil penalty as provided for in section

45.027, subdivision 6.

Minn. Stat. § 60K.11, subd. 1 (1996). Under Minn. Stat. § 45.027, subd. 6 (1996), the commissioner may impose a $2,000 maximum penalty for every violation of "law, rule, or order related to the duties and responsibilities entrusted to the commissioner unless a different penalty is specified." The commissioner must determine that this action is in the public interest and that the licensee

(i) does not intend to or is not in good faith carrying on the business of an insurance agent; * * *

(iii) has engaged in an act or practice, whether or not such act or practice involves the business of insurance, which demonstrates that the applicant or licensee is untrustworthy, financially irresponsible, or otherwise incompetent or unqualified to act as an insurance agent or agency; * * *

(v) has violated or failed to comply with any of the provisions of the insurance laws including chapter 45 or chapters 60A to 72A or any rule or order under those chapters; * * *

(x) has engaged in any fraudulent, coercive, deceptive, or dishonest act or practice whether or not such act or practice involves the business of insurance * * * .

Minn. Stat. § 60K.11, subd. 1.

Here, the deputy commissioner determined that Stark committed 10 different violations. We agree that revocation of an insurance agent's license is a severe sanction. But in light of the number of violations, and the fact that Stark's license has been suspended three times in the past, the commissioner did not err by revoking Stark's license. Stark, as a revoked licensee, may apply for a new license two years after the effective date of the revocation. Minn. Stat. § 60K.11, subd. 6 (1996).

The commissioner also did not abuse his discretion by imposing a $10,000 fine. The commissioner may order fines of up to $2,000 per violation of insurance laws or rules. Minn. Stat. § 45.027, subd. 6. Because the commissioner found that Stark committed 10 different violations, imposing a $10,000 fine was within statutory limits.

II. Substantial Evidence

A reviewing appellate court may reverse or modify an agency's decision if petitioner's substantial rights have been prejudiced because the agency's decision is:

(a) In violation of constitutional provisions; or

(b) In excess of the statutory authority or jurisdiction of the agency; or

(c) Made upon unlawful procedure; or

(d) Affected by other error of law; or

(e) Unsupported by substantial evidence in view of the entire record as submitted; or

(f) Arbitrary or capricious.

Minn. Stat. § 14.69 (1996). Agency decisions are presumed correct, and courts should give deference "to the agencies' expertise and their special knowledge in the field of their technical training, education, and experience." Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 824 (Minn. 1977). Findings by an agency should be affirmed if the record as a whole evinces that the findings "are supported by evidence that a reasonable mind might accept as adequate." In re Wang, 441 N.W.2d 488, 492 (Minn. 1989). The supreme court has noted:

We trust that in all professional disciplinary matters, the finder of fact, bearing in mind the gravity of the decision to be made, will be persuaded only by evidence with heft.


A. Advertisements in the Subject Letter

Stark argues that the statements in the questioned letter are "generally true" based on the information he has received from insurance companies he represents. We note that Stark failed to cite the source of those facts in his letter. See Minn. R. 2790.1500, subpt. 1 (requiring citation of source of statistical information). Further, he concedes that he did not obtain prior approval of American Travelers, the insurance company mentioned in the letter, before sending the letter. See Minn. R. 2790.2100, subpt. 2 (requiring prior approval by insurer of advertisements sent by agent).

Stark also claims that the commissioner abused its discretion by making findings and conclusions that were contrary to those made by the ALJ. The ALJ determined that the department had failed to prove that (a) the letter was unclear and misleading; (b) Stark engaged in fraudulent, coercive, deceptive, or dishonest acts; and (c) the letter gave the false impression that it was sent on behalf of, or had the approval of, a government agency. The commissioner concluded that the department had proven these charges.

Stark cites to no authority, and there is none, that requires the commissioner to accept the ALJ's decision without review. In certain contested agency cases, the ALJ does not make a final decision; rather, the ALJ writes a report and the parties are given an opportunity to file exceptions and present argument to the decisionmaker (the deputy commissioner in this case). Minn. Stat. § 14.61 (1996). It is true that "the hearing examiner's findings should not be taken lightly." Beaty v. Minnesota Bd. of Teaching, 354 N.W.2d 466, 472 (Minn. App. 1984). And, as a point of fact, the commissioner did not make findings that were contrary to the ALJ's. Instead, the commissioner made the legal conclusion that Stark's actions violated Minnesota Statutes and Rules. On the record before us, and in light of the deference given to agencies' decisions, we affirm the commissioner's conclusions. See Reserve Mining Co., 256 N.W.2d at 824 (holding agency decisions are presumed correct, and courts should give deference "to the agencies' expertise and their special knowledge in the field of their technical training, education, and experience").

B. Failure to Respond to Commissioner

The commissioner determined that Stark failed to comply with requests for information and failed to appear for questioning. Stark argues that he did not refuse to provide the commissioner with information or provide the commissioner with false information. Rather, he argues that he sent the commissioner three "speed memos" in response to the commissioner's requests.

The fact that Stark sent memos to the commissioner requesting information does not negate the fact that he refused to comply with the commissioner's requests. Pursuant to Minn. Stat. § 45.027, subd. 1a (1996), Stark was required to comply with department's requests for information and request to appear for questioning. He does not deny that he failed to do so. The record supports the commissioner's decision.

C. Preparation and Sending of the Letter

Stark argues that the evidence does not support the commissioner's determination that Stark distributed the letter to approximately 500 elderly people. The record does indicate that Stark made a bulk mailing of approximately 500 pieces on May 28, 1996. Stark correctly observes, however, that the record does not indicate when Marquette Trust Company received the subject letter.[1] The commissioner did not introduce any evidence that anyone else received the same letter. We do conclude that Stark is correct in his argument that the commissioner did not provide sufficient evidence that Stark mailed the subject letter as part of a bulk mailing of "500 substantially identical letters."

But there is easily sufficient evidence to support the commissioner's conclusion that Stark sent the misleading letter at issue. The letter was signed by "D.M. Harms." Stark has a stepdaughter named Dana Harms who lives with him. The return address was "P.O. Box 5514, Hopkins, MN." This box was assigned to Stark. The letter referred to American Travelers Insurance, and Stark sold policies for American Travelers at that time. The letter was mailed to a prospective client in Rochester, a town where Stark testified he conducts 95% of his business. Finally, the letterhead stated that the letter was from the "Minnesota Senior Citizens Agency." Stark testified that his company is the "Minnesota Senior Citizens Insurance Agency," and the only time he had used the title "Minnesota Senior Citizens Agency" was when, he claims, the printing company made an error. Based on this record, we uphold the commissioner's decision.

III. Free Speech

Stark argues that the statements in the subject letter are not commercial speech and, therefore, are not subject to regulation.[2] "Commercial speech includes any speech for the purpose of trade or to induce the sale of any goods or services." State v. Holmberg, 545 N.W.2d 65, 70 (Minn. App. 1996), review denied (Minn. May 21, 1996). It is an "'expression related [solely] [sic] to the economic interests of the speaker and its audience.'" State by Humphrey v. Casino Mktg. Group, Inc., 491 N.W.2d 882,

886 (Minn. 1992) (quoting Central Hudson Gas & Elec. Co. v. Public Serv. Comm'n, 447 U.S. 557, 561, 100 S. Ct. 2343, 2349 (1980)).

Despite Stark's arguments to the contrary, the subject letter constituted pure commercial speech. The letter states in small print across the bottom, "This letter is for the intent to solicit insurance." It is clear the letter was intended to generate business. Even commercial speech does have a limited protection, but to be protected by the First Amendment, commercial speech "'must concern lawful activity and not be misleading.'" Id. at 887 (quoting Central Hudson Gas, 447 U.S. at 566, 100 S. Ct. at 2351). The commissioner determined that the letter was misleading. As concluded above, the evidence supports the commissioner's decision. Therefore, the statements in the letter are not protected by the First Amendment.

IV. Government Agency Appearance

Stark next argues that the commissioner erred in determining that using the name "Minnesota Senior Citizens Agency" violated Minn. Stat. §§ 60K.14, subd. 1(c) and 62A.37, subd. 2 (1996), which make it unlawful to falsely indicate that you are working on behalf of, or are endorsed by, a state or federal government agency. Stark asserts that there is no prohibition on the use of "Minnesota" in a business title.

The letter does state in small print across the bottom, "This program is not affiliated with Medicare or any other governmental agency." Despite this disclaimer, however, the title "Minnesota Senior Citizens Agency," which is across the top of the letter in large type, does not include the word "insurance" or give any indication that it is a business. Cf. In re Contest of Election in DFL Primary, 344 N.W.2d 826, 830 n.3 (Minn. 1984) (noting disclaimer at bottom of sample ballot not sufficient to offset implication of DFL party support in prominent heading). The small disclaimer may easily have been difficult to see or overlooked. The commissioner's decision that Stark violated Minn. Stat. §§ 60K.14, subd. 1(c) and 62A.37, subd. 2, is supported by the record.

Misrepresentations to Insurance Companies

Stark admitted that he incorrectly answered questions regarding past disciplinary actions against him on three different insurance agent applications to various companies. He argues on appeal that he did not "willfully" engage in deception. Regarding one application in which he answered "no" to the question of whether any formal charges had been filed against him with a state insurance department, Stark testified, "Evidently it totally slipped my mind that I didn't have it in there for whatever particular reason." Stark also failed to list his prior suspensions when asked about suspensions in another application. He testified, "I can't really tell you why I didn't. I -- you know, whether we did it so fast that we forgot to check it or whatever." In a third application he was asked whether he had ever been subject to an insurance regulatory disciplinary action. He testified that he answered "no" because he believed the question referred only to whether his license had been revoked.

The deputy commissioner (on behalf of the commissioner) determined that Stark's excuses were not credible and concluded that Stark engaged in fraudulent, coercive or dishonest practices and demonstrated that he is "untrustworthy, financially irresponsible, or otherwise incompetent, or unqualified" to serve as an agent pursuant to Minn. Stat. § 60K.11, subd. 1(iii), (x). The deputy commissioner stated:

The suspensions are not the sort of thing one would regard as insignificant, and there is no dispute that they constitute discipline. As the Administrative Law Judge observed, this evidence demonstrates that Mr. Stark purposefully falsified his applications and thus has demonstrated that he is untrustworthy, regardless of the unconvincing excuses he may have offered up.

The commissioner concluded that Stark did intentionally provide incorrect answers to the insurance companies. Determining a witness's credibility is the role of the fact-finder. Cf. Padilla v. Minnesota State Bd. of Med. Exam'rs, 382 N.W.2d 876, 886 (Minn. App. 1986) (stating court cannot substitute its judgment for board's on witnesses' credibility), review denied (Minn. Apr. 24, 1986). Here, both the ALJ and the deputy commissioner determined that Stark was not a credible witness. We uphold the commissioner's conclusions regarding Stark's misrepresentations to insurance companies.


[*]Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1]Although relator's appendix contains a cover letter from Marquette Trust, dated June 6, 1996, and sent with the subject letter to the Commerce Department, this letter is not in the Commerce Department's file. This cover letter also does not state when Marquette Trust received the subject letter and only indicates that it had been "recently received."

[2]The commissioner asserts that Stark did not raise this issue below and, therefore, cannot raise this issue on appeal. Because this is an appeal from an administrative agency decision, we address Stark's constitutional argument. See Neeland v. Clearwater Mem'l Hosp., 257 N.W.2d 366, 368 (Minn. 1977) (ruling on constitutional issue that was not, and could not have been, raised to or decided by administrative body because it did not have subject matter jurisdiction).