Revocation of Insurance Producer License
In Burns v. Department of Insurance, an insurance producer filed a complaint for judicial review of the revocation of his insurance producer license. John T. Burns III, alleges that he was employed by USA Retirement from November, 2008, thru March, 2010. He obtained his insurance producer license in March, 2009, but he denied that he ever sold insurance products. In March, 2010, USA Retirement was taken into receivership after the Federal Securities and Exchange Commission filed a complaint against the managing partners of the company. The hearing officer determined that because Burns was found by the Securities Department to have committed fraud and other violations of the Securities Act, it was within the Director’s discretion to revoke his insurance producer license pursuant to section 500-70(a)(8) of the Insurance Code (215 ILCS 5/500-70(a)(8) (West 2012)). On January 10, 2012, the Department adopted the hearing officers factual findings, conclusion of law, and recommendations. On February 14, 2012, Burns filed an action for administrative review in the circuit court. The Department of Insurance filed a 2-619 motion to dismiss the complaint. The Department of Insurance argued that Burns failed to petition for a rehearing or to reopen the hearing pursuant to section 2402.280 of the Administrative Code (50 Ill. Adm.Code 2402.280 (West 2012)); and, therefore, failed to exhaust his administrative remedies as required by the Department’s rules.
The court addressed the question of whether the existence of a genuine issue of material fact should have precluded the dismissal or, absent an issue of fact, whether dismissal is proper as a matter of law. Regarding administrative proceedings conducted by the Department, section 2402.280(c) of the Administrative Code provides that: ” A motion for a rehearing or a motion for the reopening of a hearing shall be filed within 10 days of the date of mailing of the Director’s Order.” 50 Ill. Adm.Code 2402.280(c) (West 2012). Further, section 3-102 of the Administrative Review Law (735 ILCS 5/3-102 (West 2012)), provides that “[u]nless review is sought of an administrative decision within the time and in the manner herein provided, the parties to the proceeding before the administrative agency shall be barred from obtaining judicial review of such administrative decision.” Accordingly, the general rule is that parties aggrieved by the action of an administrative agency cannot seek review in the courts without first exhausting all administrative remedies available to them. Where the administrative rules allow for applications for rehearing, a party must do so in order to exhaust his administrative remedies and preserve his right to seek judicial review. However, the court recognized several exceptions which included: (1) where a statute, ordinance or rule is attacked as facially unconstitutional; (2) where multiple administrative remedies exist and at least one is exhausted; (3) where the agency cannot provide an adequate remedy or where it is patently futile to seek relief before the agency; (4) where no issues of fact are presented or agency expertise is not involved; (5) where irreparable harm will result from further pursuit of administrative remedies; or (6) where the agency’s jurisdiction is attacked because it is not authorized by statute.
In this case, Burns admitted that he never filed an application for rehearing pursuant to section 2402.280 of the Administrative Code, but he argued that the exception allowing judicial review, where no issues of fact are presented or agency expertise is involved, applies to his case. He argued that the Department based its revocation on hearsay statements that were improperly admitted and, whether evidence constitutes hearsay is a legal issue, not requiring the Department’s expertise or fact-finding duties. However, the transcript from the administrative hearing containing the alleged hearsay was not made a part of the appellate record, nor have the parties stipulated for its inclusion. There the court can only consider the documents in the certified record. The court, therefore, rejected Burns contention since any doubts which may arise from the incompleteness of the record will be resolved against the appellant. Without any transcript of the administrative hearing, the court must presume that the Department’s evidentiary rulings conform with the law and had a sufficient factual basis. Further the court states that if it were to consider the merits of Burn’s argument, it would not find that the evidentiary issue falls under the exception, since this exception was meant to deal with evidentiary issues that arise during an administrative hearing, but instead with novel statutory construction issues. Evidentiary issues are not novel, and permitting the Department to reconsider such issues allows it to use its expertise to correct its errors. The purpose of the exhaustion doctrine seems best served by requiring that Burns exhaust all administrative remedies including filing for a rehearing before seeking judicial review of the evidentiary issues he raised.
The court held producer failed to establish that his appeal from the revocation did not present issues of fact or involve agency expertise, so as to qualify for exception to the exhaustion doctrine.
Burns v. Department of Insurance, 2013 WL 5476425 (Ill.App. 1 Dist.).
