STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GAINESVILLE MEDICAL and HOSPITAL ) EMPLOYEES CREDIT UNION, )

)

Petitioner, )

)

vs. ) CASE NO. 78-1923

) STATE OF FLORIDA, OFFICE OF ) COMPTROLLER, )

)

Respondent. )

)

REPORT

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, G. Steven Pfeiffer, held a public hearing in the above case on January 12, 1979, in Gainesville, Florida.

The following appearances were entered: William C. Andrews, Gainesville, Florida, representing the Petitioner, Gainesville Medical and Hospital Employees Credit Union, a proposed new credit union; Michael A. Gross, Tallahassee, Florida, representing the Respondent, State of Florida, Office of the Comptroller; and Norm LaCoe, Gainesville, Florida, representing the Intervenor, Alachua General Hospital and Alachua County Employees Credit Union.

On or about August 29, 1978, the Gainesville Medical and Hospital Employees Credit Union, a proposed new credit union ("Petitioner" hereafter), filed an application for authority to establish a new credit union with the Division of Banking of the Department of Banking and Finance. The Division of Banking requested additional information. The information was received on October 16, 1978, and the Petitioner's application became complete on that date. On October 2, 1978, the Alachua General Hospital and Alachua County Employees Credit Union ("Intervenor" hereafter) requested that a public hearing be conducted with respect to the Petitioner's application. The Division of Banking forwarded the matter to the Office of the Division of Administrative Hearings for the assignment of a hearing officer and the scheduling of a hearing. The final hearing was scheduled as set out above by notice dated November 21, 1978.

At the final hearing the Petitioner called the following witnesses: Richard D. Hinson, the purchasing agent for the Alachua General Hospital, and a member of the board of the Intervenor; Sandra Hazen, one of the Petitioner's organizers; Johnny Mallory, one of the Petitioner's organizers and a member of the Intervenor's credit committee; Bryce A. Malsbary, the Director of Personnel of the Alachua General Hospital; Edward C. Peddie, the President and Chief Executive Officer of the Alachua General Hospital; Gail Batey, an employee of the Alachua General Hospital who has been a member of the Intervenor; Mable Jenkins, an employee of the Alachua General Hospital who has been a member of the Intervenor; and Katie Bell, an employee of the Alachua General Hospital who has been a member of the Intervenor. The Intervenor called the following witnesses: John H. Roper, a former employee of the Alachua General Hospital,

and a member of the board of directors of the Intervenor; Frencholyn Purvis, a former employee of the Alachua General Hospital, and a former officer of the Intervenor; Richard Filip, the Executive Vice President of the Florida Credit Union Guaranty Corporation; Ruth Hazen, the Intervenor's president; Mildred C. Casey, the manager of the Intervenor; Madeline Lang, the manager and treasurer of the North Florida Hospital Corporation of America Federal Credit Union; Steven Halas, the manager of the Alachua County Teacher's Credit Union; Louise Hinton, the treasurer and manager of the Gainesville, Florida Campus Federal Credit Union; Marvin Roberts, the treasurer of the Florida United States Department of Agriculture Federal Credit Union; and Jimmy Robbins, the director of the Research and Information Division of the Florida Credit Union League.

Petitioner's Exhibits 2 - 8, Intervenor's Exhibits 1 - 3, and Comptroller's Exhibit 1 were offered into evidence and were received. Petitioner's Exhibit 1 was marked for identification, but was neither offered nor received, and is not a part of the record. The Petitioner and the Intervenor have submitted Proposed Findings of Fact.

In accordance with the provisions of Section 120.57(1) (b)(12), Florida Statutes (1978 Supp.) only findings of fact are set out herein. Rulings on evidentiary matters were made on the record during the course of the hearing.

FINDINGS OF FACT

1. Seven persons who are residents of the State of Florida have filed the instant application for a charter for the proposed Gainesville Medical and Hospital Employees Credit Union. The organizers are individuals who are within the field of membership of the proposed credit union. The proposed field of membership has been defined as follows:

   
   

   All employees of Alachua General Hospital, Inc., a private nonprofit corporation, including physicians authorized to practice in the hospital, their employees, auxiliary members associated with the hospital, employees of the credit union, and immediate family members and associations of such persons.

   
   

2. People within the proposed field of membership all have a substantial connection with the Alachua General Hospital, Inc. The potential field of membership encompasses more than two thousand people. There are approximately eight hundred present hospital employees, one hundred fifty physicians associated with the hospital, three hundred employees of the physician, five hundred auxiliary members, and seven hundred family members of these groups.

   
   

3. The Petitioner has solicited commitments from people within the field of membership to join the proposed credit union, and to open savings accounts. Three hundred fifty people have indicated an interest, and have made commitments to engage in payroll savings programs which would result in thirty eight hundred dollars being placed in the proposed credit union each biweekly pay period.

   This would result in approximately one hundred thousand dollars in savings accounts being placed in the credit union during its first year, and would place it in a position to loan that much money at twelve percent interest. The prospects that the credit union could pay a dividend as high as five percent after its first year of operation are good. Expenses for operation of the credit union would amount to only about four thousand dollars during the first year. The Alachua General Hospital, Inc. has agreed to provide clerical

   assistance and office space for the credit union for the first three years of its operation.

   
   

4. The proposed credit union would encourage thrift by encouraging people within the field of membership to engage in savings programs through payroll deduction plans. The proposed credit union would serve as a source of credit for people within the field of membership and would allow people to repay loans through payroll deduction plans.

   
   

5. The Alachua General Hospital was originally operated as a county hospital. Its affairs were governed by a board of trustees who answered to the Alachua County Board of County Commissioners. See: Chapter 59-1046, Special Acts of Florida (1959); Chapter 69-808 and Chapter 69-814, Laws of Florida (1969). Employees of the hospital were employees of Alachua County. The hospital and the county utilized the same data processing, payroll, and retirement systems.

   
   

6. In 1977 the Florida Legislature adopted a special act which empowered the Board of County Commissioners of Alachua County to lease the facilities of the Alachua General Hospital to a nonprofit corporation, which would be responsible for the operation of the hospital. See: Chapter 77-497, Laws of Florida (1977). The special act amended the original legislation creating the hospital as follows:

   
   

   By resolution, the Board of County Com- missioners may elect to lease the capital facilities of Alachua General Hospital, consisting of real property, improve- ments, accounts receivable, choses in

   action, standing accounts, and indebtedness, fixtures, equipment, and other chattels for the purpose of operating the hospital instead of operating it in accordance with the mode of operation set out in Chapter 1046, Laws of Florida, 1959, as amended.

   Such lease shall be with a nonprofit corpora- thin formed solely for the purpose of operating Alachua General Hospital and ancillary health care facilities, and upon such terms as the nonprofit corporation

   and the Board of County Commissioner's mutually determine will provide for the effective and efficient operation of the hospital. If a resolution to lease through a nonprofit corporation is passed by the Board of County Commissioners, the Board

   of Trustees of Alachua General Hospital shall continue to operate the hospital until such time as the terms of the lease

   are agreed to and possession of the hospital is transferred to the lessee thereof. There- after, the Board of Trustees of Alachua General Hospital shall be dissolved by resolution of the Board of County Com- missioners. In the event such lease is terminated for any reason, the Board of County Commissioners shall, by resolution,

   recreate the Board of Trustees of Alachua General Hospital for the same terms and with the same authority as is provided in Section I through Section VIII, as amended.

   
   

   In accordance with the enabling legislation, the Board of County Commissioners has leased the hospital to Alachua General Hospital, Inc., a private nonprofit corporation. Since May 11, 1978, the hospital has been operated by the corporation. The same employees have remained with the hospital in their same positions; however, they are no longer employees of the county, but are rather employees of the private corporation. The hospital no longer shares the county's data processing system or payroll system. Hospital employees no longer participate in the same retirement program, and the terms and conditions of their employment are no longer identical to the terms and conditions of employment for county employees.

   
   

7. Collective bargaining activities of the hospital were under the jurisdiction of the Florida Public Employees Relations Commission (PERC) prior to the reorganization. The hospital's collective bargaining activities now fall within the jurisdiction of the National Labor Relations Board. County collective bargaining continues under the jurisdiction of PERC.

   
   

8. Prior to reorganization the Alachua County Board of County Commissioners was responsible for appointing members of the Board of Trustees, and for approving budgets and overseeing activities of the Trustees. The Board of County Commissioners now has no role in administering hospital programs unless there is a breach of the lease agreement.

   
   

9. The Intervenor was originally chartered approximately eighteen years ago as the Alachua General Hospital Employees Credit Union. Its field of membership was employees of the Alachua General Hospital and members of their families. In 1965, after a vote of the membership, the Intervenor's charter was amended and its field of membership was expanded to include all county employees and members of their families. The Intervenor's name was changed to the Alachua General Hospital and Alachua County Employees Credit Union.

   
   

10. The Intervenor presently has approximately 1700 members and $1.5 million in assets. Just over 480 of the Intervenor's members are employees of the hospital, and just over 480 members are employees of the county. The remaining members are employees of a local mental health association, or former employees of the hospital or of the county. In December, 1965 the Intervenor had 316 members, outstanding shares of $77,844.00 and outstanding loans of

    $83,684.00. By December, 1978, the membership had grown to 1699, with outstanding shares of $1,374,979.00. The Intervenor's growth has been steady, and it has been able to pay its shareholders a dividend during each year of its operation, with the possible exception of 1965. The records are unclear with respect to that year. During the past six years the dividend has typically been the maximum allowed by law, or close to that figure. As of May, 1978, outstanding shares in Intervenor held by county employees amounted to

    $236,929.00. County employees had outstanding loans of $444,491.00. Members of the Intervenor who are neither employees of the county nor of the hospital had outstanding shares of $429,437.00 and outstanding loans of $323,294.00.

    Employees of the hospital had outstanding shares of $771,022.00 and outstanding loans of $480,374.00.

    
    

11. The Board of Directors of the Intervenor is composed of seven members. Three of the present Board members are employees of the county, one is a former

    county employee, two are former hospital employees, and one is a present hospital employee.

    
    

12. The present management of Alachua General Hospital, Inc. favors the formation of a new credit union. It is management's judgment that a greater spirit of cooperation among people associated with the hospital can be accomplished through utilization of a separate credit union. Employees of the hospital continue to be eligible for membership in the Intervenor. The hospital has agreed to continue payroll deduction for loan payments for employees who have outstanding loans with the Intervenor. The hospital has refused, however, to offer payroll deduction for savings programs, or for new loans. The hospital has also declined to discuss the Intervenor in orientation sessions with new employees, and no longer encourages membership in the Intervenor.

    
    

13. Several hospital employees have had complaints about services rendered by the Intervenor, and they so testified at the hearing. The full circumstances of these complaints were not developed, and the evidence would not support a finding that the Intervenor has failed to adequately serve employees of the hospital, or has discriminated systematically, or in any improper manner against members who are employees of the hospital.

    
    

14. Large credit unions are typically able to offer a broader range of financial services to their members than are small credit unions. There have been successful credit unions that are considerably smaller than the Intervenor; however, the Intervenor and the Petitioner, if it is chartered, would be considered small credit unions.

    
    

15. A credit union associated with the University of Florida located in Gainesville, Alachua County, Florida, recently failed, and liquidated its assets. This has impacted other credit unions in the area to a limited extent by injuring public confidence in credit unions. It does appear, however, that successful credit unions in the area have continued to be successful.

    
    

16. No election has been conducted to determine whether a majority of hospital employees would prefer to be eligible for membership in the Intervenor or in the Petitioner.

    
    

17. The Department of Banking and Finance did not offer any evidence to establish the existence of any incipient policies which have not been the subject of rulemaking.

RECOMMENDED this 19th day of February, 1979, in Tallahassee, Florida.

G. STEVEN PFEIFFER Hearing Officer

Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Michael A. Gross, Esquire Assistant General Counsel

Office of the Comptroller The Capitol

Tallahassee, Florida 32304

William C. Andrews, Esquire 1133 Northwest 23rd Boulevard Gainesville, Florida 32601

Norm LaCoe, Esquire

Suite 8, 204 W. University Ave. Post Office Box 855 Gainesville, Florida 32602

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GAINESVILLE MEDICAL and HOSPITAL ) EMPLOYEES CREDIT UNION, )

)

Petitioner, )

)

vs. ) CASE NO. 78-1923

) STATE OF FLORIDA, OFFICE OF ) COMPTROLLER, )

)

Respondent. )

)

APPENDIX TO HEARING OFFICER'S REPORT

RULINGS IN ACCORDANCE WITH FLORIDA STATUTES 120.59(2)

The parties have submitted Proposed Findings of Fact. Rulings upon the proposed findings are set out herein in accordance with Section 120.59(2), Florida Statutes (1977).

Proposed Findings of Fact submitted by the Petitioner have been substantially adopted in the Findings of Fact set out in the Hearing Officer's Report. To the extent that the Proposed Findings are not inconsistent with the Findings of Fact set out in the Hearing Officer's Report, they are hereby adopted, except that the second sentence in the third paragraph on Page 3 of the Proposed Findings is hereby rejected.

The paragraphs set out on Page 1 of the Intervenor's Proposed Findings, and the first two paragraphs on Page 2 have been substantially adopted in the Findings of Fact set out in the Hearing Officer's Report. These paragraphs are hereby adopted as findings of fact to the extent that they are not inconsistent with the Findings of Fact set out in the Hearing Officer's Report. The second paragraph on Page 4 is adopted to the extent that it is not inconsistent with the Findings of Fact set out in the Hearing Officer's Report except that the statement that no member has desired to change or rescind the bylaws of the Intervenor, is rejected. The first two sentences of Paragraph 3 on Page 4 are adopted. The second two sentences are rejected insofar as they purport to raise any inference that pledges for the Petitioner were gathered in an improprietous

manner, or that no employees of the Petitioner other than top level management favor the creation of a new credit union. The first full paragraph on Page 6 is adopted, except the statement that the Intervenor enjoyed a better performance than most credit unions is not supported by the evidence and is rejected. All other paragraphs of the Intervenor's Proposed Findings are rejected as being contrary to the evidence, irrelevant, or as being in the nature of conclusions of law rather than findings of fact.

ENTERED this 19th day of February, 1979, in Tallahassee, Florida.

G. STEVEN PFEIFFER Hearing Officer

Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Michael A. Gross, Esquire Assistant General Counsel Office of the Comptroller The Capitol

Tallahassee, Florida 32304

William C. Andrews, Esquire 1133 Northwest 23rd Boulevard Gainesville, Florida 32601

Norm LaCoe, Esquire

Suite 8, 204 W. University Ave. Post Office Box 855 Gainesville, Florida 32602

Gerald Lewis Comptroller State of Florida The Capitol

Tallahassee, Florida 32304

Docket for Case No: 78-001923

Orders for Case No: 78-001923