Hazlett, and Edward Brian Staub. Petitioner's Exhibits 1, 2a-h, 3, 4, 6-8, 10-12, 13a-g, 14a-p, 15-24, 27, 28, 31, 32b, and 34-39 were admitted in evidence.
The Department presented the testimony of Jack E. Nicholson, Rene Ash, and Herbert Yohner, and had Respondent's Exhibits 1-8 admitted in evidence.
Additionally, Joint Exhibits 1 and 2 were admitted in evidence.
The transcript of the proceedings was filed on October 18, 1990. The parties timely filed their proposed findings of fact and conclusions of law on November 7, 1990. Petitioner improperly attached various exhibits to the proposed order and proposed facts based on these documents which were not admitted as exhibits at the hearing and were not proffered. These documents and the facts offered based on them are not considered. All other proposed findings of fact and conclusions of law have been considered. A specific ruling on each proposed finding of fact is made in the Appendix attached hereto and made a part of this Recommended Order.
From April 20, 1981, through April 4, 1988, the Petitioner was employed as a life and health actuary for the Florida Department of Insurance.
Petitioner is a member of the Asian race, his national origin is India, and he is a United States citizen.
Gary Granoff was Division Director of the Division of Rating for the Florida Department of Insurance from early 1981 until mid-1983, during the time Petitioner was recruited and hired by the Department. Mr. Granoff has been a property/ casualty actuary for fourteen years.
Jack Nicholson was Bureau Chief of Rates in the Division of Rating of the Florida Department of Insurance from May 1986 until March 26, 1989, and supervised Petitioner from May 1986 until Petitioner left the Department.
Dale H. Hazlett was Division Director of the Division of Rating, Florida Department of Insurance, from May 1986 until 1988. Prior to that time, he had been Bureau Chief of the Bureau of Rates for approximately one year. As Bureau Chief he was Petitioner's direct supervisor. As Division Director he supervised Petitioner's direct supervisor.
Actuaries are highly trained and highly qualified individuals who do uniquely specialized work as is evidenced by their salary levels which, as a group, are the highest in the Department of Insurance. Few people in management have statistical or mathematical backgrounds and they have to rely heavily on the judgment of actuaries. The Department necessarily expects sound, reliable advice on a variety of issues from their actuaries and regular reporting on sensitive pending matters in order to keep management informed.
STARTING SALARY
Gary Granoff, Petitioner's own witness, personally requested and hired Petitioner because he had worked with Petitioner previously and had a good relationship with him. Then-Division-Director Granoff was instrumental in the setting of the Petitioner's salary.
Mr. Granoff testified categorically that Petitioner's race or national origin played no part in setting Petitioner's salary. This testimony is credible.
Even Petitioner admitted that he did not believe Mr. Granoff would have discriminated against him relative to his starting salary.
Many factors are considered in the setting of an actuary's starting salary and were considered in the setting of Petitioner's starting salary. For example, according to Mr. Nicholson, a major factor in setting the starting salary is the prior earnings of that actuary. Mr. Hazlett agreed that the single strongest factor was probably the prior salary.
Other factors enumerated by Mr. Nicholson include the amount of rate monies available to the division to pay actuaries, the education and experience of the actuary, market value of actuaries in general and that actuary in particular, and the actuary's area of specialty. Other factors listed by Mr. Hazlett were budget constraints on the Department, education and professional status, market value and the type of actuary.
There is a broad salary range for actuaries as a result of the disparity among actuaries in ability and value.
Additionally, severe budget constraints faced by most state agencies mandate that the Department pay an adequate salary, but not more than necessary to recruit an actuary.
When he applied for his job with the Department, Petitioner requested a starting salary of $30,000.00. His starting salary, was, in fact, $29,650.00 or approximately 99% of what he requested.
There is a great disparity in the number of property/casualty actuaries versus life/health actuaries. The limited number of property/casualty actuaries, fewer than 1600, makes them harder and more expensive to recruit than life/health actuaries, who number almost 12,000.
During the time that Mr. Nicholson was Bureau Chief of the Bureau of Rates in the Division of Rating, there were four property/casualty actuary positions and two life/health actuary positions.
There are substantial differences between the duties of life/health actuaries and property/casualty actuaries relative to subject matter, calculating loss ratios, insurance pricing, reserving, investment income, statutory limits of regulation, volatility of certain lines and "long-tail" calculations.
Mr. Granoff acknowledged that it was hard to compare Petitioner with other actuaries at the Department because he was a life/health actuary while the others were property/casualty actuaries.
Mr. Granoff indicated that he had a responsibility to make the most efficient use of public funds and he simply would not have offered an actuary a higher salary than that actuary asked for to bring him on board.
The Petitioner's starting salary was 32.37% greater than he had been making with all of his previous experience. This was the highest percentage of increase of all other actuaries.
There was no discrimination by the Department in setting Petitioner's starting salary.
CONTINUING SALARY
Petitioner was an adequate employee until the last several months of his employment.
The Petitioner received across-the-board raises when all other actuaries received raises.
The Petitioner's supervisors possessed no animosity toward the Petitioner and worked with him to correct existing problems.
The Petitioner appeared to function adequately when dealing with routine actuarial assignments. His work, however, never warranted merit raises. In his several years with the Department, no one ever attempted to lure him away to a higher-paying job.
The Petitioner, in fact, never asked for a merit increase or even questioned his evaluations.
In spite of this, he received higher percentage increases than other actuaries on two separate occasions.
Not only did Petitioner receive the largest percentage increase over prior salary when starting with the Department (32.37%), but upon election to the SES (Select Exempt Service) classification, he and one other actuary received higher percentage increases than all other actuaries. While other actuaries received 10% increases, those two received an increase of 15%.
During the period of time before actuaries switched to SES, Petitioner received all raises that were received by other actuaries except for merit increases and special pay increases.
Merit increases were awarded based on exceeds ratings during that time and actuaries could not receive merit raise without an exceeds rating.
Petitioner points to a merit increase given to Mr. Ritzenthaler in September 1980 when he did not have an exceeds rating in effect. However, that increase was actually a special, one-time increase authorized by the Legislature.
Even though Petitioner was the lowest-paid actuary in the Bureau of Rates from April 1981 through December 1987, Petitioner's salary and salary increases were not a result of discrimination.
TERMINATION
On February 25, 1988, Petitioner was advised that his services were no longer needed by the Department. This termination was based on a lack of confidence by his superiors in his ability and judgment. This lack of confidence developed over a period of time and was due to a series of situations which were mishandled by Petitioner.
Mr. Hazlett made the recommendation to discharge Petitioner because "he was a loose cannon" and the results of his work activities often produced negative results.
Petitioner's termination as approved by Bill Gunter, the Commissioner of Insurance; Ann Wainwright, the Assistant Commissioner of Insurance; Gerald Wester, Deputy Insurance Commissioner; and Mike Gresham, Division Director of Administration.
Select Exempt Service employees serve strictly at the pleasure of the agency head. No reason need be given for terminating such employees. They receive additional benefits in this classification, but are not entitled to job security protections afforded Career Service employees.
Mr. Nicholson supported Mr. Hazlett's recommendation to terminate Petitioner.
Mr. Nicholson was concerned about the job his bureau had been doing in the life/health area and he thought that the actuaries on the property/casualty side were "head and shoulders above" those on the life/health side.
Until a few months before the termination, Petitioner's job performance had been rated satisfactory.
ACLU LETTER
Without consulting with his superiors, Petitioner responded to an inquiry from the American Civil Liberties Union relative to possible discriminatory rating policies for insurance companies doing business in the state of Florida.
The Petitioner's unauthorized action committed the Department to a large-scale investigation and retroactive reimbursement if discrimination was found.
Although the Petitioner treated the ACLU white ship as a routine consumer complaint, any white slip inquiry from a nationwide organization dealing with sensitive issues such as discrimination should not have been treated as a routine consumer complaint.
At hearing, the Petitioner initially admitted that the ACLU inquiry was not routine.
A competent actuary should have known by merely reading the ACLU correspondence that it was of a sensitive nature and needed to be brought to the attention of his supervisor.
In fact, the ACLU letter raised issues of such importance that it should have been brought to the attention of the Insurance Commissioner himself.
Petitioner never notified his supervisors that he had taken such an action and never followed through on his promise to investigate this matter.
Mr. Hazlett communicated the problems with his response directly to Mr. Koppikar.
The issues raised by the ACLU letter were extremely volatile and had state and national attention by the press.
The Petitioner's handling of this matter harmed or had the potential of harming the Department in several ways: It committed Department resources in an inappropriate manner; it committed the Department to ensuring restitution to insureds relative to problems predating the federal antidiscrimination laws, which was potentially detrimental to the credibility of the Department; and it subjected the Insurance Commissioner to potentially embarrassing press coverage.
ASSOCIATED DOCTORS
In this matter, Petitioner sent a letter to Associated Doctors informing them that all of their medicare supplement rates were disapproved.
The effect of this letter would have been to put that company out of business.
The Petitioner took this action without consulting with his superiors after becoming frustrated in his attempts to get information from that company.
When Mr. Nicholson investigated the file, he found correspondence from the company never answered by Petitioner.
He also found evidence that Petitioner did not understand what the company was saying and that he was making judgments without sufficient support.
Had Mr. Hazlett not immediately rescinded the letter, Petitioner's action could have jeopardized the financial condition of the company and the interests of its insureds.
The Department has responsibilities to all of the public, and the public includes both consumers and insurance companies. While violators should ultimately have appropriate action taken against them, they are entitled to an opportunity to respond to those allegations made against them, and if in violation, an opportunity to correct those violations. Before putting a company out of business, in carrying out the Department's duties, proper notice should be given along with an opportunity to correct the noncompliance. Petitioner's letter to Associated Doctors ignored these duties.
The Associated Doctors matter was ultimately resolved with Petitioner's determining that no reduction in rates was called for.
MEDICARE SUPPLEMENT REVIEW
Petitioner was in charge of reviewing the rate increase requests of insurance companies selling Medicare supplement insurance in Florida.
As a direct result of Petitioner's failure to do his job properly, the Department was placed in a potentially embarrassing situation of not knowing that several companies were in violation of the loss ratio standards required by Florida statutes.
After the publication of a newspaper article critical of the Department's regulation of those companies writing Medicare supplement policies, Petitioner was instructed by Mr. Nicholson to ask all of those companies to justify their rating practices.
Petitioner testified that he told his superiors the article was going to be written. This testimony is not supported by the competent, substantial evidence. In fact, Mr. Nicholson learned of the problem through an outside source.
Petitioner testified that the loss ratio in Florida was very satisfactory as far as the Department was concerned.
According to Mr. Nicholson, it was Petitioner's job to monitor these rates. The requested response from those companies, in fact, demonstrated that
42 out of 100 companies were not in compliance with Florida law.
The Medicare supplement issue was one of rising visibility because the Department was working on a national level through the National Association of Insurance Companies on the regulation of Medicare supplement policies and Petitioner's superiors were understandably surprised to find that the Department was not adequately regulating this area.
The Commissioner of Insurance was concerned about the critical article and the issues it raised.
Petitioner was asked to prepare a report to be used for a presentation to the Commissioner to satisfy him that the Department was taking all action possible to make sure these companies were in compliance with the Florida statutes.
Petitioner testified that he prepared this report and presented it.
However, in reality, Mr. Koppikar was unable to pull the information together in a coherent fashion. Mr. Nicholson completed the report and made the presentation in a meeting with the commissioner which merely included Mr. Hazlett and the Petitioner.
Petitioner admitted that the report in question may have been prepared on Mr. Nicholson's personal computer.
In fact, the reports were prepared by Mr. Nicholson because the Petitioner could not prepare the analysis in a cohesive, prioritized and presentable form.
AV-MED HMO
After receiving a complaint from Miami-Dade Community College about the rates charged to them by AV-MED, an HMO doing business in Florida, Petitioner was unable to determine for an extended period of time what rates AV- MED should have been charging.
According to Mr. Nicholson, Petitioner was never able to tell management if the Department had approved their rates.
Petitioner had been involved in the review of HMO rates for a period of seven years, from 1979 to 1982 in Massachusetts and from 1982 to 1986 in Florida.
From 1982, Petitioner had been reviewing the rates of AV-MED and had not noticed any problems with their rating methodology.
By 1987, Petitioner determined that AV-MED was in violation of Florida law. When AV-MED contended that they were a federally qualified HMO and that their rates were regulated by the federal government's HMO office, Mr. Koppikar was not aware of what federal regulations existed.
Accompanied by an attorney, he traveled to Washington to determine the nature of the pertinent federal regulations.
In addition to qualifying at the state level, all federally qualified HMOs in Florida had to qualify on the federal level under a rating form called community rating.
According to Mr. Nicholson, Petitioner did not understand federal guidelines for community ratings, and the Department had to hire a consultant at taxpayers' expense to explain them to him.
Although Petitioner had been involved in the review of HMO rates in general, and this one in particular, for a period of several years, he was not familiar with the requirements of federal regulation to the extent he needed to be in order to respond to AV-MED's defense. Petitioner should have been more familiar with this area of regulation.
HMO-IN-HOUSE BIDS
When given an assignment to review the bids of several HMOs wanting to provide health coverage to state employees, Petitioner was unable to give firm answers with backup explanations so that the Department could defend its findings.
The review of HMO rate filings was a routine part of Petitioner's job and it was especially distressing to his supervisors that they were unable to get firm recommendations from him.
Each time that Mr. Hazlett questioned Petitioner about his analysis, the answers would change so that Mr. Hazlett never felt comfortable that the Department could defend its position.
Mr. Nicholson agreed that in meetings with Mr. Hazlett, Petitioner would "flip flop" when asked questions by Mr. Hazlett.
This was a high-visibility issue because only one HMO would be allowed to provide coverage. The Department correctly expected that unsuccessful HMOs would challenge the recommendations of the Department.
Thus, in a situation in which Petitioner knew the Department's credibility was on the line, he was unable to perform a routine part of his job at the level of competence necessary to give his superiors confidence that he could effectively defend his recommendations.
PETITIONER'S SUPERVISORY ACTIVITIES
Petitioner gave little, if any, supervision to employees assigned to him. At times he did not know where they were.
When Petitioner was supervising Marvin Farmer, that employee's attendance record was so poor that Petitioner's supervisors had to speak to Petitioner about that problem.
Petitioner finally issued a written reprimand to Farmer, but only in response to the expressed dissatisfaction of his superiors.
Petitioner never adequately supervised Mr. Farmer on his own initiative.
As a direct result of the Petitioner's lack of supervision, office morale became very low.
After Petitioner no longer supervised Mr. Farmer, Mr. Farmer was terminated for unauthorized and fraudulent absence from the job. These absences were easily documented by the Petitioner's successor, Mark Peavy.
Petitioner was informed many times that his supervisors were dissatisfied with each and every issue enumerated above.
Although Petitioner maintains that no one ever discussed these issues with him, the record evidence strongly contradicts this contention. Petitioner's testimony in this regard was vague. It was simply not believable.
Moreover, throughout his testimony the Petitioner was being deliberately evasive and unresponsive to questioning.
ALLEGED RETALIATORY EXIT REVIEWS
On March 23, 1988, Mr. Nicholson completed an initial exit review for the Petitioner. Department policy was that exit reviews would be completed on all employees leaving the Department. The Chief of Personnel Management, Mr. Yohner, was aware of no exceptions.
Respondent did not retaliate against Petitioner for filing a charge of discrimination by lowering the ratings of his job performances on an exit review prepared by Jack Nicholson.
The first exit review prepared by Mr. Nicholson was inappropriately favorable to Petitioner because Mr. Nicholson did not want to harm Petitioner's opportunity for finding other employment.
Mr. Nicholson submitted a second exit review on the same day or the next day, which review accurately reflected Petitioner's abilities in comparison to other actuaries in the Department.
Mr. Nicholson submitted the second exit review because Mr. Yohner advised him that the purpose of the exit review was to document information to the Department, not to provide information to potential employers.
Petitioner was not harmed by the exit reviews. Other than the Petitioner, no one ever made a request to see them.
At a much later date, Mr. Nicholson wrote a memo to Mr. Yohner explaining the basis for the first exit review and the second exit review.
Petitioner's petition of discrimination, received by the Department on April 8, 1988, was the first notice the Department received of any challenge to Petitioner's termination.
The second exit review was not an attempt to retaliate against the Petitioner because the second exit review had already been filed when the Petitioner brought his complaint to the Human Relations Commission.
Mr. Wester, Deputy Insurance Commissioner at the time, offered to assist Petitioner in any way he could in trying to locate another job.
Petitioner wrote a letter to Mr. Wester thanking him for his offer of assistance.
Mr. Nicholson counselled Petitioner, at length, to assist him in finding other employment and on one occasion provided him a list of corporate recruiters accumulated through responses to ads for actuaries.
Elaine Cooper in Personnel also made at least one phone call on behalf of Petitioner to assist him in finding employment.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and subject matter of these proceedings. Section 120.57(1), Florida Statutes.
This action is brought under the Florida Human Rights Act of 1977, Sections 760.01-.10, Florida Statutes. Specifically, Petitioner is claiming that the Department engaged in unlawful employment practices contrary to Section 760.10(1)(a) and that it retaliated against him contrary to Section 760.10(7).
The applicable model of proof in Title VII discrimination cases is that outlined in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 36 L.Ed.2d 668 (1973), and Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 67 L.Ed.2d 207 (1981). While Petitioner argues that the model of proof should be that utilized in cases arising under the Equal Pay Act, it is concluded that the Equal Pay Act and cases arising thereunder are inapplicable to the claims raised herein. The correct model of proof, as more particularly stated by the Court in McDonnell and Burdine, is:
First, the plaintiff has the burden of proving by the preponderance of the evidence a prima facie case of discrimination. Second, if the plaintiff succeeds in proving a prima facie case, the burden shifts to the defendant "to articulate some legitimate, nondiscriminatory reason for the employee's rejection." . . .
Third, should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reasons, but were a pretext for discrimination.
Burdine, supra, 450 U.S. at 252-3.
In applying this model to the present case, it is first concluded that the Petitioner has proven a prima facie case of discrimination in regard to salary and termination.
As to the salary claims, the Department has clearly shown that the initial salary and the salary increases were not calculated in a discriminatory manner, but instead were based on legitimate, nondiscriminatory reasons. Further the facts clearly show that Petitioner was terminated for specific legitimate, nondiscriminatory reasons of inadequate performance.
Petitioner has failed to prove by a preponderance of the evidence that the reasons offered by the Department are pretextual. A petitioner can carry its burden of proof in this regard "either directly by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer's proffered explanation is unworthy of credence." Burdine, supra, 450 U.S. at 256. Petitioner was unable to carry its burden either directly or indirectly.
The charges of discrimination pursuant to Section 760.10(1)(a) should be dismissed.
In regard to the charges of retaliation made under Section 760.10(7), a prima facie case requires that Petitioner prove that he engaged in actions protected by the statute; that an adverse employment action was taken against him; and that a causal link exists between the protected action and the adverse employment decision. See Hamm v. Board of Regents of State of Florida, 708 F.2d 647 (11th Cir. 1983). Petitioner's proof showed that he filed a charge of discrimination with the Florida Commission on Human Relations on April 8, 1988. It did not show that an adverse employment action was taken against him which was causally connected to the charge of discrimination. The competent, substantial evidence established that the second exit interview was done a day or two after the March 23, 1988, exit interview. Hence no showing was made that the adverse exit interview was causally linked to the charge of discrimination because the second exit interview was entered before the charge of discrimination was filed. No prima facie case was proven in regard to the alleged retaliation. Even if there had been a prima facie case shown, the Department articulated legitimate, nondiscriminatory reasons for the second exit interview and Petitioner did not show that those reasons were pretextual. The retaliation charge should also be dismissed.
