STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LEGAL CLUB OF AMERICA CORPORATION, ) f/k/a AND JUSTICE FOR ALL, INC., ) d/b/a LEGAL CLUB OF AMERICA, )

)

Petitioner, )

)

vs. ) Case No. 99-0771RX

)

DEPARTMENT OF INSURANCE, )

)

Respondent. )

)

SUMMARY FINAL ORDER

This cause came before the undersigned on July 8, 1999, for telephonic hearing on Legal Club of America Corporation's Motion for Summary Final Order filed March 25, 1999; on the Department of Insurance's Cross Motion for Summary Final Order and Response to Petitioner's Motion for Summary Final Order filed May 3, 1999; on Legal Club of America Corporation's Response to Department of Insurance's Cross Motion for Summary Final Order and Response to Petitioner's Motion for Summary Final Order filed June 1, 1999; and on the Department's Notice of Filing with attached affidavits filed July 7, 1999. On July 9, 1999, the Department filed its Notice of Supplemental Filing for Department of Insurance's Cross- Motion for Summary Final Order attaching its Notice of Proposed Rulemaking filed with the Department of State on July 9, 1999.

APPEARANCES

For Petitioner: Thomas J. Jones, Esquire

Holland & Knight, L.L.P.

315 South Calhoun Street, Suite 600 Tallahassee, Florida 32302

For Respondent: Richard A. Grumberg, Esquire

Division of Legal Services Department of Insurance 612 Larson Street

200 East Gaines Street Tallahassee, Florida 32399-0333

FINDINGS OF FACT

1. On December 31, 1997, the Department of Insurance issued a Notice of Intent to Issue Cease and Desist Order against Petitioner, alleging that Petitioner is engaged in the legal expense insurance business in the State of Florida without being licensed. The Department alleges that Petitioner is in violation of several statutory provisions requiring licensure.

2. Petitioner timely requested an evidentiary proceeding regarding the allegations contained within that Notice of Intent to Issue Cease and Desist Order. Jurisdiction over the matter was transferred to the Division of Administrative Hearings on

   January 28, 1998, to conduct the evidentiary proceeding. The matter was assigned DOAH Case No. 98-0442.

3. By Notice of Hearing entered February 17, 1998, that cause was scheduled for final hearing on June 15 and 16, 1998, and the parties have engaged in extensive discovery. By agreement of the parties that cause was re-scheduled several times and then was placed in abeyance.

4. On February 24, 1999, Petitioner filed with the Division of Administrative Hearings its Petition for Administrative Determination of Invalidity of Existing Rule and Unpromulgated Rule. That Petition was assigned DOAH Case No. 99-0771RX, was consolidated with DOAH Case No. 98-0442, and is the subject of this Final Order.

5. The Petition asserts the invalidity of the Department's Rule 4-201.003, Florida Administrative Code, and the invalidity of an alleged unpromulgated rule consisting of a statement by the Department that the amount of the membership fee Petitioner charges its members will determine whether Petitioner is a legal expense insurance corporation subject to regulation under

   Chapter 642, Florida Statutes. The existing Rule and the alleged unpromulgated rule are the subject of the Petitioner's Motion for Summary Final Order and the Department's Cross Motion for Summary Final Order.

6. Petitioner alleges that Rule 4-201.003, Florida Administrative Code, is an invalid exercise of delegated legislative authority because (a) it enlarges, modifies, and contravenes specific provisions of the statute it purports to implement; (b) the Department exceeded its rulemaking authority; and (c) the Department materially failed to follow the requirements set forth in Chapter 120, Florida Statutes, by failing to repeal a rule for which there was no legislative rulemaking authority. Petitioner argues that the Department's

   alleged unpromulgated rule is an invalid exercise of delegated legislative authority because (a) the statement is an unpromulgated rule; (b) the statement enlarges, modifies, and contravenes specific provisions of the statute it purports to implement; and (c) the statement is vague, fails to establish adequate standards for the Department's decisions, and vests unbridled discretion in the agency.

7. The Department's Cross Motion for Summary Final Order alleges that Petitioner lacks standing to assert its challenges, that the challenge to the existing Rule is moot, and that the alleged unpromulgated rule does not exist.

8. Rule 4-201.003, Florida Administrative Code, relates to exemptions from the statutory definition of "legal expense insurance." The Department's Notice of Intent to Issue Cease and Desist Order does not allege that Petitioner has violated that Rule and does not even cite to that Rule as a basis for the Department's action against Petitioner. Since Petitioner is not charged with violating that Rule, Petitioner cannot show that it is substantially affected by the Rule. Further, the Department has now commenced the repeal of that Rule and has filed in this cause an affidavit from the Department's Bureau Chief of Specialty Insurers that Rule 4-201.003, Florida Administrative Code, has not been and will not be used against Petitioner in DOAH Case

   No. 98-0442 or in any other enforcement proceeding.

9. As to the alleged unpromulgated rule, the record in this cause reveals that the Department in both correspondence and conversations with Petitioner raised a concern about the amount of Petitioner's membership fees in re-considering whether Petitioner is a lawyer referral service or a legal expense insurer. However, Petitioner does not allege that the amount of the membership fee has been considered as to any entity other than Petitioner.

10. Conversely, the Department has filed affidavits from the Bureau Chief of Specialty Insurers and from the employee charged with handling licensure of legal expense insurers on a day-to-day basis that they have never heard of a Department policy in which the price of a legal service plan determines whether that plan is legal expense insurance. Those affidavits further state that no such policy has been applied by the Department and that the first time the Department heard of such a policy is when Petitioner asserted that such a policy existed. Accordingly, since it has not been shown that such a policy exists, it cannot be shown that the alleged policy constitutes an unpromulgated rule.

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties hereto and the subject matter hereof. Sections 120.56(1), (3), and (4), Florida Statutes.

12. Section 120.56(1)(b), Florida Statutes, requires that a person challenging a rule must show that that person is or will be substantially affected by the rule. Since Petitioner is not

    charged with violating Rule 4-201.003, Florida Administrative Code, since the Department has filed an affidavit stating that the Rule will not be applied to Petitioner, and since the Department has commenced proceedings to repeal the Rule, Petitioner cannot show that it is or will be substantially affected by the Rule.

13. Section 120.52(15), Florida Statutes, defines the term "rule" to mean, in part: ". . . each agency statement of general applicability that implements, interprets, or prescribes law or policy. . . ." Section 120.56(4)(a), Florida Statutes, requires that a person challenging an agency statement defined as a rule must show that the statement constitutes a rule under

Section 120.52. There is no allegation in the Petition that the alleged policy has been applied to any entity other than Petitioner, and the Department denies that such a policy exists or that it has been applied even to Petitioner. Since any agency statement alleged to be an unpromulgated rule must meet the definition of a rule, and since Petitioner has failed to demonstrate that the statement of which it complains has general applicability, Petitioner cannot show that the statement is an unpromulgated rule deficient for the reasons alleged by Petitioner.

It is, therefore, ORDERED THAT:

1. Petitioner Legal Club of America Corporation's Motion for Summary Final Order as to Rule 4-201.003, Florida Administrative Code, be and the same is hereby denied.

2. Petitioner Legal Club of America Corporation's Motion for Summary Final Order as to the alleged unpromulgated rule be and the same is hereby denied.

3. The Department of Insurance's Cross Motion for Summary Final Order be and the same is hereby granted.

4. The Petition for Administrative Determination of Invalidity of Existing Rule and Unpromulgated Rule filed in this cause be and the same is hereby dismissed.

5. The attention of the parties is directed to the Order Granting Consolidation, Granting Continuance, and Placing Case in Abeyance as to DOAH Case No. 98-0442 entered on March 3, 1999, regarding scheduling that case for final hearing.

DONE AND ORDERED this 13th day of July, 1999, in Tallahassee, Leon County, Florida.

LINDA M. RIGOT

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 13th day of July, 1999.

COPIES FURNISHED:

Bill Nelson, State Treasurer and Insurance Commissioner

Department of Insurance

The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Daniel Y. Sumner, General Counsel Department of Insurance

The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300

Richard A. Grumberg, Esquire Division of Legal Services

Department of Insurance and Treasurer 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

Thomas J. Jones, Esquire Holland & Knight, L.L.P.

315 South Calhoun Street, Suite 600 Tallahassee, Florida 32302

Carroll Webb

Executive Director and General Counsel Joint Administrative Procedures Committee Holland Building, Room 120

Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a Notice of Appeal with the agency clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate district where the party resides. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 99-000771RX

Orders for Case No: 99-000771RX