INTER-TEL, INC. AND INTER-TEL ) TECHNOLOGIES, INC., )
vs. ) Case No. 06-3651CVL
Respondent. )
Pursuant to notice, a formal hearing was scheduled in this case for December 11, 2006, in Tallahassee, Florida, before Errol H. Powell, a designated Administrative Law Judge of the Division of Administrative Hearings. The parties stipulated to all material facts at issue. The hearing was canceled. Both parties filed a motion for summary final order.
Danny Hernandez, Esquire Carlton Fields, P.A. Post Office Drawer 190
For Respondent: Michael J. Barry, Esquire
Department of Management Services 4050 Esplanade Way, Suite 160D Tallahassee, Florida 32399-0950
The issue for determination is whether Petitioners should be placed on the State of Florida’s Convicted Vendor List.
By Notice of Intent to Place Person or Affiliate on Convicted Vendor List dated August 3, 2006, the Department of Management Services, hereinafter DMS, notified Inter-Tel Technologies, Inc., hereinafter Technologies, of its intent to place Technologies on the convicted vendor list pursuant to Section 287.133(3), Florida Statutes. Among other things, DMS indicated that good cause exists for the action taken.
Inter-Tel, Inc. and Technologies,1 hereinafter Inter-Tel, disputed DMS’ determination and requested a hearing. On September 22, 2006, this matter was referred to the Division of Administrative Hearings.
October 3, 2006. During the telephone conference, the parties waived the 30-day hearing requirement and agreed on a date certain for the hearing. An order was issued on October 4, 2006, waiving the 30-day hearing requirement. A final hearing was scheduled for December 11, 2006. On November 28, 2006, the parties filed a Joint Stipulation, together with exhibits, in which, among other things, the parties stipulated to all material facts in issue. Subsequently, on December 4, 2006,
Inter-Tel filed a Motion for Summary Final Order, which included legal argument. By Order dated December 5, 2006, the final hearing was canceled. On December 5, 2006, DMS filed a Motion for Summary Final Order, including a memorandum of law. In response, on December 12, 2006, Inter-Tel filed a Memorandum in Opposition to DMS’ Motion for Summary Final Order. The parties’ Joint Stipulation and exhibits attached thereto are accepted and incorporated herein. Further, the parties’ Joint Stipulation and exhibits attached thereto, motions and responses were considered in the preparation of this Final Order.
On January 5, 2005, in the United States District Court for the Northern District Court of California, Technologies entered a plea of guilty to the commission of two crimes: an antitrust violation, involving the submission of fraudulent and non-competitive bids, and a mail fraud violation.
Technologies’ conviction arose out of its participation in the E-Rate Program — a federal program designed to provide funding to public schools and public libraries for telecommunication services, including local and long-distance telephone service, internet access, and internal connections. The E-Rate Program is operated under the offices of the Federal Communications Commission, hereinafter FCC, and is administered
by the Universal Services Administrative Company, hereinafter USAC.
On January 28, 2005, by Notice of Public Entity Crime, Inter-Tel provided notice of this conviction to DMS.
On March 9, 2005, Inter-Tel provided DMS a supplement to its (Inter-Tel’s) notice of January 28, 2005.
On August 29, 2006, by Notice of Intent to Place Person or Affiliate on Convicted Vendor List, DMS issued a notice of intent to place Technologies on the convicted vendor list.
Technologies received DMS’ notice of August 29, 2006, on August 31, 2006.
On September 18, 2006, Inter-Tel timely filed a petition for formal administrative hearing to determine whether it is in the public interest for Technologies to be placed on the State of Florida Convicted Vendor List.
The nature and details of the public entity crime for which Technologies was convicted are fully set forth in the criminal information filed in the U.S. District Court for the Northern District Court of California. As specified in the criminal information, Technologies’ public entity crime implicated specific employees working on specific transactions in Michigan and California only. In addition, the conduct was isolated to one of fifty-nine branch offices of Technologies and one related operating unit.
As part of its plea agreement, Technologies agreed to pay $1,721,000.00 in criminal fines. In addition to these fines, Technologies agreed to pay to the United States
$7,000,000.00 as part of a civil settlement between it an the United States. The $7,000,000.00 was comprised of a cash payment in the amount of $6,740,458.12 and the release of the United States from invoices in the amount of $259,541.88 for work Technologies and other affiliated subsidiaries had performed under the E-Rate Program but had not yet been compensated for.
On January 6, 2005, one day after the plea agreement and civil settlement agreement were accepted by the Court, Technologies made cash payments to the United States in the amounts of $1,721,000.00 and $6,740,458.12. In doing so, Technologies paid all fines, penalties, and damages owed in connection with its conviction. Confirmation of the wire transfers to the United States was provided.
As confirmed by the Department of Justice, hereinafter DOJ, Inter-Tel cooperated with the federal investigation by voluntarily supplying a wide array of information and documents to DOJ and by encouraging current and former employees to cooperate with DOJ’s investigators. DOJ characterized this cooperation by Inter-Tel as enabling it “to expand [its] knowledge base to criminal behavior at school districts not
previously covered in other pleas” and noted that “the nature, speed, and extent of Inter-Tel’s cooperation has been very helpful in developing [its] investigation to date.”
Inter-Tel has fully cooperated with DMS in connection with its investigation under Section 287.133, Florida Statutes. Inter-Tel promptly provided information as requested by DMS and made its attorneys available to DMS to facilitate collection of records and information vital to DMS’ investigation.
The employees who were identified as being responsible for the conduct leading to the public entity crime to which Technologies pled guilty were Jason King, Bill Boehm, Jim O’Hare, Earl Nelson, and Tim Scarafiotti.
Jason King resigned from Technologies on August 14, 2003.
Bill Boehm resigned from Technologies on September 24, 2004.
Jim O’Hare was terminated from Technologies on August 14, 2002.
Earl Nelson retired from Technologies on April 30, 2002.
Tim Scarafiotti resigned from Technologies on October 30, 2002.
No business or employment relationships currently exist between Technologies and Jason King, Bill Boehm, Jim O’Hare, Earl Nelson, or Tim Scarafiotti.
Inter-Tel has implemented an intensive, multi-year program of monitoring, training, and auditing with respect to government procurement contracts, including a comprehensive anti-fraud and antitrust compliance plan.
On February 15, 2005, Inter-Tel formally adopted a compliance program that includes: (1) an Antitrust and Anti- Fraud policy; (2) a government sales policy; (3) and E-Rate code of conduct; and (4) detailed description of the procedures for administering these policies, including employee training, reporting of suspected violations, disciplinary action, internal monitoring, external reporting, and the responsibilities of Inter-Tel’s compliance officer.
In January 2005, Inter-Tel hired a full-time compliance officer, whose job it is to ensure that Inter-Tel conducts its activities involving public entities in accordance with applicable laws and the compliance program. The compliance officer’s responsibilities include at least monthly meetings with key executives in Inter-Tel’s accounting, finance, installations, legal, marketing, and sales departments to ensure compliance. The current compliance officer has over ten years of legal experience specializing in public procurement.
While the settlement agreement with the United States only requires training for employees who deal in public procurement, Inter-Tel’s management has mandated that all employees of Inter-Tel, and its subsidiaries, including Technologies, receive extensive training on the E-Rate program, antitrust, fraud, government procurement ,and ethics. To accomplish this, Inter-Tel developed internal training programs and, in addition, retained a private company that specializes in developing compliance training. To date, all employees of Inter-Tel and its subsidiaries, including Technologies, have received the above-mentioned trainings, and new hires receive the training shortly after beginning employment with Inter-Tel, or any of the affiliated subsidiaries, including Technologies. In 2004, Inter-Tel established an ethics hotline to permit employees and other third parties to report suspected violations of Inter-Tel’s Code of Business Conduct anonymously by telephone and the internet.
In response to the fraudulent conduct, on June 30, 2006, the FCC issued its Notice of Debarment debarring Technologies from the E-Rate Program for one year, effective June 30, 2006 to June 30, 2007. The standard FCC debarment period is three years.
The FCC debarment is limited in scope and does not affect Inter-Tel’s ability to continue contracting with other federal agencies.
During the period of 2002 to 2004, Technologies transacted business with over twenty public entities within the State of Florida.
Technologies is one of three companies that have been approved by DMS’ Division of State Purchasing to provide Key System telecommunication equipment to public entities in Florida.
Since 2000, Inter-Tel has organized yearly company- wide United Way fundraisers, through which Inter-Tel has raised in excess of $100,000.00. After Hurricane Katrina, Inter-Tel conducted a one-month internal company-wide fundraising campaign and raised over $43,000.00 in donations from employees.
Inter-Tel matched funds donated by employees for a total of over
$85,000.00 raised for Hurricane Katrina victims. Following the terrorism events of September 11, 2001, employees raised over
$117,000.00 for the American Red Cross. Inter-Tel matched the employee-donated funds for a total of over $241,000.00 donated by Inter-Tel to the 9/11 relief effort. A table reflecting all the charitable and civic campaigns participate in, or organized by, Inter-Tel since 2000 was provided.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of these proceedings and the parties thereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2006).
This proceeding is governed by Section 287.133, Florida Statutes (2005) and (2006). Section 287.133(3)(e), Florida Statutes (2005) and (2006), provides in pertinent part:
In determining whether it is in the public interest to place a person or affiliate on the convicted vendor list, the administrative law judge shall consider the following factors:
Whether the person or affiliate committed a public entity crime.
The nature and details of the public entity crime.
The degree of culpability of the person or affiliate proposed to be placed on the convicted vendor list.
Prompt or voluntary payment of any damages or penalty as a result of the conviction.
Cooperation with state or federal investigation or prosecution of any public entity crime, provided that a good faith exercise of any constitutional, statutory, or other right during any portion of the investigation or prosecution of any public entity crime shall not be considered a lack of cooperation.
Disassociation from any other persons or affiliates convicted of the public entity crime.
Prior or future self-policing by the person or affiliate to prevent public entity crimes.
Reinstatement or clemency in any jurisdiction in relation to the public entity crime at issue in the proceeding.
Compliance by the person or affiliate with the notification provisions of paragraph (b).
The needs of public entities for additional competition in the procurement of goods and services in their respective markets.
Mitigation based upon any demonstration of good citizenship by the person or affiliate.
In any proceeding under this section, the department shall be required to prove that it is in the public interest for the person to whom it has given notice under this section to be placed on the convicted vendor list. Proof of a conviction of the person or that one is an affiliate of such person shall constitute a prima facie case that it is in the public interest for the person or affiliate to whom the department has given notice to be put on the convicted vendor list. Prompt payment of damages or posting of a bond, cooperation with investigation, and termination of the employment or other relationship with the employee or other natural person responsible for the public entity crime shall create a rebuttable presumption that it is not in the public interest to place a person or affiliate on the convicted vendor list. Status as an affiliate must be proven by clear and convincing evidence. If the
administrative law judge determines that the person was not convicted or is not an affiliate of such person, that person or affiliate shall not be placed on the convicted vendor list.
DMS has the ultimate burden of persuasion that it is in the public interest to place Technologies on the convicted vendor list. § 287.133(3)(e)4., Fla. Stat. While the burden of going forward may shift as it relates to the prima facie case and rebuttable presumption, the ultimate burden of persuasion does not and remains with DMS. § 287.133(3)(e)4., Florida Statutes. See Florida Department of Transportation v. J.W.C.
Company, Inc., 396 So. 2d 778, 787, 788 (Fla. 1st DCA 1981).
No dispute exists that Technologies’ convictions establish a prima facie case that it is in the public interest to place Technologies on the convicted vendor list.
§ 287.133(3)(e)4., Fla. Stat.
No dispute exists that the evidence demonstrates that two of the three requirements for establishing a rebuttal presumption that it is not in the public interest to place Technologies on the convicted vendor list have been satisfied, i.e., “[p]rompt payment of damages or posting of bond” and “cooperation with [the] investigation.” § 287.133(3)(e)4., Fla. Stat.
The parties agree that only two issues remain for determination. The two issues are the following: (1) Whether
the third requirement for a rebuttable presumption has been met and, if so, whether DMS has rebutted the presumption; and (2) whether Inter-Tel has established that it is not in the public interest that Technologies be placed on the convicted vendor list.
The wording for the rebuttable presumption has not changed from the time the Florida Legislature created Section 287.133, Florida Statutes, in 1989; only the location of the wording has changed. In 1989, the wording was located at Section 287.133(3)(e)3.k. and 4., Florida Statutes (1989). In 1990, the wording was removed from Section 287.133 (3)(e)3.k., Florida Statutes.
Regarding the third requirement for a rebuttable presumption, Section 287.133(3)(e)4., Florida Statutes, requires a showing of the “termination of the employment or other relationship with the employee or other natural person responsible for the public entity crime.” Inter-Tel argues that the resignation, termination and retirement of the employees responsible for the public entity crime satisfies the requirement of “termination.” To the contrary, DMS argues that “termination” requires an affirmative action on the part of Inter-Tel, that resignation and retirement are not affirmative action on the part of Inter-Tel, and that, therefore, Inter-Tel has not satisfied the third requirement.
The term “termination” is not, and has not been, defined by Section 287.133, Florida Statutes. It is well settled that legislative intent is the polestar that guides the statutory construction analysis. See Knowles v. Beverly Enterprises-Florida, Inc., 898 So. 2d 1, 5 (Fla. 2004). “Look first to the statute’s plain meaning.” (citation omitted) Id.
Usually, “when the language of the statute is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction; the statute must be given its plain and obvious meaning.” (citation omitted.) Id.
The stated legislative intent of Section 287.133, Florida Statutes, is “the preservation of the public contracting and purchasing process as well as the provision for public entities of open competition among persons of good citizenship.” See Florida House of Representatives, Committee on Governmental Operations, Final Staff Analysis & Economic Impact Statement o CS/HB 647 (CS/SB 458 passed) (June 28, 1989). Further, regarding definitions, the Legislative Analysis states that “[t]his bill provides the definitions of terms essential to the administration of the convicted vendor list and program. This bill defines affiliate, conviction, convicted vendor list, Department, person, public entity, and public entity crime.” Id.
Termination is defined as “the act of terminating or the condition of being terminated.” The American Heritage Dictionary of the English Language (4th ed. 2000). Terminate is defined as “to bring to an end or halt”; “to discontinue the employment of.” Id. Terminate is also defined as “to put an end to; to make to cease; to end.” Black’s Law Dictionary (revised 4th ed. 1968).
Giving the plain meaning to termination is not contrary to the legislative intent of the statutory provision; the legislative intent of the statutory provision is preserved.
Technologies’ employees who were responsible for the public entity crime either resigned or were terminated (as worded by the parties’ stipulation) or retired. Their employment with Technologies was brought to an end, discontinued, put to an end, halted, ceased and was ended. No affirmative action was required on the part of Technologies, except for one employee, Technologies did take affirmative action.
Further, prior decisions by the Division of Administrative Hearings provide guidance. In National Health Laboratories v. Department of Management Services, DOAH Case No. 93-6843CVL (Final Order 1994), in which facts were stipulated to but not agreement as to outcome, the employees, who were convicted of the public entity crime, resigned their positions;
and the Administrative Law Judge, then Hearing Officer, concluded that the parties had stipulated to facts that indicated termination of employment. In Paradies Shops, Inc., and Paradies Midfield Corporation v. Department of Management Services, DOAH Case No. 97-2090CVL (Final Order 1997), in which facts were stipulated to but no agreement as to outcome, the individual, who was convicted of public entity crime, resigned and had no control or involvement with companies; and the Administrative Law Judge concluded that the stipulated facts met the requirements for a rebuttable presumption.
The undersigned is persuaded and concludes that the stipulated facts demonstrate that Inter-Tel has met the requirements for a rebuttable presumption that it is not in the public interest to place it (Inter-Tel) on the convicted vendor list.
The question now is whether the stipulated facts demonstrate that DMS has overcome the rebuttable presumption that it is not in the public interest to place Inter-Tel on the convicted vendor list. Considering the factors in Section 287.133(3)(e)3., Florida Statutes, the stipulated facts demonstrate that all are favorable for Inter-Tel. However, two factors are not as obvious as the others and require further explanation; they are factors “h.” and “j.” As to factor “h.” (“[r]einstatement or clemency in any jurisdiction in relation to
the public entity crime at issue in the proceeding”), Technologies was debarred form the E-Rate program by the FCC for one year, whereas, the standard debarment period by the FCC is three years, which shows leniency by the FCC toward Technologies; and the debarment does not affect Inter-Tel’s ability to continue contracting with other federal agencies. As to factor “j.” (“[t]he needs of public entities for additional competition in the procurement of goods and services in their respective markets”), Technologies is one of only three companies that have been approved by DMS’ Division of State Purchasing to provide Key System telecommunications equipment to public entities in the entire State of Florida; and, during the period of 2002 to 2004, Technologies transacted business with over twenty public entities within the State of Florida.
Therefore, the need for additional competition in the market area in which Technologies engages has been demonstrated.
Hence, the stipulated facts demonstrate that DMS has not overcome the rebuttable presumption that it is not in the public interest to place Inter-Tel on the convicted vendor list.
Further, even assuming that Inter-Tel failed to satisfy the third requirement for a rebuttable presumption that it is not in the public interest to place Inter-Tel on the convicted vendor list, the stipulated facts demonstrate that it is not in the public interest to place Inter-Tel on the
convicted vendor list. If Inter-Tel fails to satisfy the requirements for a rebuttable presumption, it “may prove by a preponderance of the evidence that it would not be in the public interest to put [it] on the convicted vendor list, based upon evidence addressing the factors in [Section 287.133(3)(e)3.].”
§ 287.133(3)(e)3., Fla. Stat. Considering the factors in Section 287.133(3)(e)3., Florida Statutes, except subparagraphs
3.h. and j., which are not applicable, the stipulated facts demonstrate that all are favorable for Inter-Tel. Therefore, the stipulated facts demonstrate that it is not in the public interest to place Inter-Tel on the convicted vendor list.
ORDERED that it is not in the public interest to place Inter-Tel Technologies, Inc. on the convicted vendor list.
DONE AND ORDERED this 2nd day of April, 2007, in Tallahassee, Leon County, Florida.
ERROL H. POWELL
Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April, 2007.
1/ Technologies is the wholly owned subsidiary of Inter-Tel, Inc.
Martha Harrell Chumbler, Esquire Danny Hernandez, Esquire Carlton Fields, P.A.
Michael J. Barry, Esquire Department of Management Services 4050 Esplanade Way, Suite 160D Tallahassee, Florida 32399-0950
John Brenneis, General Counsel Department of Management Services 4050 Esplanade Way
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 the original Notice of Appeal with the agency clerk of the Division of Administrative Hearings and a 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.
