vs. ) CASE NO. 78-1607
DWIGHT S. CENAC, )
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a consolidated public hearing in the above styled case with Case No. 78-2242R on 28 February 1979 at Gainesville, Florida.
For Petitioner: James S. Quincy, Esquire
Frederick R. Brock, Esquire 2320 Independent Square
By Administrative Complaint filed 21 August 1978, the Florida State Board of Accountancy, Petitioner or Board, seeks to revoke or suspend the certificate as a public accountant of Dwight S. Cenac, Respondent. As grounds therefor it is alleged that after requesting, and receiving, an exemption and before reestablishing his professional knowledge and competency as required, Respondent engaged in the practice of public accounting and violated various statutes and regulations with respect to soliciting business, offering services on a contingent fee basis, encroaching on other practitioners, and engaging in a business inconsistent with the responsibilities of a public accountant.
This case and 78-2242R were consolidated for hearing and the Order in 78- 2242R was entered this date. That Order is not dispositive of this case. At the hearing 2 witnesses were called by Petitioner, 2 witnesses were called by Respondent and 15 exhibits were admitted into evidence. Objections to the admissibility of Exhibits 12, 14 and 18 were sustained.
Proposed Findings of Fact not included below were not supported by competent substantial evidence or were deemed unnecessary or immaterial to the issues involved.
Dwight S. Cenac, Respondent, holds certificate No. 3639 as a Certified Public Accountant in the State of Florida.
On 2 September 1977 he requested an exemption from the continuing education program required of public accountants to retain their certificate (Exhibit 2). Therein he stated he was not practicing public accounting, the exemption was granted and Respondent's registration card has been endorsed with a statement that Respondent's certificate to practice public accounting in Florida is inoperative.
Following his graduation from college in 1970 Respondent worked for the accounting firm of Ernst and Ernst for two years and attained his certificate in 1973. He was employed with Blue Cross of Florida from 1973 until 1977 when he was employed by a health care provider in Puerto Rico to help set up their procedures to improve Medicare and Medicaid payments for services they provided.
His understanding of the Medicare regulations and procedures acquired while working at Blue Cross, coupled with the conditions he found in Puerto Rico, led Respondent to believe that many health care providers had need for special consulting in conjunction with their financial record keeping.
Health Care Management Consulting, Inc. (HCMC) was formed in 1977 with Respondent as the sole shareholder. In order to acquaint providers with the services he proposed, Respondent prepared a proposal (Exhibit 1) which was sent to health care providers. As a certified public accountant he could not do this without violating the laws and regulations proscribing solicitation by Florida practitioners. In order to overcome this potential problem, Respondent, on 2 September 1977, (by Exhibit 2), notified Petitioner that he was no longer performing public accounting.
As the owner and principal operator of HCMC, Respondent does not hold himself out as a CPA, such information is not included in his letterhead or business cards, office or telephone directory or in any public place. His certificates as a Certified Public Accountant are hanging on the wall of his office, but none of his clients ever visit his office.
In addition to Respondent, HCMC employs two other consultants who previously worked for Blue Cross, as well as a secretary. Neither of the other two consultants is a certified public accountant, but both perform services for clients similar to those services performed by Respondent. They, as well as Respondent, obtained the special expertise they offer to health care providers while working in the intermediary field between the government and the provider.
HCMC provides specialized services not provided by public accountants such as setting up books and records for health care providers, preparing cost reports, providing assistance in setting rates and general familiarity with Medicare rules and regulations. Many of the services provided by HCMC, inasmuch as they involve financial records, are the same type services provided by Florida practitioners.
Respondent, by submitting the HCMC Proposal to hospitals, nursing homes and other health care providers is both advertising and soliciting business. HCMC has submitted copies of its Proposal (Exhibit 1) to over 300 hospitals in Florida, and has obtained business previously performed by Florida practitioners.
In the Proposal (Exhibit 1) HCMC offers services on a contingent fee basis. These services offered include reimbursement and recoupment of Medicare funds, and the fee paid HCMC is a percentage of the additional funds obtained as a result of the services provided by HCMC. Many of HCMC's services involve increasing reimbursement to the health care provider from Medicare and Medicaid sources.
No audits unrelated to Medicare or Medicaid are performed, and financial statements prepared by HCMC do not refer to generally accepted accounting principles and generally accepted auditing standards, nor do they purport to express or disclaim an opinion as to the fairness of the presentation.
The work performed by Respondent as an employee of HCMC would not constitute the practice of public accounting if performed by a non-certified person. The other employees of HCMC providing consulting services to health care providers similar to that provided by Respondent, are not in violation of Chapter 473, Florida Statutes.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.
The sole issue in this case is whether in his employment by HCMC Respondent was providing public accounting services or rendering services of a type performed by independent public accountants.
Public accounting is, by Section 473.011, Florida Statutes, defined and construed to mean:
All services offered to or performed for the public by a Florida practitioner or an
out-of-state practitioner involving the use of accounting skills, specifically including, but not limited to, management services, and
All services offered to or performed for the public by any other person, acting as an individual, as a partner or employee of a partnership, as a stockholder, officer or employee of a professional corporation, or
as an officer or employee of any other corpora- tion, involving the use of accounting skills, except as follows:
The keeping of books of account and related accounting records, including payroll records, and preparing trial balances;
The preparation of financial state- ments and submission thereof to others, if such statements are issued without certificate of expression or disclaimer of opinion as to
the fairness of the representation shown there- in and do not purport to result from an audit or examination;
The preparation of tax returns to be filed with any federal, state, county, or municipal office or agency, if the preparation of such returns by persons other than certified public accountants or public accountants is not prohibited by law or by regulation of such office or agency; and
The rendition of other management services.
In interpreting any statute the primary guide is to ascertain the intent of the legislature. Tyson v. Lanier, 156 So.2d 833 (Fla. 1963). Here that intent has been affected by judicial decisions.
Prior to the decisions in Florida Accountants Association v. Dandelake, 98 So.2d 323 (Fla. 1957) and Mercer v. Hemmings, 194 So.2d 579 (Fla. 1967), Chapter 473, Florida Statutes, provided that any person was deemed engaged in public accounting, either individually or as a member of a firm or officer or employee of a corporation, who performed services for compensation requiring accounting skills.
In Dandelake, the Board of Accountancy brought an action to enjoin the Florida Accountants Association from holding themselves out as accountants when they were not certified by the Board. At the time, Section 473.25, Florida Statutes, authorized only those persons holding certificates of authority from the State Board as "certified public accountants" or "public accountants" to engage in the practice of public accounting in this state.
After finding
There is a valid field of operation for a non- certified accountant who is not sufficiently expert in all phases of accountancy to qualify as a certified public accountant but who is entirely capable of dealing with routine accounting matters, which, as noted, is all that most small business need or desire,
the court stated at page 327:
And so long as the businessman is under no misapprehension as to the type of services for which he has contracted--that of a non-certified accountant, rather than a CPA--it would seem to serve no useful purpose to hold that such work must be performed in an "employer's" office by one who must style himself a "part-time book- keeper for one or more employers."
After pointing out the right of all citizens to contract for personal employment and superimposing those rights upon the needs of small business, the court then weighed those two factors against the right of the state, in the exercise of its police power, to regulate the practice of accountancy, and stated that if the statute were construed so as to deprive persons not certified
by the Board from doing many accounting tasks it would be unconstitutional. The court quoted with approval from State ex rel Short v. Riedell (1924) 109 Okla 35, 233 P. 684, 691 where that court said:
The effect of the act is that in a growing, expanding, and lucrative field of usefulness of accountants, power is given a board in which accountants have control, to restrict their number, and tends toward a monopoly.
It deprives those desiring an audit the right of contract in matters purely of private con- cern, and deprives accountants not certified of the enjoyment of the gains of their own industry guaranteed to them by the Bill of Rights, in that it denies to them the right to follow the occupation for which they have qualified themselves by the expenditure of time and toil.
In holding that accountants could advertise as such and not just as bookkeepers the court stated:
So long as the defendants do not use the statutory title of "certified public accountant" or "public accountant" or any other designation that might mislead the public into believing that they hold a certificate from the State Board--for example, "licensed accountant," "registered accountant," "certified accountant," "enrolled accountant" might create such a false impression--we think they have a right to work
at their chosen profession and to call themselves "accountants" rather than "bookkeepers."
Mercer v. Demings, supra, involved the accounting firm of Price Waterhouse which had done extensive work in Florida with its interstate customers by obtaining for its out of state practitioners temporary certificates issued by the Board. When the business grew to the point Price Waterhouse found it expedient to open permanent offices in Florida, the Board refused to issue temporary certificates to out-of-state practitioners employed by Price Waterhouse or to waive the two-year residence requirement for sitting for the Florida CPA exam.
Section 473.16 Florida Statutes (1955) provided in part:
It is unlawful for any person holding a certi- ficate as a certified public accountant or a certificate of authority as a public accoun- tant to act as a representative, agent or manager, in this state, in connection with
the practice of public accounting, of any per- son not authorized under the provisions of this Chapter to practice public accounting in this state, or of any firm or association of persons, unless each member of such firm or
association of persons shall be authorized to practice public accounting in this state under the provisions of this Chapter . . . .
In construing that provision the court held:
However, this statute was certainly not in- tended to prevent a Florida certified public accountant from making audits within this state under the employment of and for the use of accounting firms in other states in making master audits of clients engaged in interstate commerce.
After holding that the out-of-state practitioners had no right to a temporary certificate and that the reciprocity provisions of the statute were constitutional, the court further held that the two-year residence requirement to qualify to sit for the Florida CPA examination was unconstitutional. In so holding the court pointed out, at page 583:
The regulation of the profession of accounting is an exercise of the police power, for the benefit and protection of the public and is not intended as economic protection for the pro- fession from prospective competitors.
The present Chapter 473 Florida Statutes (1967) was enacted after the Supreme Court decisions in the two cases cited above. Section 473.16 Florida Statutes (1955) was replaced with Section 473.241 Florida Statutes (1967) which states in pertinent part:
(1) A Florida practitioner may practice under the same name as an out-of-state practitioner if the Florida practitioner maintains an office on a full-time basis and acts as agent for the out-of-state practitioner.
The instant case differs from Dandelake and Mercer in that here it is a Florida practitioner at odds with the Board. Were he not certified, the acts of Respondent were acknowledged by Petitioner's witnesses to be outside the jurisdiction of the board and the services provided would not be deemed engaging in public accounting.
Respondent applied for exemption from the program of continuing education established by Section 473.111 Florida Statutes. Subsection 9(a) thereof provides:
Individuals who hold certificates as certi- fied public accountants or public accountants issued by the board, but who do not practice public accounting in Florida because of ill- ness, military service, retirement, nonresi- dence, or nonpublic practice, shall be exemp- ted from those provisions of this section requiring the completion of programs of con- tinuing professional education and examina- tions, conditioned upon their full compliance
with all rules of the board respecting such persons . . . .
This statutory provision is implemented by Rule 21A-15.06 Florida Administrative Code which provides in pertinent part:
Each certified-public accountant and public accountant who is not a Florida prac- titioner, i.e., not engaged in the practice of public accounting in Florida, whether because of illness, military service, retirement, non- residence or nonpublic practice, shall be exempt from this chapter provided such cer- tified public accountant or public accountant requests exemption on forms prescribed by the Board and such request is granted by the Board. Otherwise, a certified public accountant or public accountant who is not a Florida prac- titioner shall be deemed to be a Florida practitioner for the purpose of this chapter.
A resident certified public accountant or public accountant shall be deemed to be a Florida practitioner if he engages in the practice of public accounting in Florida to any extent or in any manner whatsoever. A nonresident Florida certified public account- ant or public accountant shall also be deemed to be a Florida practitioner if he engages in the practice of public accounting in Florida to any extent or in any manner whatsoever.
This rule merely postulates the obvious, viz. that when a certified public accountant engages to any extent in the practice of public accounting in Florida he will be deemed subject to the continuing education program.
A careful perusal of Section 473.011(5) Florida Statutes (1977) above quoted would indicate that a different definition of what constitutes "public accounting" is applied to services provided by a practitioner than is applied to those services provided by "any other person" although no reason for such a difference is readily apparent. Ruling on the constitutionality of this provision of the statute is beyond the jurisdiction of this tribunal.
It is obvious that the Board, when Declaratory Statement 75-01 was published, did not consider that a different definition of public accounting applied to Florida practitioners when they did not hold themselves out as practitioners. There two Florida practitioners were employed exclusively by a corporation in which they were shareholders with three others who were not practitioners. The corporation engaged in activities closely akin to those normally performed by CPA's engaged in public practice except the corporation also sold insurance. The practitioners in no manner held themselves or the corporation out as certified public accountants. The accounting function also involved pension and profit sharing plans tied to insurance sales with the major emphasis on the sale of insurance. In holding that this did not constitute the practice of public accounting the Board stated that because the practitioners did not hold themselves out as CPA's and thereby more qualified to render these services than another person they were not in violation of Chapter 473.
However, in Declaratory Statement 76-02, where a partnership formed to perform accounting, bookkeeping and related tax work by Florida practitioners and non-CPA partners, the Board held that although the partnership did not hold itself out as certified public accountants, nevertheless the CPA's were Florida practitioners and because the services performed were accounting services, pursuant to Section 473.011(5)(a) Florida Statutes, they were engaged in public accounting and subject to all of the provisions of Chapter 473.
As was pointed out in the NOTE in the Florida Accounting News in which these two declaratory statements were published, one major distinction between the partnership and the corporation was that the former performed only accounting type services while the latter had as one of its primary functions the sale of insurance.
The facts presented in the instant case are more closely aligned to those involved in D.S. 75-01 than D.S. 76-02. The principal service Respondent here is providing is expertise in the intermediary field where benefits are collected from the government and paid to the provider.
This does not, however, resolve the issue. If the purpose of the exercise of those police powers promulgated in Chapter 473 is to protect the public, it is difficult to see how the acts of Respondent, through HCMC, whose services are provided solely to health care providers, in any manner harms the public. On the other hand, if the statute clearly provides that public accounting includes all services offered or performed by a practitioner involving the use of accounting skills, ergo, Respondent has been engaged in the practice of public accounting while employed by HCMC.
Agency interpretation of a statute is entitled to great weight, and particularly so if the interpretation is of long standing. Austin v. Austin,
350 So.2d 102 (Fla. 1st DCA 1977). In D.S. 75-01 the Board interpreted Section 473.011(5)(a) Florida Statutes to mean that accounting services performed by a Florida practitioner who holds himself out as a CPA constitute public accounting; but a practitioner who performs services for an entity engaged in accounting and non-accounting work, and which in no manner holds itself out as performing those services requiring the skills of a CPA, is not engaged in public accounting. This position was clarified in D.S. 76-02 wherein the Board held that CPA's were engaged in public accounting when employed by a partnership which offered only those services normally provided by public accountants even though they did not hold themselves out to the public as certified public accountants or gave opinions or disclaimers on financial reports. This is the agency interpretation of the statute.
Further, the regulation of the profession of public accounting is an exercise of the police power of the state to protect the public. A statute enacted under such power which does not provide public protection may have constitutional infirmities. The courts have a duty, if reasonably possible and consistent with constitutional rights, to resolve all doubts as to the validity of a statute in favor of its constitutionality and to construe it so as not to conflict with constitutional provisions. State v. Gale Distributors, Inc., 349 So.2d 150 (Fla. 1977).
Accordingly, a holding in consonance with the rationale of the Court's decision in Dandelake, supra, that the public was harmed only if the practitioner holds himself out as certified, and, as was held by the Board in
D.S. 75-01, avoids any potentially constitutional conflict in interpreting the provisions of Section 473.011(5) Florida Statutes.
Additionally to be noted is the requirement that regulatory statutes be applied uniformly to those whom they purport to regulate. Interpreting the statute so as to exempt the practitioners involved in D.S. 75-01 requires a similar interpretation for other practitioners similarly situated. Changes in this interpretation would appear best accomplished by rule. Such a proposed rule could be tested by administrative and judicial proceedings before it became effective. If upheld as a valid exercise of delegated authority and published, all practitioners would be on notice that their registration was subject to disciplinary action if they violated the rule, and would not, as here, be faced with license revocation for performing similar services as those previously sanctioned by the Board.
From the foregoing it is concluded that Respondent, in the scope of his employment of HCMC, is providing a service not provided by public accountants and is not engaged in the practice of public accounting as defined in Section 473.011(5)(a) Florida Statutes. It is therefore
RECOMMENDED that the petition be dismissed. Entered this 30th day of March, 1979.
K. N. AYERS Hearing Officer
James S. Quincy, Esquire and
Frederick R. Brock, Esquire 2320 Independent Square
