STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ANN & JAN RETIREMENT VILLA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 89-6186F

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a final hearing in the above-styled matter was held on February 2, 1990, by telephone conference call before Joyous D. Parrish, a designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:

APPEARANCES

For Petitioner: Joel M. Weissman

Weissman & Chernay, P.A.

250 Australian Avenue South, Suite 1000 West Palm Beach, Florida 33401

For Respondent: Janice Gammill

Department of Health and Rehabilitative Services

111 Georgia Avenue

West Palm Beach, Florida 33401 STATEMENT OF THE ISSUES

The central issues in this case are whether Petitioner, Ann & Jan Retirement Villa, Inc., is entitled to an award of attorneys fees as a prevailing party; and, if so, in what amount.

PRELIMINARY STATEMENT

This case began on November 13, 1989, when the Petitioner, Ann & Jan Retirement Villa, Inc., filed a motion to tax costs and attorney fees with the Division of Administrative Hearings. The motion alleged Petitioner is entitled to fees and costs pursuant to Section 57.111, Florida Statutes.

Petitioner's claim for entitlement stems from another administrative action: DOAH case no. 88-6257, an administrative challenge of a Department of Health and Rehabilitative Services (Department) preliminary decision to deny the renewal of a license to operate an adult congregate living facility. That case resulted in a settlement which obviated the need for formal hearing of the

cause. Jurisdiction in case no. 88-6257 was relinquished to the Department on September 14, 1989.

Pursuant to Rule 221-6.020, Florida Administrative Code, and as announced at the outset of the hearing in this cause, official recognition has been taken of the record in DOAH case no. 88-6257.

At the hearing, the following witnesses testified on behalf of Petitioner: Gary William Roberts, an attorney licensed to practice law in the State of Florida; Joel Weissman, attorney of record for the Petitioner; and Sophie DeRuiter, administrator and owner of Ann & Jan Retirement Villa. Petitioner's exhibits numbered 1 and 2 were admitted into evidence.

After the hearing, the transcript was filed with the Division of Administrative Hearings on February 15, 1990. Neither party filed proposed orders which included proposed findings of fact. The parties' arguments relating to the issues of the case have been considered prior to the drafting of this order.

FINDINGS OF FACT

Based upon the testimony of the witnesses, the documentary evidence received at the hearing, and the record in DOAH case no. 88-6257, the following findings of fact are made:

1. On October 24, 1988, the Department notified Sophie DeRuiter and Ann & Jan Retirement Villa that the license to operate an adult congregate living facility expired on October 23, 1988, and that the application for renewal was denied. The specific reasons listed as the grounds for such denial were a determination of confirmed medical neglect of residents and the inappropriate retention of residents.

   
   

2. Thereafter, Petitioner timely sought an administrative review of the denial by filing a petition for administrative hearing with the Department which was subsequently forwarded to the Division of Administrative Hearings for formal proceedings on December 16, 1988. That matter was assigned DOAH case no. 88- 6257.

   
   

3. Hearing of case no. 88-6257 was originally scheduled for March 17, 1989, by notice of hearing dated January 18, 1989.

   
   

4. Thereafter, Petitioner scheduled a number of depositions and requested a continuance in the case to accommodate Sophie DeRuiter. That motion was unopposed by the Department and was granted by order entered February 27, 1989. That order also rescheduled the hearing for April 14, 1989, and required the parties to file a prehearing statement no later than March 24, 1989.

   
   

5. Neither party timely filed a prehearing statement. In fact, the parties were unable to agree on a statement due to their disagreement as to the issues of the case. The unilateral statements filed by the parties established that Petitioner sought review of all grounds for the denial of the license renewal. On the other hand, the Department took the position that since Sophie DeRuiter was listed on the Florida Abuse Registry for confirmed medical neglect of residents, that such listing precluded renewal of the license. The Department alleged that Petitioner had not timely challenged the abuse report, and that such record could not be challenged in the instant case. The

   Department's letter denying amendment or expungement of the medical neglect had been issued December 7, 1988.

   
   

6. Given the confusion of the parties and their failure to file prehearing statements as required, the hearing scheduled for April 14, 1989, was cancelled. Subsequently, the Department moved to limit the issue to whether there was a confirmed record of an abuse report (and thereby presume the underlying report correct). Such motion was denied on June 1, 1989.

   
   

7. On June 9, 1989, the hearing of this matter was convened. At that time, the Department moved to continue the case due to illness of counsel and her inability to review an amended witness list filed by Petitioner. The motion was granted after it was apparent counsel for the Department was unprepared to go forward on all issues of the case (she represented she had just received the order requiring her to go forward on all issues on June 8, 1989).

   
   

8. The case was rescheduled for August 10, 1989. Subsequently, the matter was continued again at Petitioner's request. The case was finally scheduled for hearing for September 8, 1989. The Petitioner filed a motion for summary judgment on August 14, 1989.

   
   

9. On September 7, 1989, the Department filed a notice of dismissal which was construed as an assent, in whole or in part, to the relief requested by the Petitioner. Consequently, the hearing was cancelled and jurisdiction was relinquished to the Department for such further action as would be appropriate. It was presumed that the abuse record would be expunged which would result in the reinstatement of the license. The Petitioner in the instant case has not, however, established the final resolution of DOAH case no. 88-6257. Petitioner did not comply with Rule 22I-6.035, Florida Administrative Code by attaching the documents on which the claim that the small business party prevailed was predicated nor was proof of such document offered at the hearing of this matter.

   
   

10. Sophie DeRuiter is the administrator and owner of Ann & Jan Retirement Villa which is located at 3486 Rostan Lane, Lake Worth, Florida. According to the style of the initial pleading filed by Petitioner in the instant case, Ann & Jan Retirement Villa has been incorporated. The proof offered at hearing suggested that Sophie DeRuiter is the sole proprietor of a business known as "Ann & Jan Retirement Villa."

    
    

11. In August, 1988, Ms. DeRuiter employed approximately four full-time employees. In the three years she has owned and operated the facility, Ms. DeRuiter has never employed more than twenty-five full-time employees.

    
    

12. The net worth of Ann & Jan Retirement Villa is less than two million dollars.

    
    

13. Ms. DeRuiter's personal net worth is less than two million dollars. The combined worth of Ann & Jan Retirement Villa and Ms. DeRuiter is less than two million dollars.

    
    

14. Ms. DeRuiter employed the law firm of Weissman and Chernay, P.A. to represent her in connection with the allegations in DOAH case no. 88-6257.

    
    

15. In connection with that case, Ms. DeRuiter incurred legal fees in the amount of $8587.50 together with costs in the amount of $897.59. The reasonableness of those amounts was not disputed.

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.

17. Section 57.111, Florida Statutes, provides, in pertinent part: (3)(c) A small business party is a

    "prevailing small business party" when:

    1. A final judgment or order has been entered in favor of the small business party and such judgment or order has not been reversed on appeal or the time for seeking judicial review of the judgment or order has expired;

    2. A settlement has been obtained by

       the small business party which is favorable to the small business party on the majority of issues which such party raised during the course of the proceeding; or

    3. The state agency has sought a voluntary dismissal of its complaint.

       1. The term "small business party" means:

          1.a. A sole proprietor of an unincorporated business, including a professional practice, whose principal office is in this state, who is domiciled in this state, and whose business or professional practice has, at the time the action is initiated by a state agency, not more than 25 full-time employees or a net worth of not more than $2 million, including both personal and business investments; or

          b. A partnership or corporation, including a professional practice, which has its principal office in this state, and has at the time the action is initiated by a state agency not more than 25 full-time employees

          or a net worth of not more than $2 million;

          * * *

       2. A proceeding is "substantially justified" if it had a reasonable basis in law and fact at the time it was initiated by a state agency.

       (4)(a) Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or

       special circumstances exist which would make the award unjust.

       
       

18. The case underlying the request for attorney's fees involved two distinct actions. First, the denial of the license renewal and second, the

    allegations of medical neglect. While the record of the medical neglect was specified as grounds for nonrenewal, it only involved the individual, Sophie DeRuiter, not the entity, Ann & Jan Retirement Villa. Consequently, any amendment or expungement related to the allegations of medical neglect would have only related to the individual. Whether the other grounds for denial were justified (the inappropriate retention of residents) is not resolved by this record.

    
    

19. In the case at issue, the Petitioner has shown that, ultimately, the Department withdrew its objection to the renewal of the license. The Petitioner has not established that, at the time the matter was initiated, that the Department's position was not substantially justified. The existence of an abuse report, medical neglect, is sufficient to warrant nonrenewal of the license. Later, when the Department became aware of the factual matters related to that report (which presumably required expungement), the prosecution of the case became less justified.

    
    

20. As it stands, at the time the matter was initiated, there were sufficient grounds to go forward and the agency's actions were substantially justified.

    
    

21. The Petitioner has failed to prove the individual, Sophie DeRuiter, is a small business as defined by Section 57.111, Florida Statutes. Consequently, Sophie DeRuiter's success at having a record amended or expunged would not be the basis for recovery of attorney's fees and costs pursuant to Section 57.111, Florida Statutes.

    
    

22. Further, relating to the business entity known as Ann & Jan Retirement Villa, since the actions of the Department were substantially justified at the time of the initiation of the case, the Petitioner may not prevail. At the time of the initiation of the case, Section 400.414(2)(e), Florida Statutes, prohibited renewal in cases of a confirmed report of abuse, neglect, or exploitation. The Department mistakenly presumed that Petitioner's administrative request regarding the license denial was inadequate to challenge the abuse/neglect report related to the individual. That matter was resolved by order entered June 1, 1989. If Section 57.111, Florida Statutes, allowed a proration of fees and costs (which it does not), and if the business entity owned the license under question (which this record does not establish), Petitioner could recover fees and costs incurred from June 1, 1989; however, the statute under which Petitioner seeks recovery limits the time frame to when the matter is initiated. Accordingly, Petitioner's claim must fail.

ORDERED

Based on the foregoing, it is ordered that the Motion to Tax Costs and Attorney Fees is hereby DENIED.

ORDERED this 20th day of March, 1990, in Tallahassee, Leon County, Florida.

JOYOUS D. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of March 1990.

COPIES FURNISHED:

Joel M. Weissman Weissman & Chernay, P.A. Suite 1000

250 Australian Avenue South West Palm Beach, Florida 33401

Janice Gammill Dept. of Health and

Rehabilitative Services

111 Georgia Avenue

West Palm Beach, Florida 33401

Sam Power, Agency Clerk Dept. of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, Florida 32399-0700

John Miller, General Counsel Dept. of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, Florida 32399-0700

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.

================================================================= DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT

JANUARY TERM 1991

ANN & JAN RETIREMENT VILLA, INC.,

Appellant,

v. CASE NO. 90-1051

DOAH CASE NO. 89-6186F

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Appellee.

/ Opinion filed May 15, 1991

Appeal from the State of Florida Division of Administrative Hearings.

Joel Weissman and Claudia E. Hughes of Weissman & Chernay, P.A., West Palm Beach, for appellant.

Janice M. Gammill, Assistant District IX Legal Counsel, Department of Health and Rehabilitative Services, West Palm Beach, for appellee.

DELL, J.

Ann and Jan Retirement Villa, Inc., appeals from an order of the Department of Administrative Hearings which denied its claim for attorney's fees and costs pursuant to section 57.111, Florida Statutes (1990), also known as the Florida Equal Access to Justice Act. Appellant requested attorney's fees and costs for two distinct actions, a denial of a license renewal and allegations of medical neglect. We reverse.

Sophie DeRuiter owns all of the stock of Ann and Jan Retirement Villa, Inc. Appellee Department of Health and Reha-bilitative Services ("HRS"), through its Office of Licensure and Certification ("OLC"), had issued a license to Sophie DeRuiter for the operation of the retirement villa, her solely owned adult congregate living facility. When Ms. DeRuiter applied for the annual renewal of that license, OLC, in compliance with Rule 10A-5.014, Florida Administrative Code, conducted a search through the Florida Protective services System Control Abuse Registry. The purpose of the registry is to apprise OLC of any existing abuse or neglect reports filed against license applicants during the previous year.

In Ms. DeRuiter's case, OLC's search disclosed the presence of a report filed during the previous year by the Aging and Adult Services Division of HRS. The report's presence indicated that presumably an investigation conducted by Aging and Adult Services led to its determination that Sophie DeRuiter had been a perpetrator of medical neglect. OLC then notified Ms. DeRuiter that the license could not be issued due to the abuse charges and informed her that she had a right to appeal that decision under section 120.57, Florida Statutes (1989).

Ann and Jan Retirement Villa, Inc., appealed the denial of Ms. DeRuiter's license renewal to the Division of Administrative Hearings ("DOAH"). HRS maintained below that due to the abuse report, Rule 10A-5.014(5)(a)(7)(c), prohibited OLC from reissuing Sophie DeRuiter a license to run her adult congregate living facility. HRS also maintained that since the Florida Abuse Registry listed Sophie DeRuiter individually, it could not renew the license for the corporation until Sophie DeRuiter could prove herself not guilty of the abuse charge. On December 7, 1988, HRS issued a letter denying amendment or expungement of the medical neglect report.

On August 14, 1989, in the DOAH proceeding, Ann and Jan Retirement Villa filed a motion for summary judgment on the issues of HRS's revocation of Sophie DeRuiter's license and the denial of the license renewal. Although the hearing on the motion was scheduled for September 8, 1989, on September 7, HRS filed a notice of dismissal in February, 1990, DOAH conducted a hearing solely on the issue of appellant's entitlement under section 57.111, Florida Statutes (1990) to attorney's fees and costs incurred in the appeal of HRS's denial of the license. Appellant argued that the voluntary dismissal constituted an assent to the relief requested by Ann and Jan Retirement Villa.

The hearing officer denied appellant's attorney's fees and costs on three grounds. First, the hearing officer found that Ann and Jan Retirement Villa did not comply with Rule 22I-6.035, Florida Administrative Code, because it failed to attach "the documents on which the claim that the small business party prevailed was predicated." The record indicates, however, that at the commencement of the proceedings, the hearing officer took judicial notice of the entire court file which included HRS's Notice of Voluntary Dismissal of the charges against Sophie DeRuiter. Under these facts, we hold that the record shows substantial compliance with Rule 22I-6.035.

Next, the hearing officer found that HRS's denial of Sophie DeRuiter's license renewal (through its OLC agency) was "substantially justified" under section 57.111(4)(a). Section 57.111(3)(e) provides that such action is "substantially justified" where there exists a reasonable basis in law and fact for the agency action at the time the agency initiates the action. We find no such evidence in the record. We do note, however, that OLC accepted without question the report on the abuse registry which resulted from only a cursory investigation by Aging and Adult Services. The record supports appellant's contention that upon conducting a more thorough investigation, HRS voluntarily dismissed the charges.

We cannot ignore the acts of the agency initially responsible for the report's presence in the abuse registry. The record shows that if Aging and Adult Services had conducted a reasonable investigation, the unsubstantiated report against Sophie DeRuiter would not have made its way into the abuse registry. The legislature, to protect small businesses from such action, enacted section 57.111 "to provide alternative, and in some cases, additional means for a small business to recover costs and attorney fees when a state

agency initiates action against it..." City of Naples Airport Authority v. Collier Development Corp., 515 So.2d 1058 (Fla. 2nd DCA 1987). The term "initiated by a state agency" means, in pertinent part, that the state agency, under section 57.111(3)(b)(3), "[w]as required by law or rule to advise a small business party of a clear point of entry after some recognizable event in the investigatory or other free-form proceeding of the agency." Moreover, section 400.414(2)(e), Florida Statutes, (1987), titled "Denial, revocation, or suspension of license; imposition of administrative fine; grounds," provides:

(2) Any of the following actions by a facility or its employee shall be grounds for action by the department against a licensee:

(e) A confirmed report of abuse, neglect, or exploitation, as defined in

s. 415.102, which has been upheld following a chapter 120 hearing or a waiver of such proceedings where the perpetrator is an employee, volunteer, administrator, or owner... and the administrator has not taken action to remove the perpetrator. A perpetrator may seek an exemption from disqualifi- cation through the procedures provided in s. 415.107 (5)(b)....

Here, the report of abuse, as entered in the abuse regis-try, was never substantiated, was not upheld following a chapter 120 hearing and, in fact, was abandoned when appellee dropped its objections to the license renewal.

Accordingly, we hold that HRS failed to prove substantial justification for its actions under section 57.111(3)(e).

Finally, we disagree with the hearing officer's finding that appellant did not qualify as a small business party as defined by section 57.111. The record shows that Sophie DeRuiter and Ann and Jan Retirement Villa are one and the same entity. We note that the hearing officer at one point acknowledged that fact.

Section 57.111(3)(d) states that "[t]he term "small business party" means:

1.a. A sole proprietor of an incorporated business, including a professional prac- tice, whose principal office is in this state, who is domiciled in this state,

and whose business or professional prac- tice has, at the time the action is initiated by a state agency, not more than 25 full-time employees or a net worth of not more than $2 million, in- cluding both personal and business in- vestments; or

b. A partnership or corporation, includ- ing a professional practice, which has its principal office in this state and has at the time the action is initiated by a state agency, not more than 25 full- time employees or a net worth of not more than $2 million;....

(emphasis supplied) The record shows that in August, 1988, Ms. DeRuiter employed approximately four (4) full-time employees and that during the time that she owned and operated Ann and Jan Retirement Villa, she never employed more than 25 full-time employees. The record also shows that the combined net worth of Ms. DeRuiter and the Ann and Jan Retirement Villa was less than two million dollars.

Section 57.111(3)(c) provides:

(c) A small business party is a "pre- vailing small business party" when:

1. ....

2. ....

3. The state agency has bought a volun- tary dismissal of its complaint.

HRS voluntarily dismissed its stated objections to Sophie DeRuiter's license renewal. Further, HRS's wrongful refusal to renew appellant's licence caused appellant to incur attorney's fees and costs in order to defend its right to continue to operate the business. Section 57.111(2) states:

The purpose of this section is to diminish the deterrent effect of seeking review of, or defending against, governmental action by providing in certain situations an award of attorney's fees and costs against the state.

Accordingly, we hold that the Division of Administrative Hearings erred when it denied appellant's claim for attorney's fees and costs as contemplated by section 57.111. We reverse the order on appeal and we remand this cause with instructions to enter an order awarding Ann and Jan Retirement Villa, Inc., reasonable attorney's fees and costs pursuant to section 57.111, Florida Statutes (1990).

ANSTEAD and GUNTHER, JJ., concur.

Docket for Case No: 89-006186F

Orders for Case No: 89-006186F