STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MICRO BIO-MEDICS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 92-4331CVL

)

STATE OF FLORIDA, DEPARTMENT )

OF MANAGEMENT SERVICES, )

)

Respondent. )

)

FINAL ORDER CASE HISTORY

On January 9, 1992, Petitioner was convicted of a one count felony charge under Title 18, United States Code, Section 1001, based upon activity committed by the General Manager of Petitioner's Healer Products Division. That conviction was in relation to the commission of a public entity crime as defined Section 287.133(1)(g), Florida Statutes. The conviction occurred in the United States District Court, Eastern District of Pennsylvania.

On September 24, 1990, as contemplated in Section 287.133(3)(a) and (b), Florida Statutes, Petitioner notified Respondent of its conviction. The notification was beyond the 30 day requirement for notification set out in Section 287.133(3)(b), Florida Statutes.

Based upon this conviction Respondent gave notice on June 17, 1990, of its intent to place the Petitioner on the convicted vendor list. This preliminary action was taken upon the belief that good cause existed for that placement.

Authority for the investigation and preliminary determination of good cause is set forth in Section 287.133(3)(e)1, Florida Statutes. Maintenance of the convicted vendor list is described at Section 287.133(3)(d), Florida Statutes.

The notice of intent reminded the Petitioner that it had 21 days from the date of receipt of the notice of intent to place Petitioner on the convicted vendor list within which time the Petitioner could petition for a formal hearing to contest the placement. The 21 day point of entry is described at Section 287.133(3)(e)2, Florida Statutes. The formal hearing contemplated a hearing pursuant to Section 120.57(1), Florida Statutes. That hearing would be for the purpose of deciding whether it would be in the public interest for the Petitioner to be placed on the convicted vendor list.

In response to the opportunity to petition for a hearing the Petitioner timely filed a petition to challenge the determination to place it on the convicted vendor list. See Section 287.133(3)(e)2.a, Florida Statutes. The filing date was July 7, 1992.

As addressed in Section 287.133(3)(e)2.b, Florida Statutes, Respondent notified the Division of Administrative Hearings of the request for the formal

hearing. This notification was by correspondence of July 15, 1992. In accordance with that same section the Director of the Division of Administrative Hearings assigned the present Hearing Officer to preside over the proceeding.

The order of assignment was dated July 21, 1992.

CASE DISCUSSION

Contemporaneous with the submission of the formal hearing request Respondent transmitted a joint stipulation by the parties. That joint stipulation and its exhibits have been considered in preparing the Final Order.

The joint stipulation and the attached exhibits point to a lack of disputed issues of material facts between the parties and their agreement concerning the necessary facts to allow a determination to be made concerning the issue of whether Petitioner should be placed on the convicted vendor list when taking into account the text to the stipulation and the attached exhibits. As a consequence the formal hearing envisioned by Section 287.133(3)(e)2.c, Florida Statutes, will not be conducted.

While informal disposition of the case through Section 120.57(2), Florida Statutes, may not be pursued in that such disposition is prohibited by Section 287.133(3)(e)2, Florida Statutes, the parties may seek informal disposition pursuant to Section 120.57(3), Florida Statutes, based upon the authority set forth in Section 287.133(3)(e)2.f, Florida Statutes. Having reviewed the joint stipulation and exhibits it is concluded that the parties desire the dispute to be resolved pursuant to Section 287.133(3)(e)2.f, Florida Statutes. Under their agreement a final order is sought pursuant to the stipulation in which statements of fact and law are agreed upon. The request shall be honored unless such disposition is precluded by law. Having examined the joint stipulation and its exhibits the terms of the joint stipulation are not precluded by law and they shall form the basis for disposition of the case.

To better understand the reason for accepting the joint stipulation, the text of the joint stipulation, without reference to the text set forth in the attached exhibits is now described. (In reviewing that text the reader should bear in mind that the Respondent, State of Florida, Department of Management Services is the successor agency to the Department of General Services described in the joint stipulation.) The text to the joint stipulation states:

Micro Bio-Medics, Inc. ("MBM") and the Department of General Services ("Department"), by counsel, enter into this Joint Stipulation and stipulate to the following facts:

1. On January 9, 1990, MBM was convicted of a one count felony charge under Title 18, United States Code, Section 1001, based upon activity committed by the General Manager of

   MBM's Healer Products Division (See Exhibit 1). Specifically, pursuant to a plea agreement executed in October, 1989, the company pleaded guilty in the Eastern District of Pennsylvania to making a false statement through the General Manager of its Healer Products Division in a bid submitted to the United States General Services Administration in January of 1985. (See Exhibit 2).

2. On June 17, 1992, the Department issued

   a notice of intent pursuant to Section 287.133(3)(e)1., Florida Statutes. (See Exhibit 3)

3. On July 7, 1992, pursuant to Section 287.133(3)(e)2., Florida Statutes, MBM filed a petition for formal hearing pursuant to Section 120.57(1), Florida Statutes, to determine whether or not it is in the public interest for Micro Bio-Medics, Inc. to be placed on the State of Florida Convicted Vendor List. (See Exhibit 4).

4. Section 287.133(3)(e)3.e., Florida Statutes, establishes "[c]ooperation with a state or federal investigation or prosecution of any public entity crime" as a factor mitigating against placement on the convicted vendor list.

5. MBM fully cooperated with the Department's investigation relating to the public entity crime at issue, and with those investigations conducted by federal agencies. In a letter dated May 24, 1990, the Antitrust Division of the Department of Justice explicitly represented that "[b]y pleading guilty MBM cooperated fully with the government's investigation." (See Exhibit 5).

6. Section 287.133(3)(e)3.d., Florida Statutes, establishes "[p]rompt or voluntary payment of any damages or penalty as a result of the conviction" as a mitigating factor against placement on the convicted vendor list.

7. As part of its plea agreement with the United States, MBM agreed, and was thereafter sentenced to, pay to the Government a fine in the amount of $50,000. On January 9, 1990, the date on which sentencing occurred, MBM received a receipt from the Clerk of the United States District Court for the Eastern District of Pennsylvania, evidencing the payment of the $50,000 fine and $200 special assessment imposed by the Court that day. (See Exhibit 6).

8. As a further part of its plea agreement with the Government, MBM agreed to pay to the United States $25,000 in settlement of any related civil claims. The civil settlement agreement was entered into a January 9, 1990. (See Exhibit 7). By letter dated January 9, 1990, the Antitrust Division acknowledged receipt of $25,000, the full amount due as a result of the civil settlement agreement, (See Exhibit 8).

9. Section 287.133(3)(e)3.c., Florida Statutes, establishes "the degree of culpability of the person or affiliate proposed to be placed on the convicted vendor list" as a mitigating factor against placement

   on the convicted vendor list.

10. The activity which formed the basis for the public entity crime at issue occurred in January, 1985, more then seven years ago.

    The conduct was alleged to have been initiated by the former president of MBM who died in 1987 and carried out by his son-in-law, then the General Manager of a single division of MBM. The conduct underlying the public entity crime was thus committed by a single employee of a single division of MBM. That division accounted for less than 2% of MBM's entire revenues at the time. There is no evidence that any similar conduct occurred in any other division of MBM. The division in which said conduct occurred does not participate in the public purchasing and contracting process in the State of Florida.

11. Section 287.133(3)(e)3.f., Florida Statutes, established "[d]issociation from any other person or affiliate convicted of the public entity crime" as a mitigating factor against placement on the convicted vendor list.

12. MBM demoted the employee who committed the public entity crime at issue and relieved him of all management responsibilities relating to bidding on government contracts. The employee's authority to sign company checks was withdrawn, as was his eligibility to participate in the company's Management Bonus Plan. (See Exhibit 9). Although certain members of the Board of Directors considered dismissal to be the appropriate sanction, after extensive discussion, the Board decided to demote rather than terminate the employee because: (1) he was very young when he committed the offense: (2) there were no other problems with his performance between 1985 and 1989; and (3) his second child was born just weeks before the Board had to make a decision whether or not terminate his employment. The United States General Services Administration ("GSA") originally debarred the employee from contracting for a period of two years, but subsequently reduced the debarment period to one year based on his cooperation with the federal authorities and his expression of remorse. (See Exhibit 10). The employee was demoted to the position of Sales Manager of MBM's Healer Products Commercial Division, and was required to report to the Vice-President of Healer Products, Inc. He has since resigned from

    the company. (See Exhibit 11).

13. Section 287.133(3)(e)3.g., Florida Statutes, establishes "[p]rior or future

    self-policing by the person or affiliate to prevent public entity crimes" as a mitigating factor against placement on the convicted vendor list.

14. MBM has and continues to maintain an active antitrust compliance program. The company's Employee Manual states that MBM holds its employees to "a strict code of ethics and integrity." It also alerts employees to the potential conflict of interest if the employee discusses "competitive bids with a competitor." The Manual is clear that "[c]onflicts of interest may result in disciplinary action, including termination." (See Exhibit 12). To ensure that the conduct which formed the basis of the company's guilty plea would not recur, the company circulated a memorandum to all employees, advising them of the circumstances underlying the guilty plea and reiterating that each employee is required to "handle all company transactions, especially those

    relating to antitrust matters, in a completely ethical and moral manner." Along with this memorandum, the company distributed a copy of the relevant page from the Employee Manual which sets forth MBM's ethical policy. The memorandum also reminded the employees that the company "expects transactions with the government to meet the highest ethical standards" and that any violation of the company's ethical policies can result in "immediate dismissal." (See Exhibit 12).

15. Section 287.133(3)(e)3.h, Florida Statutes, establishes "[r]einstatement or clemency in any jurisdiction in relation to the public entity crime at issue in the proceeding" as a mitigating factor against placement on the convicted vendor list.

16. In May, 1990, MBM received a notice of proposed debarment from the GSA, based on the public entity crime at issue. After considering the information and arguments presented by the company, GSA's debarment and suspension official decided that MBM should not be debarred from bidding on government contracts. The GSA limited debarment to MBM's Healer Products Division and further limited the duration of the division's debarment period to six months -- substantially less than the three years generally authorized by the applicable regulation. The GSA based its decision to limit the period and scope of debarment on the fact that: (1) other than evidence of the role of the former, since deceased President of MBM, there was no evidence that the wrongdoing went beyond the

    Healer Products Division; (2) debarment of the entire company would have an economic impact on the company; (3) the company took important remedial actions to prevent recurrence of the wrongdoing; (4) MBM cooperated with the Department of Justice and promptly paid its fine and civil settlement;

    (5) the company's present management is genuinely committed to ensuring the MBM follows ethical practices; and (5) the company forthrightly expressed its regret for the circumstances giving rise to the conviction. (See Exhibit 13).

17. Section 287.133(3)(e)3.i., Florida Statutes, establishes compliance with notification provisions as a mitigating factor against placement on the convicted vendor list.

18. MBM notified the Florida Department of General Services of the fact and circumstances involving the public entity crime at issue. (See Exhibit 14).

19. Section 287.133(3)(e)3.j., Florida Statutes, provides that, in determining whether a company should be placed on the convicted vendor list, the presiding officer shall consider "[t]he needs of public entities for additional competition in the procurement of goods and services in their respective markets."

20. MBM, a publicly-owned corporation, is the largest distributor of school and sports medical supplies in the country. It is also a nationwide distributor of emergency medical service products, diagnostic test kits, physicians' supplies, and prescription and over-the-counter pharmaceutical products.

    The MBM Division of the company opened an office in Jacksonville, Florida in January, 1991 in order to supply schools and professional athletic teams in the southeast United States.

21. Section 287.133(3)(e)3.k., Florida Statutes, establishes "any demonstration of good citizenship by the person or affiliate" as a mitigating factor against placement on the convicted vendor list.

22. MBM contributes vital medical supplies to the National Association for the Exchange of Industrial Resources ("NAEIR"), a not-for- profit organization which redistributes the merchandise to charitable organizations to be used for the care of the ill, the needy, and infants. In 1991, MBM donated approximately

    $22,000 of merchandise to NAEIR. (See Exhibit 15).

23. This Joint Stipulation provides a full

and complete factual basis for determining whether MBM should be placed on the convicted vendor list. In light of the facts and the criteria set forth in Section 287.133(3)(e)3.a.-k., Florida Statutes, there are no disputed issues of material fact between the Department and MBM which would require a formal hearing.

CONCLUSIONS OF LAW

1. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Section 287.133, Florida Statutes.

   
   

2. Petitioner was convicted of a public entity crime on January 9, 1990 in the United States District Court, Eastern District of Pennsylvania. See Section 287.133(1)(g), Florida Statutes. Such conviction constitutes a prima facie showing that it is in the public interest for the Petitioner to whom the Respondent has given notice of the existence of that conviction to be placed on the convicted vendor list. The prima facie showing is as contemplated by Section 287.133(3)(e)4, Florida Statutes.

   
   

3. Notwithstanding the prima facie showing that the Petitioner should be placed on the convicted vendor list in the public interest based upon the conviction described, Section 287.133(3)(e)5, Florida Statutes creates the opportunity for the Petitioner to prove by a preponderance of the evidence that it would not be in the public interest to put it on the convicted vendor list. The joint stipulation supports Petitioner in this proof. In essence, the parties agree that the Petitioner has met that proof. The foundation for that proof concerns the agreement by the parties related to the evidence addressing the factors set forth in Section 287.133(3)(e)3, Florida Statutes, which state:

   
   

   1. In determining whether it is in the public interest to place a person or affiliate on

      the convicted vendor list, the hearing officer shall consider the following factors:

      1. Whether the person or affiliate committed a public entity crime.

      2. The nature and details of the public entity crime.

      3. The degree of culpability of the person or affiliate proposed to be place don the convicted vendor list.

      4. Prompt or voluntary payment of any damages or penalty as a result of the conviction.

      5. 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.

      6. Disassociation from any other persons or affiliates convicted of the public entity crime.

      7. Prior or future self-policing by the person or affiliate to prevent public entity crimes.

      8. Reinstatement or clemency in any jurisdiction in relation to the public entity crime at issue in the proceeding.

      9. Compliance by the person or affiliate with the notification provisions of paragraph

         (a) or paragraph (b).

      10. The needs of public entities for additional competition in the procurement of goods and services in their respective markets.

      11. Mitigation based upon any demonstration

          of good citizenship by the person or affiliate.

          
          

   2. The Petitioner has satisfactorily addressed all of those mitigating factors with the exception of the requirement to notify the Respondent within 30 days of its conviction of the public entity crime. That requirement has been met in spirit and to the satisfaction of the Respondent. Therefore it shall not form the basis for rejecting Petitioner's attempt to keep its name from being placed on the convicted vendor list.

      
      

   3. In summary, having considered the joint stipulation and the attached exhibits, it is concluded that it would not be in the public interest to place Petitioner on the convicted vendor list.

DONE and ORDERED this 30th day of July, 1992, in Tallahassee, Florida.

CHARLES C. ADAMS, 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 30th day of July, 1992.

COPIES FURNISHED:

Larry Strong, Acting Secretary Department of Management Services

110 Knight Building 2737 Centerview Drive

Tallahassee, FL 32399-0950

Sharon D. Feldman, Esquire Andrew M. Lawler, P.C.

220 East 42 Street New York, NY 10017

Joan Van Arsdall, Esquire Department of Management Services

309 Knight Building 2737 Centerview Drive

Tallahassee, FL 32399-0950

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: 92-004331CVL

Orders for Case No: 92-004331CVL