STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EXECUTIVE RISK CONSULTANTS, INC., ) FLORIDA UNITED BUSINESSES SELF-INSURERS ) FUND, FLORIDA HOMEBUILDERS SELF- ) INSURERS FUND, and FLORIDA UNITED ) BUSINESSES ASSOCIATION, INC., )

)

Petitioners, )

)

vs. ) CASE NO. 94-3224RP

) DEPARTMENT OF LABOR AND EMPLOYMENT ) SECURITY, DIVISION OF SAFETY, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a formal hearing was conducted in this case on October 10, 1994, in Tallahassee, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Thomas W. Stahl, Esquire

Eric D. Prutsman, Esquire Newell & Stahl, P.A.

817 North Gadsen Street Tallahassee, Florida 32303-6313

For Respondent: David C. Hawkins, Senior Attorney

John M. Carlson, Senior Attorney Department of Labor and

Employment Security

2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189

STATEMENT OF THE ISSUE

Whether the Department of Labor and Employment, Division of Safety's, proposed adoption of Rule Chapter 38I-17, Florida Administrative Code, notice of which was published on pages 3569 through 3576 of the May 20, 1994, edition of Florida Administrative Weekly, constitutes an invalid exercise of delegated legislative authority for the reasons asserted by Petitioners?

PRELIMINARY STATEMENT

On June 10, 1994, Petitioners filed a Petition to Determine Invalidity of Proposed Rule with the Division of Administrative Hearings (hereinafter referred to as the "Division") seeking an administrative determination that Rule Chapter

38I-17, Florida Administrative Code, proposed by the Department of Labor and Employment, Division of Safety (hereinafter referred to as the "Department"), is an invalid exercise of delegated legislative authority. By order issued June 14, 1994, the Division Director assigned the case to the undersigned Division Hearing Officer, who, on June 16, 1994, issued a Notice of Hearing scheduling the final hearing in this case for July 7 and 8, 1994.

On June 24, 1994, the parties filed a motion jointly requesting that "the Hearing Officer continue the scheduled hearing for at least 45 days." In their motion, the parties stated the following in support of their request:

As grounds for this Motion, the parties represent that they have begun good faith efforts to narrow and resolve the issues of the controversy. Further, the parties note that the Department is actively engaged in rulemaking and will hold a public hearing on the proposed rule chapter on June 28, 1994 for the purpose of accepting public comment.

By order issued June 29, 1994, the Hearing Officer granted the parties' joint motion for continuance. In his order, the Hearing Officer directed the parties, no later than 45 days from the date of the order, to "advise the Hearing Officer in writing of the status of the case, whether a hearing [wa]s necessary and, if so, the estimated length of the hearing and the dates on which the parties w[ould] be unavailable for hearing."

On August 15 and 16, 1994, respectively, the Department and Petitioners filed the written advisements required by the Hearing Officer's June 29, 1994, order. Both the Department and Petitioners indicated in their advisements that a hearing in this case was still necessary. Accordingly, on August 18, 1994, the Hearing Officer issued an order rescheduling the final hearing in this case to commence on October 10, 1994.

On September 23, 1994, the Department filed a motion requesting that the Hearing Officer dismiss the Petition to Determine Invalidity of Proposed Rule filed by Petitioners in the instant case "because Petitioners lack standing under [S]ection 120.54[, Florida Statutes]" to seek such a determination. On September 30, 1994, Petitioners filed a response in opposition to the motion. A hearing on the motion was held by telephone conference call on October 3, 1994. The Hearing Officer, on October 5, 1994, issued an order concerning the matter in which he stated the following:

To the extent that Respondent's motion requests the entry of a prehearing order of dismissal in the instant case, it is hereby DENIED. The Hearing Officer, however, will give the parties the opportunity to present evidence at the final hearing in this case, and to thereafter present additional argument in their proposed final orders, on the issue of whether the instant petition should be dismissed on the grounds alleged by Respondent in its motion to dismiss, provided the parties comply with the requirements imposed by the Hearing Officer's June 16, 1994, Order Requiring Prehearing Stipulation for doing so.

If the issue is further litigated in accordance with the requirements of the Hearing Officer's June 16, 1994, order, the Hearing Officer will address the issue in his final order.

The parties filed unilateral proposed prehearing stipulations on October 5, 1994. In their proposed prehearing stipulation, Petitioners described the legal issues that remained for the Hearing Officer's resolution as follows:

Petitioners contend that the primary issue of law to be determined by the Hearing Officer is whether proposed Rule 38I-17 constitutes an invalid delegation of legislative authority, based upon:

1. Whether Section 627.0915, Fla. Stat., requires the Division of Safety to affirmatively approve each individual employer's safety program implemented for the purpose of obtaining a safety program premium credit.

2. Whether Section 442.011, Fla. Stat., requires the Division of Safety to affirmatively approve each individual employer's safety program implemented for the purpose of obtaining a safety program premium credit and the proposed Rule contravene these provisions.

3. Whether the proposed Rule fails to establish any criteria by which carriers or their agents can make determination[s] concerning the eligibility of an employer for a workplace safety premium credit.

4. Whether the proposed Rule provides a mechanism or procedure for the approval of an employer's safety program by the Division of Safety as required by Sections 442.011 and 627.0915, Fla. Stat.

5. Whether the proposed Rule fails to inform employers of the certainty of receiving a safety program premium credit if a safety program is implemented,

6. Whether the proposed Rule enlarges, modifies, or contravenes the specific provisions of law implemented.

7. Whether the proposed Rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency. 1/

At the final hearing in this case, which was held on October 10, 1994, Petitioners presented the testimony of Sandy Harley, John Koelemij, Jeffrey Jennings and Karen Philips. The Department presented the testimony of one witness, Richard Maiello, its Acting Director. In addition, the Department offered three exhibits into evidence, all of which were admitted by the Hearing Officer. The only other evidence offered at hearing was a certified copy of pages 3569 through 3576 of the May 20, 1994, edition of the Florida Administrative Weekly, which was offered as a joint exhibit. It too was admitted by the Hearing Officer.

At the close of the evidentiary portion of the hearing on October 10, 1994, the Hearing Officer advised the parties on the record that their post-hearing submittals had to be filed no later than ten days following the Hearing Officer's receipt of the hearing transcript. The hearing transcript was received by the Hearing Officer on November 8, 1994. On November 16, 1994, Petitioners filed a motion requesting an extension of the deadline for the submission of post-hearing submittals. The motion was granted and the deadline was extended to November 22, 1994.

On November 22, 1994, Petitioners and the Department filed proposed final orders. The parties' proposed final orders contain, what are labelled as, "findings of fact." These "findings of fact" have been carefully considered and are specifically addressed in the Appendix to this Final Order.

FINDINGS OF FACT

Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made:

1. Petitioner Executive Risk Consultants, Inc. (hereinafter referred to as "ERC"), is a servicing carrier and third-party administrator for workers' compensation self-insurance funds.

   
   

2. It has over six hundred employees in the State of Florida.

   
   

3. For its services, which include marketing, enrollment, premium billing 2/ and collection, claims handling and investigation, and safety counseling, ERC is typically paid an agreed upon percentage 3/ of the total premiums it bills and collects for the self-insurance funds it services.

   
   

4. The granting of premium credits therefore serves to decrease the amount of compensation ERC receives for its services.

   
   

5. The Florida Homebuilders Self-Insurers Fund (hereinafter referred to as "FHSIF") and the Florida United Businesses Self-Insurers Fund (hereinafter referred to as "FUBSIF") are two of the workers' compensation self-insurance funds for whom ERC provides services.

   
   

6. FHSIF and FUBSIF have approximately 12,300 and 10,000 participating employer members/policyholders. 4/

   
   

7. In 1993, FHSIF's and FUBSIF's premium volumes were approximately 200 million dollars and 39 million dollars, respectively. 5/

   
   

8. The granting of premium credits serves to lower premium volume. Fund members are subject to assessment if premium volume is lowered to such an extent that it is insufficient to pay claims and expenses.

   
   

9. Florida United Businesses Association, Inc. (hereinafter referred to as "FUBA"), is a general business trade association comprised of various types of small to medium-sized Florida businesses.

   
   

10. It has just over 10,000 members, the vast majority of whom are also members/policyholders of FUBSIF. 6/

    
    

11. FUBA's purpose, as stated in its articles of incorporation, is "to represent the interests of Florida businesses, to educate Florida businesses, and to perform all acts provided in the Florida Not-For-Profit Corporation Act." 7/

    
    

12. FUBA monitors all legislation, rules and regulations that affect the Florida business community and advises its members concerning these matters.

    
    

13. Notice of the Department's intention to adopt proposed Rule Chapter 38I-17, Florida Administrative Code, was published in the May 20, 1994, edition of Florida Administrative Weekly.

14. The notice described the "purpose and effect" of proposed Rule Chapter 38I-17, Florida Administrative Code, as follows:

    
    

    The Florida Legislature authorized the granting of "specific identifiable consideration" under a

    rating plan approved by the Department of Insurance, for each employer who implements a safety program approved by the Division of Safety. Ch. 93-415, 94, Laws of Fla. (amending 627.0915, Fla. Stat.) The Division of Safety intends that this rule chapter establish specifications for a safety program that will enable employers to qualify for premium credits authorized by law. The division anticipates that this rule chapter will enable employers to become eligible for reduced workers' compensation insurance

    premiums and to promote occupational safety and health with the implementation of a workplace safety program.

    
    

15. The notice also provided the following "summary" of the proposed rule chapter:

    
    

    This rule chapter establishes the requirements for a workplace safety program that will enable an employer to qualify voluntarily for a workers'

    compensation insurance premium credit in an amount determined by the Department of Insurance. Under this rule chapter, a safety program must contain the following elements: management commitment and involvement, safety committee, safety and health training, first aid procedures, accident investi- gation, recordkeeping procedures, and safety rules, policies, and procedures. The division further delineates a typical safety program, designates help supply services companies as the employer

    for purposes of this rule chapter, identifies dispute resolution procedures, and prescribes an effective date.

    
    

16. Proposed Rule Chapter 38I-17, Florida Administrative Code, is comprised of proposed Rules 38I-17.001 (Purpose and Scope), 38I-17.002 (Definitions), 38I-17.003 (Essential Requirements for a Safety Program), 38I-

    17.004 (A Typical Written Safety Program), 38I-17.005 (Client Employer Training Requirements of Help Supply Services Company Employees), 38I-17.006 (Disputes Regarding Employer Eligibility) and Rule 38I-17.200 (Effective Date).

    
    

17. Proposed Rule 38I-17.001, Florida Administrative Code, provides as follows:

    
    

    1. The purpose of this rule is to promote safety and health in the workplace, thereby decreasing the frequency and severity of work- related injuries. Any employer who implements a safety program that meets or exceeds the requirements specified in this rule chapter may be eligible for a premium credit under a rating plan approved by the Department of

       Insurance. Employers who implement the safety program described in this rule chapter shall contact their carrier or agent for the proper procedure to apply for a premium credit.

    2. This rule chapter applies to Florida public and private sector employers, except the federal government.

       
       

18. Proposed Rule 38I-17.002, Florida Administrative Code, defines the terms "Calendar year," "Division," "employee representative," "hazard," "illness," "premium credit," "safe," "safety," "safety committee," "safety- related incident," "scheduled meeting," and "workplace." It further provides that "the definition for 'accident,' 'carrier,' 'employee,' and 'injury' contained in section 440.02, Florida Statutes, and the definition of 'occupational disease' contained in section 440.151(2), Florida Statutes," as well as "the definition of 'employer' contained in section 440.02(14), Florida Statutes," are "incorporate[d] by reference" in the proposed rule chapter.

    
    

19. Proposed Rule 38I-17.003, Florida Administrative Code, describes in detail the required "elements" of a safety program. Among these required elements is the "safety committee" element described in subsection (2)(h) of the proposed rule, which reads as follows:

    
    

    The safety committee shall:

    1. Establish and communicate procedures by which the employer shall conduct internal safety inspections of the workplace. The procedures shall be used to evaluate the effectiveness of engineering, administrative, and personal protective control measures provided by the employer to protect employees from recognized hazards in the work and work environment;

    2. Establish and communicate procedures by which the employer shall investigate all workplace accidents, safety-related incidents, injuries, illnesses, occupational diseases, and fatalities;

    3. Evaluate the effectiveness of and recommend improvements to the employer's safety rules, policies, and procedures for accident and illness prevention programs in the workplace and, when approved by the employer, ensure that written updates and changes to the safety program are completed;

    4. Establish and communicate procedures by which the employer shall train committee members on the requirements of this rule chapter;

    5. Post the scheduled date, time, and location of committee meetings in a conspicuous place where employees normally gather;

    6. Provide minutes of committee meetings in a conspicuous place where employees normally gather and provide a copy thereof to individual employees upon written request; and

    7. Retain all original written communications between the employer and the committee, or true copies thereof, in the workplace. Copies of these written communications shall be made available to the division upon request.

    
    

20. As stated in its introductory paragraph, Proposed Rule 38I-17.004, Florida Administrative Code, "prescribes a typical written safety program that conforms with [proposed] rule 38I-17.003[,] . . . show[ing] the level of detail required for compliance and . . . language suitable for use by an employer." The proposed rule states that "[a]n employer may enhance any subsection of the typical written safety program to reflect actual operations and work practices, provided that the enhancement comports with rule 38I-17.003."

    
    

21. Proposed Rule 38I-17.005, Florida Administrative Code, provides as follows:

    
    

    A help supply services company shall comply with the responsibilities of employers under this rule chapter, except that the client of a help supply services company shall include

    the employees of the help supply services company in the client's safety and training program, as prescribed in rule 38I-17.003(3), unless the company and the client otherwise contract in writing. No such contract shall alter the rights and responsibilities of help supply service companies provided in section 440.11, Florida Statutes.

    
    

22. Proposed Rule 38I-17.006, Florida Administrative Code, provides as follows:

    
    

    1. An employer should direct initially all inquiries concerning eligibility for a premium credit under section 627.0915, Florida Statutes, to its carrier or agent.

    2. If the employer cannot resolve a complaint or dispute concerning the employer's eligibility, the employer should contact the Department of Insurance by calling the consumer assistance line

       at 1-800-342-2762, or writing to: Consumer Services,

       200 E. Gaines Street, Tallahassee, Florida 32399. The Department of Insurance should direct to the division questions that ultimately ask whether a workplace safety program conforms to this rule chapter. 8/

       
       

23. Proposed Rule 38I-17.200, Florida Administrative Code, provides as follows:

    
    

    This rule chapter shall take effect twenty days after the date the division files this rule chapter for adoption, provided that an employer has imple- mented or maintained a safety program between January 1, 1994 and the effective date of this

    rule chapter, which safety program complies with

    the requirements of this rule chapter, may be eligible for a premium credit under a rating plan approved for the period of program operation that precedes the effective date.

    
    

24. Such a rating plan, filed by the National Council on Compensation Insurance, 9/ was approved by the Department of Insurance on July 1, 1994.

    
    

25. The filing memorandum submitted by the National Council on Compensation Insurance provided as follows:

    
    

    ITEM 05-FL-94 -- FLORIDA SAFETY PREMIUM CREDIT

    (To be effective upon approval by the Florida Department of Insurance applicable pro rata subject to a policy anniversary rating date of January 1, 1994 or after).

    
    

    PURPOSE:

    The purpose is to comply with Section 94 of Florida's workers compensation reform legislation, Senate Bill 12C. Senate Bill 12C amended section 627.0915 of Florida Statutes to allow for a safety premium credit for employers who implement approved safety programs.

    
    

    BACKGROUND:

    Florida Senate Bill 12C, which was signed into law effective January 1, 1994, provides that the Florida Department of Insurance shall approve rating plans for workers compensation insurance for employers who implement a safety program approved by the Division of Safety pursuant to rules adopted by the Department of Labor and Employment Security.

    
    

    IMPACT:

    This filing makes a 2 percent safety premium credit available to those employers who certify adoption of an approved Workplace Safety Program developed by the Florida Department of Labor and Employment Security.

    
    

    IMPLEMENTATION:

    Attached is the Florida State Special Rule to implement the Employer Safety Premium Credit Program along with a proposed Application for Employer Safety Program Premium Credit. 10/ Upon approval of this filing, NCCI will notify all of its members and subscribers by Circular and publish the rules in the Basic Manual for Workers Compensation and Employers Liability.

    
    

26. The "Florida State Special Rule to implement the Employer Safety Premium Credit" appended to the filing memorandum read as follows:

    
    

    1. The premium for a risk shall be reduced by 2 percent for an insured which has certified that it has established a Safety Program in

       accordance with Rule 38I-17, as established

       by the Division of Safety of the Florida Depart- ment of Labor and Employment Security.

    2. The premium credit shall be applied to the insured's policy pro rata as of the date of certification by the employer, but no earlier than the date a final rule is adopted by the Department of Labor and Employment Security, subject to an anniversary rate date of January 1, 1994, or after. Self-certification by the

       employer may be accomplished by completing Florida Form- Safety 09-1 and is subject to physical verification by the insurer and/or the Division

       of Safety.

    3. The premium credit shall be applied to a risk in a multiplicative manner, after increased

       limits factors and deductible credits, if applicable, but before application of experience modification,

       and before application or any other premium surcharges (including Joint Underwriting Association Surcharges), factors, the Florida Contracting Classification Premium Adjustment Program (FCCPAP) and expense accounts.

    4. Expected losses used in the calculation of the insured's experience modification factor will be decreased by the policy credit percentage.

    5. Standard earned premium figures reported to the National Council on Compensation Insurance, Inc. on the aggregate calls for experience (e.g., policy year, calendar/accident year, etc.) must be net of the effects of the credits (i.e., be after). The net standard premium will then be the basis of any adjustment (i.e., guaranteed cost or retro).

    6. The Employer Safety Premium credits must be reported under statistical code 9880 on unit statistical reports submitted to the National Council on Compensation Insurance, Inc.

    7. Certification is required for each year in which premium credit is permitted under this program and is based upon evidence contained in the file of the insurer at the time the credit is allowed.

    8. The insured's policy is subject to reimbursement of premium credit, and cancellation if it is determined that the insured misrepresented its compliance with Rule 38I-17 as promulgated by the Division of Safety.

    
    

    CONCLUSIONS OF LAW

    
    

27. Petitioners are challenging the Department's proposed adoption of Rule Chapter 38I-17, Florida Administrative Code. They are making their challenge pursuant to Section 120.54(4)(a), Florida Statutes, which provides that "[a]ny substantially affected person may seek an administrative determination of the invalidity of any proposed rule on the ground that the proposed rule is an invalid exercise of delegated legislative authority."

28. The Department has questioned Petitioners' standing to bring such a challenge.

    
    

29. With respect to this issue, Petitioners have the burden of proof. See Department of Health and Rehabilitative Services v. Alice P., 367 So.2d 1045, 1052 (Fla. 1st DCA 1979).

    
    

30. A party challenging a proposed rule pursuant to Section 120.54(4)(a), Florida Statutes, meets its burden of demonstrating its standing to initiate such a challenge by showing that it would be "substantially affected," i.e., "affected in an important and significant way[,] if the proposed rule were adopted by the agency." Department of Professional Regulation, Board of Dentistry v. Florida Dental Hygienist Association, Inc., 612 So.2d 646, 652 (Fla. 1st DCA 1993).

    
    

31. Such a showing is made if the challenging party establishes that the adoption of the proposed rule would cause it "injury in fact" and that the interest it seeks to protect is within the "zone of interests" sought to be protected by the statutory provision(s) being implemented by the rule. See Florida Medical Association, Inc., v. Department of Professional Regulation, 426 So.2d 1112 (Fla. 1st DCA 1983).

    
    

32. "A trade or professional association [is] able to institute a rule challenge even though it is acting solely as the representative of its members. To do so the association must demonstrate that a substantial number of its members, although not necessarily a majority, are substantially affected by the challenged [proposed] rule, that the subject matter of the [proposed] rule is within the association's general scope of interest and activities, and that the relief requested is of the type appropriate for a trade [or professional] association to receive on behalf of its members." Florida League of Cities, Inc., v. Department of Environmental Regulation, 603 So.2d 1363, 1366 (Fla. 1st DCA 1992).

    
    

33. Petitioners also bear the burden of proving that the proposed rule chapter is "an invalid exercise of delegated legislative authority," within the meaning of Section 120.54(4)(a), Florida Statutes. See Adam Smith Enterprises, Inc., v. Department of Environmental Regulation, 553 So.2d 1260, 1274 n.24 (Fla. 1st DCA 1989); Humana, Inc., v. Department of Health and Rehabilitative Services, 469 So.2d 889, 890 (Fla. 1st DCA 1985); Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1978), cert. denied, 376 So.2d 74 (Fla. 1979).

    
    

34. "An invalid exercise of delegated legislative authority," as that phrase is used in Section 120.54(4)(a), Florida Statutes, is defined in Section 120.52(8), Florida Statutes, as follows:

    
    

    "Invalid exercise of delegated legislative authority" means action which goes beyond the powers, functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one or more of the following apply:

    1. The agency has materially failed to follow the applicable rulemaking procedures set forth in s. 120.54;

    2. The agency has exceeded its grant of rule- making authority, citation to which is required

       by s. 120.54(7);

    3. The rule, enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(7);

    4. The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency; or

    5. The rule is arbitrary or capricious.

    
    

35. Among the "rulemaking procedures set forth in Section 120.54," Florida Statutes, which, if not followed, may result in a finding that there has been "an invalid exercise of delegated legislative authority," as contemplated by subsection (8)(a) of Section 120.52, Florida Statutes, are those found in subsection (3)(b) of Section 120.54, Florida Statutes, which provides as follows:

    
    

    If the agency determines that the proposed action will affect small business as defined by the agency as provided in paragraph (2)(a), the agency shall send written notice of such

    rule to the Small and Minority Business Advocate, the Minority Business Enterprise Assistance Office, and the Division of Economic Development of the Department of Commerce not less than 21 days prior to the intended action.

    1. Within the 21-day period after written notice has been sent and the day on which the intended action is to take place, the agency shall give the Small and Minority Business Advocate, the Minority Business Enterprise Assistance Office, and the Division of Economic Development of the Department of Commerce an opportunity to present evidence and argument and to offer alternatives regarding the impact of the rule on small business.

    2. Each agency shall adopt those alternatives offered pursuant to this subsection which it finds

       are feasible and consistent with the stated objectives of the proposed rule and which would reduce the impact on small business.

    3. If an agency does not adopt all alternatives offered pursuant to this subsection, it shall, prior to rule adoption or amendment and pursuant to subsection (11), file a detailed written statement with the committee explaining the reasons for failure to adopt such alternatives. Within 3 working days of the filing of such notice, the agency shall send a copy of such notice to the Small and Minority Business Advocate, the Minority Business Enterprise Assistance Office, and the Division of Economic Development of the Department of Commerce.

    
    

36. To the extent that it addresses a proposed or existing rule's lack of compliance with its enabling statute, the definition of "an invalid exercise of delegated legislative authority" found in Section 120.52(8), Florida Statutes, is a codification of the case law on the subject existing at the time of its

    enactment, an observation that was made in Florida League of Cities v. Department of Environmental Regulation, 603 So.2d 1363, 1367 (Fla. 1st DCA 1992), wherein it was stated:

    
    

    Although the only explicitly stated ground under section 120.54(4)(a) for challenging a proposed rule is that the proposed rule constitutes an

    invalid exercise of delegated legislative authority, case law, beginning notably with Agrico Chemical Co.

    v. Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1978), cert. denied sub nom. Askew v. Agrico Chemical Co., 376 So.2d 74 (Fla. 1979), has engrafted specific criteria that must be applied in determining whether the rule or proposed rule complies with the enabling statute. The challenger, among other things, is required to show that the requirements of the rule are inappropriate to the ends specified in the legislative act, or that the requirements proposed are not reasonably related to the purpose of the enabling legislation, or that the proposed rule is arbitrary and capricious. [Citations omitted.] These criteria have since been codified by the 1987 legislature, amending section

    120.52 by adding subsection (8) thereto, defining the term "invalid exercise of delegated legislative authority." See Ch. 87-385, Section 2, Laws of Fla. See also Sta[te] of Florida, House Committee on Governmental Operations, "Staff Analysis of Proposed Amendments to Chapter 120, F.S. for House Bill 710 and Senate Bill 608" (1987)(Florida State Archives),

    explaining that Section 120.52(8)(e), Florida Statutes (1987), relating to the term arbitrary or capricious, "codifies the long established principle that administrative rules cannot be arbitrary or capricious, i.e., unsupported by logic, despotic or irrational."

    In support of this statement the Staff Analysis refers to the Agrico Chemical Co. 11/ and the General Telephone Co. of Florida opinions.

    
    

37. In determining whether a proposed rule is noncompliant with its enabling statute, it must be kept in mind that the agency's interpretation of that statute need not be the sole possible interpretation, or even the most desirable one, but must only be within the range of possible interpretations. See Orange Park Kennel Club, Inc., v. Department of Business and Professional Regulation, 19 FLW D2234 (Fla. 1st DCA October 17, 1994); Florida League of Cities v. Department of Environmental Regulation, 603 So.2d at 1369; Escambia County v. Trans Pac, 584 So.2d 603, 605 (Fla. 1st DCA 1991); Department of Professional Regulation v. Durrani, 455 So.2d 515, 517 (Fla. 1st DCA 1984). Furthermore, the agency's interpretation must be viewed in light of the entire statutory framework. If there are other related statutory provisions in the same chapter or elsewhere in Florida Statutes, they should be examined. See State v. Rodriguez, 365 So.2d 157, 159 (Fla. 1978); Florida Jai Alai, Inc., v. Lake Howell Water and Reclamation District, 274 So.2d 522 (Fla. 1973); Cataract Surgery Center v. Health Care Cost Containment Board, 581 So.2d 1359, 1361 (Fla. 1st DCA 1991); Escambia County Council on Aging v. Goldsmith, 465 So.2d 655, 656 (Fla. 1st DCA 1985). In addition, it may be helpful to review the legislative history of the statute. See Asphalt Pavers, Inc., v. Department of

    Revenue, 584 So.2d 55, 57 (Fla. 1st DCA 1991). In doing so, however, it is important to recognize that "a mere change in the language of a statute does not necessarily indicate an intent to change the law, because the intent may be to clarify what was doubtful and to safeguard misapprehension as to existing law." Asphalt Pavers, Inc., v. Department of Revenue, 584 So.2d at 58. Of course, it is only necessary to resort to legislative history and other aids to statutory construction if the statute is ambiguous. "Where the language of the statute is clear and unambiguous on its face, it must be given its plain and ordinary meaning." Mayo Clinic Jacksonville v. Department of Professional Regulation, Board of Medicine, 625 So.2d 918, 919 (Fla. 1st DCA 1993).

    
    

38. To evaluate a claim that a proposed rule does not comply with its enabling statute the Hearing Officer must ascertain the meaning, not only of the enabling statute, but of the proposed rule as well. In doing so, the Hearing Officer is obligated to accept the agency's interpretation of its own rule unless the agency's interpretation is not within the range of possible interpretations and therefore is clearly erroneous. See Falk v. Beard, 614 So.2d 1086, 1089 (Fla. 1993); South Miami Hospital, Inc., v. Department of Health and Rehabilitative Services, 623 So.2d 510, 511 (Fla. 3d DCA 1993); Ball

    v. Florida Podiatrist Trust, 620 So.2d 1018, 1022 (Fla. 1st DCA 1993); Kearse

    v. Department of Health and Rehabilitative Services, 474 So.2d 819, 820 (Fla. 1st DCA 1985).

    
    

39. In their proposed final order, Petitioners complain that:

    
    

    Proposed Rule Chapter 38I-17 fails to contain an approval process, approval mechanism, or any provisions that indicate to an employer how to have a safety program approved by the Division of Safety.

    
    

    The proposed rule chapter fails to provide for any review by the Division of an employer's safety program and fails to advise employers as to whether or not they will be eligible for safety credits as set forth in Section 627.0915, Fla. Stat.

    
    

    The absence of any mechanism for approval of safety programs by the Division will result in servicing carriers and self-insurance funds being unable to determine whether or not an employer has adopted and implemented an approved safety program prior

    to an employer receiving a premium credit. The proposed rule's lack of an approval process implies that servicing carriers and self-insurance funds should review and approve an employer's safety program rather than the Division of Safety. The proposed rule transfers and redirects the statutory obligation to approve safety programs from the Division to carriers and self-insurers funds.

    
    

    Petitioners further argue in their proposed final order that "because the proposed rule [chapter] fails to carry out the underlying statutory mandate, fails to establish adequate standards for its implementation, is vague, and vests unbridled discretion in the agency," it "is an invalid exercise of delegated legislative authority." 12/

40. Servicing carriers like ERC, self-insurance funds like FUBSIF and FHBSIF, and trade associations, such as FUBA, comprised of businesses, the vast majority of which are also employer members/policyholders of workers' compensation self-insurance funds, have standing to advance such a challenge in a Section 120.54(4)(a) proceeding inasmuch as these servicing carriers and self- insurance funds, as well as a substantial number of members of these trade associations, meet both the "injury in fact" and "zone of interest" prongs of the standing test and, in addition, with respect to the trade associations, the subject matter of the proposed rule chapter is within their general scope of interest and activities and the relief requested in a rule challenge proceeding is of the type appropriate for the trade associations to receive on behalf of their members.

    
    

41. In evaluating the merits of Petitioners' challenge, it is necessary to first examine the language of Section 627.0195, Florida Statutes. 13/

    
    

42. Section 627.0195, Florida Statutes, as amended by Chapter 93-415, Laws of Florida, provides as follows:

    
    

    The Department of Insurance shall approve rating plans for workers' compensation insurance that give specific identifiable consideration in the

    setting of rates to employers that either implement a drug-free workplace program pursuant to rules adopted by the Division of Workers' Compensation

    of the Department of Labor and Employment Security or implement a safety program approved by the Div- ision of Safety pursuant to rules adopted by the Division of Safety of the Department of Labor and Employment Security or implement both a drug-free workplace program and a safety program. The plans

    must take effect January 1, 1994, must be actuarially sound, and must state the savings anticipated to result from such drug testing and safety programs.

    
    

43. Through Section 627.0915, Florida Statutes, the Legislature has delegated to the Department not only the authority, but also the responsibility, to approve, pursuant to rules adopted by the Department, employer workplace safety programs for purposes of determining an employer's entitlement to a workers' compensation insurance premium credit.

    
    

44. It is not entirely clear from a simple reading of Section 627.0915, Florida Statutes, whether, in order to meet its responsibility under the statute, the Department must individually review the safety program of each and every employer seeking a premium credit, as Petitioners argue, or whether it may fulfill its obligation by merely describing in its rules those safety programs which meet its approval, as it has done, in a manner that is neither unreasonable, illogical, vague, nor lacking in adequate standards, in proposed Rule Chapter 38I-17, Florida Administrative Code. The language in the statute is reasonably susceptible to both Petitioners' and the Department's interpretations. Resorting to established aids to statutory construction yields no more certainty concerning which of these constructions the Legislature intended.

    
    

45. Because the Department's interpretation of Section 627.0915, Florida Statutes, codified in proposed Rule Chapter 38I-17, Florida Administrative Code, is within the range of possible interpretations of the statute, it may not be

    rejected, even though it may not be the only possible interpretation or even the most reasonable one. See Florida League of Cities v. Department of Environmental Regulation, 603 So.2d at 1369; Escambia County v. Trans Pac, 584 So.2d at 605; Department of Professional Regulation v. Durrani, 455 So.2d at 517.

    
    

46. Moreover, contrary to Petitioners' claim, an employer seeking a premium credit for a workplace safety program it has devised, and that employer's carrier, will have the opportunity to obtain directly from the Department a statement as to whether the employer's safety program is an approved program under proposed Rule Chapter 38I-17, Florida Administrative Code. The procedure for obtaining such a statement is set forth in the Department of Labor and Employment Security's existing Rule 38A-4.001, Florida Administrative Code, 14/ which provides as follows:

    
    

    1. Any person may seek a declaratory state- ment as to the applicability of a specific stat- utory provision or of any rule or order of the Agency as it applies to the Petitioner in his particular set of circumstances only. The agency shall give notice of each petition, briefly stating the question presented, in the manner prescribed by Section 120.565, F.S., 15/ and shall similarly give notice of the disposition of each petition, briefly explaining the agency's response. Copies of each petition and disposition thereof shall also be furnished to the Administrative Procedures Committee.

    2. The petition seeking a declaratory statement shall be filed in writing with the Agency and shall provide substantially the following information:

       1. Name of Petitioner

       2. Address of Petitioner

       3. Name of Agency

       4. Agency rule, order or statutory provision on which declaratory statement is sought

       5. Description of how this rule, order or statute may or does affect the petitioner in his/her particular set of circumstances only

       
       

       Signature of Petitioner Address

       Date

       
       

       Given the existence of Rule 38A-4.001, Florida Administrative Code, employers and carriers will not be without a means to ascertain with certainty whether the safety program involved in their "particular set of circumstances" meets the Department's approval. It is therefore apparent, when proposed Rule Chapter

       38I-17, Florida Administrative Code, is read in conjunction with Rule 38A-4.001, Florida Administrative Code, that, even assuming that Section 627.0915, Florida Statutes, does impose upon the Department the obligation to provide a procedure for Department review and assessment of individual workplace safety programs as Petitioners contend, the Department has complied with, not deviated from, this requirement.

47. In view of the foregoing, the Hearing Officer concludes that Petitioners have not met their burden of establishing that proposed Rule Chapter 38I-17, Florida Administrative Code, is an "invalid exercise of delegated legislative authority," as defined in Section 120.52(8), Florida Statutes.

Accordingly, it is hereby ORDERED that

Petitioners' petition challenging proposed Rule Chapter 38I-17, Florida Administrative Code, pursuant to Section 120.54(4)(a), Florida Statutes, is dismissed.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 7th day of December, 1994.

STUART M. LERNER

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 7th day of December, 1994.

ENDNOTES

1/ Those legal issues raised in Petitioners' Petition to Determine Invalidity of Proposed Rule but not referenced in Petitioners' proposed prehearing stipulation must be deemed to have been abandoned by Petitioners. See Sanders

v. Bureau of Crimes Compensation, 474 So.2d 410, 411 (Fla. 5th DCA 1985)("both the parties and the deputy commissioner are bound by the stipulation;" "a finder of fact may not rule upon issues which are outside the record and beyond the scope of the hearing"); Lotspeich Company v. Neogard Corporation, 416 So.2d 1163, 1165 (Fla. 3d DCA 1982)("[p]retrial stipulations prescribing the issues on which a case is to be tried are binding upon the parties and the court, and should be strictly enforced").

2/ To provide such premium billing services it is necessary for ERC to determine which employer members/policyholders are entitled to premium credits.

3/ The amount of ERC's service fee, at least under the Indemnity Agreements offered and received into evidence in the instant case, is subject to renegotiation "from time to time."

4/ Most FHSIF members are homebuilders.

5/ It is estimated that FUBSIF's 1994 premium volume will be approximately 50 million dollars.

6/ As of August 31, 1994, FUBA had 9,979 members who were also members/policyholders of FUBSIF.

7/ FUBA is nonprofit corporation.

8/ The Department has indicated in pleadings filed in the instant case that it intends to construe the dispute resolution procedure identified in proposed Rule 38I-17.006, Florida Administrative Code, as discretionary, rather than mandatory, in nature. Given the Department's use of the word "should" in the proposed rule, such construction is not unreasonable. See State v. Thomas, 528 So.2d 1274, 1275 (Fla. 3d DCA 1988); University of South Florida v. Tucker, 374 So.2d 16, 17 (Fla. 2d DCA 1979).

9/ It appears that both FHSIF and FUBSIF are members and subscribers of the National Council on Compensation Insurance.

10/ The Application for Employer Safety Program Premium Credit requires the employer to certify that its "workplace safety program meets the requirements of the Florida Occupational Safety and Health Act, Chapter 93-415, Section 52-74, Laws of Florida, and Rule 38I-17 of the Florida Administrative Code," that its "safety program has been implemented in [its] workplace and is being maintained as submitted to [its] carrier," and that it understands that it is subject to criminal prosecution for knowingly and willfully making any false or fraudulent statement on the application.

11/ In Agrico, a "capricious action" was described as "one which is taken without thought or reason or irrationally" and an "arbitrary decision" was described as "one not supported by facts or logic, or despotic." Id. at 763.

12/ Petitioners raised other grounds of invalidity in their petition, which they have not further pursued. Consequently, these other alleged grounds have been deemed abandoned and are not addressed in this Final Order.

13/ Section 627.0915, Florida Statutes, is among the statutory provisions listed under "Specific Authority" and "Law Implemented" in proposed Rule Chapter 38I-17, Florida Administrative Code. So is Section 442.011, Florida Statutes, which provides as follows:

Each insurance carrier writing workers' compensation insurance in this state, each employer qualifying as an individual self-insurer under 440.38, each self-insurance fund under s. 624.461, and each mutual insurer under s. 628.6011 must provide safety consultations to each of its policyholders who requests such consultations. Each such carrier or self-insurer must inform its policyholders of the availability of such consultations and must report annually on its safety and health programs and consultations to the division in such form and at such time as the division prescribes. The division is responsible for approving all safety and health programs. The division shall aid all insurance carriers and self-insurers in establishing their safety and health programs by setting out criteria in an appropriate format.

As the Department concedes in its proposed final order, its reliance on Section 442.011, Florida Statutes, as authority for the proposed adoption of Rule Chapter 38I-17, Florida Administrative Code, was misplaced inasmuch as the safety programs referenced in the statute are those of insurance carriers and self-insurers, not employers seeking a workplace safety premium credit. Because it deals with latter type of safety programs, which Section 442.011, Florida Statutes, does not address, proposed Rule Chapter 38I-17, Florida Administrative Code, cannot be successfully challenged on the ground that it contravenes the requirements of Section 442.011, Florida Statutes.

14/ Proposed Rule 38I-17.006, Florida Administrative Code, which deals with the resolution of disputes concerning an employer's eligibility for a workplace safety premium credit, would supplement, not supersede, the provisions of Rule 38A-4.001, Florida Administrative Code.

15/ Section 120.565, Florida Statutes, reads as follows:

Each agency shall provide by rule the procedure for the filing and prompt disposition of petitions for declaratory statements. A declaratory statement shall set out the agency's opinion as to the applicability of a specified statutory provision or any rule or order of the agency as it applies to the petitioner in his particular set of circumstances only. The agency shall give notice of each petition and its disposition in the Florida Administrative Weekly, except that educational units shall give notice in the same manner as provided for rules in s. 120.54(1)(a), and transmit copies of each petition and its disposition to the committee. Agency disposition of petitions shall be final agency action.

APPENDIX TO FINAL ORDER IN CASE NO. 94-3224RP

The following are the Hearing Officer's specific rulings on the "findings of fact" proposed by the parties in their proposed final orders:

Petitioners' Proposed Findings

1-2. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Final Order.

1. Not incorporated in this Final Order because it would add only unnecessary detail.

2. Accepted and incorporated in substance.

3. Second and sixth sentences: Rejected as findings of fact because they are more in the nature of legal argument than findings of fact; Remaining sentences: Accepted and incorporated in substance.

6-7. Rejected as findings of fact because they are more in the nature of legal argument than findings of fact.

8-9. Accepted and incorporated in substance.

1. Rejected as a finding of fact because it is more in the nature of legal argument than a finding of fact.

2. First sentence: Rejected as a finding of fact because it is more in the nature of legal argument than a finding of fact; Remaining sentences: Accepted and incorporated in substance.

3. Rejected as a finding of fact because it is more in the nature of legal argument than a finding of fact.

13-15. Accepted and incorporated in substance.

16. To the extent that this proposed finding recites the provisions of Sections 442.011 and 627.0915, Florida Statutes, it has been rejected as a finding of fact because it is more in the nature of a statement of the law than a finding of fact. Otherwise, it has been accepted and incorporated in substance.

17-22. Rejected as findings of fact because they are more in the nature of legal argument than findings of fact.

The Department's Proposed Findings

1. Accepted and incorporated in substance.

2-3. Rejected as findings of fact because they are more in the nature of legal argument than findings of fact.

4. First sentence: Accepted and incorporated in substance; Remaining sentences: Not incorporated in this Final Order because they would add only unnecessary detail.

5-18. Rejected as findings of fact because they are more in the nature of legal argument than findings of fact.

19-22. Accepted and incorporated in substance.

23-34. Rejected as findings of fact because they are more in the nature of legal argument than findings of fact.

35-38. Accepted and incorporated in substance.

39. Rejected as a finding of fact because it is more in the nature of legal argument than a finding of fact.

40-41. Accepted and incorporated in substance.

1. Not incorporated in this Final Order because it would add only unnecessary detail.

2. First and second sentences: Accepted and incorporated in substance; Third sentence: Rejected because it is not supported by the record.

3. Rejected as a finding of fact because it is more in the nature of a statement of legal position than a finding of fact.

45-46. Accepted and incorporated in substance.

47. Rejected as a finding of fact because it is more in the nature of legal argument than a finding of fact.

COPIES FURNISHED:

Thomas W. Stahl, Esquire Eric D. Prutsman, Esquire NEWELL & STAHL, P.A.

817 North Gadsden Street Tallahassee, Florida 32303-6313

Edward A. Dion, Esquire David C. Hawkins, Esquire John M. Carlson, Esquire

Office of the General Counsel Department of Labor and

Employment Security

The Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189

Liz Cloud, Chief

Bureau of Administrative Code The Capitol, Room 1802 Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director 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 Summary 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: 94-003224RP

Orders for Case No: 94-003224RP