STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BANKERS INSURANCE COMPANY, )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF INSURANCE, )

)

Respondent, )

) Case No. 96-4938

and )

)

AIB INSURANCE GROUP, INC.; )

FLORIDA RESIDENTIAL PROPERTY ) AND CASUALTY JOINT UNDERWRITING ) ASSOCIATION; POLICY MANAGEMENT ) SYSTEMS CORPORATION; AMERICAN ) INTERNATIONAL INSURANCE COMPANY; ) and AUDUBON INSURANCE COMPANY, )

)

Intervenors. )

)

RECOMMENDED ORDER

On June 29 through July 1, 1998, a formal administrative hearing was held in this case in Tallahassee, Florida, before

J. Lawrence Johnston, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Douglas A. Mang, Esquire

Wendy Russell Wiener, Esquire Mang Law Firm, P.A.

Post Office Box 11127 Tallahassee, Florida 32302-3127

For Respondent: Michael H. Davidson, Esquire

Division of Legal Services

200 East Gaines Street 612 Larson Building

Tallahassee, Florida 32399-0333

For Intervenors

AIB Insurance Group, Inc.:

Seann M. Frazier, Esquire Greenberg, Traurig, Hoffman,

Lipoff, Rosen & Quentel, P.A. Post Office Drawer 1838 Tallahassee, Florida 32302

Perry Ian Cone, General Counsel AIB Insurance Group, Inc.

2500 Northwest 79th Avenue Miami, Florida 33122

Florida Residential Property and Casualty Joint Underwriting Association:

Michael Colodny, Esquire Stuart B. Yanofsky, Esquire

Colodny, Fass & Talenfeld, P. A. 2000 West Commercial Boulevard Suite 232

Fort Lauderdale, Florida 33309

Fred E. Karlinsky Associate General Counsel

Florida Residential Property and Casualty Joint Underwriting Association

101 North Monroe Street Suite 1000

Tallahassee, Florida 32301

Policy Management Systems Corporation:

Zollie M. Maynard, Esquire William C. Owen, Esquire

Panza, Maurer, Maynard & Neel, P.A.

215 South Monroe Street, Suite 320 Tallahassee, Florida 32301

American International Insurance Company:

J. Stephen Menton, Esquire Rutledge, Ecenia, Underwood,

Purnell & Hoffman, P.A. Post Office Box 551

Tallahassee, Florida 32302-0551

Audubon Insurance Company:

Mitchell B. Haigler, Esquire Paul R. Ezatoff, Esquire

Katz, Kutter, Haigler, Alderman, Bryant & Yon, P.A.

Post Office Box 1877 Tallahassee, Florida 32302

STATEMENT OF THE ISSUES

The issues in this case are whether the Florida Real Property and Casualty Joint Underwriting Association (FRPCJUA) failed to comply with applicable requirements and standards of Part I of Chapter 627, Florida Statutes, when it utilized a request for proposals (RFP) in autumn 1995 to arrive at its decision in early 1996 to contract with Intervenors, Audubon Insurance Company (Audubon), AIB Holdings, Inc. (AIB), and American International Insurance Company (AIIC), but not with the Petitioner, Bankers Insurance Company (Bankers), for insurance policy servicing work through the year 1999. Specifically, Bankers asserts: (1) that FRPCJUA improperly gave policy servicing work to AIB, which is not a licensed insurance company;

1. that FRPCJUA violated Chapter 287, Florida Statutes, regarding competitive bidding requirements for state agencies;

2. that, regardless whether Chapter 287 is applicable, whether FRPCJUA acted arbitrarily and in bad faith instead of using procedures equivalent to the procedures found in Chapter 287,

   Florida Statutes; and (4) that FRPCJUA violated the Government in the Sunshine Law, Chapter 286, Florida Statutes. The Respondent, the Department of Insurance (the Department), and the Intervenors oppose Bankers' assertions.

   After initially seeking maintenance of the status quo or a contract on the same terms as the others, Bankers now seeks money damages from FRPCJUA, including attorney fees and costs.

   
   

   PRELIMINARY STATEMENT

   
   

   During the autumn of 1995, FRPCJUA initiated and pursued an RFP for insurance policy servicing work through the year 1999. On February 29, 1996, FRPCJUA decided to enter into contracts with Audubon, AIB, and AIIC, but not with Bankers, and Bankers filed a bid protest and appeal requesting formal administrative proceedings under Sections 120.53(5) and 120.57(1), Florida Statutes (1995).

   Bankers' bid protest and appeal asserted: (1) that FRPCJUA improperly gave policy servicing work to AIB, a non-insurer; (2) that FRPCJUA violated Chapter 287, Florida Statutes; and (3) that, if Chapter 287 was not applicable, that FRPCJUA took arbitrary actions and used bad faith instead of using procedures equivalent to those in Chapter 287. Bankers demanded that FRPCJUA either maintain the status quo or enter into a contract with Bankers on the same terms as the others.

   FRPCJUA treated Bankers' appeal and bid protest as an appeal under Section 24 of FRPCJUA's Second Amended Plan of Operation.

   Bankers presented its appeal to FRPCJUA on April 7, 1996. After hearing and discussion, FRPCJUA denied the appeal.

   On April 24, 1996, Bankers appealed FRPCJUA's decision to the Department. The Department assigned a presiding officer, who treated the matter as an agency investigation of Bankers' "complaint" under Section 627.371, Florida Statutes, but nevertheless held a hearing and considered the parties' written filings and oral arguments during the summer of 1996. In addition to the three issues raised before FRPCJUA, Bankers was permitted to raise the issue whether FRPCJUA had violated the Government in the Sunshine Law, Chapter 286, Florida Statutes.

   The Findings and Conclusions of Presiding Officer Shropshire (Shropshire Findings and Conclusion) were filed on September 16, 1996. In response, Bankers filed both a direct appeal to the District Court of Appeal, First District (in the event that the Shropshire Findings and Conclusion constituted final agency action) and a request for formal administrative proceedings under Chapter 120, Florida Statutes (Supp. 1996). The latter was referred to the Division of Administrative Hearings (DOAH) on October 17, 1996.

   As reflected in the official file, the motion practice and discovery disputes in this case were extensive; while the DOAH case history included in this Preliminary Statement is lengthy, it

   omits much and attempts to focus on matter that aid in understanding the issues considered at final hearing and the state of the evidentiary record.

   At DOAH, the case was set for final hearing on February 17- 19, 1997, and AIB and Policy Management Systems Corporation (PMSC) were granted leave to intervene. FRPCJUA and PMSC moved to dismiss Bankers' petition, and Bankers moved to stay the proceeding pending its direct appeal to the District Court. An Order Denying Motions was entered on January 15, 1997. But Bankers and the Department filed an Joint Motion for Continuance to which the intervenors consented, and final hearing was continued pending reports on the status of the appellate court proceeding. On April 2, 1996, Bankers reported that the appellate court had dismissed Bankers' appeal.

   On April 22, 1997, Bankers moved to relinquish jurisdiction for informal proceedings before the Department based on Bankers' representation that it did not dispute any material facts.

   However, FRPCJUA and PMSC contested Bankers' representation, and the motion was denied on May 13, 1997. Bankers moved for rehearing and reconsideration, but the Department joined FRPCJUA and PMSC in opposing the motion; rehearing and reconsideration were denied on July 10, 1997; and the case was rescheduled for final hearing on November 17-19, 1997.

   On September 25, 1997, Bankers moved to disqualify two of FRPCJUA's lawyers based on their being potential witnesses in the

   case. On October 6, 1997, FRPCJUA moved for a protective order on several grounds, including the ground that Bankers was seeking discovery on facts contained in the Shropshire Findings and Conclusion to which Bankers had stipulated as the basis for Bankers' motion to relinquish jurisdiction and motion for rehearing and reconsideration. Bankers took the position that it stipulated only on the condition that its motions were granted.

   After hearing on October 10, 1997, it was found, to the contrary, that Bankers had stipulated to those facts, and that the only question was whether the parties would be able to stipulate to all other disputed issues of fact being raised by the parties other than Bankers (e.g., facts relating to legislative history and the affirmative defenses.) Accordingly, FRPCJUA's Motion for Protective Order was granted, and discovery was limited to the facts that remained in dispute. Based in part on the Protective Order, Bankers' motion to disqualify FRPCJUA's lawyers was denied.

   On October 17, 1997, Bankers filed a Motion for Rehearing and Reconsideration [on the ground that Bankers had not stipulated to the facts in the Shropshire Findings and Conclusions], or in the Alternative, Motion to Withdraw Stipulation, and Motion for Continuance of Final Hearing (to include the additional issues Bankers wanted to raise). On October 29, 1997, Bankers filed an emergency Motion for Protective Order directed to depositions scheduled by FRPCJUA for November 3, 1997. At an emergency hearing on October 31, 1997, Bankers' motion was denied, and

   Bankers moved ore tenus for a continuance of the final hearing regardless whether it was allowed to raise additional issues. Bankers filed a Motion for Continuance on November 4, 1997.

   AIIC and Audubon were granted leave to intervene on November 4, 1997.

   On November 7, 1997, an Order Continuing Final Hearing until February 23-25, 1998, was entered. In addition, the Order Continuing Final Hearing: (1) denied Bankers' Motion for Rehearing and Reconsideration based on the finding that Bankers had indeed stipulated to the facts in the Shropshire Findings and Conclusions; (2) granted Bankers' alternative Motion to Withdraw Stipulation, in part because of the continuance; and (3) defined the issues for determination at final hearing. Based on Section 627.371(3), Florida Statutes (1995), the issues were limited to and defined in terms of the three issues raised in Bankers' bid protest and appeal to FRPCJUA on February 29, 1996. (It was overlooked that Shropshire also considered and ruled on the issue whether FRPCJUA had violated the Government in the Sunshine Law.) Issues relating to the affirmative defenses and legislative history would also be heard.

   Bankers filed an Emergency Motion for Continuance (due to inability to complete discovery) on January 21 and an Emergency Motion to Compel on February 6, 1998. On February 6, 1998, an Order Continuing Final Hearing until June 29 through July 1, 1998, was entered. In addition, regarding the Emergency Motion to

   Compel, responses to Banker's outstanding discovery requests were required to be served on or before February 13, 1998, and the parties were required to utilize the week of February 23, 1998, to complete all previously noticed depositions. The parties were held to the latter requirement notwithstanding numerous other discovery disputes that arose and were resolved before final hearing.

   On June 4, 1998, Bankers filed a Motion to Disqualify Agency Head. (Bankers attempted to file the motion on May 22, 1998, and responses in opposition were filed prior to June 4, 1998.) Bankers motion was denied for want of jurisdiction on June 8, 1998; it was left for the Insurance Commissioner to rule on Bankers' suggestion of disqualification after receipt of this Recommended Order.

   On June 10, 1998, FRPCJUA filed a Motion for a Partial Summary Final [sic] Order on the issue whether FRPCJUA violated Chapter 287, Florida Statutes. On June 17, 1998, FRPCJUA filed a Motion to Strike [Bankers'] Expert Witness.

   At final hearing, the parties filed a partially-executed Prehearing Stipulation. (A fully-executed original was filed on July 7, 1998.) Bankers sought to include in the Prehearing Stipulation the Government in the Sunshine issue that had been omitted from the November 4, 1997, Order Continuing Final Hearing; the Prehearing Stipulation noted the objection of the other parties to inclusion of the issue. At final hearing, FRPCJUA

   filed a motion in limine to exclude the issue; the Department and AIB joined in the motion. During the course of the final hearing, it was ruled that the issue should be considered because: it was part of the Shropshire Findings and Conclusions; it was inadvertently omitted from the November 4, 1997, Order Continuing Final Hearing; consideration of the issue would not require much evidence; and, therefore, no party would be prejudiced.

   The Prehearing Stipulation also made reference to FRPCJUA's Motion for a Partial Summary Final [sic] Order on the issue whether FRPCJUA violated Chapter 287, Florida Statutes, and Motion to Strike [Bankers'] Expert Witness. Rulings on those motions were deferred. The former is now denied as moot; the latter, in which the Department and all intervenors joined on the record at final hearing, also is denied, but the bases for the motion go to the weight given to the evidence.

   At final hearing, FRPCJUA also filed a Motion in Limine to Exclude the Testimony of Representative John Cosgrove. The Department, AIB, AIIC, and perhaps PMSC joined in the motion.

   Ruling was deferred, and Rep. Cosgrove's testimony was taken subject to the motion and objections. It is now ruled that the testimony is admitted as appropriate evidence on the issue of legislative intent.

   During the course of the final hearing, Bankers called seven witnesses, including the disputed expert and the executive director of FRPCJUA as an adverse party witness. FRPCJUA re-

   called its executive director and called three other witnesses, including Bankers' corporate secretary and general counsel as an adverse party witness. No other parties called witnesses, but FRPCJUA and PMSC sought the introduction of deposition transcripts in lieu of live testimony. See discussion of Exhibits 429 and 431, infra.

   During the course of the final hearing, the following exhibits were admitted in evidence: (by the Department) 4, 6, and 63-67; (by AIB) 71; (by Bankers) 101, 105, 106, 108-110, 113, 114,

   116, 117, 126-128, 132, and 133; (by FRPCJUA) 403-407, 412, 414,

   
   

   423, 424, 426, and 439; (by Audubon) 601-603; and (by AIIC) 702. In addition, the parties agreed to attempt to stipulate as to the content and admissibility, in lieu of live testimony, of FRPCJUA Exhibit 429 (excerpts from the deposition transcript of Robert Menke, one of Bankers' corporate officers and directors) and PMSC Exhibit 431 (excerpts from the deposition transcript of Senator John Grant), and to complete the evidentiary record by indicating which additional documents listed without objection in the Prehearing Stipulation's exhibit lists would come into evidence.

   At the conclusion of the final hearing on July 1, 1998, the parties were given 30 days from the filing of the transcript of the final hearing in which to file proposed recommended orders (PROs). The transcript was filed on August 6, 1998, but Bankers filed a Motion to Extend Proposed Recommended Order Deadline to October 8, 1998; eventually, the Department and all intervenors

   opposed the motion. Meanwhile, Bankers and PMSC were unable to stipulate to the contents and admissibility of PMSC Exhibit 431. Instead, PMSC had to file a Motion to Include Certain Deposition Testimony in the Cause. In addition, issues also appeared to remain as to FRPCJUA Exhibit 429, and the parties had not yet completed the evidentiary record as they were supposed to have done. In light of the incomplete evidentiary record, the time for filing PROs was extended to October 8, 1998, and the parties were given until September 18, 1998, in which to join all issues as to Exhibits 429 and 431 and to complete the evidentiary record.

   Bankers filed a response in opposition to PMSC's motion to admit Exhibit 431, and FRPCJUA file a response in support. On September 15, 1998, an Order Admitting Exhibit 431 was entered.

   On September 18, 1998, Bankers added Department Exhibits 1-

   
   

   3, 5, 7, 9, 10, 12, 15, 16, 19, 20, 21, 23-25, 29, 30, and 35,

   
   

   and its Exhibits 111, 120, 121, and 122 to the evidentiary record. FRPCJUA, which through no fault of its own was unaware of the September 18, 1998, deadline for Exhibit 429 and for the addition of other exhibits until the end of September, missed the September deadline but added its Exhibits 421 and 422 (which merely duplicated Bankers' Exhibits 108 and 109) on October 2, 1998, and advised that FRPCJUA and Bankers continued to discuss the contents and admissibility of Exhibit 429.

   All parties except timely filed PROs. Bankers' was 75 pages in length and was accompanied by a motion to enlarge the Florida Administrative Code Rule 28-106.215 page limit of 40. The Department and all intervenors except Audubon (which did not respond) opposed the motion. Although there is merit to the opposition, Bankers' PRO has been considered, and the motion is granted.

   Bankers also filed a motion to add to PMSC Exhibit 431.

   
   

   PMSC and FRPCJUA opposed the motion; AIIC had no objection; the others did not respond. The motion is denied.

   FRPCJUA Exhibit 429 still has not been filed.

   
   

   FINDINGS OF FACT

   
   

   1. In response to Hurricane Andrew, which struck in September 1992, insurers either stopped or significantly curtailed writing residential property and casualty insurance in Florida, or in parts of Florida. In response to this crisis, the Florida Legislature enacted Section 627.351, Florida Statutes, which created the Intervenor, the Florida Real Property and Casualty Joint Underwriting Association (FRPCJUA). FRPCJUA is an unincorporated association of insurers licensed to write residential property and casualty insurance in Florida. In addition to the licenses held by its members, FRPCJUA itself also is required by law to be licensed by the Respondent, the Department of Insurance (Department), as an insurer in Florida. FRPCJUA is governed by a Board of Governors chosen in accordance

      with the statute; some members are appointed by the Insurance Commissioner. The Petitioner, Bankers Insurance Company (Bankers), was represented on the initial FRPCJUA Board of Governors. The FRPCJUA Board hires an executive director and other staff to conduct the day-to-day operations of FRPCJUA.

   2. The evidence indicates that Florida Representative John Cosgrove and his staff were the primary drafters of the FRPCJUA legislation and that the House Insurance Committee he chaired was its primary sponsor. Rep. Cosgrove believed that the legislation did not intend to authorize FRPCJUA to contract with non-insurers for policy and claims servicing. Rep. Cosgrove's primary reasons for wanting to limit policy and claims servicing to insurers were to ensure the financial backing of those doing the work and to maintain regulatory control over them. However, policy and claims servicing providers bear no policy risk, and the Department maintains regulatory control over FRPCJUA both under the Section 627.351 and under the statutes regulating licensed insurers.

   3. Insurance Commissioner, Tom Gallagher, and his staff also were involved in the enactment of the FRPCJUA legislation. Commissioner Gallagher believed that the legislation authorized FRPCJUA to contract with non-insurers for policy and claims servicing. He believed that the legislation was not designed to enable insurers, who had "created" the insurance crisis by

      refusing to write or curtailing the writing of, insurance, to keep the lucrative policy and claims servicing to themselves.

   4. Section 627.351 requires FRPCJUA to operate pursuant to a plan of operations approved by the Department. FRPCJUA's first plan of operations and its articles of association were approved by the Department in 1993. The First Amended Articles of Association were approved by the Department on December 29, 1993. Before approving them, the Department reviewed both of these documents and required FRPCJUA to make corrections or revisions. Both of these documents provided for the use of insurers (called service carriers) and non-insurers (called servicing providers) to provide policy and claims services for FRPCJUA. In addition, they provided that FRPCJUA itself could provide those services.

   5. Bankers' President, David Meehan, was on the FRPCJUA Board when it produced the first two versions of FRPCJUA's plan of operations. Bankers never objected to the provisions for the use of non-insurers to provide policy and claims services.

   6. In accordance with the plans of operation, FRPCJUA formed the Shared Market Insurance Services, Inc. (SMISI) to provide policy and claims services for FRPCJUA. SMISI in turn contracted with other entities, including Intervenor, Policy Management Services Corporation (PMSC), which did policy servicing using a computer system it developed called the Point System. In addition to the SMISI contract, FRPCJUA also had policy and claims servicing contracts with five servicing

      carriers: Bankers; Diamond State Insurance Company; Fortune Insurance Company; Intervenors, Audubon Insurance Company (Audubon); and American International Insurance Company (AIIC).

   7. In late 1994, Bankers objected to the growth of SMISI. When Bankers' President tried to persuade Commissioner Gallagher to abolish or down-size SMISI, he was informed that Gallagher himself supported SMISI. In response, Meehan said he was going to resign in protest. Gallagher told Meehan that he intended to ask all representatives of FRPCJUA's members to resign and asked Meehan to wait until all resigned for the sake of appearance. Meehan agreed.

   8. Approximately coinciding with Meehan's conversation with Commissioner Gallagher, the Department initiated a market conduct examination of Bankers. For various reasons, Bankers believed and alleged in this proceeding that Bankers was targeted for the market conduct examination and other punitive measures in reprisal for opposing SMISI and for arguing the issue with Commissioner Gallagher. Bankers' allegations were not proven by the evidence in this case, but Bankers' beliefs colored its perception of the Department's dealings with it from then on. They also caused Bankers to suspect that the Department also was trying to influence FRPCJUA to take punitive action against Bankers. But it was not proven that the Department's relations with Bankers had any effect on FRPCJUA's dealings with Bankers.

   9. In late 1994, Florida elected Bill Nelson to succeed Tom Gallagher as Insurance Commissioner in January 1995. Commissioner Nelson appointed William Wilson as new chair of the

      FRPCJUA Board and recommended that Wilson consider James W. (Jay) Newman, Jr., for appointment as new Executive Director of FRPCJUA. Wilson interviewed and hired Newman, who had impressive credentials (including service as Insurance Commissioner for the State of Virginia) and extensive and directly relevant experience.

      
      

   10. The Department approved FRPCJUA's Second Amended Plan of Operation on July 21, 1995. As with the earlier versions of the plan of operations, the Department reviewed the document and required FRPCJUA to make corrections or revisions before approving it. As with the earlier versions of the plan of operations, the Second Amended Plan of Operation provided for the use of insurers (called service carriers) and non-insurers (called servicing providers) to provide policy and claims services for FRPCJUA. It also provided that FRPCJUA itself could provide those services. Although Bankers no longer was represented on the FRPCJUA Board, it knew of these provisions and voiced no objection to them.

   11. By September 1995, FRPCJUA had decided to reduce its business (so-called "depopulation") and thought that it soon would not need so many contracts for policy and claims servicing.

       It also thought it could save money by reducing the number of servicing contracts. Meanwhile, the contracts of the five servicing carriers were due to expire in February 1996, and the deadline for notice of non-renewal was approaching. (Bankers' contract would have expired in approximately June 1995, but it was extended.) Although all of the contractors were performing satisfactorily, Executive Director Newman thought FRPCJUA should give notice to the five servicing carriers that their contracts would not be renewed and should initiate a request for proposals (RFP) for new contracts. His desire was to reduce the number of contracts from five to either two or three. (The SMISI contracts

       and subcontracts were not due to expire, and no consideration was given to terminating those contracts at the time.)

   12. At the FRPCJUA Board meeting on September 19, 1995, which was noticed and conducted as an open meeting, Newman presented this idea, and the FRPCJUA Board agreed with him. It directed Newman to give notice of non-renewal to the five servicing carriers and to proceed with the RFP process.

   13. On October 18, 1995, FRPCJUA published notice in the Florida Administrative Weekly that it would be accepting proposals from insurance companies interested in servicing FRPCJUA policies and that the deadline for proposals would be December 4, 1995. The notice referred those interested to FRPCJUA staff from whom the RFP would be available at a later date. No specifics of the RFP were included in the notice.

   14. Prior to the Board's next meeting on October 25, 1995, Newman prepared Proposed Servicing Carrier Selection Criteria. At the Board's meeting on October 25, 1995, which was noticed and conducted as an open meeting, the Board decided to add a provision that FRPCJUA should reserve the right to reject all proposals and instead negotiate contracts apart from the RFP and

       that the criteria should allow all existing servicing carriers to be eligible for selection. The Board directed Newman to proceed with the RFP so that the Board would be in a position to make its

       selection decision at its December 1995 meeting. (It does not appear from the evidence that there was a November 1995 meeting of the Board.)

       
       

   15. Immediately after the meeting on October 25, 1995, Newman began the task of drafting an RFP with the help of FRPCJUA General Counsel Michael Colodny and FRPCJUA staff attorney Fred Karlinsky. At some point in the drafting process, Colodny noticed that, by its terms, the draft RFP only solicited proposals from servicing carriers (insurers) and could be construed to prohibit servicing providers (non-insurers) from responding. To include servicing providers, other modifications to the RFP also would have to made. Newman, Colodny, and Karlinsky re-drafted the RFP to accommodate proposals by servicing providers and issued the re-drafted RFP on November 7, 1995.

   16. Bankers did not object to the eligibility of non- insurers to respond to the re-drafted RFP. Instead, it proceeded to prepare its response.

   17. On November 17, 1995, FRPCJUA published an amended notice in the Florida Administrative Weekly that it would be accepting proposals from both insurance companies and non- insurers interested in servicing FRPCJUA policies and that the deadline for proposals would be December 6, 1995.

   18. The RFP provided for a pre-bid conference to answer any questions on the services to be rendered under the RFP; it also provided an opportunity for written inquiries after the pre-bid conference. The pre-bid conference was held on November 28, 1995. Bankers attended and asked questions about the applicability of Chapter 287, Florida Statutes, and Newman answered that it did not apply. Bankers also asked questions on how to present compensation proposals and how different proposals would be scored. Newman explained that the intent was to encourage creative responses.

   19. Questions also were asked at the pre-bid conference about the requirements for a non-insurer to act as a servicing provider. Newman explained the terms of the RFP and confirmed that proposals from non-insurers were welcomed. Bankers did not object then or at any time prior to submission of its proposal.

   20. The RFP provided that proposals would be evaluated by FRPCJUA's executive director and staff. Newman asked FRPCJUA Chief Operating Officer, Robert Sklenar, Colodny, and Karlinsky to assist him in evaluating the proposals.

   21. Sklenar had extensive (35 years) experience in the insurance industry, mostly as vice-president of personal lines for Travelers Insurance Company. His experience included the design and preparation of competitive scoring processes for

       vendor selection by Travelers. Newman asked him to prepare the documents to be used for scoring RFP responses (the score sheets).

   22. Proposals were received on December 6, 1995. Proposals were received from Bankers, AIIC, Audubon, PMSC, Fortune, Hartford Fire Insurance Company, Mobile America Insurance Group, Inc., National Con-Serv, Inc. (NCSI), American Southern Insurance Company, and Intervenor, AIB Holdings, Inc. (AIB), which had a subcontract for policy and claims servicing with Diamond State. The RFP provided that submission of a response signified acceptance of the terms and conditions of the RFP.

   23. Newman, Sklenar, Colodny, and Karlinsky met in Tallahassee to evaluate the responses on December 6, 1995. First, the four jointly evaluated the proposals to determine whether they met seven mandatory criteria. They determined that all ten proposals met the mandatory criteria. Then each

       evaluator independently scored the ten proposals on each of seven technical criteria, using a numerical point scale of 1 to 5 for each criterion. Then they compared their scores, discussed any differences, and attempted to reach consensus scores for each technical criterion. Then they added the consensus scores given on all technical criteria for each of the ten proposals.

   24. At this point in the process, the evaluation team observed that 15 points seemed to be a natural break point and reasoned that American Southern Fortune, Mobile America, and NCSI

       should be eliminated from further consideration because they got less than 15 points on the technical criteria.

   25. Of the proposals still under consideration, Hartford scored 23 on the technical criteria, PMSC scored 22, Audubon scored 21, AIIC scored 20, Bankers scored 18, and AIB scored 17.

   26. The evaluators then discussed the top two scorers, Hartford and PMSC. The team did not think FRPCJUA should enter into a contract under the RFP with either Hartford or PMSC. By this time, the evaluation team was aware that the SMISI contract would terminate as of December 27, 1995, for "breaches and defaults of the agreements and obligations owing to the FRPCJUA by SMISI," in accordance with correspondence from FRPCJUA Board Chairman Wilson, dated November 14, 1995; however, it was anticipated that PMSC would continue to handle the SMISI

       business--fully half of FRPCJUA's total book of business--under a direct contract with FRPCJUA. Due to capacity concerns, the team did not think additional business should be directed to PMSC until those concerns were allayed. Meanwhile, Hartford's proposal disclosed that it would not be in a position to handle a large number of policies for some time, and it proposed either delaying initiation of services or subcontracting with PMSC in the interim. The evaluation team did not think either alternative was acceptable.

   27. Evaluation of the mandatory and technical criteria took approximately six hours and was not completed until 1 or 2 a.m.

       on December 7, 1995. The evaluators decided not to review or evaluate the compensation proposals; however, the other three evaluators persuaded Newman to at least look at the compensation proposals and generally advise the group as to the general nature and parameters of the compensation proposals without identifying the proposers.

   28. Colodny was unable to meet again on December 7, 1995. Newman, Sklenar, and Karlinsky met briefly to review the proposals, but it was decided that Newman would conduct a more thorough review and report his findings and recommendations to the others by telephone.

   29. Although Newman knew the team would not recommend either Hartford or PMSC, he evaluated their compensation proposals for information and comparison. Hartford offered a flat 18.42% fee. PMSC offered two alternatives. One was a very favorable flat fee of 14.9%; the other proposed flat dollar amounts.

   30. Bankers proposed an 18% fee for six-month policies, and an 18.45% fee if FRPCJUA returned to annual policies. The other compensation proposals were tiered by volume (either net written policies or policies in force). AIB structured its compensation proposal as follows: 18% fee for $25 million net written policies (NWP); 17.75% for $25-$30 million NWP; 17.50% for $30-

       $35 million NWP; 17.25% for $30-$40 million NWP; and 17.00% for more than $40 million NWP. Audubon proposed a 17.9% fee for up

       to 50,000 policies in force (PIF), 17.5% for up to 100,000 PIF, and 16.9% for over 100,000 PIF. AIIC structured its proposal: 20.0% for up to 50,000 PIF; 19.5% for up to 100,000 PIF; 19.0%

       for up to 150,000 PIF; 18.5% for up to 200,000 PIF; 18.0% for up to 250,000 PIF; and 17.5% for over 250,000 PIF.

   31. In order to evaluate the tiered proposals, Newman had to exercise professional judgment as to future volume in light of FRPCJUA's "depopulation" efforts and intention to replace five contracts with just two or three.

   32. Newman did not score the Hartford and PMSC compensation proposals since he knew the team would not be recommending that FRPCJUA should enter into contracts with either under the RFP. In Newman's judgment, based on a 15 point scale, the Audubon and AIB compensation proposals deserved scores of 14, Bankers' proposal deserved a score of 10, and AIIC deserved a score of 9. Adding these scores to the technical scores, Audubon's proposal would be scored the best, with 35 points, AIB would score 31 points, AIIC would score 29 points, and Bankers would score 28 points.

   33. As agreed, Newman telephoned the other evaluators to discuss the compensation proposals and Newman's scoring of them. All agreed with Newman's assessments. They decided to recommend that FRPCJUA contract with Audubon and attempt to negotiate with the others to accept Audubon's compensation proposal. Sklenar wanted to recommend that FRPCJUA contract with Audubon and one

       other; Newman thought it would be more prudent to contract with three. It was agreed to recommend that FRPCJUA first attempt to negotiate with AIB and AIIC to accept Audubon's compensation proposal and to negotiate with Bankers (and, if necessary, those previously eliminated from consideration) only if either AIB or AIIC refused to accept Audubon's compensation proposal.

   34. The recommendation of the evaluation team was put in writing on December 11 and was presented to the FRPCJUA Board at its meeting on December 14, 1995, which was noticed and conducted as an open meeting. The evidence was that the Board had a full and open discussion of the recommendation. Ultimately, the Board voted unanimously to accept the evaluation team's recommendation, and it instructed Newman and his staff to proceed with contract negotiations.

   35. Section 24 of the Second Amended Plan of Operation provided a means for resolving disputes with respect to any decision of the FRPCJUA Board. Section 24 provided:

       Except as to any dispute, cause of action, claim or controversy arising under, or out of, any contract or Agreement pertaining to bonding or borrowing by the Association, any person or entity aggrieved with respect to any action or decision of the Board of the Association, or any Committee thereof, (other than matters regarding Assessments which appeals are governed by Sections 15, 16 and 17 hereof) may make written request of the Board for specific relief. All written requests for relief or redress shall be deemed Appeals and shall be delivered to the Executive Director. The Executive Director shall schedule any Appeal for hearing at the next regularly scheduled Board meeting occurring, not less than ten (10) days nor more than forty (40) days from the Executive Director's receipt of the Appeal. Any person or entity

       whose Appeal for relief is denied by the Board may appeal to the Insurance Commissioner in the manner provided by § 627.371, Florida Statutes. A transcript of any Appeal items shall be made at the time of hearing.

       
       

       In accordance with Section 24 of the Second Amended Plan of Operation, Bankers and Fortune appealed from the FRPCJUA Board's action taken at its meeting on December 14, 1995.

   36. Before the next scheduled meeting of the FRPCJUA Board on February 7, 1996, Newman was able to successfully negotiate contracts with Audubon, AIIC, and AIB. However, the contracts were not finalized and executed by the time of the meeting. Bankers also indicated its willingness to accept the terms being offered to the other three if FRPCJUA would agree to contract with Bankers as well.

   37. At the Board's meeting on February 7, 1996, which was noticed and conducted as an open meeting, the Board fully and openly discussed several subjects relevant to the RFP contracts, including capacity concerns and whether to contract with Bankers, Fortune and Hartford. Ultimately, a motion was made to reject the RFP process and negotiate contracts with the five existing servicing carriers--i.e., Audubon, AIIC, Bankers, Fortune, and Diamond State--with new contract provisions and a blended compensation rate. The Board voted to approve the motion with only member Diaz voting "no." Bankers and Fortune indicated that the Board's action was acceptable to them, and Chairman Wilson announced that the Board's action mooted the appeals of Bankers

       and Fortune. Audubon, AIIC, and AIB did not indicate whether the Board's action was acceptable to them. Before the next regular meeting of the Board, all three appealed from the Board's action under Section 24 of the Second Amended Plan of Operation.

   38. The next regular meeting of the FRPCJUA Board was held on February 29, 1996, which was noticed and open to the public. The Board considered a motion by member Ricciardelli to rescind its action on February 7, 1996. After a full and open discussion, the Board voted to approve the motion; members McGriff and Burgess voted "no."

   39. As part of its attempt to prove improper influence by the Department and arbitrary and capricious action by the FRPCJUA Board, Bankers introduced as evidence that Insurance Commissioner Nelson contacted Board member McGriff once by telephone prior to the meeting on February 29, 1996, to ask him to support the FRPCJUA staff's recommendation made on December 14, 1995. But there also was evidence that Bankers' representatives contacted McGriff several times to ask him to vote to uphold the Board's action on February 6, 1996, and it is self-evident that Commissioner Nelson's telephone contact did not influence McGriff at all.

   40. In accordance with Section 24 of the Second Amended Plan of Operation, on February 29, 1996, Bankers filed an appeal of the Board's actions of that date, and Bankers presented its appeal to the Board at a meeting on April 7, 1996, which was

       noticed and open to the public. After hearing and discussion, the Board denied the appeal. On April 24, 1996, Bankers appealed the Board's decision to the Department of Insurance.

   41. It is found from the evidence presented that the FRPCJUA's actions in connection with the RFP were neither arbitrary nor capricious. The Board and its staff set about to reduce the number of servicing contracts it had (other than the SMISI contract) from five to either two or three in order to save money. FRPCJUA thoughtfully adopted a reasonable RFP process for achieving its objective and implemented the RFP in a thoughtful and reasonable manner. The result achieved the objective. FRPCJUA replaced the five existing servicing contracts with three new contracts and has saved FRPCJUA millions of dollars a year in servicing fees.

   42. Bankers presented the testimony of an expert in business valuation, RFP processes, and gaming theory in an attempt to prove that the RFP process and the scoring of the proposals was so flawed as to be arbitrary and capricious. But Bankers' evidence itself was flawed. First, Bankers' expert questioned RFP specifications that Bankers accepted. Second, the expert questioned the points given by the evaluators on the scoring scale they used without ever reviewing or considering any proposals other than those submitted by Bankers, Audubon, AIIC, and AIB. Third, while the expert conceded that it was important to understand the thought processes of the evaluators in

       assessing the validity of their judgments, he had absolutely no evidence and no knowledge about the judgments of Colodny or Karlinsky. Fourth, while the expert criticized the scoring system as not being sophisticated enough to indicate "fractional differences" between proposals, and criticized the team's failure to use a "tie-breaking" mechanism, he conceded that the consensus scoring used by the team was a valid and acceptable way to assess relatively small differences between proposals and to break scoring ties. Fifth, much of the expert's criticism amounted to disagreements as to how to evaluate aspects of the proposals; meanwhile, as the expert admitted, in most cases the evaluation required the exercise of professional judgment, and the evaluation team had more and better expertise. The expert's testimony did not prove that the RFP process and the scoring of the proposals was arbitrary or capricious.

       CONCLUSIONS OF LAW

       
       

       Jurisdiction

       
       

   43. Section 627.351(6)(a), Florida Statutes (1995), provided that FRPCJUA "shall operate pursuant to a plan of operation approved by order of the department." Section 24 of the approved Second Amended Plan of Operation provided in pertinent part: "Any person or entity whose Appeal for relief is denied by the [FRPCJUA] Board may appeal to the Insurance Commissioner in the manner provided by § 627.371, Florida Statutes."

   44. Section 627.371, Florida Statutes (1995), provided:

       
       

       1. Any person aggrieved by any rate charged, rating plan, rating system, or underwriting rule followed or adopted by an insurer, and any person aggrieved by any rating plan, rating system, or underwriting rule followed or adopted by a rating organization, may himself or by his authorized representative make written request of the insurer or rating organization to review the manner in which the rate, plan, system, or rule has been applied with respect to insurance afforded him. If the request is not granted within 30 days after it is made, the requester may treat it as rejected. Any person aggrieved by the refusal of an insurer or rating organization to grant the review requested, or by the failure or refusal to grant all or part of the relief requested, may file a written complaint with the department, specifying the grounds relied upon. If the department has already disposed of the issue as raised by a similar complaint or believes that probable cause for the complaint does not exist or that the complaint is not made in good faith, it shall so notify the complainant. Otherwise, and if it also finds that the complaint charges a violation of this chapter and that the complainant would be aggrieved if the violation is proven, it shall proceed as provided in subsection (2).

       2. If after examination of an insurer, rating organization, advisory organization, or group, association, or other organization of insurers which engages in joint underwriting or joint reinsurance, upon the basis of other information, or upon sufficient complaint as provided in subsection (1), the department has good cause to believe that such insurer, organization, group, or association, or any rate, rating plan, or rating system made or used by any such insurer or rating organization, does not comply with the requirements and standards of this part applicable to it, it shall, unless it has good cause to believe such noncompliance is willful, give notice in writing to such insurer, organization, group, or association stating therein in what manner and to what extent noncompliance is alleged to exist and specifying therein a reasonable time, not less than 10 days thereafter, in which the noncompliance may be corrected, including any premium adjustment.

       3. If the department has good cause to believe that such noncompliance is willful or if, within the period prescribed by the department in the notice required by subsection (2), the insurer, organization, group, or association does not make such changes as may be necessary to correct the noncompliance specified by the department or establish to the satisfaction of the department that such specified noncompliance does not exist, then the department is required to proceed to further determine the matter. If no notice has been given as provided in subsection (2), the notice shall state in what manner and to what extent noncompliance is alleged to exist. The proceedings shall not consider any subject not specified in the notice required by subsections (2) and (3). (emphasis added)

          Although Bankers' appeal to the Department from FRPCJUA's refusal to grant the relief Bankers requested was not a grievance directed to "any rate charged, rating plan, rating system, or underwriting rule followed or adopted by an insurer" under the first sentence of paragraph (1), Section 24 of the Second Amended Plan of Operation clearly contemplated that the appeal should proceed as a complaint to the Department under the second sentence of paragraph (1) and the rest of Section 627.371. As a result, the threshold question before the Department was whether there was "good cause to believe that" FRPCJUA had complied with "the requirements and standards of this part [I of Chapter 627] applicable to it." Only then would the Department take the next step: either "give notice in writing" as to the alleged noncompliance and the time within which corrective action would have to be taken; or, if the Department had "good cause to believe that" the noncompliance was willful, "proceed [directly] to further determine the matter."

   45. The Department's proceeding under Section 627.371 appears to be in the nature of an investigation culminating in a probable cause determination. An agency's finding of no probable cause would not always affect the substantial interests of a complainant so as to entitle the complainant to proceedings under Sections 120.569 and 120.57, Florida Statutes (Supp. 1996). But it is concluded that, in this case, where the Department's proceeding under Section 627.371 was Bankers' means of challenging FRPCJUA's rejection of Bankers' proposal in response to an RFP, the Department's decision not to find probable cause affected Bankers' substantial interests and that Bankers was entitled to initiate proceedings under Sections 120.569 and

       120.57. It also is concluded that, in the interest of economy, it makes sense for Bankers to be able to attempt to establish in this proceeding not only that the Department should find probable cause under paragraph (2) of Section 627.371 but also that the Department should now "proceed to further determine" under paragraph (3) of Section 627.371 whether FRPCJUA failed to comply with applicable requirements and standards of Part I of Chapter 627.

       The Issues

       
       

   46. However, while proceedings under Sections 120.569 and

       
       

       120.57 may be appropriate to determine whether FRPCJUA failed to comply with applicable requirements and standards of Part I of Chapter 627, since the Department declined to find probable

       cause, it is concluded that the alleged noncompliance issues for determination in this proceeding are limited to those raised by Bankers. Only three issues were raised in Bankers' bid protest and appeal to FRPCJUA on February 29, 1996: (1) whether FRPCJUA improperly gave policy servicing work to AIB, a non-insurer; (2) whether FRPCJUA violated Chapter 287, Florida Statutes; and (3), if Chapter 287 was not applicable, whether FRPCJUA took arbitrary actions and used bad faith instead of using procedures equivalent to those in Chapter 287. In addition, during its investigation and probable cause proceeding, the Department permitted Bankers to raise the issue whether FRPCJUA violated the Government in the Sunshine Law, Chapter 286, Florida Statutes.

       Chapter 287

       
       

   47. By its terms, Chapter 287 only applies to state agencies. Section 287.012(1), Florida Statutes (1995), defined the term "agency" to mean "any of the various state officers, departments, boards, commissions, divisions, bureaus, and councils and any other unit of organization, however designated, of the executive branch of state government."

   48. Section 627.351(6)(j), Florida Statutes (1995), provided:

       The Residential Property and Casualty Joint Underwriting Association is not a state agency, board, or commission. However, for the purposes of s. 199.183(1), the Residential Property and Casualty Joint Underwriting Association shall be considered a political subdivision of the state and shall be exempt from the corporate income

       tax.

       
       

   49. In In re Advisory Opinion to the Governor--State Revenue Cap, 658 So. 2d 77, 81 (Fla. 1995), the Florida Supreme Court opined that "assessments, premiums, and policy surcharges imposed by the Association's Board of Governors collected pursuant to section 627.351(6), Florida Statutes, are not 'state revenues' within the meaning of article VII, section 1(e) of the Florida Constitution." In so doing, the Court stated:

       We acknowledge that section 627.351(6)(j) provides that for purposes of section 199.183(1), Florida Statutes (1993), the Association shall be considered a political subdivision of the State. However, this provision was included in order to exempt the Association from intangible taxes and does not reflect a legislative intent that the Association should be considered a political subdivision of the State for any other purpose.

       
       

       Id.

       
       

   50. In Bankers Ins. Co. v. Florida Residential Property and

       
       

       Cas. Joint Underwriting Ass'n, 137 F.3d 1293 (11th Cir. 1998), the Eleventh Circuit upheld the dismissal of Bankers' antitrust case against FRPCJUA on the ground of state action immunity. It recognized In re Advisory Opinion to the Governor--State Revenue Cap, supra, but still held that FRPCJUA was a political subdivision for antitrust purposes. While this holding is not binding on the question whether FRPCJUA is a "state agency" under Chapter 287, the federal court's observations on the nature of FRPCJUA are worth noting:

       The Association is not short on public-entity trappings that suggest it is entitled to political-subdivision status. The Association is subject to Florida's "sunshine laws." See Fla. Stat. § 627.351(6)(n). It is exempt from corporate tax. See id. § 627.351(6)(j). It is authorized to issue

       tax-free bonds. See id. § 627.351(6)(c)(3). Upon its dissolution, its assets become property of the state. See id. § 627.351(6)(k). The Association operates under a detailed plan that must be approved by the Department of Insurance. See id. § 627.351(6)(a), (c). A board of governors supervises the Association's operations; the 13-member board includes five consumer representatives, the insurance consumer advocate, and two representatives of the insurance industry appointed by the state insurance commissioner. Only five of the members are appointed by the insurance industry, and even those serve at the insurance commissioner's pleasure. See id. § 627.351(c)(4).

       
       

       On the other hand, the Association has one attribute that at first blush would seem to weigh on the private side of the public/private scale: it is at bottom an association of private, competing insurers. Two facts, however, suggest that this attribute matters little here. First, the Association was not created to compete in or regulate an existing market; rather, it invented a market where--by definition--none existed before. See Fla. Stat. § 627.351(6)(a) (creating Association to serve "applicants who are in good faith entitled, but are unable, to procure insurance through the voluntary market"). The members of the Association are not, therefore, competing in the market the Association serves. This impossibility of competition is an indicator that the Association represents public interests, rather than competing private interests. Cf. Hass, 883 F.2d at 1465-66 (Ferguson, J., dissenting) (contending that a state bar should not be considered a political subdivision because its members

       compete in the very market the bar regulates). Second, the Association is involuntary. See id. § 627.351(6)(b). Coerced private participation is yet another clue that the Association is an entity created by Florida's legislature to serve public interests and not a private, anticompetitive alliance formed with the state's blessing. (Footnote omitted.)

       Id. at 1297.

       
       

   51. Having concluded that FRPCJUA was a political subdivision of the State of Florida for antitrust purposes, the Eleventh Circuit next had to consider the question whether the alleged state anticompetitive action was pursuant to a clearly articulated policy, i.e., whether the alleged action was both authorized by statute and its anticompetitive effect was an intended (meaning foreseeable) result of that authorization. In so doing, the federal court stated that, through Section 627.351(6)(c)1, Florida Statutes (1995):

       Florida's legislature has granted the Association open-ended authority to plan to have its policies serviced by outside contractors . . ..

       
       

       The plan of operation of the association [m]ay provide for one or more designated insurers, able and willing to provide policy and claims service, to act on behalf of the association to provide such service. Each licensed agent shall be entitled to indicate the order of preference regarding who will service the business placed by the agent. The association shall adhere to each agent's preferences unless after consideration of other factors in assigning agents, including, but not limited to,

       servicing capacity and fee arrangements, the association has reason to believe it is in the best interests of the association to make a different assignment. (Citation omitted.)

       
       

       . . . The legislature's selection of the modal "may," rather than "shall," "will," or "must," shows that all of the first sentence of the section authorizing servicing contracts is permissive, not mandatory. The Association is therefore freely permitted to "provide for" policy service as it sees fit-- or not to contract at all. It is foreseeable that conferring such unfettered discretion on the Association to select policy servicing services could result in potentially anticompetitive adjustment and revision of standards and selection criteria.

       Id. While not the precise issue before the federal court, these statements might suggest that the court would not have been inclined to rule that FRPCJUA is bound by the strictures of Chapter 287.

   52. Florida Attorney General Opinions suggest that FRPCJUA is not a state agency for purposes of Chapter 287, Florida Statutes. See 1978 Op. Att'y Gen. 078-19 (Broward County Housing Authority was not a state agency for purposes of Chapter 287); 1978 Op. Att'y Gen. 078-39 (St. Augustine Airport Authority was not a state agency for purposes of Chapter 287); 1974 Op. Att'y Gen. 074-7 ("special districts and other separate entities are not considered to be agencies of the state" for purposes of Chapter 287).

   53. It is concluded that FRPCJUA is not "a unit of organization of the executive branch of state government" for

       purposes of Chapter 287, Florida Statutes (1995), and that Chapter 287 did not apply to the FRPCJUA's RFP. Absent a specific statutory requirement, the FRPCJUA had "no obligation to establish a bidding procedure and may contract in any manner not arbitrary or capricious." Volume Services v. Canteen Corp., 369 So. 2d 391, 395 (Fla. 2d DCA 1979). See also Eggart v. Westmark,

       45 So. 2d 505 (Fla. 1950); Berbusse v. North Broward Hospital District, 117 So. 2d 550 (Fla. 2d DCA 1960); 1978 Op. Att'y Gen. 078-19.

       Other Procurement Requirements and Standards

       
       

   54. An "arbitrary" action is one not supported by facts or logic, or despotic. Agrico Chem. Co. v. Dept. of Environmental Reg., 365 So. 2d 759, 763 (Fla. 1st DCA 1978). A "capricious" action is one taken without thought or reason or irrationally. Id. As found, Bankers did not prove that FRPCJUA acted arbitrarily or capriciously in connection with the RFP.

       Use of Non-Insurers

       
       

   55. Section 627.351(6)(c), Florida Statutes (1995), provided in pertinent part:

       The plan of operation of the association:

       1. May provide for one or more designated insurers, able and willing to provide policy and claims service, to act on behalf of the association to provide such service.

       * * *

       3. May provide that the association may employ or otherwise contract with individuals or other entities to provide administrative

       or professional services that may be appropriate to effectuate the plan.

       
       

       All of the parties claim that the statutory language is unambiguous on the question whether it authorized FRPCJUA to contract with non-insurers, like AIB, for policy and claims service. Bankers contends that the statutory language clearly prohibited such contracts; the other parties contend that the statutory language clearly authorized such contracts. It is concluded that the statute is ambiguous on the point.

   56. When a statute is ambiguous, the polestar guide to its meaning is the legislative intent. City of Boca Raton v. Gidman, 440 So. 2d 1277, 1281 (Fla. 1983); State v. Webb, 398 So. 2d 820, 824 (Fla. 1981). In Webb, the Florida Supreme Court held that to determine legislative intent, an act must be considered as a whole, including the evil to be corrected, the language of the act, including its title, the history of its enactment, and the state of the law already in existence bearing on the subject.

   57. In this case, the evidence on legislative intent is conflicting. Rep. Cosgrove maintains that there never was an intent to authorize policy and claims servicing contracts with

       non-insurers; former Insurance Commissioner Gallagher maintains that such was always the intent.

   58. Rep. Cosgrove's primary reasons for wanting to limit policy-servicing and claims adjustment work to insurers--to ensure the financial backing of those doing the work and to maintain regulatory control over them--are questionable. Policy- servicing and claims adjusting providers bear no policy risk, and the Department maintains regulatory control over FRPCJUA both under the Section 627.351 and under the statutes regulating licensed insurers. Meanwhile, Gallagher's rationale makes more sense--that the legislation was not designed to enable insurers, who "created" the problem by refusing to write, or limiting, homeowner's insurance in Florida, to keep the lucrative policy- servicing and claims adjustment work to themselves.

   59. Regardless of the views of the legislative intent witnesses, Gallagher and current Insurance Commissioner Nelson have approved three successive FRPCJUA plans of operation that authorized such contracts. Through subcontracts, several non- insurers have done policy and claims service for FRPCJUA since 1993. Agency constructions of statutes they administer are accorded great weight and are given deference unless clearly erronious. See Ameristeel v. Clark, 691 So. 2d 473 (Fla. 1997); Dept. of Health, etc., v. A. S., 648 So. 2d 128 (Fla. 1995); Florida Cable Television Ass'n v. Deason, 635 So. 2d 14 (Fla. 1990); Idle Assets, Inc., v. Dept. of Ins., 424 So. 2d 902 (Fla.

       1st DCA 1983). In addition, where the agency's statutory construction is long-standing and known to the Legislature, and the Legislature allows it to stand, the construction should be given effect. See State, by and through Ervin, v. Massachussetts Co., 95 So. 2d 902 (Fla. 1957), cert. denied, 355 U.S. 881, 78

       S.Ct. 147, 2 L.Ed. 2d 112 (1957); State ex rel. Fronton Exhibition Co. v. Stein, 198 So. 2d 82 (Fla. 1940); Walker v. Dept. of Transp., 366 So. 2d 96 (Fla. 1st DCA 1979); Austin v. Austin, 350 So. 2d 102 (Fla. 1st DCA 1977).

   60. As previously noted, it would seem that the federal Eleventh Circuit Court of Appeal readily would accept the Department's construction of the statute, having viewed the statute as giving FRPCJUA "open-ended authority to plan to have its policies serviced by outside contractors" and the freedom "to 'provide for' policy service as it sees fit--or not to contract at all." Bankers, supra, at 1297.

       Waiver and Estoppel

       
       

   61. In addition, as to Bankers' protest and claim for damages from FRPCJUA, even if FRPCJUA had contracted with AIB wrongfully, as alleged, Bankers waived the protest and is estopped from asserting the claim.

   62. Bankers knew all long that non-insurers were providing policy and claims service under subcontracts with SMISI and never questioned the validity of those contracts. Bankers also knew from the time the RFP first was issued that it solicited

       proposals from non-insurer service providers yet Bankers participated fully in the RFP process without protesting the RFP's specifications or otherwise ever giving FRPCJUA notice that Bankers would protest an award to a non-insurer as being contrary to Section 627.351(6)(c)1. As a result, FRPCJUA was not given an opportunity to address the issue in a timely fashion, but instead invested its time and energy in the RFP as issued. It is concluded that Bankers waived the issue for purposes of a claim for damages against FRPCJUA and is estopped from making that claim.

       Government in the Sunshine

       
       

   63. Section 627.351(6)(n)2, Florida Statutes (1995), provided:

       Portions of meetings of the Residential Property and Casualty Joint Underwriting Association are exempt from the provisions of

       s. 286.011 and s. 24(b), Art. I of the State Constitution wherein confidential underwriting files or confidential open claims files are discussed.

       
       

       It must be presumed that the Legislature intended all other FRPCJUA meetings to be subject to Section 286.001, the Government in the Sunshine Law (or Sunshine Law).

   64. In proceedings under Section 627.371, the Department is to determine whether FRPCJUA complied with "the requirements and standards of this part [I of Chapter 627] applicable to it." Since Section 627.351 required FRPCJUA to comply with the Sunshine Law, it is concluded that the Department has the

       authority to consider alleged violations of the Sunshine Law in proceedings under Section 627.371. Those allegations having been raised, considered, and decided in the Department's investigation and probable cause determination under Section 627.371, they also are properly considered in this formal administrative proceeding.

   65. Section 286.001(1), Florida Statutes (1995), provided:

       
       

       1. All meetings of any board or commission of any state agency or authority or of any agency or authority of any county, municipal corporation, or political subdivision, except as otherwise provided in the Constitution, at which official acts are to be taken are declared to be public meetings open to the public at all times, and no resolution, rule, or formal action shall be considered binding except as taken or made at such meeting. The board or commission must provide reasonable notice of all such meetings.

          Bankers contends that FRPCJUA violated the Sunshine Law when: the members of the RFP "Evaluation Committee" were selected; RFP documents and amendments were drafted and reviewed; the procedures to be utilized by the "Evaluation Committee" were established; and the "Evaluation Committee" met and scored the proposals.

   66. As to the first contention, it does not appear from the evidence that any meeting at all took place in connection with the selection of the members of the evaluation team; rather, Executive Director Newman made the selection on his own. Without a meeting, there can be no Sunshine Law violation. On the other hand, meetings did take place in connection with the other

       actions. Whether the other meetings violated the Sunshine Law seems to depend on the nature and purpose of the meeting.

   67. Generally speaking, staff of a "board or commission" is not under the Sunshine Law, and meetings among staff need not be conducted "in the sunshine." See Occidental Chem. Co. v. Mayo,

       1. So. 2d 336, 341 (Fla. 1977). But where a group of staff is delegated significant responsibility to act on behalf of the "board or commission" in a clear and formal way, meetings of the group are subject to the Sunshine Law. See Wood v. Marston, 442 So. 2d 934, 938-939 (Fla. 1983)(search-and-screen committee appointed by state university president to solicit and screen applications for the deanship of the university law school); Town of Palm Beach v. Gradison, 296 So. 2d 473 (Fla. 1974)(town council created citizens committee to act as its alter ego and summarily approved committee's recommendations in purely ceremonial public meeting); Silver Express Co. v. Dist. Bd. of Lower Tribunal Trustees of Miami-Dade Community College, 691

          So. 2d 1099, 1100-1101 (Fla. 3d DCA 1997)(bid evaluation committee appointed by college's board of trustees); News-Press Publishing Co., Inc., v. Carlson, 410 So. 2d 546, 547-548 (Fla. 2d DCA 1982)(hospital board's internal budget committee); Krause v. Reno, 366 So. 2d 1244 (Fla. 3d DCA 1979)(city manager empowered by city charter to select and appoint police chief appointed a special committee to screen applications, conduct interviews, evaluate applicants, and recommend "short list").

          Contrast Cape Publications, Inc., v. City of Palm Bay, 473 So. 2d 222, 223-224 (Fla. 5th DCA 1985)( sole function of experts asked by city manager interviewing candidates for police chief was to assist the city manager in acquiring information by asking questions during the interviews and then discussing with the city manager the qualifications of each candidate, not to make recommendations or participate in the city manager's decision- making responsibility); Godheim v. City of Tampa, 426 So. 2d 1084, 1088 (Fla. 2d DCA 1983)(city staff members under mayor's supervision conducted negotiation meetings with competing vendors but the ultimate decisions concerning the procedures to be followed and the award of the contract were made by the city council in open meetings); Bennett v. Warden, 333 So. 2d 97 (Fla. 2d DCA 1976)(career employees' council met with college president to discuss their own staff positions and working conditions).

   68. Under these authorities, it would not appear that the meetings to draft and review RFP documents and amendments were required to be "in the sunshine." FRPCJUA delegated the task to its Executive Director, who informally requested the assistance of FRPCJUA's General Counsel and staff counsel. On the other hand, it would appear that FRPCJUA's evaluation team was required to comply with the Sunshine Law when it met to establish the procedures it would follow and to evaluate and score the

       proposals. Although the members of the team were appointed in a relatively informal way, the purpose of the group was to screen, evaluate, and cull proposals on behalf of the FRPCJUA Board.

   69. However, other authorities also come into play in deciding whether the evaluation team's meetings should have been conducted "in the sunshine." Where the discussion at a meeting otherwise subject to the Sunshine Law would disclose documents that are confidential by statute and not subject to disclosure under Section 119.07, Florida Statutes, also known as the Public Records Law, the meetings may be exempt from the Sunshine Law. See Capeletti Bros., Inc., v. Dept. of Transp., 499 So. 2d 855, 858 (Fla. 1st DCA 1986), rev. denied, 509 So. 2d 1117 (Fla. 1987 (DOT cost estimates, the identities of potential bidders, and bid analysis and monitoring systems made confidential and exempt from disclosure by statute were sure to be discussed at meetings of DOT's bid evaluation committee); Marston v. Gainesville Sun Publishing Co., 341 So. 2d 783 (Fla. 1st DCA 1976), cert. denied,

       1. So. 2d 171 (Fla. 1977)(opening college honor court proceedings to public would result in disclosure of student records made confidential by statute). Cf. also Tribune Co. v. D.M.L., 566 So. 2d 1333, 1335 (Fla. 2d DCA 1990)(Baker Act hearing that centered around confidential patient records would be closed to the public).

   70. Section 627.351(6)(n)1., Florida Statutes (1995), provided in pertinent part:

       The following records of the Residential Property and Casualty Joint Underwriting Association are confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution:

       * * *

       h. Information relating to . . . contractual services, until the conclusion of the negotiations.

       
       

       It seems clear that the RFP, the evaluation procedures, the score sheets, and the proposals all involved "information relating to

       . . . contractual services." As such, the meetings in question at which this information was discussed were exempt from the Sunshine Law under the cited authorities.

   71. Even if the evaluation team's meetings should have been held "in the sunshine," they were followed by FRPCJUA meetings held in accordance with the Sunshine Law. At the meeting on December 14, 1995, the team's evaluations and recommendations were discussed freely and openly before being adopted. At the meeting on February 7, 1996, more free and open discussion took place, and the Board reversed itself. At the meeting on February 29, 1996, still more free and open discussion took place, and the Board reversed itself again and re-adopted its earlier action. Those meetings clearly were not perfunctory or merely ceremonial, and the FRPCJUA's actions taken at open

       meetings "in the sunshine" cured any prior Sunshine Law violation by the evaluation team. See Tolar v. School Bd. of Liberty

       County, 398 So. 2d 427 (Fla. 1981); Monroe County v. Pidgeon Key Historical Park, 647 So. 2d 857 (Fla. 3d DCA 1994).

   72. Finally, even if a Sunshine violation had been proven, while the Department could take action to require FRPCJUA to comply with the Sunshine Law, nothing in Section 286.011, Florida Statutes, would suggest that administrative agencies should consider claims for money damages for violations of the Government in the Sunshine Law. The statute confers jurisdiction for its enforcement only on the circuit courts, and the remedies provided by statute do not include an award of money damages. It is concluded that the Department would have had no authority to award money damages against FRPCJUA for any alleged violation of the Government in the Sunshine Law.

   73. Section 286.001(4) authorizes the court to award a reasonable attorney's fee against an agency determined in enforcement proceedings to have violated the Government in the Sunshine Law (and to "assess a reasonable attorney's fee against the individual filing such an action if the court finds it was filed in bad faith or was frivolous"). But the statute does not authorize an administrative agency to award attorney fees. Absent a contract or statute specifically authorizing such an award, attorney fees cannot be awarded. Cadenhead v. Gaetz, 677 So. 2d 96 (Fla. 1st DCA 1996); California Fed. Sav. & Loan Ass'n v. Coley, 593 So. 2d 1152 (Fla. 1st DCA 1992).

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Insurance enter a final order denying Bankers' appeal and claim for money damages and attorney fees.

DONE AND ENTERED this 10th day of November, 1998, in Tallahassee, Leon County, Florida.

J. LAWRENCE JOHNSTON Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 1998.

COPIES FURNISHED:

Douglas A. Mang, Esquire Wendy Russell Wiener, Esquire Mang Law Firm, P.A.

Post Office Box 11127 Tallahassee, Florida 32302-3127

Michael H. Davidson, Esquire Division of Legal Services

200 East Gaines Street 612 Larson Building

Tallahassee, Florida 32399-0333

Seann M. Frazier, Esquire Greenberg, Traurig, Hoffman,

Lipoff, Rosen & Quentel, P.A. Post Office Drawer 1838 Tallahassee, Florida 32302

Perry Ian Cone, General Counsel AIB Insurance Group, Inc.

2500 Northwest 79th Avenue Miami, Florida 33122

Michael Colodny, Esquire Stuart B. Yanofsky, Esquire

Colodny, Fass & Talenfeld, P. A. 2000 West Commercial Boulevard Suite 232

Fort Lauderdale, Florida 33309

Fred E. Karlinsky Associate General Counsel

Florida Residential Property and Casualty Joint Underwriting Association

101 North Monroe Street Suite 1000

Tallahassee, Florida 32301

Zollie M. Maynard, Esquire William C. Owen, Esquire

Panza, Maurer, Maynard & Neel, P.A.

215 South Monroe Street, Suite 320 Tallahassee, Florida 32301

Mitchell B. Haigler, Esquire Paul R. Ezatoff, Esquire

Katz, Kutter, Haigler, Alderman, Bryant & Yon, P.A.

Post Office Box 1877 Tallahassee, Florida 32302

J. Stephen Menton, Esquire Rutledge, Ecenia, Underwood,

Purnell & Hoffman, P.A. Post Office Box 551

Tallahassee, Florida 32302-0551

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 96-004938

Orders for Case No: 96-004938