THE TREASURER OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE
IN THE MATTER OF:
DOAH CASE NO. 98-0442
AND JUSTICE FOR ALL, INC., CASE NO. 21675-97-C d/b/a LEGAL CLUB OF AMERICA
/
FINAL ORDER
THIS CAUSE came on before the undersigned Treasurer of the State of Florida, acting in his capacity as Insurance Commissioner, for consideration and final agency action. On December 31, 1997, the Department of Insurance issued a Notice of Intent to Issue Cease and Desist Order, alleging that And Justice For All, Inc., d/b/a Legal Club of America (hereinafter, "Respondent"), was engaged in the legal expense business without being properly licensed. Respondent timely filed a request for a formal proceeding pursuant to Section 120.57(1), Florida Statutes.
In the Joint Prehearing Stipulation, filed October 22, 1999, the parties agreed to submit this case on a stipulated record.
The stipulated record consisted of the depositions of Therese J. Littlefield, John Anthony Boggs, Marci Rubin, and Brett Merl, and Agreed Exhibits numbered 1 through 54.
After consideration of the stipulated record, the Administrative Law Judge (ALJ) issued a Recommended Order on February 3, 2000. (Attached as Exhibit A). The ALJ recommended that a Final Order be entered determining that Respondent is not selling legal expense insurance and IS not subject to regulation by the Department, and further recommended the withdrawal of the Notice of Intent to Issue Cease and Desist Order.
On February 18, 2000, the Department timely filed exceptions to the Recommended Order. The Department excepted to the Findings of Fact, Conclusions of Law, and the Recommendation. On February 28, 2000, Respondent filed its Response to Petitioner's Exceptions to Recommended Order. Each of the Department's exceptions is addressed below.
RULINGS ON THE DEPARTMENT'S EXCEPTIONS
Exceptions to Findings of Fact
The Department excepts to the ALJ's determination in Paragraphs 1 and 2 of the Recommended Order that Respondent is a
lawyer referral service. Rule 4-7.8(b), The Rules regulating The Florida Bar, defines "lawyer referral service" as:
any person, group of persons, association, organization, or entity that receives a fee or charge for referring or causing the direct or indirect referral of a potential client to a lawyer drawn from a specific group or panel of lawyers.
The record in this matter reflects that Respondent meets The Florida Bar's threshold definition of a "lawyer referral service".
The Department's exception to this finding seems to be predicated upon the argument that because Respondent is a legal expense insurer regulated under Chapter 642, Florida Statutes, it therefore cannot be a "lawyer referral service" as defined by The Florida Bar. However, the record reflects that these two types of entities are not mutually exclusive. Section 642.017(2), Florida Statutes, specifically exempts from the Florida Insurance Code, "Any lawyer referral service authorized by The Florida Bar". Chapter 8 of The Rules Regulating The Florida Bar governs the authorization of lawyer referral services by The Florida Bar. Those entities which The Florida Bar may authorize are limited to lawyer referral services operated by a local bar association.
The definition set forth in Florida Bar Rule 4-7.8(b)(1) is not limited to lawyer referral services operated by a local bar association, and thus, an entity which meets that definition can nonetheless fall under the regulatory authority of the Department as set forth in Chapter 642. Accordingly, the Department's exception to the finding that Respondent is a lawyer referral service is rejected.
The Department excepts to the ALJ's determination in Paragraph 2 of the Recommended Order that, "Respondent operates a purchasing cooperative, in which the combined purchasing power of its members is connected to attorneys willing to offer free and discounted services in exchange for new clients". The record contains sufficient evidence to support this determination by the ALJ. It is undisputed that plan attorneys do not receive any payment from Respondent, and that plan attorneys agree to perform free or discounted services offered by Respondent to plan members. Thus, a reasonable inference can be made that this arrangement is a "purchasing cooperative" in which plan attorneys are willing to perform the free or discounted services offered by Respondent in order to obtain new clients. Accordingly, the Department's exception to Paragraph 2 is rejected.
The Department excepts to Paragraph 5 of the Recommended Order, in which the ALJ found that, "If Respondent is unable to refer a plan member to a participating attorney who will abide by the fee schedule outlined in the Plan Member Guidebook, the plan member is entitled to a refund of the membership fee paid to Respondent". The Department contends that the deposition testimony of Marci Rubin, Respondent's general counsel, indicates that plan members are not entitled to a refund of the membership fee after thirty (30) days if Respondent is unable to refer them to a plan attorney.
The ALJ found, in Paragraph 3 of the Findings of Fact, that Respondent offers two membership plans in Florida: a Family Plan and a Small Business Plan. At the time the Department issued its cease and desist letter, no member of either plan was entitled to a refund of the membership fee after thirty (30) days.
Subsequent to the initiation of this action, however, Respondent twice revised its Plan Member Guidebook for the Family Plan, and provided, in October of 1999, a "guarantee" that if Respondent cannot find an attorney for a Family Plan member, that plan member is entitled to a refund of the membership fee. [Agreed Exhibits 2 and 3] While the thirty (30) day provision still exists in the revised Family Plan Member Guidebook, the "guarantee" clearly overrides this provision in the event Respondent cannot provide an attorney willing to abide by the fee schedule. Respondent has not revised the Plan Member Guidebook for its Small Business Plan. Therefore, the ALJ's finding, which does not so differentiate between the plans offered by Respondent, is not fully supported by competent, substantial evidence and is modified to reflect that, as of October, 1999, only a Family Plan member is entitled to a refund of the membership fee if Respondent is unable to provide an attorney who will abide by the fee schedule contained in the Family Plan Member Guidebook. Accordingly, the Department's exception to Paragraph 5 is accepted in part.
The Department excepts to the ALJ's finding in Paragraph
11 of the Recommended Order that, "The only thing Respondent provides to plan members is a referral to a plan attorney". There is no dispute as to the general structure of Respondent's business, as set forth in Paragraphs 3 through 10 of the ALJ's Findings of Fact.1 In addition to the specific factual findings made by the ALJ, the record reflects that Respondent's marketing materials and Plan Member Guidebooks provide not just a referral to an attorney, but a referral to an attorney who will provide certain free and discounted services to members of Respondent's plans. [Agreed Exhibits l through 3]
Respondent has represented in its marketing materials that, in exchange for the payment of an annual membership fee, plan
members are entitled to receive a referral to a plan attorney who will provide the free and discounted services set forth in the advertisements. [Agreed Exhibits 1A, pgs. 1 and 2, and 1B, pas.
3 and 4] Further, in its Plan Member Guidebooks, which contain the contractual terms by which Respondent and each plan member must abide, Respondent has obligated itself to provide to each plan member a plan attorney who will provide these free or discount legal services. [Agreed Exhibits lC, pgs. 8-10, and 1D, pgs. 16-19]
For example, Respondent provides access to attorneys who agree to perform "Eight Commonly Used Legal Services" at guaranteed fixed fees: Traffic ticket defense ($89); Name change ($155); Simple will with trust ($170); Chapter 7 bankruptcy ($250); Non-support ($239); Simple divorce ($210); Incorporation ($295); and Personal real estate closing ($175). [Agreed Exhibit lB, pg. 3] Respondent also provides certain free services, such as phone and person-to-person consultations, review of legal documents, phone calls and letters from the attorney, simple wills, and general advice and assistance with small claims court actions and governmental programs. [Agreed Exhibit lB, pg. 4] Each of these free or discounted services is provided by Respondent to members only through membership in Respondent's club.
In addition, the ALJ's own findings of fact support this finding. Specifically, the ALJ found in Paragraph 3 that in exchange for the payment of the annual membership fee, a plan member "receives a referral from Respondent to a plan attorney who has agreed to abide by a schedule of free and discounted services". (Emphasis supplied). Further, the ALJ found in Paragraph 8 that "if a plan member needs legal representation exceeding the free or discounted services included in the plan, the plan member and the attorney are free to negotiate representation for a mutually agreeable amount". (Emphasis supplied). The ALJ's own findings clearly indicate that Respondent provides more than just a referral to a plan attorney. Respondent is obligated to provide an attorney who will provide the specific free or discounted services offered by Respondent in its marketing materials and mandated in its Plan Member Guidebooks.
The fact that Respondent provides more than simply a referral to a plan attorney is further evidenced by the effect of the termination of a plan member's membership. Respondent's Plan Member Guidebooks provide that Respondent reserves the right to terminate a plan member's membership for delinquency in paying the membership fee, or if Respondent otherwise provides ten (10) days notice of cancellation. [Agreed Exhibit 2B, pg. 16] Upon termination of membership, a plan member loses not just the right
to a referral to a plan attorney, but the right, provided by Respondent, to receive certain free or discounted legal services from the plan attorney. Thus, based upon a review of the entire record, the ALJ's finding that Respondent only provides to plan members a referral to a plan attorney is not supported by competent, substantial evidence. Accordingly, the Department's exception to Paragraph 5 is accepted.
The Department excepts to the ALJ's finding in Paragraph 22 of the Recommended Order that Rule 4-7.8(b)(1), The Rules Regulating The Florida Bar, "covers the manner in which Respondent operates". Rule 4-7.8(b)(1) sets forth The Florida Bar's definition of "lawyer referral service". The Rule undoubtedly covers the manner in which lawyer referral services who meet that definition, as determined by The Florida Bar, operate, in that Rule 47.8(a) prohibits attorneys from accepting referrals from lawyer referral services which do not meet the six
(6) stated criteria. As stated in Paragraph 1 above, the record in this matter reflects that Respondent meets the threshold definition of "lawyer referral service". Notwithstanding that determination, however, the ALJ's finding that the Rule covers the manner in which Respondent operates is rejected as unsupported by competent, substantial evidence, based upon uncontroverted documentation contained in the record which evidences The Florida Bar's interpretation of Rule 4-7.8.
The record reflects that in October of 1998, The Florida Bar notified Respondent by letter that Respondent had been removed from The Florida Bar's list of private referral companies because, in The Florida Bar's opinion, Respondent did not fall within the type of entity determined by The Florida Bar to be covered by Rule 4-7.8. [Agreed Exhibits 43 and 44] Regardless of the weight given by the ALJ to the testimony of Anthony Boggs, Director of The Florida Bar's legal division, these undisputed letters, which were apparently overlooked by the ALJ, indicate that The Florida Bar, and not just Mr. Boggs, has interpreted the Rules which it oversees to exclude Respondent from the provisions of Rule 4-7.8. Further, the letters indicate that The Florida Bar took steps in October of 1998 to remove Respondent from its list of private lawyer referral services. Thus, since The Florida Bar has determined that Respondent is not required to comply with Rule 4-7.8, Rule 4-7.8(b)(1) cannot be found to cover the manner in which Respondent operates.
In any event, even if Rule 4-7.8 is applicable to Respondent, such a finding does not have any bearing upon whether Respondent is also subject to regulation under Chapter 642, Florida Statutes, as a legal expense insurer. As stated in Paragraph 1 above, only lawyer referral services "authorized by The Florida Bar" are exempt from Chapter 642. Thus, a lawyer
referral service not operated by a local bar association which falls within the definition set forth in Rule 47.8(b)(1) can qualify as a "legal expense insurer", if it also falls within the definition set forth in Section 642.015(5), Florida Statutes.
Accordingly, the Department's exception to Paragraph 22 is accepted.
The Department excepts to the ALJ's finding in Paragraph
23 of the Recommended Order that, "All legal expense insurance companies licensed in Florida...either reimburse policyholders for legal expenses incurred or pay attorneys to provide legal services to policyholders". The Department asserts that two companies, Don Caldwell Legal Administrators of Florida, Inc., and LegalWise Services, Inc., are either pure access plans or include an access plan as one of its arrangements.
The record reflects that, with respect to Don Caldwell, its Administrator/Attorney Agreement specifically provides that legal services fees will be paid to the participating office or attorney by Don Caldwell. [Agreed Exhibit 49C, pgs. 533 and 534] With respect to LegalWise, its Participating Affiliate Attorney Application & Agreement provides that it will pay a participating attorney or firm for basic services covered under the plan. [Agreed Exhibit 491, pg. 875] Thus, the record reflects that both Don Caldwell and LegalWise pay attorneys to provide legal services to policyholders. Based upon the record evidence which shows that LegalWise pays attorneys to provide basic services, the fact that LegalWise also offers an "access plan" for comprehensive services is of no consequence. Accordingly, the Department's exception to Paragraph 23 is rejected.
The Department excepts to the inference drawn by the ALJ in Paragraph 30 of the Recommended Order from a 1997 Departmental e-mail that the Department's motivation in directing Respondent to cease operating in response to a complaint the Department received was, "at least in part. . . a desire to please or protect licensed legal expense insurance companies from competition by Respondent". Based upon the text of the email, which stated that Respondent's non-licensed status was "beginning to hit the licensed companies in the pocket", and the ALJ's unchallenged finding in Paragraph 24 that a regulated legal expense insurer filed a complaint with the Department regarding Respondent (which prompted the Department's issuance of a cease and desist letter to Respondent), the ALJ made what is arguably a reasonable inference regarding the motivation for the Department's action. However, to the extent, if any, the ALJ is attempting to infer that the Department's action is not substantively motivated, the Department's exception is accepted. The Department has an obligation to ensure that entities requiring licensure become licensed to assure that statutory
requirements are met and that all licensees carry their fair share of regulatory expenses. Accordingly, given the qualification above, the Department's exception to Paragraph 30 is rejected.
The Department excepts to the ALJ's finding in Paragraph
31 of the Recommended Order that no other state has "determined that Respondent was subject to its regulation as providing insurance". The Department cites in support of this exception evidence in the record which indicates that at least four states have reversed their initial decisions exempting Respondent from regulation as a legal expense insurer, when they were provided specific details regarding Respondent's plans. The Department misapprehends the scope of the ALJ's finding. The ALJ's finding states that:
In addition to requesting guidance from Florida regulators before commencing business in Florida, Respondent requested opinions from regulators in other states regarding whether Respondent would be regulated as providing insurance or by the state bar associations. No state determined that Respondent was subject to regulation as providing insurance. (Emphasis supplied).
The ALJ's finding appears to be limited to the time period prior to Respondent's commencement of business in Florida. The Department concedes that each state which subsequently reversed its decision regarding whether Respondent was subject to that state's regulation as a legal expense insurer originally exempted Respondent from regulation. Thus, the ALJ's finding, although irrelevant, is supported by the record evidence. Accordingly, with the qualification that the ALJ's finding is limited to the period of time before Respondent commenced doing business in Florida, the Department's exception to Paragraph 31 is rejected.
The Department excepts to the ALJ's statement in Paragraph 38 of the Recommended Order that, "The Florida Bar has authorized the existence of lawyer referral services in its Rule 4-7.8, and Respondent is such an entity". This statement is not a finding of fact, but rather a conclusion of law, and is addressed in Paragraph 11 below.
Exceptions to Conclusions of Law
The Department excepts to the ALJ's conclusion in Paragraph 35 of the Recommended Order that, "Respondent does not provide specific legal services", and therefore, is not subject to the Department's regulation under Chapter 642, Florida
Statutes. "Legal expense insurance" is defined in Section 642.015(5), Florida Statutes, as:
a contractual obligation to provide specific legal services, or to reimburse for specific legal expenses, in consideration of a specified payment for an interval of time, regardless of whether the payment is made by the beneficiaries individually or by a third person for them, but does not include the provision of, or reimbursement for, legal services incidental to other insurance coverages. (Emphasis supplied).
Based upon the findings of fact addressed in Paragraph 4 above and Paragraphs 3 and 8 of the Recommended Order, Respondent has a contractual obligation to its plan members to provide specific free and discounted legal services through a plan attorney, in return for which Respondent receives an annual membership fee from plan members. A partial listing of the specific free and discounted legal services provided by Respondent is set forth in Paragraph 4 above. Thus, Respondent is subject to the Department's regulation pursuant to Chapter 642, Florida Statutes.
This is true because Respondent need not employ attorneys or otherwise directly perform legal services order to "provide" legal services. Rather, through the agreement it enters into with its plan members, Respondent "provides" its members with the promised free and discounted legal services through a referral to a plan attorney who has agreed to abide by the fee schedule set forth in the Plan Member Guidebook, which contains the provisions of the agreement entered into by Respondent and its members.
It is the provision of the specified free and discounted legal services by Respondent which brings its activities within the definition of "legal expense insurance". If, as the ALJ incorrectly found, Respondent truly provided nothing more than a referral to an attorney, without the concomitant promise that the attorney would provide certain legal services for free or at a discount, Respondent would arguably not fall within the definition of "legal expense insurance" contained in Section 642.015(5), Florida Statutes. Conversely, but for the provision of specifically mandated legal services by the plan attorney, there would be no reason for a potential plan member to join.
Moreover, in this instance, Respondent controls which legal services the plan attorney will provide and the fees, if any, to be charged by the attorney for those services. Only through the payment of the annual membership fee to Respondent does a plan member receive these benefits. Thus, based upon the statutory
language of Section 642.015(5), Florida Statutes, and the findings of fact discussed above, the ALJ's conclusion is rejected. The Department's conclusion that Respondent provides specific legal services and is subject to the Department's regulation pursuant to Chapter 642 is more reasonable than the ALJ's rejected conclusion.
Respondent argues in its Response to Petitioner's Exceptions that Professional Lens Plan, Inc. v. Department of Insurance, 387 So.2d 548 (Fla. 1st DCA 1980), is instructive as to the issue of whether Respondent's plan is "a contractual obligation to provide specific legal services". In PLP, the court was called upon to interpret Section 637.011, Florida Statutes (1978), which applied to optometric service plans. That statute defined "optometric service plans" as "the contracting for the payment of fees toward, or the furnishing of, professional services or ophthalmic materials authorized or permitted to be furnished by a duly licensed doctor of optometry". PLP provided administrative services for optometrists whose patients wished to participate in a program for the purchase of replacement contact lens for an annual fee, plus a fixed sum for the cost of the lenses. Id. at 549. The PLP court found that PLP was not subject to regulation under Chapter 637 because PLP did "not bind itself in any way to provide 'optometric service or care' to the public". Id. at 551.
The PLP case is inapplicable to the matter at hand, and offers no insight into the proper interpretation of Section 642.015(5), Florida Statutes, as the PLP plan differs from Respondent's plan in several material respects. First, no contractual obligation or duty existed between PLP and the patient. Id. at 550. Second, the annual fee charged for the service was set by the optometrists. Id. at 549. PLP merely collected the fees, then forwarded them to the optometrist. Id. PLP then simply deducted a small portion as an administrative charge for the ministerial activities it performed, such as providing application forms and brochures to the optometrists.
Id. In the instant matter, Respondent has a contractual obligation to "provide" a plan attorney who will perform certain free or discount legal services determined by Respondent.
Further, Respondent sets, collects, and retains the entire amount of the membership fee paid by plan members. In addition, the substantive quality of the services provided by Respondent differs greatly from the administrative services performed by PLP. Respondent is responsible for setting the fees charged, if any, by the plan attorneys, choosing the services which the plan attorneys will perform, and authoring the agreement which binds Respondent and its members. Thus, based upon the vast differences between the PLP plan and Respondent's plan, PLP is of no consequence to the determination of this matter. Respondent
also argues in its Response to Petitioner's Exceptions that its business is not intended to be regulated under Chapter 642 because the Legislature did not use language similar to that used in Section 636.003(9), Florida Statutes, in which "Prepaid Limited Health Service Organization" is defined as:
any person, corporation, partnership, or any other entity which, in return for a prepayment, undertakes to provide or arrange for, or provide access to, the provision of a limited health service to enrollees through an exclusive panel of providers.
Respondent argues in its Response to Petitioner's Exceptions that the doctrine of in pari materia requires that Chapter 636 and Chapter 642 be construed together. However, the doctrine of in pari materia only applies to statutes which have "a common aim or purpose and scope, and relate to the same subject, object, thing or person". State. Department of Health and Rehabilitative Services v. McTigue, 387 So.2d 454, 456 (Fla. lst DCA 1980).
Here, Chapter 642, which regulates the provision of legal services, is in no way related to the regulation of prepaid limited health service organizations. Both Chapters have separate purposes (see Section 642.013, Florida Statutes) and are limited in scope to the fields that both regulate. Neither Chapter has any application to the other. Thus, the use of certain terminology by the Legislature in Chapter 636 is of no consequence to the interpretation of the definition of "legal expense insurance".
Further, if Chapters 636 and 642 are to be read in pari materia as suggested by Respondent, it should be noted that Section 636.003(9)(c), Florida Statutes, expressly provides that an entity which does not assume any responsibility to pay a provider is not subject to regulation. No such provision appears in Chapter 642. Thus, contrary to Respondent's assertion, if the absence from Chapter 642 of language appearing in Chapter 636 has any significance, it would suggest that the Legislature intended to regulate entities such as Respondent.
In support of its exception to Paragraph 35, the Department asserts that Section 642.025(3)(d), Florida Statutes, indicates that the Legislature intended for Respondent's business activities to be regulated pursuant to Chapter 642, Florida Statutes. Section 642.025(3)(d), Florida Statutes, provides:
Policies providing for legal services to be supplied by a limited number of attorneys who have executed provider contracts with the insurer, whether the attorney in an
individual case is to be selected by the insured or by the insurer, shall provide for alternative benefits if the insured is unable to find a participating attorney willing to perform the services or the attorney selected by the insurer is disqualified or otherwise unable to perform the services. The alternative benefit may consist of furnishing the services of an attorney selected and paid by the insurer or paying the fee of an attorney selected by the insured. The policy shall also provide a procedure that includes impartial review for settling disagreements concerning the grounds for demanding an alternative benefit.
This section clearly covers the plans offered by Respondent. Application of this section to Respondent's business would require Respondent to provide an alternative benefit to those members for whom Respondent is unable to find an attorney able to perform the legal services promised by Respondent. In the case of Respondent's Family Plan, Respondent arguably provides the alternative benefit of a return of the membership fee to those members for whom Respondent is unable to find an attorney. With respect to Respondent's Small Business Plan, Respondent would be required to either provide a similar benefit, or, as suggested by the statute, pay for an attorney who will provide those services.
Respondent makes the illogical argument in its Response to Petitioner's Exceptions that because it does not provide the alternative benefits mentioned in Section 642.025(3)(d), it cannot comply with the statute. If licensed, Respondent would, of course, be required to provide such alternative benefits.
Respondent's claim that it cannot comply with the statute is not persuasive, given that its non-compliance is not the result of its inability to comply, but rather is simply a result of its violation of the statute. Further, the statute does not mandate that the specific alternative benefits listed be provided; thus, Respondent's "guarantee" of the return of the membership fee would arguably bring Respondent within compliance.
In response to the Department's assertion that Section 642.025(3)(d), Florida Statutes, indicates that the Legislature intended to include Respondent's business activities within Chapter 642, Respondent argues in its Response to Petitioner's Exceptions that several other provisions of Chapter 642 would be inapplicable to its business. Respondent argues that Section 642.023, Florida Statutes, which requires a company to deposit securities or file a bond with the Department to protect against "the failure of the corporation to faithfully perform-its
obligations to its insureds in the event of insolvency", is inapplicable to Respondent. This is simply untrue. Respondent has a contractual obligation to its members to provide free or discounted legal services. Respondent has contractually obligated itself to refund the membership fees of those members for whom it cannot provide an attorney willing to perform legal services as contemplated in the Family Plan Member Guidebook.
Thus, Respondent has undertaken clear financial obligations for which the deposit of securities or the filing of a bond is protection for Respondent's members, should Respondent become insolvent. Respondent's argument that this provision relates only to the payment of claims is not supported by the plain language of the statute, which contains the general term "obligations", indicating more than just the payment of claims.
Respondent also points to Section 642.027, Florida Statutes, as inconsistent with Respondent's business. Section 642.027, Florida Statutes provides, in part:
No policy of legal expense insurance may be issued in this state unless the premium rates for the insurance have been filed with and approved by the department. Premium rates shall be established and justified in accordance with generally accepted insurance principles, including, but not limited to, the experience or judgment of the insurer making the rate filing or actuarial computations.
Respondent argues in its Response to Petitioner's Exceptions that this provision is "nonsense" when applied to it, as its membership fee is not based on insurance principles. However, Respondent's membership fee is undoubtedly based upon a determination by Respondent as to the administrative costs associated with its plans, as well as an acceptable profit level, both of which are principles utilized by insurers in determining a premium rate. The statute does not require the use of actuarial computations in determining premium rates; it merely makes the use of such computations permissible, as well as the insurer's "experience or judgment". Respondent utilizes its experience and judgment in determining the specific membership fee it charges. Thus, Respondent is able to comply with the requirements of Section 642.027, Florida Statutes.
Finally, Respondent argues in its Response to Petitioner's Exceptions that Rule 4201.005, Florida Administrative Code, is also inapplicable to Respondent. Rule 4-201.005 was promulgated by the Department pursuant to Sections 642.032 and 625.051, Florida Statutes. Section 642.032(2), Florida Statutes, provides
that Chapter 625, which requires each insurer to maintain an unearned premium reserve account, shall apply to legal expense insurance corporations, to the extent not inconsistent with Chapter 642. While those legal expense insurers who offer legal expense insurance through a traditional insurance arrangement are required to maintain such an account, since Respondent does not pay claims, the application of Section 625.051 to Respondent would be inconsistent with Chapter 642. Thus, Respondent would not be required to maintain an unearned premium reserve account.
Accordingly, the Department's exception to Paragraph 35 is accepted.
The Department excepts to the ALJ's conclusions in Paragraph 38 of the Recommended Order that, "The Florida Bar has authorized the existence of lawyer referral services in its Rule 4-7.8, and Respondent is such an entity". As Rule 4-7.8 is not a rule within the substantive jurisdiction of the Department, the ALJ's conclusions of law with regard to the interpretation of that rule cannot be overturned by the Department. However, to the extent the ALJ has made a conclusion of law based upon an interpretation of the exemption to Chapter 642 contained in Section 642.017(2), Florida Statutes, the Department does have substantive jursidiction to review the ALJ's conclusion of law in that regard.
Based upon the ALJ's conclusions of law that, "The Florida Bar has authorized the existence of lawyer referral services in its Rule 4-7.8, and Respondent is such an entity", the ALJ concluded that Section 642.017(2), Florida Statutes, exempts Respondent from regulation under Chapter 642. The ALJ's conclusion is without a rational legal basis and is not supported by competent, substantial evidence.
Section 642.017(2), Florida Statutes, provides an exemption from Chapter 642 for, "Any lawyer referral service authorized by The Florida Bar". As the ALJ found, "The Florida Bar does not regulate or license lawyer referral services; it only regulates the lawyers involved". Rule 47.8 contains no language which provides The Florida Bar with the ability to authorize lawyer referral services. However, Chapter 8 of The Rules Regulating The Florida Bar does contain such language, and specifically permits The Florida Bar to govern the establishment, operation, and termination of lawyer referral services operated by local bar associations. See Rule 8-2.1, The Rules Regulating The Florida Bar. Local bar associations must apply to the board of governors of The Florida Bar for authority to operate a lawyer referral service. See Rule 8-2.2,, The Rule Regulating The Florida Bar.
Thus, Chapter 8 governs the authorization of lawyer referral
services by The Florida Bar, and is clearly the "authorization"
referred to in the exemption contained in Section 642.017(2), Florida Statutes. When read in pari materia with Chapter 8 of The Rules Regulating The Florida Bar, Section 642.017(2), Florida Statutes, only provides an exemption from Chapter 642 for lawyer referral services operated by local bar associations. It is undisputed that Respondent is not a lawyer referral service operated by a local bar association. Thus, Respondent clearly does not fall within the exemption set forth in Section 642.017(2), Florida Statutes. Accordingly, the ALJ's conclusion that Respondent is exempt from the provisions of Chapter 642, is rejected. Given the clear language of both Section 642.017(2), Florida Statutes, and Chapter 8 of The Rules Regulating The Florida Bar, the Department's substituted conclusion is the only reasonable conclusion that can be made.
Upon careful consideration of the record, the submissions of the parties, and being otherwise fully advised in the premises, it is ORDERED:
The Findings of Fact of the Administrative Law Judge are adopted in full, as the Department's Findings of Fact, with the exceptions noted in Paragraphs 3, 4, and 5 above, which modify Paragraphs 5, 11, and 22 of the Recommended Order.
The Conclusions of Law of the Administrative Law Judge are adopted in full, as the Department's Conclusions of Law, with the exceptions noted in Paragraphs 10 and 11 above, which modify Paragraphs 35 and 38 of the Recommended Order.
Respondent is found to be transacting legal expense insurance in this State without proper licensure, and is subject to the Department's regulation under Chapter 642 of the Florida Insurance Code. However, the record reflects that Respondent received conflicting indications from the Department as to whether its activities required licensure. Therefore, it would be inequitable to require Respondent to immediately discontinue its operations in this State.
ACCORDINGLY, Respondent shall cease and desist from the sale and transaction of legal expense insurance in this State effective October 1, 2000, unless, prior to October 1, 2000, Respondent has obtained a license from the Department in accordance with Chapter 642, Florida Statutes, provided that Respondent files with the Department an application for licensure in accordance with Chapter 642, Florida Statutes, within thirty
(30) days of the entry of this Final Order. In the event Respondent fails to file an application with the Department in accordance with Chapter 642, Florida Statutes, within thirty (30) days of the entry of this Final Order, Respondent shall cease and desist from the sale and transaction of legal expense insurance
in this State as of the thirtieth (30th) day subsequent to the entry of this Final Order.
NOTICE OF RIGHTS
Any party to these proceedings adversely affected by this Order is entitled to seek review of the Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a petition or Notice of Appeal with the General Counsel, acting as the agency clerk, at 200 East Gaines Street, Tallahassee, FL 32399-0300, and a copy of the same and the filing fee with the appropriate District Court of Appeal within thirty
(30) days of the rendition of this Order.
DONE and ORDERED this 2nd day of May, 2000.
BILL NELSON
Treasurer and Insurance Commissioner
ENDNOTE
1/ The Department excepted to a portion of Paragraph 5 of the ALJ's Findings of Fact, which is addressed above and not incorporated into the "general structure" of the plan referenced in this paragraph.
COPIES FURNISHED TO:
Linda M. Rigot Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
Thomas J. Jones, Esquire Holland & Knight, LLP
315 South Calhoun Street, Suite 600 Tallahassee, Florida 32302 Attorney for Respondent
Richard A. Grumberg, Esquire Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0333
Attorney for the Department of Insurance
| Issue Date | Proceedings |
|---|---|
| May 01, 2002 | Motion for Attorney`s Fees (DOAH Case No. 02-1785F established) filed by Respondent via facsimile. |
| Jan. 14, 2002 | Amended Final Order filed. |
| May 04, 2000 | Final Order filed. |
| Feb. 28, 2000 | Response of And Justice for All, Inc., d/b/a Legal Club of America to Petitioner`s Exceptions to Recommended Order filed. |
| Feb. 03, 2000 | Recommended Order sent out. CASE CLOSED. No hearing held. 2/8/2000) |
| Dec. 21, 1999 | Petitioner`s Objections to Agreed Record Exhibits Pursuant to Joint Pre-Hearing Stipulation; Joint Stipulation filed. |
| Dec. 17, 1999 | Petitioner`s Proposed Recommended Order filed. |
| Dec. 17, 1999 | (Respondent) Notice of Filing Proposed Order; Proposed Recommended Order of and Justice for All, Inc., d/b/a Legal Club of America (for judge signature) filed. |
| Nov. 12, 1999 | (Respondent) Notice of Filing Agreed Record filed. |
| Nov. 12, 1999 | Exhibits (9 Binders) filed. |
| Nov. 05, 1999 | Order sent out. (PRO`s due by 12/17/99) |
| Nov. 02, 1999 | Petitioner`s Unopposed Motion to Extend Time for Filing Proposed Recommended Orders filed. |
| Oct. 27, 1999 | Order sent out. (hearing cancelled, proposed recommended orders will be filed no later than 11/24/99) |
| Oct. 22, 1999 | Joint Prehearing Stipulation; Agreed Exhibits that Will be Admitted Into Evidence Subject to Any Objection as to Relevance filed. |
| Oct. 20, 1999 | Order sent out. (motion in limine denied) |
| Oct. 20, 1999 | Amended Notice of Hearing sent out. (hearing set for November 1 through 3, 1999; 9:30 a.m.; Tallahassee, Florida) |
| Oct. 15, 1999 | (T. Jones) Notice of Service filed. |
| Oct. 08, 1999 | Legal Club of America`s Memorandum in Opposition to Petitioner`s Motion in Limine and Motion to Compel the Production of Documents filed. |
| Oct. 01, 1999 | Petitioner`s Motion in Limine and Motion to Compel the Production of Documents filed. |
| Aug. 24, 1999 | Legal Club of America Corporation`s Third Request for Production of Documents to Department of Insurance and Treasurer filed. |
| Aug. 03, 1999 | Notice of Hearing sent out. (hearing set for November 1 through 3, 1999; 9:30 a.m.; Tallahassee, Florida) |
| Jul. 28, 1999 | (T. Jones) Consented Status Report and Request to Reschedule Final Hearing (filed via facsimile). |
| Jul. 09, 1999 | Notice of Supplemental Filing for Department of Insurance`s Cross-Motion for Summary Final Order; (Petitioner) Notice of Proposed Rule making filed. |
| Jul. 07, 1999 | (R. Grumberg) Notice of Filing; (2) Affidavit (filed via facsimile). |
| Jun. 28, 1999 | (T. Jones) Notice of Telephonic Hearing (7/8/99; 2:00 p.m.) filed. |
| Jun. 15, 1999 | (T. Jones) Response to Petitioner`s Third Request for Production of Documents filed. |
| Jun. 01, 1999 | Legal Club of America Corporation`s Response to Department of Insurance`s Cross Motion for Summary Final Order and Response to Petitioner`s Motion for Summary Final Order filed. |
| May 14, 1999 | Order sent out. (motion for extension of time is granted and Petitioner shall have up to 5/31/99 to file its response to Department of Insurance cross motion for Summary final order) |
| May 12, 1999 | Agreed Motion for Extension of Time filed. |
| May 12, 1999 | Notice of Service of Responses to Department of Insurance`s Third Set of Interrogatories filed. |
| May 03, 1999 | Department of Insurance`s Cross Motion for Summary Final Order and Response to Petitioner`s Motion for Summary Final Order filed. |
| Apr. 12, 1999 | Notice of Service of Petitioner`s Third Set of Interrogatories to Respondent filed. |
| Apr. 01, 1999 | Order sent out. (motion to extend time for response to Respondent`s motion for Summary final order is granted) |
| Mar. 29, 1999 | (Petitioner) Unopposed Motion to Extend Time for Response to Respondent`s Motion for Summary Final Order filed. |
| Mar. 25, 1999 | The Deposition of: Teri Littlefield w/exhibits filed. |
| Mar. 25, 1999 | Deposition of John Anthony Boggs ; Deposition of Brett Alan Merl ; Deposition of Marci Rubin, Esq. filed. |
| Mar. 25, 1999 | Legal Club of America Corporation`s Motion for Summary Final Order; Legal Club of America Corporation`s Notice of Filing Depositions in Support of Its Motion for Summary Final Order filed. |
| Mar. 03, 1999 | Order Granting Consolidation, Granting Continuance, and Placing Case in Abeyance sent out. (98-000442 & 99-0771RX consolidated) |
| Feb. 25, 1999 | (T. Jones) Notice of Cancellation of Deposition rec`d |
| Feb. 24, 1999 | Order sent out. (Respondent`s request for judicial notice is granted) |
| Feb. 24, 1999 | (T. Jones) Notice of Telephonic Hearing; Motion to Consolidate and for Continuance rec`d |
| Feb. 19, 1999 | (Respondent) Notice of Taking Deposition filed. |
| Feb. 18, 1999 | Notice of Service of Respondent`s Answers to Petitioner`s Second Set of Interrogatories rec`d |
| Feb. 11, 1999 | Corrected Notice of Service of Responses to Petitioner`s Second Set of Interrogatories; Notice of Filing Corrected Certificate of Service to Response to Petitioner`s Second Request for Production of Documents rec`d |
| Feb. 08, 1999 | (T. Jones) Notice of Taking Deposition; Request for Judicial Notice filed. |
| Feb. 03, 1999 | (T. Jones) Response to Petitioner`s Second Request for Production of Documents filed. |
| Feb. 03, 1999 | Notice of Service of Responses to Petitioner`s Second Set of Interrogatories filed. |
| Jan. 19, 1999 | and Justice for All, Inc.`s Notice of Serving Second Set of Interrogatories to Department of Insurance and Treasurer filed. |
| Jan. 05, 1999 | Notice of Service of Petitioner`s Second Set of Interrogatories and Second Request for Production of Documents to Respondent filed. |
| Dec. 31, 1998 | Order sent out. (request for reimbursement of costs/expenses is denied; petition to invalidate subpoena duces tecum is granted) |
| Dec. 11, 1998 | Non-Party Securities Attorney Referral Service, Inc.`s Petition to Invalidate Subpoena Duces Tecum (filed via facsimile). |
| Nov. 12, 1998 | (T. Jones) 11/Notice of Production from Non-Party filed. |
| Nov. 12, 1998 | (T. Jones) 3/Notice of Production from Non-Party filed. |
| Nov. 04, 1998 | (T. Jones) Notice of Appearance filed. |
| Oct. 26, 1998 | Order Granting Continuance and Re-Scheduling Hearing sent out. (hearing set for March 8-9, 1999; 9:30am; Tallahassee) |
| Oct. 19, 1998 | (Respondent) Motion to Reschedule Hearing (filed via facsimile). |
| Oct. 13, 1998 | Third Notice of Hearing sent out. (hearing set for Feb. 22-23, 1999; 9:30am; Tallahassee) |
| Oct. 01, 1998 | Joint Status Report and Motion for Hearing filed. |
| Aug. 11, 1998 | Order Cancelling Hearing and Allowing Counsel to Withdraw sent out. (T. Rigsby Granted Leave to Withdraw; parties to file status report by 10/1/98) |
| Aug. 07, 1998 | (Respondent) Motion to Continue Hearing (filed via facsimile). |
| Aug. 05, 1998 | (R. Rigsby) Motion to Withdraw as Counsel filed. |
| Jun. 08, 1998 | (R. Grumberg) Notice of Appearance and Substitution of Counsel filed. |
| Jun. 08, 1998 | (K. Rao) Notice of Appearance filed. |
| May 29, 1998 | (Petitioner) Response to Motion to Continue filed. |
| May 28, 1998 | Order Granting Continuance and Re-scheduling Hearing sent out. (hearing set for Sept. 15-16, 1998; 9:30am; Tallahassee) |
| May 27, 1998 | (Respondent) Motion to Continue Hearing filed. |
| Mar. 31, 1998 | Notice of Service of Respondent`s Answers to Petitioner`s First Interrogatories Filed by Respondent filed. |
| Mar. 09, 1998 | Petitioner`s Response to Respondent`s First Request for Production of Documents; Notice of Serving Answers to Respondent`s First Interrogatories filed. |
| Feb. 17, 1998 | Notice of Hearing sent out. (hearing set for June 15-16, 1998; 9:30am; Tallahassee) |
| Feb. 17, 1998 | Order of Prehearing Instructions sent out. |
| Feb. 11, 1998 | Joint Response to Initial Order filed. |
| Feb. 03, 1998 | and Justice for All, Inc.`s First Request for Production of Documents to Florida Department of Insurance; and Justice for All, Inc.`s Notice of Serving First Set of Interrogatories to Department of Insurance and Treasurer filed. |
| Feb. 02, 1998 | Initial Order issued. |
| Jan. 28, 1998 | Petitioner`s Notice of Service of Petitioner`s First Set of Interrogatories To Respondent filed. |
| Jan. 28, 1998 | Notice of Intent To Issue Cease and Desist Order; Election of Rights (unsigned); Agency Referral Letter; Petition for Formal Administrative Hearing; Agency Action Letter (exhibits) filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 11, 2002 | Agency Final Order | |
| May 02, 2000 | Agency Final Order | |
| Feb. 03, 2000 | Recommended Order | Dismissal of cease and desist order for private lawyer referral service not subject to regulation by the Department as a legal expense insurance provider. |
