STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) INSURANCE AND TREASURER, )

)

Petitioner, )

)

vs. ) Case Nos. 97-2915

) 97-3735

MATTHEW L. BRILLIS and INSURANCE ) SCHOOL OF CONTINUING EDUCATION, )

INC., a dissolved Florida )

corporation, )

)

Respondents. )

)

) MATTHEW L. BRILLIS and INSURANCE ) SCHOOL OF CONTINUING EDUCATION, )

INC., a dissolved Florida )

corporation, )

)

Petitioners, )

)

vs. ) Case No. 98-0631RX

) STATE OF FLORIDA, DEPARTMENT OF ) INSURANCE AND TREASURER, )

)

Respondent. )

)

FINAL ORDER IN CASE NO. 98-0631RX

An administrative hearing was conducted in this consolidated proceeding on January 30 and March 4, 1998, in Tallahassee, Florida, before Daniel Manry, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioners: Cynthia S. Tunnicliff, Esquire

Pennington, Moore, Wilkinson, Bell and Dunbar, P.A.

215 South Monroe Street, Suite 200 Tallahassee, Florida 32302-2095

For Respondent: Stephen C. Fredrickson, Esquire

David J. Busch, Esquire Department of Insurance

200 East Gaines Street, Room 645A Tallahassee, Florida 32399-0307

STATEMENT OF THE ISSUES

The issues in this case are whether Florida Administrative Code Rules 4-228.040(1), (2)(d) and (3)(b); 4.228-090(5);

4-228.100(2); 4-228.160(1) and (6); 4-228.170; 4-228.210; and

4-228.220 constitute an invalid exercise of delegated legislative authority. (Unless otherwise stated, all references to rules are to rules promulgated in the Florida Administrative Code in effect as of the date of this Order.)

PRELIMINARY STATEMENT

Respondent filed administrative complaints against Petitioners on May 20 and 22, 1997, respectively. Petitioners timely requested an administrative hearing.

The matters were referred to the Division of Administrative Hearings ("DOAH") to conduct a hearing and assigned case

nos. 97-2915 and 97-3735. The separate matters were consolidated on September 17, 1997.

At the hearing, Respondents challenged Rules 4-228.040(1), 4-228.040(2)(d) and (3)(b); 4.228-090(5); 4-228.100(2);

4-228.160(1) and (6); 4-228.170; 4-228.210; and 4-228.220 as an

invalid exercise of delegated legislative authority. Pursuant to the agreement of the parties, the undersigned granted Respondents leave to file a rule challenge pursuant to

Section 120.56, Florida Statutes (1997) (hereinafter "Florida Statutes"), consolidated all three cases, conducted an administrative hearing regarding the rule challenge on

March 4, 1998, and issued separate recommended and final orders after the hearing regarding the rule challenge. The issues raised in the hearing conducted pursuant to Section 120.57(1) are addressed in the separate Recommended Order issued on the same date as the date of this Final Order.

At the administrative hearing conducted pursuant to Section 120.56, Petitioners called no witnesses, submitted no

exhibits for admission in evidence, but incorporated by reference the transcript of the hearing conducted pursuant to

Section 120.57(1). Respondent called one witness and submitted two exhibits for admission in evidence.

The identity of the witness and exhibits, and the rulings regarding each, are set forth in the transcript of the hearing filed with the undersigned on March 31, 1998. The parties timely filed their proposed final orders ("PFOs") on April 10, 1998.

FINDINGS OF FACT

1. Respondent is the state agency responsible for regulating life and health insurance agents. Brillis is licensed as a life and health insurance agent. The Insurance School of Continuing Education, Inc. (the "Insurance School") is a dissolved Florida corporation.

2. The Insurance School was formed as a Florida corporation on May 31, 1991. It was dissolved on August 26, 1994. Since its

   dissolution, the Insurance School has not been a Florida corporation. However, Brillis provides continuing education courses in the name of the Insurance School.

3. The challenged rules, collectively, are part of Chapter 4-228. Chapter 4-228 is titled "Continuing Education."

4. Petitioners do not question the statutory authority of Respondent to approve and otherwise regulate continuing education courses. Petitioners contend that those portions of the challenged rules which regulate providers of approved courses violate Sections 120.52(8)(a)-(c) by going beyond the powers, functions, and duties delegated by the legislature; enlarging or modifying the specific provisions of the law implemented; and vesting unbridled discretion in Respondent.

5. The grant of rulemaking authority to Respondent is contained in Section 626.308. In relevant part, Section 626.308 provides:

   The department may adopt reasonable rules necessary to effect any of the statutory duties of the department. Such rules shall not extend, modify, or conflict with any law of this state or the reasonable implications of such laws. (Emphasis supplied.)

6. The specific law implemented by the challenged rules is contained in Section 626.2815. In relevant part,

   Section 626.2815 provides:

   1. The purpose of this section is to establish requirements and standards for continuing education courses for persons licensed to solicit or sell insurance in the state.

   2. The provisions of this section apply to persons licensed to engage in the sale of insurance in this state for all lines of insurance for which an examination is required for licensing. The provisions of this section shall not apply to any person holding a license for the sale of any line of insurance for which an examination is not required by the laws of this state. . . .

   
   

   (3)(a) Each person subject to the provisions of section must . . . complete a minimum of 28 hours of continuing education courses every 2 years in basis or higher-level courses prescribed by this section or in other courses approved by the department.

   * * *

   (f) Compliance with continuing education requirements is a condition precedent to the issuance, continuation, reinstatement, or renewal of any appointment subject to this section.

   
   

   * * *

   (4) The following courses may be completed in order to meet the continuing education course requirements:

   
   

   * * *

   (k) Each person or entity sponsoring a course for continuing education credit must furnish, within 30 days after completion of the course, in a form satisfactory to the department or its designee, a written and certified roster showing the name and license number of all persons successfully completing such course and requesting credit, accompanied by the required fee.

   * * *

   (6)(a) There is created an 11-member continuing education advisory board to be appointed by the Insurance Commissioner and Treasurer. . .

   . The purpose of the board is to advise the department in determining standards by which courses may be evaluated and categorized as basic, intermediate, or advanced. . . .

   The department shall require all approved course providers to submit courses for approval to the department using the criteria. . . (Emphasis supplied.)

   
   

7. Except for the last quoted sentence in

   Section 626.2815(6)(a), there is no express authority in the specific law implemented for Respondent to regulate providers of continuing education courses. From the phrase "approved course providers," Respondent has established an entire regulatory scheme for providers of approved courses.

8. The term "approved" in the statutory phrase "approved course providers" modifies the term "course." It does not modify the term "providers."

9. The statutory phrase "approved course providers" is reasonably construed to mean "providers of approved courses." Respondent erroneously construes the quoted statutory phrase to mean "approved providers of courses."

10. The law implemented in the challenged rules does not grant Respondent statutory authority to regulate providers of continuing education courses. The authority to approve such providers would impose a regulatory scheme on providers who are not required to be licensed to solicit or sell insurance in the state in order to provide continuing education courses.

11. The purpose of the specific law implemented in the challenged rules is to establish requirements and standards for continuing education "courses" for persons "licensed" to solicit or sell insurance in the state. The purpose of the law

    implemented is not to establish requirements and standards for providers of continuing education courses who are not required to be licensed to solicit or sell insurance in the state in order to provide continuing education courses.

12. The purpose of the continuing education advisory board, authorized in Section 626.2815(6)(a) of the specific law implemented, is to advise the department in determining standards by which "courses" may be evaluated and categorized as basic, intermediate, or advanced. The purpose of the board is not to advise the department in determining standards by which providers of courses may be approved through a regulatory scheme not authorized by statute.

13. The specific law implemented in the challenged rules is a subset of Part 1 of Chapter 626. Section 626.022 provides in relevant part:

    (1) This part applies to insurance agents, solicitors, service representatives, adjusters, and insurance agencies; as to any and all kinds of insurance; and as to stock insurers, mutual insurers, reciprocal insurers, and all other types of insurers

    . . . .

    As far reaching as the language in Section 626.022 is, it does not reach providers of continuing education courses who are not licensed as insurance agents, solicitors, or others described in Section 626.022. Regulation of persons not described in

    Section 626.022 conflicts with Section 626.022 in violation of the grant of rulemaking authority in Section 626.308.

14. The construction proposed by Respondent would vest

    unbridled discretion by Respondent in violation of

    Section 120.52(8)(c). Section 626.2815 does not establish any standards by which Respondent can exercise its discretion to approve or disapprove providers of approved courses.

    CONCLUSIONS OF LAW

15. The Division of Administrative Hearings has jurisdiction over the subject matter and parties. The parties were duly noticed for the administrative hearing.

16. Respondent moved to dismiss the rule challenge by the Insurance School for lack of standing. Respondent argued that the Insurance School lacks standing because it is a dissolved corporation.

17. Respondent's motion to dismiss is denied for the reasons stated in Petitioners' proposed final order. Respondent evidences the standing of the Insurance School by pursuing inconsistent litigating positions. Respondent prosecutes the Insurance School in Case No. 97-3735 and then seeks to dismiss the rule challenge of the Insurance School for lack of standing.

18. Petitioners have the burden of proof in this proceeding. Petitioners must show by a preponderance of the evidence that the challenged rules exceed the grant of rulemaking authority, enlarge or modify the specific provisions of the law implemented, or vest unbridled discretion in Respondent within the meaning of Sections 120.52(8)(b) and (c). Dravo Basic Materials Co. v. State Department of Transportation, 602 So. 2d 632, 635 (Fla. 2d DCA 1992).

19. Petitioners satisfied their burden of proof. For reasons stated in the Findings of Fact and not repeated here, Petitioners showed by the requisite standard of proof that regulation of providers of approved courses exceeds the grant of rulemaking authority in Section 626.308, enlarges or modifies the specific law implemented in Section 626.2815, and vests unbridled discretion in Respondent.

20. The statutory phrase "approved course provider" is not defined by statute. Terms in the quoted phrase must be construed according to their plain and ordinary meaning. Department of Health and Rehabilitative Services v. McTigue, 387 So. 2d 454 (Fla. 1st DCA 1980).

21. The plain and ordinary meaning of the quoted statutory phrase is "providers of approved courses." Such an interpretation is consistent with the purpose of the specific law implemented and with the purpose of the continuing education advisory board prescribed in Sections 626.2815(1) and (6)(a); which is to establish standards and requirements for continuing education courses; not standards and requirements for the providers of those courses. See, e.g., Cataract Surgery Center v. Health Care Cost Containment Board, 581 So. 2d 1359 (Fla. 1st DCA 1991) (holding that a scant statutory reference to ambulatory surgical centers was insufficient for the HCCCB to exercise regulatory authority over such centers).

22. The statutory construction proposed by Respondent would vest unbridled discretion in the state agency to regulate

    providers of continuing education courses. Other than a reference to "approved course providers," the specific law implemented by the challenged rules provides no standards by which Respondent is to approve providers of continuing education courses. The challenged rules do not elaborate the statutory standard and do not set forth any standards by which providers are to be approved. See Merritt v. Department of Business and Professional Regulation, Board of Chiropractic, 654 So. 2d 1051 (Fla. 1st DCA 1995).

23. Respondent submitted credible and persuasive evidence of the reasonableness in regulating providers of approved continuing education courses. In relevant part, Respondent's witness testified:

    You have to look at the provider to make sure that they are qualified to . . . operate a business . . . the instructor needs to be qualified relative to his . . . subject matter. It's important that the Department can rely on documents that are submitted by a provider as certification. . . .

    * * *

    The quality of that delivery, and the instructor teaching it, if we didn't approve

    
    

    instructors, we would have no way to maintain any quality or integrity of the course that is being submitted.

    Transcript at 30-31.

24. The approval and other regulation of providers of approved courses is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious. However, that fact alone is not sufficient authority to promulgate the challenged portion of the rules.

25. No agency has authority to adopt a rule merely because the rule is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious. There must also be a specific law implemented.

. . . An agency may adopt only rules that implement, interpret, or make specific the particular powers and duties granted by the enabling statute. . . . Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than the particular powers and duties conferred by the . . . statute. (Emphasis supplied.)

Section 120.536(1). See also, Consolidated Tomoka Land Co. v. St. Johns River Water Management District, 19 FALR 2663 (DOAH, 1997).

ORDER

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

ORDERED that those portions of the challenged rules which regulate providers of approved courses constitute an invalid exercise of delegated legislative authority within the meaning of Sections 120.52(8)(a)-(c).

DONE AND ENTERED this 8th day of June, 1998, in Tallahassee, Leon County, Florida.

DANIEL MANRY

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 8th day of June, 1998.

COPIES FURNISHED:

Bill Nelson

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Barbara Leighty, Clerk Growth Management and

Strategic Planning 2105 Capitol

Tallahassee, Florida 32399

David Schwartz, Esquire Office of the Governor The Capitol, Room 209

Tallahassee, Florida 32399-0001

Daniel Y. Summer, General Counsel Department of Insurance and

Treasurer

The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300

Stephen C. Fredrickson, Esquire David J. Busch, Esquire Department of Insurance

200 East Gaines Street, Room 645A Tallahassee, Florida 32399-0307

Cynthia S. Tunnicliff, Esquire Pennington, Moore, Wilkinson,

Bell and Dunbar, P.A.

215 South Monroe Street, Suite 200 Tallahassee, Florida 32302-2095

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a Notice of Appeal with the Agency Clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The Notice of Appeal must be filed within the 30 days of rendition of the order to be reviewed.

Docket for Case No: 98-000631RX

Orders for Case No: 98-000631RX