Petitioner, CASE NO. 13721-95-C DOAH CASE NO. 98-1312
vs.
ST. PAUL FIRE AND
Respondent.
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 November 24, 1997, an Order to Show Cause was filed charging the Respondent with various violations of the Florida Insurance Code. Respondent timely filed a request for a proceeding to pursuant to Section 120.57(1), Florida Statutes. Pursuant to notice the final hearing was ultimately heard before Donald R. Alexander, Administrative Law Judge, Division of Administrative Hearings, on November 12, 1998.
After consideration of the evidence, argument and testimony presented at hearing and subsequent written submission by Petitioner, the Administrative Law Judge issued his Recommended Order on February 9, 1999. (Attached as Exhibit A). The Administrative Law Judge recommended that the Order to Show Cause be dismissed with prejudice.
On February 24, 1999, Petitioner timely filed exceptions to the Recommended Order. (Attached as Exhibit B). Petitioner excepted to the Preliminary Statement, Findings of Fact, Conclusions of Law, and the Recommendation. Each exception is addressed below. Respondent did not file exceptions.
Petitioner excepts to the Administrative Law Judge's Preliminary Statement wherein it stated that this matter began on November 24, 1997. The Petitioner is correct, pursuant to Section 627.371, Florida Statutes, this matter did not begin with
the filing of an Order to Show Cause. This matter began pursuant to Section 627.371, Florida Statutes, on January 5, 1995, when the Association submitted a written request to St. Paul Fire and Insurance Company (hereinafter sometimes referred to as "St.
Paul") requesting that St. Paul apply the Teaching Physicians Discount Rate to the premiums and refund the difference to the Jacksonville Faculty Practice Association (hereinafter referred to as "Association"). When St. Paul denied the Association request, the Association filed a complaint with the Department.
Rule 28-106.107, Florida Administrative Code provides "Parties may file exceptions to findings of fact and conclusions of law contained in recommended orders ...." The Petitioner has not excepted to a finding of fact or conclusion of law. Thus, Petitioner's exception is REJECTED. However, the Preliminary Statement should accurately reflect the evidence presented in this matter. Thus, the Preliminary Statement shall be changed so that it correctly reflects the record.
Petitioner excepts to Findings of Fact 7, 38, 39 and 40, based upon the Administrative Law Judge's finding that no later than 1991 or 1992, the Association discovered the discount table contained in St. Paul's rate manual, which was the basis for this proceeding and contemporaneously advised the Department of this fact. Petitioner argues this finding is not supported by competent substantial evidence. Petitioner is correct. There is no competent substantial evidence in the record that supports the Administrative Law Judge findings.
There was evidence presented that an Administrative Complaint was filed by the Department of Insurance no later than 1992 against St. Paul. Yet, the evidence does not specify that the Association discovered the discount table in 1991 or 1992, and the evidence does not specify the allegations in or the basis for the filing of the Administrative Complaint. In addition, there was evidence presented which indicated that there were civil actions filed by the Association against St. Paul. Again, the evidence does not specify that the Association discovered the discount table in 1991 or 1992. Therefore, there was no competent substantial evidence presented to support the Administrative Law Judge's findings. Accordingly, Petitioner's exception to the statements in the Administrative Law Judge's Findings of Fact 7, 38, 39 and 40, which refer to the time period in which the Association discovered the discount table and informed the Department of such, is ACCEPTED.
Since the statements in the Administrative Law Judge's Findings of Fact 7, 38, 39 and 40, which refer to the time period in which the Association discovered the discount table and informed the Department, is rejected, the Administrative Law
Judge's finding in Finding of Fact 39, that the Department did not issue its Order to Show Cause until November 24, 1997, more than five years later is REJECTED. Accordingly, the Administrative Law Judge's finding that St. Paul was prejudiced by the Department's delay in prosecuting the complaint is likewise REJECTED.
In sum, there was no competent substantial evidence presented to establish that the Association discovered the discount table no later than 1991 or 1992, which, in turn, formed the basis for the Administrative Law Judge to determine that the Department did not file its Order to Show Cause until five years later. To the contrary, there was competent substantial evidence to disprove the Administrative Law Judge's finding in Finding of Fact 39. The evidence presented showed that the filing of the Order to Show Cause did not occur until after the Association filed a complaint with the Department, which was after January 5, 1995.
In fact, the Administrative Law Judge in Finding of Fact 7 found as follows:
On January 5, 1995, the Association made a formal written request to St. Paul that the insurer apply the discount rate to the premiums previously paid and that it refund the overcharges to the Association. After St. Paul refused to refund, the Association filed a complaint with the Department, as authorized by Section 627.371, Florida Statutes.
Pursuant to Section 627.371, Florida Statutes, the Department could not proceed with an action against St. Paul until after the filing of the complaint by the Association. Thus, there is no competent substantial evidence to support the Administrative Law Judge's contrary finding that the Department delayed the prosecution of the complaint by filing the complaint five years later than it could have, and that St. Paul was prejudiced by the Department's delay.
Although the part of the Administrative Law Judge's finding in Finding of Fact 40, which refers to the time period in which the Department was informed of the Association's grievance regarding the discount table is rejected, there is competent substantial evidence to support the part of the finding which states "at a minimum the records from 1987 should still have been in the Department's files at that time."
There is competent substantial evidence to support this finding, because in 1992, the Department questioned St. Paul about the policies at issue in these proceedings and specifically inquired into the particular credits and discounts applied to these policies, which were individual risk rate filings, for the years 1983-1987. So, the Department was placed on notice that there was a possible problem with St. Paul's individual risk rate filing. Thus, a permissible inference could be made by the Administrative Law Judge that the Department should have maintained the records from 1987 relating to these individual risk rate filings. Moreover, there is also competent substantial evidence to support the finding that the absence of these Department records hampered the ability of St. Paul to present an adequate defense to the charges.
However, it should be noted that the same analysis in the previous paragraph can be applied to St. Paul. St. Paul also was on notice that there were problems with the individual risk rate filings at issue in this matter. Prior to this matter, St. Paul had been involved in two civil litigations which involved the policies that are at issue in this matter. Further, St. Paul received a written request for a refund from the Association which pertained to the policies at issue in this matter.
Consequently, St. Paul was on notice that there were possibly unresolved issues pertaining to the individual risk rate filings at issue in this proceeding. Thus, it certainly appears that St. Paul should have maintained its individual risk rate filings. As a result, St. Paul hampered its own ability to defend itself in this matter.
Although the Department might reach a different conclusion on the evidence, the Administrative Law Judge possesses the statutory mandate to consider all evidence presented, judge credibility of witnesses, draw permissible inferences from the evidence and reach findings of fact based on competent substantial evidence. Heifetz v. Dept. of Business Regulation,
475 So. 2d 1277, 1281 (Fla. 1st DCA 1985). Since there is competent substantial evidence to support this part of Finding of Fact 40, it will not be disturbed.
Petitioner takes exception to Findings of Fact 25 and 26, because the Petitioner contends the Administrative Law Judge incorrectly concluded that in 1986 and 1987 St. Paul filed with the Department those individual risk rate filings which would have permitted St. Paul to deviate from its rate manual. Petitioner further contends that the Administrative Law Judge's finding is unsupported in the record.
Although there was credible evidence presented to support Petitioner's contention, the Petitioner did not prove by clear
and convincing evidence that in 1986 and 1987 St. Paul failed to file those individual risk filings which would have permitted St. Paul to deviate from its rate manual. Petitioner is correct that the witness employed by St. Paul denied any personal knowledge of St. Paul's actual compliance with its policy to make all required filings in this matter, and further stated that he had no personal knowledge the records in question ever existed. Yet, there was competent substantial evidence presented to support the Administrative Law Judge's finding. Respondent presented evidence via the Processing List for the 1986 policy, which arguably indicated that the policy was properly prepared, the regulatory requirements were met, and an "a" rate filing was prepared. There also was testimony presented, which stated that St. Paul regularly filed its filings with the Department. In addition to the evidence referenced above, a Department market conduct study on St. Paul in 1988 indicated that, in regards to the policies presently at issue for the three years prior to 1988, St. Paul committed no errors of any type. Based on the evidence presented, the Administrative Law Judge made a permissible inference and found that the individual risk filings had been filed in 1986 and 1987.
The Petitioner also excepts to the Administrative Law Judge's finding by arguing that the processing list, which the Administrative Law Judge's found was the most credible evidence, was approved before the 1986 policy was typed. Thus, Petitioner contends the processing list was not probative "evidence" that the necessary documentation was later prepared and filed with the Department. Despite Petitioner's correct description of this evidence, the Administrative Law Judge must be presumed to have weighed all of the evidence and made an evidentiary determination. Although this determination may not have compelling support in the record, it is arguably supported by competent substantial evidence, is within the purview of the Administrative Law Judge, and will not be overturned.
Petitioner further argues in its exception that the Administrative Law Judge "brushed aside two significant pieces of record evidence," which would establish that St. Paul does not adhere to its established company procedures. Petitioner contends that the two pieces of evidence would show that St. Paul failed to adhere to its document retention policy for files relating to insurance policies containing reporting endorsements, and that St. Paul repeatedly failed to-file its individual risk filing-with the Department for other lines of insurance.
Although this evidence tends to support Petitioner's contention that the Administrative Law Judge should not have found that the 1986 and 1987 filings were filed with the Department, the Petitioner did not prove by clear and convincing
evidence that the filings were not made. The Administrative Law Judge should be presumed to have considered the evidence referenced above. There was also evidence presented that would refute the Department's argument that the filings were not made. This evidence is outlined in the preceding paragraphs. Further, the market conduct examination did not indicate that St. Paul repeatedly failed to file its individual risk filings with the Department for its other lines of insurance. Thus, the Administrative Law Judge was permitted to weigh the conflicting evidence and reach his own determination. As stated, it is the function of the Administrative Law Judge to consider all evidence presented, judge credibility of witnesses, draw permissible inferences from the evidence and reach findings of fact based on competent substantial evidence. Heifetz, 475 So.2d at 1281. As there was competent substantial evidence to support the Administrative Law Judge's finding, it will not be disturbed.
Thus, Petitioner exception is REJECTED.
Petitioner excepts to Findings of Fact 29 and 30, relating to the eligibility of insureds for the Teaching Physicians Discount Rate. Petitioner argues that those findings incorrectly state that unless all the individuals covered by the policy are entitled to the discount (i.e., only full-time teaching physicians), then the discount rate would not apply to any of the covered individuals. Petitioner argues that the record demonstrates those findings to be incorrect, as no such limitation is included in the discount provision.
However, despite Petitioner's contention, there is competent substantial evidence to support the Administrative Law Judge's findings. Mr. Swisher, an employee of the Department, stated that the company could determine if the criteria for the discount have been met. St. Paul determined that the criteria for this discount had not been met. Ronald Stegeman, Vice President of St. Paul, also testified to that fact.
Additionally, Mr. Stegeman testified that the discount only applied when the company is insuring all the residents, interns, or teaching faculty for that particular group. The evidence presented indicated that the teaching faculty must be full-time for the discount to be applied. Mr. Stegeman also indicated in his testimony that if the group contained persons who were not entitled to the discount, then the Association would not be entitled to the discount. Finally, there was also evidence presented that showed that there were some physicians in the group who would not be considered full-time teaching physicians, and there was an indication that all of the residents may not have been included in the group. Thus, there was arguably competent substantial evidence for the Administrative Law Judge to reach his findings. Petitioner's exception is REJECTED.
Petitioner (incorrectly designated as the Respondent in its exception) excepts to Finding of Fact 26, because Petitioner asserts that it is not a finding a fact, but an incorrect conclusion of law. Petitioner contends that the Administrative Law Judge incorrectly concluded that if St. Paul did not file documentation with the Department pursuant to Section 627.331, F.S., St. Paul did not automatically forfeit its right to "a" rate the policy and deviate from its filed and approved rates.
Petitioner is correct that the Administrative Law Judge made a determination that was not a finding of fact, but a conclusion of law. Nonetheless, this legal conclusion is supported by competent substantial evidence. It is true that St. Paul must adhere to the statutory procedure that allows it to deviate from its filed and approved rates. However, there was competent substantial evidence presented which indicated that when St. Paul did not file the required documentation so that it could "a" rate its policies on its other lines of insurance, it was not Department policy to automatically "revoke" St. Paul's right to "a" rate these policies. Instead, the Department imposed an administrative penalty and ordered St. Paul to henceforth comply with the applicable statutory requirements.
Thus, Petitioner's exception is REJECTED.
Petitioner excepts to Conclusion of Law 42 as it is incomplete. Petitioner contends the conclusion fails to take into account that St. Paul had the burden of proving that it qualifies for the exemption. However, Petitioner's contention is incorrect.
Although the Administrative Law Judge stated in his finding that Respondent's deviation from its filed and approved rates was in the nature of an exception, it does not necessarily follow that the deviation is thus an "exemption", which under principles of statutory construction, would shift the burden of proving entitlement of the exemption to the Respondent. Nowhere in the Florida Insurance Code is such a deviation characterized as an exemption for statutory construction purposes. Moreover, this issue was not raised in the Prehearing Stipulation, and neither Petitioner nor the Administrative Law Judge stated at any time prior to the filing of these exceptions that St. Paul had the burden of proving its entitlement to deviating from its filed and approved rates. Nonetheless, even if Petitioner's contention is correct, there was arguably competent substantial evidence presented to support a conclusion that St. Paul followed the proper procedures that would entitle it to deviate from its filed and approved rates. Thus, Petitioner's exception is REJECTED.
Petitioner excepts to Conclusion of Law 45, wherein the Administrative Law Judge concludes that Section 627.371, Florida
Statutes is only procedural in nature. As the Petitioner correctly stated, Section 627.371(2), Florida Statutes, authorizes the Department to order a "premium adjustment." This legislatively authorized course of Department action is clearly substantive and remedial in nature. Thus, Petitioner's exception is ACCEPTED.
Finally, Petitioner excepts to Conclusion of Law 46. Petitioner contends that the Administrative Law Judge has incorrectly limited the scope of Section 627.062, Florida Statutes. The Order to Show Cause alleged that Respondent violated Section 627.062, Florida Statutes. It does not identify which subsections of Section 627.062 that Respondent violated. However, the Administrative Law Judge concluded, based on the time period and the nature of the action, that the Department was referring to Section 627.062(1), Florida Statutes. Petitioner contends that it also was alleging violations of subsections (2)(a) and (3) of that statutory section. Thus, it would appear that the Administrative Law Judge incorrectly limited his analysis to subsection 1 of Section 627.062, Florida Statutes. Although the Administrative Law Judge may have incorrectly limited the scope of the above-referenced section, it is not a matter that needs to be rectified because it would not change the outcome of this proceeding. Petitioner has not proven by clear and convincing evidence that St. Paul violated any subsection of Section 627.062, Florida Statutes. Thus, Petitioner's exception is ACCEPTED. However, inasmuch as no violation of any provision of Section 627.062, Florida Statutes has been established, the error is not material.
After careful consideration of the entire record, the submissions of the parties and being otherwise fully advised in the premised, it is ORDERED:
ACCORDINGLY, the Order to Show Cause is hereby dismissed.
Any party to these proceedings adversely affected by this Order is entitled to seek review of this 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 Notice of Appeal with the General Counsel, acting as Agency Clerk, 200 East Gaines Street, 612 Larson Building, Tallahassee, Florida 32399-0333 and a copy of the same and filing fee, with the appropriate District Court of Appeal within thirty
(30) days of rendition of this Order.
