STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
CENTRAL STATES HEALTH AND )
LIFE COMPANY OF OMAHA, )
)
Petitioner, )
)
vs. ) Case No. 98-2767RU
) DEPARTMENT OF INSURANCE AND ) TREASURER, )
)
Respondent. )
)
FINAL ORDER
A formal hearing was held in this case before Larry J. Sartin, a duly designated Administrative Law Judge of the Division of Administrative Hearings, on July 20-21 and September 30, 1998, in Tallahassee, Florida.
APPEARANCES
For Petitioner: R. Terry Rigsby, Esquire
Blank, Rigsby & Meenan, P.A. Post Office Box 11068 Tallahassee, Florida 32302-3068
For Respondent: Elizabeth G. Arthur, Esquire
David Hershel, Esquire Dennis Silverman, Esquire Division of Legal Services Department of Insurance and
Treasurer
612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0333
STATEMENT OF THE ISSUE
The issue in this case is whether Respondent applied the
following policy to Petitioner and, if so, whether the policy
constitutes an unpromulgated "rule" as defined in Section 120.52(15), Florida Statutes.
If during its review of a rate change filing, DOI determines an insurer is not in compliance with the annual rate filing requirements of section 627.410(7), Florida Statutes, and if the filing involves a Medicare Supplement form, section 627.6745, Florida Statutes, then DOI will only approve an "annual portion" as a percentage of the rate change requested based on the elapsed time period since the last approved rate filing.
PRELIMINARY STATEMENT
On or about January 20, 1998, Petitioner filed requests for rate increases on individual and group Medicare supplement policy forms with Respondent. On or about March 6, 1998, Respondent notified Petitioner that both rate increase requests were denied. Respondent also notified Petitioner that, while the amount of the rate increases sought by Petitioner had been denied, a lower rate increase could be approved.
On March 24, 1998, Petitioner filed two Petitions for Formal Administrative Proceeding with Respondent. Petitioner requested a formal hearing to challenge the denial of its group Medicare supplement policy form rate increase in one petition and the denial of its individual Medicare supplement policy form rate increase in the other petition. Both petitions were filed with the Division of Administrative Hearings on April 2, 1998.
The petition challenging the group rate increase request was
designated Case Number 98-1562 by the Division of Administrative Hearings. The petition challenging the individual rate increase
request was designated Case Number 98-1563. Both cases were assigned to the undersigned.
On May 11, 1998, a Notice of Hearing was entered scheduling Case Numbers 98-1562 and 98-1563 for formal hearing on
July 20 and 21, 1998.
On June 16, 1998, Petitioner filed a Petition to Determine Invalidity of Agency Statement Pursuant to Section 120.56(4), Florida Statutes with the Division of Administrative Hearings.
In this petition it was alleged that Respondent had relied upon a policy statement developed and applied by Respondent in violation of Section 120.56(4), Florida Statutes, in denying Petitioner's rate increase requests. Petitioner requested in the petition that the policy be declared an unpromulgated rule, that Respondent be precluded from applying the unpromulgated rule against Petitioner, and that the policy be declared an invalid exercise of delegated legislative authority.
Petitioner's Section 120.56(4), Florida Statutes, petition was designated Case Number 98-2767RU and was assigned to Administrative Law Judge Suzanne F. Hood by Order of Assignment entered June 19, 1998. Judge Hood scheduled a formal hearing in Case Number 98-2767RU for July 7, 1998, by Notice of Hearing entered June 22, 1998.
On July 7, 1998, an Order of Consolidation and Canceling Final Hearing in Case Number 98-2767RU was entered. Pursuant to this order Case Numbers 98-1562, 98-1563, and 98-2767RU were consolidated. The hearing scheduled for July 7, 1998, in Case Number 98-2767RU was cancelled and the parties were informed that the hearing in all three cases would be held on July 20 and 21, 1998, as provided in the Notice of Hearing entered in Case Numbers 98-1562 and 98-1563.
On June 25, 1998, Respondent filed a Motion for Summary Order, Motion to Expedite and Motion for Attorney's Fees in Case Number 98-2767RU. Respondent argued that it had undertaken steps to adopt the challenged policy in Case Number 98-2767RU as a rule and, therefore, it was authorized to rely upon that policy for its agency decisions in Case Numbers 98-1562 and 98-1563 consistent with Section 120.56(4)(e), Florida Statutes (1997).
After a review of the pleadings it was concluded that it was not clear on the face of the pleadings that the policies Respondent was attempting to adopt by rule incorporated the policy statement being challenged in Case Number 98-2767RU. Therefore, a ruling on the motion was reserved. It has been concluded in this Final Order that Section 120.56(4)(e), Florida Statutes, is not an absolute defense to a proceeding instituted pursuant to Section 120.56(4), Florida Statutes. Therefore, the Motion for Summary Order, Motion to Expedite and Motion for Attorney's Fees is hereby denied.
At the formal hearing Petitioner presented the testimony of Dawn Enquist Helwig, Ira Nathan, and Frank Dino. Ms. Helwig and Mr. Nathan were accepted as expert actuaries. Petitioner offered twenty-two exhibits into evidence. All were accepted.
Petitioner's Exhibit 12 was accepted only to the extent ultimately determined relevant. Petitioner's Exhibits 20, 21, and 22A, B, and C consisted of the deposition testimony of James Bracher, Mr. Dino, and Linda Patricia Ziegler, respectively.
Respondent presented the testimony of Mr. Nathan, Mr.
Bracher, Mr. Dino, and Ms. Ziegler. Mr. Dino and Ms. Ziegler were accepted as expert actuaries. Respondent offered fifteen exhibits into evidence. All were accepted. Respondent's Exhibits 12 and 15 consisted of the deposition testimony of Mr. Nathan and Ms. Helwig.
Official recognition of the following provisions was taken during the hearing: (1) Sections 627.410, 627.411, and 627.6745,
Florida Statutes; (2) Rule 4-156.011, Rule 5-159.012, and Chapter 4-149, Florida Administrative Code; (3) Notice of Proposed Rules, Volume 23, Number 45, Pages 6045-6068 of the Florida Administrative Weekly (November 7, 1997); and (4) a Notice of Change, Volume 24, Number 20, Pages 2689-2701, Florida
Administrative Weekly (May 15, 1998).
Subsequent to the conclusion of the formal hearing, Petitioner filed a Motion to Supplement the Record and for Official Recognition. Petitioner requested in the motion that
official recognition of a Second Notice of Change of Proposed Rule Chapter 4-149, Florida Administrative Code, issued after the formal hearing be taken and that the second notice be considered as part of the evidence in this case.
Respondent filed a response to the motion arguing that the record should be reopened only if it were given an opportunity to introduce evidence concerning the second notice. Following a motion hearing conducted by telephone on September 1, 1998, it was ordered that the record of this case would be reopened to allow the parties to present additional evidence concerning the second notice of change on September 30, 1998.
On September 30, 1998, Petitioner presented the testimony of Ms. Helwig. Petitioner also offered two exhibits. Petitioner's Exhibits 23 and 24 were accepted into evidence. Petitioner's Exhibit 23 is the notice of change.
Respondent presented the testimony of Mr. Dino and Ms.
Ziegler. Respondent offered Respondent's Exhibit 16, which was accepted into evidence.
The last volume of the transcript of the formal hearing was filed on October 19, 1998. Proposed orders were, therefore, required to be filed on or before October 29, 1998. Both parties filed proposed orders on October 19, 1998. Those proposed orders and Petitioner's Summary of Argument have been fully considered in entering this Final Order.
A Recommended Order disposing of Case Numbers 98-1562 and
98-1563 is being entered simultaneously with this Final Order.
FINDINGS OF FACT
The Parties.
Petitioner, Central States Health and Life Company of Omaha (hereinafter referred to as "Central States"), is a corporation domiciled in Nebraska.
Central States holds a certificate of authority issued by the Department which allows it to sell life and health insurance, including individual and group standardized Medicare supplement policies, in Florida.
Respondent, the Department of Insurance and Treasurer (hereinafter referred to as the "Department"), is an agency of the State of Florida. The Department is charged with the responsibility for, among other things, the review and approval of health insurance policy forms used in Florida.
General Requirements for Medicare Supplement Policy Forms in Florida.
No "basic insurance policy" may be delivered in Florida unless the "form" has first been approved by the Department. Section 627.410(1), Florida Statutes.
Section 627.410(6), Florida Statutes, additionally requires that a copy of the applicable rating manual or rating schedule included as part of a insurance policy form must be filed with the Department for approval before any "health
insurance policy form" is delivered in Florida.
Pursuant to Section 627.410(7), Florida Statutes, insurers required to file rating manuals or rating schedules pursuant to Section 627.410(6), Florida Statutes, must make an "annual filing" with the department.
The rating manual and rating schedule requirements of Section 627.410(7), Florida Statutes, may be satisfied by:
A "rate filing prepared by an actuary which contains documentation demonstrating the reasonableness of benefits in relation to premiums charged in accordance with the applicable rating laws and rules promulgated by the department." Section 627.410(7)(b)1, Florida Statutes; or
"If no rate change is proposed, a filing which consists of a certification by an actuary that benefits are reasonable in relation to premiums currently charged in accordance with applicable laws and rules promulgated by the department." Section 627.410(7)(b)2, Florida Statutes.
The filing requirements of Section 627.410(6) and (7), Florida Statutes, apply to Medicare supplement forms.
Section 627.6745, Florida Statutes, limits the manner in which entities providing Medicare supplement policies may meet the annual filing requirement of Section 627.410(7), Florida Statutes. Section 627.6745, Florida Statutes, eliminates the use of the certification procedure described in Finding of Fact 7.b.,
supra, by Medicare supplement policy providers. Section 627.6745(2), Florida Statutes, requires that all providers of Medicare supplement policy forms:
. . . file annually its rates, rating schedules, and supporting documentation demonstrating that it is in compliance with the applicable loss ratio standards of this code. The filing of rates and rating schedules shall demonstrate that the actual and expected losses in relations to premiums comply with the requirements of this section.
Rule 4-156.012(3), Florida Administrative Code, requires that issuers of Medicare supplement policies and certificates must file their rates annually "for approval by the Department in accordance with Section 627.410, Florida Statutes."
Section 627.6745, Florida Statutes, also provides limitations on the rates which may be charged for Medicare supplement policies:
Medicare supplement policies shall return the following to policyholders in the form of aggregate benefits under the policy, with respect to the lifetime of the policy, on the basis of earned premiums and on the basis of incurred claims experience . . . and in accordance with accepted actuarial principles and practices:
At least 75 percent of the aggregate amount of premiums earned in the case of group policies.
. . . for individual policies issued on or after July 1, 1989, at least 65 percent of the aggregate amount of premiums earned. . . .
Stated very simply, this provision requires that for every dollar of premiums earned, a minimum of 75 cents must be paid in claims
for group policies and a minimum of 65 cents must be paid in claims for individual policies.
The grounds for disapproval of "any form filed under s. 627.410" are provided in Section 627.411, Florida Statutes. In pertinent part, Section 627.411(1), Florida Statutes, provides that a "form" may be disapproved if the form:
(e) Is for health insurance, and provides benefits which are unreasonable in relation to the premium charged, contains provisions which are unfair or inequitable or contrary to the public policy of this state or which encourage misrepresentation or which apply rating practices which result in premium escalations that are not viable for the policyholder market or result in unfair discrimination in sales practices.
The Department has adopted rules establishing rate filing procedures. Rule 4-149.003, Florida Administrative Code. Rule 4-149.006, Florida Administrative Code, sets out the information an actuary must provide and the manner in which an actuary is to provide that information. The Department has also adopted rules providing the manner in which the reasonableness of benefits in relation to premiums will be determined.
Rule 4-149.005, Florida Administrative Code.
Central States' 1998 Rate Increase Filings and the Department's Denial Thereof.
On or about January 20, 1998, Central States filed two requests for rate increase with the Department. One request sought a 39% increase for Individual Medicare supplement policy forms (hereinafter referred to as "Individual Medicare Forms")
sold in Florida and the other sought a 39% increase for Group Medicare supplement policy forms (hereinafter referred to as "Group Medicare Forms") sold in Florida. For purposes of this Final Order all Findings of Fact and Conclusions of Law apply equally to each type of rate increase request unless otherwise noted.
Both rate increase requests were accompanied by an actuarial memorandum certified by Dawn Helwig, an actuary retained by Central States.
The rate increase requests were reviewed by Linda Ziegler, an actuary employed by the Department. Following her review, Ms. Ziegler asked for additional information or explanation concerning several issues by letters dated February 10, 1998.
By letter dated February 18, 1998, Central States responded to Ms. Ziegler's letters. Each of the issues raised by Ms. Ziegler was addressed in the February 18, 1998, letter.
After review of Central States' rate increase requests, the Department informed Central States that the 39% rate increases it had requested were disapproved. Central States was informed of the denial by letter dated March 6, 1998.
The Department also informed Central States in the March 6, 1998, denial letter that rate increases of 9.6% were "APPROVED." Central States was requested to "provide revised rate pages reflecting the approved rate increase by March 20,
The Department denied the 39% rate increase requests for three reasons:
The Department determined that the rate increases sought by Central States did not provide benefits which were reasonable in relation to the premium to be charged. Therefore, the Department denied the rate increase requests pursuant to Section 627.411(1)(e), Florida Statutes. This determination was based upon a finding that Central States' projected Anticipated Loss Ratio did not meet or exceed the weighted average of the Anticipated Loss Ratio *N (hereinafter referred to as the "*N Test"). "Anticipated Loss Ratio" is defined in Rule 4- 149.006(3)(b)20, Florida Administrative Code, as essentially the present value of future benefits (claims) divided by the present value of future premiums. The conclusion that Central States' projected Anticipated Loss Ratio did not meet or exceed the *N Test was based essentially upon four areas of disagreement with Ms. Helwig's calculations in her actuarial memoranda;
The Department determined that Central States' "forms" were in violation of Chapter 627, Florida Statutes. Therefore, the Department denied the rate increase requests pursuant to Section 627.411(1)(a), Florida Statutes. This determination was based upon the Department's conclusion that Central States had failed to make annual rate filings as required by Section 627.410(7), Florida Statutes, and Rule 4-156.011, Florida
Administrative Code; and
The Department determined that Central States' requested rates were not "viable." Therefore, the Department denied the rate increase requests pursuant to Section 627.411(1)(e), Florida Statutes. This determination was based upon the Department's conclusion that because Central States had failed to obtain annual approval of its Individual and Group Medicare Forms for several years the amount of the increases sought by Central States was not "viable."
The four areas of disagreement with Ms. Helwig's calculations are:
What Individual Medicare Forms should be considered to have been issued to individual customers after "6/1/94" for purposes of Rule 4-149.005(2), Florida Administrative Code. (This issue only impacted Central States' Individual Medicare Forms request);
Whether Central States should pool its experience with its Individual and Group Medicare Forms;
Whether Central States should use its actual nationwide experience instead of its actual nationwide experience "adjusted to the Florida Rate basis"; and
Whether it was appropriate for Central States to assume that its premiums would be received and its claims incurred at the beginning of the year.
The Department concluded that 32.7% increases would
meet the *N Test if the four areas of disagreement with
Ms. Helwig were corrected by Central States. The four areas of disagreement are the subject of Case Numbers 98-1562 and 98-1563.
The Department also concluded, however, that even if Central States met the *N Test it would only be entitled to a one-year adjustment which it calculated to be 9.6%. It is this determination that Central States has alleged constitutes the application of an unpromulgated rule.
The Challenged Unpromulgated "Rule."
The specific statement or statement description challenged by Central States as an unpromulgated rule is as follows:
If during its review of a rate change filing, DOI determines an insurer is not in compliance with the annual rate filing requirements of section 627.410(7), Florida Statutes, and if the filing involves a Medicare Supplement form, section 627.6745, Florida Statutes, then DOI will only approve an "annual portion" as a percentage of the rate change requested based on the elapsed time period since the last approved rate filing.
(The foregoing statement of policy will be referred to as the Challenged Policy").
Central States has alleged that the Department applied the Challenged Policy to it in denying its rate increase requests. Central States has also alleged that the Challenged Policy had not been adopted or proposed as a rule pursuant to Section 120.54, Florida Statutes, at the time of its application by the Department.
The Department's Application of the Challenged Policy.
The Challenged Policy is actually more than one policy. First, the Challenged Policy includes a policy of the Department that it will not allow a rate increase for Individual or Group Medicare supplement forms attributable to more than a one-year period if an insurer fails to comply with the annual filing requirement of Section 627.410(7)(b), Florida Statutes. This policy is based upon the Department's conclusion that the failure to obtain annual approval means that any future "form" filed by an insurer is in violation of Chapter 627, Florida Statutes, and its conclusion that any future rate increase will not be viable.
Secondly, the Challenged Policy includes a policy of the Department that, if the annual filing requirement has not been met, it will only approve an "annual portion" as a percentage of the rate change requested based on the elapsed time period since the last approved rate filing.
The evidence in this case proved that the first part of the Challenged Policy formed a large part of the basis for the Department's denial of Central States' applications for rate increases. The evidence also proved that the second part of the Challenged Policy was relied upon by the Department in determining that increases of 9.6% would be acceptable.
The Challenged Policy was a statement of general applicability implementing and interpreting Section 627.411(1)(e), Florida Statutes, and prescribing policy of the
Department concerning the procedures the Department intended to follow in determining a viable rate of increase for Medicare supplement forms where an insurer has not made the annual filings required by Section 627.410(7), Florida Statutes. The Department has not disputed this finding.
The Challenged Policy, as alleged by Central States, constitutes a "rule" as that term is defined in
Section 120.52(15), Florida Statutes. The Challenged Policy had not been adopted by the rulemaking procedure provided in Section 120.54, Florida Statutes, at the time of its application to Central States.
Throughout this proceeding, the Department has conceded that the Challenged Policy is a "rule" and that the Challenged Policy has not been adopted by rulemaking.
Feasibility of Rulemaking.
The Challenged Policy was proposed for adoption as a rule by the Department prior to the filing of the petition in this case. On November 7, 1997, the Department caused notice of its intent to adopt proposed rules to be published. Volume 23, Number 45, Pages 6045-6068 of the Florida Administrative Weekly (November 7, 1997). Pursuant to this notice the Department indicated its intent to repeal Chapter 4-149, Florida Administrative Code, and replace it with a new Chapter 4-149.
Included in the newly proposed rule chapter, the Department included newly proposed rule 4-149.108(14):
(14) If an insurer has not made an annual rate filing or certification stating the reasonableness of benefits in relation to the premiums charged as required by section 627.410(7), Florida Statutes, other than when the department approved a lower increase than what was requested, the current rate increase request shall be limited to the current year's increase. The current year's increase is defined as the maximum level average annual increase permitted by this part, determined assuming that the insurer had implemented level annual rate increase for the period where no filing or certification had been made.
(Hereinafter referred to as the "First Proposed Policy"). Volume 23, Number 45, Pages 6045-6068 of the Florida
Administrative Weekly (November 7, 1997)(hereinafter referred to as the "Proposed Rules").
Neither party disputes the fact that the Challenged Policy is included in the First Proposed Policy. Nor do the parties dispute that the Department applied the policies of the First Proposed Policy to Central States in March 1998 in denying its requested rate increases and approving a 9.6% rate increase.
Therefore, the evidence failed to prove that rulemaking was not feasible and practicable under Section 120.54(1)(a), Florida Statutes.
CONCLUSIONS OF LAW
Jurisdiction.
The Division of Administrative Hearings has
jurisdiction over the parties to, and the subject matter of, this proceeding. Section 120.56(4), Florida Statutes (1997).
Standing.
Section 120.56(4), Florida Statues, allows any person that is "substantially affected by an agency statement" to institute a proceeding to determine whether the statement violates Section 120.54(1)(a), Florida Statutes.
38 The evidence in this case proved that the Department applied an unpromulgated rule policy to Central States. As a consequence, Central States was denied approval of the full amount of rate increases it had sought approval from the Department for.
Central States, therefore, was "substantially affected" by the Department's policy and had standing to institute this proceeding.
Burden of Proof.
The burden of proof, absent a statutory directive to the contrary, is on the party asserting the affirmative of the issue in a Chapter 120, Florida Statutes, proceeding. Antel v. Department of Professional Regulation, 522 So. 2d 1056 (Fla. 5th DCA 1988); Department of Transportation v. J.W.C. Co., Inc., 396 So. 2d 778 (Fla. 1st DCA 1981); and Balino v. Department of Health and Rehabilitative Services, 348 So. 2d 249 (Fla. 1st DCA 1977).
The initial burden of proof in a proceeding instituted pursuant to Section 120.56(4), Florida Statutes, is placed on the petitioner. Section 120.56(4)(a), Florida Statutes, requires that any petition filed pursuant to Section 120.56(4), Florida Statutes, include the following allegations: (a) what the alleged "statement" is; (b) that the statement constitutes a rule under Section 120.52, Florida Statutes; and (c) that the agency has not adopted the statement by the rulemaking procedures of Section 120.54, Florida Statutes.
Section 120.56(4)(c), Florida Statutes, provides that the burden shifts to the agency to prove that "rulemaking is not feasible and practicable under s. 120.54(1)(a)" if the petitioner proves the allegations required to be included in the petition.
Based upon the foregoing, Central States was required to prove the allegations of its petition and the Department was required to prove that rulemaking was not feasible and practicable.
Central States met its burden of proof because the Department conceded that the Challenged Statement was an unpromulgated rule. The Department did not dispute that rulemaking was feasible and practicable.
The Challenged Policy Constitutes an Unpromulgated Rule.
The evidence in this case proved that the Challenged Policy in this case is a "rule" as defined in Section 120.52(15),
Florida Statutes. In fact, there was no dispute concerning this issue.
The evidence also proved that the Department has not finally adopted the policy by the rulemaking procedure provided in Section 120.54, Florida Statutes. This fact was also conceded.
Finally, the Department did not attempt to meet its burden of proving that rulemaking was not feasible and practicable under Section 120.54(1)(a), Florida Statutes. The Department conceded that rulemaking was feasible and practicable.
Based upon the foregoing, the Challenged Policy violates Section 120.54(1)(a), Florida Statutes.
Section 120.56(4)(e), Florida Statutes.
Section 120.56(4)(c), Florida Statutes, provides that the administrative law judge is to make the following determination, which is considered "final," in a challenge brought pursuant to Section 120.56(4)(a), Florida Statutes:
(c) The administrative law judge may determine whether all or part of a statement violates s 120.54(1)(a).
Pursuant to Section 120.56(4)(d), Florida Statutes, if a final order is entered finding all or part of a policy to violate Section 120.54(1)(a), Florida Statutes, the agency is required to "immediately discontinue all reliance upon the statement or any substantially similar statement as a basis for agency action." Pursuant to this provision, any person to whom
an agency attempts to apply a statement found to be an unpromulgated rule by Final Order may rely upon the Final Order in a Section 120.57(1), Florida Statutes, proceeding to avoid application of the policy.
Section 120.56(4)(d), Florida Statutes, is self- executing. To take effect, it does not require any order of the Administrative Law Judge other than the order the Administrative Law Judge is called upon in Section 120.56(4)(c), Florida Statutes, to make.
Section 120.56(4)(e), Florida Statutes, provides an exception to the consequences of Section 120.56(4)(d), Florida Statutes. Pursuant to Section 120.56(4)(e), Florida Statutes, an agency may rely upon a policy despite a determination that the policy is an unpromulgated rule in violation of Section 120.54(1)(a), Florida Statutes, if the following conditions are met:
Prior to the entry of the final order, the agency publishes, pursuant to s. 120.54(3)(a), proposed rules which address the statement;
The agency proceeds expeditiously and in good faith to adopt rules which address the statement; and
The statement or a substantially similar statement meets the requirements of s. 120.57(1)(e).
While the Department has not disputed the findings of this Final Order that the Challenged Policy constitutes an
unpromulgated rule and that it was feasible and practicable to adopt the Challenged Policy as a rule, the Department has argued that Section 120.56(4)(e), Florida Statutes, is an "absolute defense" to Central States' Section 120.56(4), Florida Statutes, challenge.
The Department's argument is rejected. All that Section 120.56(4)(e), Florida Statutes, does is to allow an agency to rely upon a policy that has been determined to constitute an unpromulgated rule in the defense of a challenge to its application of the policy in a proceeding pursuant to Section 120.57, Florida Statutes, if the conditions listed, supra, are met.
Additionally, the applicability of Section 120.56(4)(e), Florida Statutes, need not be determined until a Final Order has been entered finding that the agency has a policy that constitutes an unpromulgated rule.
While it may be true that the determination that a statement constitutes an unpromulgated rule will only negatively impact the agency by providing for an award of attorney's fees, Section 120.56(4), Florida Statutes, requires that a determination be made as to whether Section 120.54(1)(a), Florida Statutes, has been violated even if Section 120.56(4)(e), Florida Statutes, applies.
Central States has taken the position in its proposed final order that the determination of whether Section
120.56(4)(e), Florida Statutes, applies should be made in this Final Order. This argument is also rejected.
Again, the determination of whether Section 120.56(4)(e), Florida Statutes, has been met is only pertinent in deciding whether an unpromulgated rule may be relied upon by an agency in a proceeding pursuant to Section 120.57, Florida Statutes. There is, therefore, no need to address this issue in the Section 120.56(4), Florida Statutes, proceeding.
Additionally, it is possible that an agency may take the requisite steps for Section 120.56(4)(e), Florida Statutes, to apply after the conclusion of the formal hearing in the Section 120.56(4), Florida Statutes, proceeding. All that is required is that the steps be taken "[p]rior to entry of a final order . . . ." Therefore, it appears that the Legislature did not intend that the determination of whether Section 120.56(4)(e), Florida Statutes, applies should be made until an agency attempts to rely upon the unpromulgated rule in defense of its action in a Section 120.57, Florida Statutes, proceeding.
Based upon the foregoing, the issue of whether
Section 120.56(4)(e), Florida Statutes, applies to the Challenged Policy has been decided in the Recommended Order entered simultaneously with this Final Order in Case Numbers 98-1562 and 98-1563.
Other Arguments Raised by Central States.
In its proposed final order Central States has suggested three grounds for a proposed ruling that the Challenged Policy may not be relied upon by the Department to deny Central States' rate increase requests which are not appropriate in challenges brought pursuant to Section 120.56(4), Florida Statutes:
Central States challenges the Department's ability to employ non-rule policy which is in conflict with a previously adopted and still valid rule until such time as the promulgated rule is repealed and the proposed rule is finally adopted.
. . . .
The Department's non-rule policy fails each and every requirement of Section 120.57(1)(e), Florida Statutes. . . .
The challenged agency statement has prohibited retrospective effects. The challenged agency statement levies substantial penalties, not previously provided for by law or rule, for alleged violations occurring in the past.
While the arguments quoted in paragraph 61 may be appropriate in determining whether the Department's proposed denial of Central States' rate increase requests was appropriate agency action in the proceedings instituted pursuant to Section 120.57, Florida States, these arguments are not appropriate in this proceeding for two reasons.
First, the jurisdiction of the forum in a Section 120.56(4), Florida Statutes, proceeding is limited to the following determinations:
Is the person instituting the proceeding "substantially affected";
Has the agency adopted a "statement" that constitutes a "rule" which had not been adopted pursuant to the rulemaking procedures of Section 120.54, Florida Statutes; and
Was rulemaking feasible and practicable under Section 120.54, Florida Statutes.
The three issues quoted in paragraph 61 need not be addressed to make the foregoing determinations.
Secondly, issues 1 and 4 quoted in paragraph 61 were not raised by Central States in its Petition to Determine Invalidity of Agency Statement Pursuant to Section 120.56(4), Florida Statutes. Central States cannot rely upon issues it failed to put the Department on notice that it intended to rely upon in this case.
Attorney's Fees and Costs.
Section 120.595(4)(a), Florida Statutes, provides the following with regard to an award of attorney's fees and costs in proceedings pursuant to Section 120.56(4), Florida Statutes:
(a) Upon entry of a final order that all or part of an agency statement violates s. 120.54(1)(a), the administrative law judge shall award reasonable costs and reasonable attorney's fees to the petitioner . . . .
Based upon this provision, a separate Order Concerning Attorney's Fees and Costs is being entered simultaneously with this Final Order. Pursuant to the order, the parties will be
given an opportunity to address whether an award of fees and costs should be made in this case and, if so, to determine the amount of fees and costs that should be awarded.
ORDER
Based on the foregoing Findings of Fact and Conclusions of Law, it is
ORDERED that the statement quoted in paragraph 24 of this Final Order constitutes a rule as defined in Section 120.52(15), Florida Statutes, which has not been adopted pursuant to the rulemaking procedures of Section 120.54, Florida Statutes, and the evidence failed to prove that rulemaking was not feasible and practicable under Section 120.54, Florida Statutes.
DONE AND ORDERED this 1st day of December, 1998, in Tallahassee, Leon County, Florida.
LARRY J. SARTIN
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 1st day of December, 1998.
COPIES FURNISHED:
R. Terry Rigsby, Esquire Timothy J. Meenan, Esquire
A. Kenneth Levine, Esquire
Blank, Rigsby & Meenan, P.A. Post Office Drawer 11068 Tallahassee, Florida 32302-3068
Elizabeth G. Arthur, Senior Attorney Division of Legal Services Department of Insurance
200 East Gaines Street Tallahassee, Florida 32399-0333
Bill Nelson
State Treasurer and Insurance Commission
The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Daniel Y. Sumner, General Counsel Department of Insurance
The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300
Carroll Webb, Executive Director and General Counsel
Administrative Procedures Committee Holland Building, Room 120 Tallahassee, Florida 32399-1300
Liz Cloud, Chief
Bureau of Administrative Code The Elliott Building Tallahassee, Florida 32399-0250
NOTICE OF RIGHT TO JUDICIAL REVIEW
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 the notice of appeal with the Agency Clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
| Issue Date | Proceedings |
|---|---|
| Jan. 10, 2000 | Record Returned from the First DCA filed. |
| Sep. 29, 1999 | BY ORDER OF THE COURT (Appeal Dismissed per the First DCA) filed. |
| Sep. 14, 1999 | Order Granting Motion to Set Aside Final Order and Closing File sent out. CASE CLOSED. |
| Sep. 13, 1999 | Joint Motion to Declare Final Order Moot filed. |
| Sep. 02, 1999 | BY ORDER OF THE COURT (Joint motion to relinquish jurisdiciton is granted) filed. |
| Aug. 25, 1999 | Joint Motion to Relinquish Jurisdiction (filed with the first DCA) filed. |
| Aug. 05, 1999 | BY ORDER OF THE COURT (appellant has failed to timely file the initial brief, failure to do so within 20 days the appeal will be dismissed) filed. |
| Jun. 09, 1999 | BY ORDER OF THE COURT (Joint motion for relinquish of jurisdiciton is granted, to the lower tribunal for 30 days to consider a motion to vacate the final order) filed. |
| May 13, 1999 | BY ORDER OF THE COURT (First DCA) motion filed 5/07/99 for Extension of time is Granted) filed. |
| May 11, 1999 | Order Granting Motion to Continue sent out. (2/19/99 hearing cancelled; parties to provide status report by 4/30/99) |
| Apr. 06, 1999 | Order Denying Motion to Set Aside Final Order sent out. |
| Apr. 01, 1999 | Motion to Set Aside Final Order (Respondent) filed. |
| Mar. 23, 1999 | Index, Record, Certificate of Record sent out. |
| Mar. 10, 1999 | Payment in the amount of $650.00 for indexing filed. |
| Feb. 10, 1999 | BY ORDER OF THE COURT (extension of time is granted by the First DCA) rec`d |
| Feb. 09, 1999 | Invoice for indexing in the amount of $650.00 sent out. |
| Feb. 09, 1999 | Index sent out. (Record Index to the District Court of Appeal) |
| Feb. 08, 1999 | Amended Notice of Appelate Mediation Conference rec`d |
| Feb. 02, 1999 | Order Granting Motion to Continue sent out. (Hearing scheduled for 2/19/99 is Cancelled; status report due by 4/30/99) |
| Jan. 26, 1999 | Motion to Continue Hearing on Amount of Attorney`s Fees and Costs (Petitioner) rec`d |
| Jan. 15, 1999 | Amended Notice of Appeal rec`d |
| Jan. 12, 1999 | Notice of Hearing on Amount of Attorney`s Fees and Costs sent out. (hearing set for 2/19/99; 9:00am; Tallahassee) |
| Jan. 06, 1999 | Letter to E. Arthur from D. Gebhart Re: Administrative Order 96-3 (1st DCA Letter) filed. |
| Jan. 05, 1999 | Letter to DOAH from DCA filed. DCA Case No. 1-98-4814. |
| Jan. 05, 1999 | Certificate of Notice of Appeal sent out. |
| Dec. 29, 1998 | Notice of Appeal filed. |
| Dec. 21, 1998 | Letter to Judge Sartin from R. Terry Rigsby (RE: request for hearing) filed via facsimile) filed. |
| Dec. 02, 1998 | Case 98-002767 unconsolidated due to closing order. |
| Dec. 01, 1998 | Order Concerning Attorney Fees and Costs sent out. |
| Dec. 01, 1998 | CASE CLOSED. Final Order sent out. Hearing held 07/20-21/98 and 09/30/98. |
| Oct. 29, 1998 | (Respondent) Proposed Recommended Order and Proposed Final Order filed. |
| Oct. 29, 1998 | (Petitioner) Certificate of Service; (Petitioner) Indexed and Tabbed Submission filed. |
| Oct. 29, 1998 | (Petitioner) Summary of the Argument filed. |
| Oct. 29, 1998 | Petitioner`s Proposed Recommended Order (for judge signature/case no. 98-1562) filed. |
| Oct. 29, 1998 | Petitioner`s Proposed Final Order (for jduge signature/case no. 98-2767RU) filed. |
| Oct. 19, 1998 | Notice of Filing; (Volume 5 of 5) DOAH Court Reporter Final Hearing Transcript filed. |
| Oct. 16, 1998 | Letter to M. Whiddon from R. Rigsby Re: Scrivener`s errors in transcript filed. |
| Sep. 25, 1998 | Subpoena Duces Tecum (R. Rigsby) filed. |
| Sep. 09, 1998 | Order Granting Motion to Supplement the Record and for Official Recognition; Notice of Hearing sent out. (hearing to reconvene on 9/30/98; 9:30am; Tallahassee) |
| Sep. 08, 1998 | Notice of Taking Deposition Duces Tecum of Non-Parties (Respondent) filed. |
| Sep. 04, 1998 | (Petitioner) Amended Notice of Taking Deposition Duces Tecum filed. |
| Sep. 01, 1998 | (Petitioner) Notice of Taking Deposition Duces Tecum filed. |
| Aug. 28, 1998 | Respondent`s Reply to Petitioner`s Reply to Respondent`s Response to Petitioner`s Motion to Supplement the Record and for Official Recognition (filed via facsimile). |
| Aug. 20, 1998 | Petitioner`s Reply to Respondent`s Response to Its Motion to Supplement the Record and for Official Recognition filed. |
| Aug. 19, 1998 | Respondent`s Response to Petitioner`s Motion to Supplement the Record and for Official Recognition filed. |
| Aug. 18, 1998 | (Petitioner) Motion to Supplement the Record and for Official Recognition filed. |
| Aug. 05, 1998 | Notice of Filing; (Volumes 1-4 of 4) DOAH Court Reporter Final Hearing Transcript filed. |
| Jul. 20, 1998 | CASE STATUS: Hearing Held. |
| Jul. 16, 1998 | Order on Motion for Summary Final Order, Motion to Expedite and Motion for attorney`s Fees sent out. |
| Jul. 15, 1998 | Petitioner`s Response to Respondent`s Response to Motion for Summary Final Order, Motion to Expedite and Motion for Attorney`s Fees filed. |
| Jul. 10, 1998 | Respondent`s Response to Petitioner`s Response to Motion for Summary final Order, Motion to Expedite and Motion for Attorney`s Fees filed. |
| Jul. 07, 1998 | Order of Consolidation and Cancelling Final Hearing in Case Number 98-2767RU sent out. (Consolidated cases are: 98-1562, 98-1563 & 98-002767RU) |
| Jul. 06, 1998 | Petitioner`s Response to Motion for Summary Final Order, Motion to Expedite and Motion for Attorney`s Fees filed. |
| Jun. 25, 1998 | (Respondent) Motion for Summary Final Order, Motion to Expedite and Motion for Attorney`s Fees filed. |
| Jun. 22, 1998 | Notice of Hearing sent out. (hearing set for 7/7/98; 10:00am; Tallahassee) |
| Jun. 22, 1998 | Order Establishing Prehearing Procedure sent out. |
| Jun. 19, 1998 | Order of Assignment sent out. |
| Jun. 18, 1998 | Letter to Liz Cloud & Carroll Webb from M. Lockard w/cc: Agency General Counsel sent out. |
| Jun. 16, 1998 | Petition to Determine Invalidity of Agency Statement Pursuant to Section 120.56(4), Florida Statutes filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 01, 1998 | DOAH Final Order | Petitioner proved that Respondent has applied a statement which constituted a rule not adopted pursuant to Section 120.54, Florida Statutes. |
