DEPARTMENT OF LABOR AND ) EMPLOYMENT SECURITY, DIVISION ) OF WORKFORCE AND EMPLOYMENT ) OPPORTUNITY, )
vs. ) Case No. 00-2577
Respondent. )
Pursuant to notice, a formal hearing was held in this case before Lawrence P. Stevenson, a duly-designated Administrative Law Judge of the Division of Administrative Hearings, on December 6, 2000, in Largo, Florida.
For Petitioner: Sonja P. Mathews, Esquire
2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189
Nestor Sales Company, Inc. 7337 Bryan Dairy Road Largo, Florida 34647
At issue in this proceeding is whether Respondent, a tool company, should be required to repay funds that the Department of Labor and Employment Security, Division of Workforce and Employment Opportunity (the "Department") alleges were erroneously paid under a North American Free Trade Agreement- Transitional Adjustment Assistance ("NAFTA" or "NAFTA-TAA") job training program for equipment that Respondent provided to two NAFTA-TAA trainees.
By letter dated May 15, 2000, the Department notified Respondent that its Office of Inspector General had investigated tool purchases made from Respondent's business by students participating in the NAFTA-TAA program, and concluded that Respondent had been overpaid by $12,383.71 for tools that were not authorized under the program. The letter officially requested that Respondent repay the stated amount within 21 days, and notified Respondent of its hearing rights under Section 120.57, Florida Statutes. By letter dated May 25, 2000, Respondent requested a formal administrative hearing on the matter. On June 20, 2000, the Department transmitted the case to the Division of Administrative Hearings for assignment of an Administrative Law Judge and to conduct a formal
administrative hearing pursuant to Section 120.57, Florida Statutes.
At the hearing, the Department presented the testimony of Henry Broomfield, state TAA coordinator for the Department; Charles Thackrah and Richard Knight, instructors at Pinellas Vocational Technical Institute ("P-Tech"); Howard Spangler and Robert Dennison, the P-Tech students who made the allegedly unauthorized purchases from Respondent; Margaret Brewer, a customer service representative for the Department's Clearwater office from 1980 until October 1998; Harriet Broadwater, who assumed Ms. Brewer's duties in October 1998; Sylvia Moore, an employment representative for the Department's St. Petersburg office; and Jason Hoch, a former employee of Respondent. The Department's Exhibits 1 through 10, 12, 13, and 15 through 22 were admitted into evidence.
Respondent presented the testimony of Keith Williams, a salesman for Respondent; and Jacqueline Corbett, Respondent's credit manager. Respondent's Exhibits 1 and 2 were admitted into evidence.
The hearing Transcript was filed on January 4, 2001. The parties timely filed Proposed Recommended Orders on January 18, 2001.
Based on the oral and documentary evidence adduced at the final hearing, the following findings of fact are made:
The Department administers NAFTA-TAA, a job training program established under the provisions of the North American Free Trade Agreement and funded by the federal government.
The program provides vocational training for employees adversely affected by trade agreements made by the United States with Canada and Latin America. Once a business is certified as "NAFTA eligible" based upon diminished employment opportunities attributable to international trade, the affected employees are referred to the Department for evaluation by a local NAFTA coordinator.
In consultation with the Department's local NAFTA coordinator, a participant chooses from training programs taught at various public and private educational institutions and vocational training facilities. The student is provided a training allowance that includes the cost of tuition, books and fees. The Department arranges to pay training costs directly, and to pay vendors for the required books, tools and supplies.
In this case, the Department alleges that two students participating in the NAFTA program purchased tools from Respondent that were not required for their training as
automotive technicians. The Department alleges that, by providing tools not required for training and obtaining reimbursement therefor from the Department, Respondent acted in violation of the "rules and practices" of the NAFTA program.
The Department offered no evidence that it has promulgated rules related to its administration of the NAFTA- TAA program, and offered no evidence of a Florida statute or of federal statutes, rules or policies governing the Department's administration of the program. The Department produced no documentation to indicate that it has developed official written policies regarding its administration of the NAFTA-TAA program.
Henry Broomfield, the Department's statewide TAA coordinator, testified as to the actual operation of the program. Mr. Broomfield stated that the program pays for tuition, books and supplies for up to 104 weeks. He testified that the participating schools are required to present a list of the books, tools and supplies that the student will need during training, and that reimbursement is limited to the items on that list. Mr. Broomfield testified that the list is limited to items required for training, and does not include tools that students may need in the field after they complete
their training. The student and the Department's local TAA coordinator are provided with copies of the list.
Charles Thackrah, an instructor at P-Tech, testified as to the development of the approved book, tool and supply list at his institution. The list was developed over time by Mr. Thackrah and his fellow instructors, and includes the minimum basic hand tools required to complete the objectives of the program. The list was not developed specifically for the NAFTA program, but is the minimum tool list for all students enrolled in the automotive service technology course. Mr. Thackrah stated that P-Tech does not require the purchase of tools outside the list.
Mr. Broomfield testified that when a student needs particular items on the list, the student must contact the local TAA coordinator, who authorizes the purchase from a third party vendor. When the student receives the tools, the third party vendor sends the bill to the local TAA coordinator, who then forwards the invoice to the state office for final approval.
Mr. Broomfield testified that a request for an unlisted tool must be made in writing by the student's instructor. The student brings the written request to the local TAA coordinator, who forwards it to Mr. Broomfield's
office for final approval. The instructor must verify that the requested tool is necessary for training.
The evidence established that, aside from one incident in which a student obtained approval for a special pair of welding shoes, neither of the students in question followed the approval procedure for unlisted tools set forth by Mr. Broomfield.
On February 13, 1998, Howard Spangler of Largo was enrolled in the NAFTA-TAA program by the Department's local coordinator for the Clearwater area, Margaret Brewer. Mr. Spangler was enrolled for training as an automotive technician. Also on that date, Mr. Spangler received a letter approving his request for training. The letter stated that his training would be provided by P-Tech "at a cost not to exceed $4,400.00." The letter stated that this amount "includes tuition, books, supplies and fees."
Also on February 13, 1998, Ms. Brewer provided
Mr. Spangler with an "Applicant Acknowledgement Form" stating that $2,400 would be allotted for "books, equipment, supplies and/or tools. This is the total amount allowed for the entire length of your training, be it a one-week, or a two-year course." The form stated that "books, special equipment, tools and uniforms will be limited to those items required by the school for every student." The form also stated that when
the amount allotted for training materials has been exhausted, any additional costs must be borne by the student. Mr.
Spangler signed the form, acknowledging that its contents had been "fully discussed" with him.
The evidence established that Mr. Spangler obtained from Respondent tools that were not on the approved list at a total price of $4,336.92, and that the Department paid Respondent for those purchases.
Mr. Spangler testified that he was aware of the limits set forth in the letter and acknowledgement form, and of the approved list of tools, but also testified that Ms. Brewer told him that he could purchase items not on the list with his instructor's approval. He stated that Ms. Brewer never told him that her approval was required for purchases of tools not on the list.
Mr. Spangler testified that he approached Ms. Brewer about a pair of special shoes for his welding course. Although the welding shoes were on the approved list, Mr.
Spangler wanted Ms. Brewer's approval for his purchase because he paid more for them than the price shown on the list. Mr.
Spangler testified that during this conversation he also asked Ms. Brewer about purchasing tools not on the list, and that Ms. Brewer told him that he needed only his instructor's signature to obtain tools he would need in the field.
Mr. Spangler understood the $4,400 limit on tuition, books, supplies and fees. Notwithstanding the limit, he purchased over $4,000 in tools alone from Respondent. He stated that he relied on Ms. Brewer's advice in making these purchases. Mr. Spangler testified that it would be difficult to hold a job in the field with only the tools included on the approved list, and that Ms. Brewer clearly imparted the understanding to him that he would be allowed to purchase whatever he needed for the field, if his instructor approved.
Ms. Brewer testified that she always told the students that the state would not pay for tools outside of those on the list. She told the student that if he needed something special that the instructor believed was necessary to complete the course, then the student would have to bring her a letter from the instructor. She would then send the letter to Mr. Broomfield in Tallahassee for approval.
Ms. Brewer recalled Mr. Spangler approaching her about approval for the welding shoes, but did not recall telling him that he could get approval for items outside the approved list. She testified that she would not have approved purchases of items not on the list without writing a letter of explanation to Mr. Broomfield and obtaining his final approval.
The facts that Mr. Spangler approached Ms. Brewer for approval of the welding shoes, and that Ms. Brewer submitted this request to Tallahassee for final approval, tend to support Ms. Brewer's testimony as to what transpired between her and Mr. Spangler regarding the necessity of Department approval for items not on the approved list.
Ms. Brewer testified that, as far as she knew, she had no independent authority to approve purchases outside the list. She stated that it was her understanding that the NAFTA program dealt strictly with the tools needed to complete the coursework, not with tools that students might need in the field after completing the courses.
Ms. Brewer had no direct contact with the vendors, but relied on the students to convey the information regarding the NAFTA program to the vendors and to their instructors.
Mr. Thackrah was Mr. Spangler's instructor, and testified that he did not tell Mr. Spangler that the NAFTA program would pay for tools that he would need in the field after completing his coursework. Mr. Thackrah stated that he did not have the responsibility to track the various programs that provided funding to his students, and that he did not know what the NAFTA program would provide.
Mr. Thackrah testified that he was provided no written guidelines as what the NAFTA program would or would
not pay for. He stated that anything he knew about the NAFTA program was conveyed to him by his students, who told him that NAFTA would cover anything they would need in the field. Mr. Thackrah recalled helping the students put together lists of tools they would need in the field. He assumed that NAFTA would pay for these tools, based on his students' explanation of the program.
Mr. Thackrah testified that he might have passed along this understanding of the NAFTA program information to Keith Williams, Respondent's employee in charge of the P-Tech account. Mr. Thackrah did not believe he told Mr. Williams that the students were allowed to buy anything they wanted, but that Mr. Williams may have heard that from the students.
Mr. Williams testified that he had an informal meeting with instructors at P-Tech, and that they told him that the NAFTA students were entitled to any tools that they would need in the field to perform an automotive technician's job. The instructors gave him no dollar limit on those purchases, and told him that the students needed only the instructors' approval to purchase the tools. Mr. Williams testified that these students must have "thought it was Christmas."
Mr. Williams recalled that Mr. Thackrah was "probably" the person who gave him the information about NAFTA
reimbursements. Mr. Williams testified that he took the P- Tech instructors at their word, because he had been dealing with them over the course of five years and never had a problem with reimbursements.
On September 1, 1998, Robert Dennison of Pinellas Park was enrolled in the NAFTA-TAA program by the Department's local coordinator for the St. Petersburg area, Sylvia Wells- Moore. Mr. Dennison was enrolled for training as an automotive technician. Also on that date, Mr. Dennison received a letter approving his request for training. The letter stated that his training would be provided by P-Tech "at a cost not to exceed $3,950." The letter stated that this amount "includes tuition, books, supplies and fees."
Also on September 1, 1998, Ms. Wells-Moore provided Mr. Dennison with an "Applicant Acknowledgement Form" stating that $450 would be allotted for "books, equipment, supplies and/or tools. This is the total amount allowed for the entire length of your training, be it a one-week, or a two year course." The form stated that "books, special equipment, tools and uniforms will be limited to those items required by the school for every student." The form also stated that when the amount allotted for training materials has been exhausted, any additional costs must be borne by the student. Mr.
Dennison signed the form, acknowledging that its contents had been "fully discussed" with him.
The evidence established that Mr. Dennison obtained from Respondent tools that were not on the approved list at a total price of $8,046.79, and that the Department paid Respondent for those purchases.
Mr. Dennison testified that he looked at the list of approved tools and concluded that no one could do a mechanic's job with those tools. He asked Ms. Wells-Moore if other tools would be provided, and she said they would. Mr. Dennison did not recall whether Ms. Wells-Moore told him that he would need her approval for purchases outside the list. He testified that, as he understood the NAFTA program, he believed all the tools he purchased were authorized.
Ms. Wells-Moore testified that her practice was to tell students that all their tools and supplies had to come from the approved list. She stated that students were required to come to the Department and obtain a voucher before making any purchases. The student would then take the voucher to the merchant and obtain the approved tools. The merchant is then responsible for sending the invoice to the Department of Labor for reimbursement.
Documents entered into evidence at the hearing indicate that Ms. Wells-Moore provided written instructions to
Jason Hoch, a salesman working for Respondent on the P-Tech account. These instructions were consistent with her description of the vouchering process. She sent these instructions by facsimile transmission on October 2, 1998, prior to the purchase of any of the unlisted tools by either Mr. Spangler or Mr. Dennison.
Ms. Wells-Moore testified that she never told Mr.
Dennison that he could purchase items that he would need in the field after completing his coursework. She stated that she was not authorized to approve such purchases.
Ms. Wells-Moore testified that if a student approached her about a tool not on the list, her first step would be to contact the instructor to ask whether the student really needed the tool to complete the coursework. She recalled such a conversation with one of Mr. Dennison's instructors, and the instructor telling her that the unlisted tools in question were not required for the course.
Richard Knight was Mr. Dennison's instructor at P- Tech. Mr. Knight provided Mr. Dennison with a copy of the approved list and told him that these were the minimum tools. Mr. Knight testified that he had no direct knowledge of the NAFTA program and was unaware of any authority he had to
approve the purchase of tools not on the list. He never told Mr. Dennison that NAFTA would provide tools for use in the field.
Mr. Knight stated that he never "approved" any tool purchases, but he did recall signing a list of tools that Mr. Dennison brought to him. He understood that his signature was to verify that these were tools that the student would find useful in the field.
Mr. Knight never received any written guidelines from the Department as to allowable purchases under the NAFTA program. He recalled a former student in the NAFTA program who said that NAFTA would pay the students for anything they needed in the field. Mr. Knight testified that both Mr. Dennison and Mr. Spangler appeared to assume that NAFTA would pay for tools they would need in the field. Mr. Knight also conceded that he may have relayed the students' understanding to the Respondent's salespeople.
Mr. Broomfield testified that he became aware of problems when a representative of Respondent called to complain that some of its invoices were not being paid. Mr. Broomfield could find no record of the invoices at issue. He investigated and discovered that Respondent was bypassing the local TAA coordinators and sending its invoices directly to Tallahassee, some to the wrong division within the Department.
Mr. Broomfield testified that this explained why so many unauthorized purchases were reimbursed by the Department. When an invoice arrives at the Tallahassee office, it is assumed that the local TAA coordinator has investigated and approved the purchase. Under ordinary circumstances, the Tallahassee office does not conduct an item-by-item review; it merely processes the invoices and writes the checks.
In summary, the evidence established that Mr.
Spangler and Mr. Dennison purchased tools not on the approved P-Tech list valued at a total of $12,383.71. The evidence established that these students were provided written notice of the firm limits on the allotted costs for their training. The evidence established that Ms. Wells-Moore gave Respondent written notice of the proper procedure for processing its invoices, prior to any of the unauthorized purchases. The evidence established that Respondent bypassed this procedure, and was reimbursed for purchases that had not been approved at the local level.
The evidence established that the Department was remiss in its administration of the NAFTA program. It has promulgated no written rules or policies setting forth the reimbursement limits of the NAFTA program. It provided no written guidelines to either the schools or the vendors regarding allowable purchases. Ms. Brewer frankly stated that
she relied on the students to inform their schools and vendors as to the purchasing limits. Whether Messrs. Spangler and Dennison honestly believed their purchases were allowed, or whether they were manipulating the system, they might not have obtained the unauthorized items had the Department directly informed P-Tech of its reimbursement practices.
The evidence supports the finding that Respondent at the least was aware that the NAFTA program appeared to be unusually liberal, and that Respondent should have made further inquiry. Mr. Williams likened the program to "Christmas" for its participants. He testified that the instructors explained that the students were entitled to tools they would need in the field. However, the instructors credibly testified that, if they told Mr. Williams such a thing, they were merely relaying what the students told them.
At best, Respondent was content to rely on the information provided by the students rather than contacting the Department to seek confirmation. The fact that Respondent bypassed the local TAA coordinators, and offered no explanation for this breach of the billing procedure, supports an inference that Respondent's failure to inquire was not entirely innocent.
The evidence established that Respondent knew or should have known that the purchases in question were not
covered by the NAFTA program, absent prior approval from the local TAA coordinators and the central office in Tallahassee. The Department's failure to establish a system of informing schools and vendors of the program's requirements was sufficiently obviated in this case by Ms. Wells-Moore's contacts with Respondent's representative. Ms. Wells-Moore directly placed Respondent on notice of the Department's reimbursement practices, prior to the purchases by Messrs.
Spangler and Dennison.
At the hearing, Respondent asserted a claim that the Department still owes Respondent $14,119.59 for tools provided to Messrs. Spangler and Dennison. Given the findings of fact above, it is unnecessary to address this claim.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this case pursuant to Section 120.57, Florida Statutes.
The Department is the agency charged with administration of the federal NAFTA-TAA program at the state level. The Department has not adopted rules setting forth the standards under which it will administer this program. Respondent has not challenged this failure to adopt rules, nor has Respondent challenged the agency statements regarding its administration of the program as unadopted rules.
Respondent concedes that the Department has the authority to disburse funds to vendors under the NAFTA-TAA program. The authority to disburse funds necessarily implies the authority to recover payments made in error, even in the absence of a rule to that effect. See Wotring v. Department of Administration, DOAH Case No. 83-2939 (Recommended Order, November 18, 1983).
Respondent contends that the Department should be estopped from claiming reimbursement for the $12,383.71 paid to Respondent for tools not on the approved list for P-Tech's automotive technician course. Respondent has not established the elements of estoppel. The facts set forth above establish that the Department's erroneous payments to Respondent resulted from a combination of the Department's failure to set forth authoritatively its payment standards to participating schools and vendors, and Respondent's failure to inquire as to those standards or to follow the instructions provided by Ms. Wells-Moore, the local TAA coordinator.
The doctrine of equitable estoppel may be applied against the state only rarely and under exceptional circumstances. Dolphin Outdoor Advertising v. Department of Transportation, 582 So. 2d 709, 710 (Fla. 1st DCA 1991). Such circumstances are found to exist where state agencies deny benefits because of mistaken statements of fact. Warren v.
Department of Administration, 554 So. 2d 568, 571 (Fla. 5th DCA 1989). The state cannot be estopped through mistaken statements of the law. Department of Revenue v. Anderson, 403 So. 2d 397, 400 (Fla. 1981).
To demonstrate estoppel, the following elements must be shown: 1) a representation as to a material fact that is contrary to a later-asserted position; 2) reliance on that representation; and 3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon. Anderson, 403 So. 2d at 400; Tri-State Systems, Inc. v. Department of Transportation, 500 So. 2d 212 (Fla. 1st DCA 1986); Salz v. Department of Administration, 432 So. 2d 1376 (Fla. 3d DCA 1983).
In the instant case, there was no showing that Respondent relied to its detriment on any statement made by an employee of the Department. No employee of the Department told Respondent that the NAFTA-TAA program would pay for tools other than those on the school's approved list. By its own admission, Respondent relied upon the representations of the students, as relayed by their instructors, and made no further inquiry. Further, the representations in question were at least arguably mistaken statements of law, not fact. Finally, a claim of detrimental reliance cannot be premised upon the inability to retain money that should never have been received
in the first place. Lewis v. Department of Health and Rehabilitative Services, 659 So. 2d 1255, 1257 (Fla. 1st DCA 1995).
Given the relatively large amount of money at issue, and the Department's own failure to provide definitive guidance to its vendors as to the limits of the program, the Department should grant Respondent a reasonable period of six months to repay the funds.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that:
The Department enter a final order providing that Respondent is indebted to the Department for NAFTA-TAA program overpayments in the amount of $12,383.71, and that Respondent shall repay the aforesaid amount within six months following entry of the final order.
___________________________________ LAWRENCE P. STEVENSON
Jacqueline Corbett, Credit Manager Nestor Sales Company, Inc.
Sonja P. Mathews, Esquire Department of Labor and
2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189
Mary B. Hooks, Secretary Department of Labor and
The Hartman Building, Suite 303 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152
2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189
15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
