STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN SAMPSON AND ANNETTE )

SAMPSON, )

)

Petitioners, )

)

vs. ) Case No. 01-0087F

)

DEPARTMENT OF CHILDREN AND )

FAMILY SERVICES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a formal hearing was held in this case on April 27, 2001, before Lawrence P. Stevenson, a duly- designated Administrative Law Judge of the Division of Administrative Hearings, in Tampa, Florida.

APPEARANCES

For Petitioners: Leenetta Blanton, Esquire

3407 West Morrison Avenue Tampa, Florida 33629-5233

For Respondent: Raymond R. Deckert, Esquire

Jennifer Lima, Esquire Department of Children and

Family Services

9393 North Florida Avenue, Suite 900

Tampa, Florida 33612

STATEMENT OF THE ISSUE

Whether the Petitioner is entitled to an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes.

PRELIMINARY STATEMENT

On January 8, 2001, Petitioner Annette Sampson1 filed with the Division of Administrative Hearings an Application for Attorney's Fees and Costs. The Application requests an award of attorney's fees and costs incurred by Mrs. Sampson in litigating the consolidated cases styled Department of Children and Family Services v. John Sampson and Annette Sampson, DOAH Case Nos. 98- 1928 and 99-5240. On January 26, 2001, the Department of Children and Family Services (the "Department") filed a Motion to Dismiss, contending in relevant part that Mrs. Sampson was not a "small business party" as defined in Section 57.111, Florida Statutes. By order dated April 2, 2001, the Motion to Dismiss was denied until evidence could be heard on the issue.

The case was set for hearing on April 27, 2001.

On April 13, 2001, the Department filed a Motion to Bifurcate, requesting that the issue of Mrs. Sampson's status as a "small business party" be litigated separately, prior to a full hearing on the issue of whether the Department's agency action was "substantially justified" under Section 57.111, Florida Statutes. By order dated April 20, 2001, the Motion to

Bifurcate was denied. At the final hearing, the Department renewed its Motion to Bifurcate. After hearing argument, the undersigned granted the motion. Thus, the sole issue at the April 27, 2001, hearing concerned Mrs. Sampson's status as a "small business party."

At the hearing, Mrs. Sampson testified in her own behalf and presented the deposition testimony of Michael J. Leding, Jr., proferred as an expert in "business." Mrs. Sampson's Composite Exhibits A and B, and Exhibits C through G were offered and received into evidence. The Department presented the testimony of David Beaven, programs specialist for the Department; Laura Lazzara, assistant manager of tax and license services for the Hillsborough County Tax Collector; Lisa Fowler, foster care licensing specialist for the Department; and Mike Katz, a family services specialist for the Department. The Department's Exhibit 1, subpart 1, and Exhibits 4, 5, 8, 9, and

10 were offered and received into evidence.

No transcript of the proceedings was ordered. The parties stipulated that their proposed final orders would be submitted on May 9, 2001. Both parties filed their proposed final orders on the agreed date.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made:

1. The Department is the state agency responsible for licensing and regulating foster homes.

2. Mrs. Sampson operated a Childrens' Medical Services ("CMS") medical foster home for children with special medical, emotional and physical needs, and was licensed by the Department as either a CMS medical foster home or as a regular foster home from 1990 until November 1997.

3. At some point in 1996 or 1997, Mrs. Sampson voluntarily ceased operating as a CMS medical foster home, but continued to operate as a regular foster home. There was conflicting evidence as to the precise date of this change, but the date is not relevant to this phase of the bifurcated proceeding.

4. On March 2, 1998, the Department filed an Administrative Complaint that sought to revoke Mrs. Sampson's foster care license. On October 6, 1999, the Department filed an Amended Administrative Complaint. The Department also denied Mrs. Sampson's application to adopt one of the foster children in her care.

5. Mrs. Sampson requested a formal administrative hearing on both the revocation of her foster care license and the denial

   of her adoption application. The cases were consolidated, and a formal administrative hearing was held over several dates in April, May, and June 2000.

6. Mrs. Sampson prevailed on all issues in the consolidated cases. A Recommended Order in her favor was entered on August 11, 2000. A Final Order adopting the findings of fact and conclusions of law in the Recommended Order was entered on October 2, 2000.

7. Mrs. Sampson contends that she is a "small business party" as defined in Subsection 57.111(3)(d)1.a, Florida Statutes, which provides that the term "small business party" includes:

   A sole proprietor of an unincorporated business, including a professional practice, whose principal office is in this state, who is domiciled in this state, and whose business or professional practice has, at the time that action is initiated by a state agency, not more than 25 full-time employees or a net worth of not more than $2 million, including both personal and business investments. . . .

   
   

8. At all times relevant to this case, Mrs. Sampson was domiciled in the State of Florida. At all times relevant to this case, Mrs. Sampson was licensed as a Licensed Practical Nurse ("LPN").

9. The determinative issue is whether Mrs. Sampson's operation of a foster home establishes her as the sole

   proprietor of an unincorporated business or professional practice.

10. Mrs. Sampson initially operated her medical foster home for the benefit of one child, who was admitted to Tampa General Hospital while Mrs. Sampson worked there as a contract nurse. The child was born prematurely and was not expected to live longer than six weeks. Mrs. Sampson became a licensed foster parent to take this child home and care for him. Under her care, the child thrived.

11. Though he survived the initial crisis, the child continued to require full-time nursing care. Mrs. Sampson was not able to return to full-time employment as a contract nurse outside the home. Mrs. Sampson testified that she advised the Department's case workers that she would need to take in additional medical foster children to supplement her income while she worked at home caring for the children.

12. Over a period of eight years, the Department placed at least 14 medically needy foster children in Mrs. Sampson's home.

13. The Department establishes foster home care board rates, which are standard reimbursements to foster parents for the expenses incurred for the foster children, such as food, clothing, medical care, and transportation. The board rates are minimums that can be increased by the Department if the needs of the foster child cannot otherwise be met. Mrs. Sampson received

    an enhanced board rate for at least some of the children in her care.

14. The Department conducts orientation meetings for and training of prospective foster parents. The Department emphasizes that the purpose of foster parenting is to provide temporary surrogate parenting for the foster children. The prospective parents are informed that they are considered volunteers and will not be paid for their services. The parents are told that the board payments are for the childrens' expenses. Foster parents sign an agreement acknowledging that the board payments are "on behalf of the child."

15. Rule 65C-13.011(4), Florida Administrative Code, expressly provides that substitute care parents must have sufficient income to assure the stability and security of their own families without reliance on the board payments, and that the substitute family must have sufficient income to absorb four to six weeks of a foster child's care before receiving a board payment.

16. If the Department removes a child from a foster home, the board payment to the foster payment ceases. If the child is placed with a new foster parent, then the board payment goes to the new foster parent.

17. In addition to the regular and enhanced board payments, a CMS medical foster parent may receive payments from

    Medicaid as reimbursement for medically necessary services rendered to the foster children. Mrs. Sampson was a designated Medicaid provider from April 1992 through March 1997.

18. Mrs. Sampson contended that these Medicaid payments were for the nursing services she provided to the children, just as physicians receive Medicaid payments for treatment of eligible patients. However, medical foster parents are not required to be licensed medical professionals. Mrs. Sampson offered no evidence that the Medicaid payments were for her services as an LPN, or that private, residential LPN services even qualify for Medicaid reimbursement absent prior authorization. CMS-administered medical foster care services are authorized for Medicaid reimbursement, and the best evidence is that Mrs. Sampson was reimbursed as a medical foster care provider, not as an LPN.

19. The Department established that Mrs. Sampson did not hold herself out as running a business, nor did she report as income on her federal tax return the payments received in connection with providing foster care. Mrs. Sampson testified that she hired part-time employees to assist her in caring for the children, but she did not withhold federal income tax or Social Security taxes from their pay and did not file W-2 wage statements for them.

20. Mrs. Sampson explained her failure to report her board payments as income by reference to 26 U.S.C. s. 131, which excludes foster care payments from reportable gross income.

    This citation justifies her failure to report, but also supports the Department's contention that foster care payments should not be considered business income.

21. Mrs. Sampson implicitly conceded that her foster home did not possess any of the common indicia of a business. Her chief contention was that from 1970 to 1990, she worked as an LPN through nursing agencies, caring for sick children in hospitals or in their homes, and that from 1990 to 1997, she worked as an LPN caring for medical foster children in her own home. In other words, Mrs. Sampson contended that by operating the foster home, she was continuing to practice her profession in a different setting. She gave up the income from her practice as an LPN through nursing agencies in favor of the income she received as an LPN acting as a medical foster parent.

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to Section 120.569 and

    Subsection 120.57(1), Florida Statutes.

23. Section 57.111, Florida Statutes (2000), the Florida Equal Access to Justice Act, provides in pertinent part as follows:

    (4)(a) Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.

    
    

24. In proceedings to establish entitlement to an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes, the initial burden of proof is on the party requesting the award to establish by a preponderance of the evidence that it prevailed in the underlying disciplinary action and that it was a small business party at the time the disciplinary action was initiated. Once the party requesting the award has met this burden, the burden of proof shifts to the agency to establish that it was substantially justified in initiating the disciplinary action. See Helmy v. Department of Business and Professional Regulation, 707 So. 2d 366, 368 (Fla. 1st DCA 1998); Department of Professional Regulation, Division of Real Estate v. Toledo Realty, Inc. and Ramiro Alfert, 549 So. 2d 715,

    717 (Fla. 1st DCA 1989).

25. The Department conceded at the hearing that Mrs. Sampson prevailed in the underlying proceeding. Subsection 57.111(3)(c)3, Florida Statutes.

26. The issue for decision in this phase of the bifurcated proceeding is whether Mrs. Sampson was a "small business party" as contemplated by Subsection 57.111(3)(d), Florida Statutes, which provides in relevant part as follows:

    (d) The term "small business party" means:

    
    

    1.a. A sole proprietor of an unincorporated business, including a professional practice, whose principal office is in this state, who is domiciled in this state, and whose business or professional practice has, at the time that action is initiated by a state agency, not more than 25 full-time employees or a net worth of not more than $2 million, including both personal and business investments; or

    
    

    b. A partnership or corporation, including a professional practice, which has its principal office in this state and has at the time the action is initiated by a state agency not more than 25 full-time employees or a net worth of not more than

    $2 million. . . .

    
    

27. Mrs. Sampson contended that, as a provider of medical foster home services, she was the sole proprietor of an unincorporated business. Mrs. Sampson also contended that she was engaged in professional practice as an LPN by providing medical foster home services.

28. While Mrs. Sampson's skills as an LPN may have proven useful in caring for her foster children, the evidence established that Mrs. Sampson was not paid for her services as an LPN. She was reimbursed as a foster home licensee, and the question is whether a foster home licensee may be said to be operating a "business."

29. In Pierce v. Department of Children and Family Services, DOAH Case No. 98-5480 (Final Order March 15, 1999), the Administrative Law Judge made the following findings:

    1. Likewise, Petitioner presented no evidence that he was a small business party. Family foster homes are distinct from larger operations, such as residential child-care facilities, which might under some circumstances be construed as businesses.

       
       

    2. A foster home license is not a permit to engage in a business activity for profit. Instead, foster home parents act as temporary surrogate parents. Payments to foster care parents are reimbursements for moneys advanced by the parents for the care of children placed in their care. The payments are not fees for services rendered. They are not taxable as income.

       
       

30. These findings led the Administrative Law Judge to conclude that possession of a foster home license did not constitute a small business. The cited findings are consonant with those in the instant case, and persuasively lead to the same conclusion.

31. Section 57.111, Florida Statutes, does not explicitly define the term "business," and the appellate decisions do not address the definitional question. Appellate decisions dealing with other statutes, particularly Section 48.181, Florida Statutes, governing the process of service on nonresidents, consistently hold that an essential element of "doing business" in this state is activity performed for the purpose of "pecuniary benefit" or "in anticipation of economic gain." See, e.g., Dinsmore v. Martin Blumenthal Associates, Inc., 314 So. 2d

    561, 564 (Fla. 1975); DeVaney v. Rumsch, 228 So. 2d 904, 906-07

    
    

    (Fla. 1969). While such decisions are not dispositive of an interpretation of Section 57.111, Florida Statutes, they support the view that the term "business" necessarily encompasses the notion of financial gain, which is inimical to the role of a foster parent.

32. The Department's rules and policies make clear that payments to foster parents are intended to reimburse them for their expenses in caring for the children placed in their homes. To conclude that a foster parent license establishes the licensee as a "small business party" would be to validate a mercenary motive for undertaking what is, however temporarily, a familial relationship. Such a conclusion would be contrary to the sound public policy implemented by the Department's rules and policies.

33. Because it is concluded that Mrs. Sampson was not a "small business party" as defined in Subsection 57.111(3)(d), Florida Statutes, there will be no need to undertake the second phase of this bifurcated proceeding, which would have addressed the issue of whether the Department's actions in commencing the case against Mrs. Sampson was "substantially justified."

CONCLUSION

Based on the foregoing Findings of Fact and Conclusions of Law, the Respondent's Motion for Attorney's Fees and Costs is denied.

DONE AND ORDERED this 4th day of June, 2001, in Tallahassee, Leon County, Florida.

LAWRENCE P. STEVENSON

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 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 4th day of June, 2001.

ENDNOTE

1 The style of this case reflects the style of the substantive proceeding, Department of Children and Family Services v. John Sampson and Annette Sampson, DOAH Case Nos. 98-1928 and 99-5240. The fees claimed in the instant proceeding relate to counsel's

representation of Annette Sampson. John Sampson did not participate in the instant proceeding.

COPIES FURNISHED:

Leenetta Blanton, Esquire 3407 West Morrison Avenue Tampa, Florida 33629-5233

Raymond R. Deckert, Esquire Jennifer Lima, Esquire Department of Children and

Family Services

9393 North Florida Avenue, Suite 900

Tampa, Florida 33612

Virginia A. Daire, Agency Clerk Department of Children and

Family Services Building 2, Room 204B 1317 Winewood Boulevard

Tallahassee, Florida 32399-0700

Josie Tomayo, General Counsel Department of Children and

Family Services Building 2, Room 204

1317 Winewood Boulevard

Tallahassee, Florida 32399-0700

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 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 30 days of rendition of the order to be reviewed.

Docket for Case No: 01-000087F

Orders for Case No: 01-000087F