_ RECEIVED

01:PARTMENT OF HEALTH

STATE OF FLORIDA ·

DEPARTMENT OF HEAtflt'UUG 22 PM 3: 37

OFFICE OF THE CLERK

PLANTS OF RUSKIN, INC.,

Petitioner,

V.

DEPARTMENT OF HEALTH,

Respondent.

Rendition No.: DOH-17-0791-FOI-HO DOAH Case No.: 17-0116

TORNELLO LANDSCAPE CORP., d/b/a 3BOYSFARM,

Petitioner,

v. DOAH Case No.: 17-0117

DEPARTMENT OF HEALTH,

Respondent.

FINALORDER

THIS MATTER came before the Department of Health ("Department") for the consideration of a Recommended Order and entry of a Final Order. On May 23, 2017, Administrative Law Judge John G. Van Laningham ("ALJ") issued a Recommended Order ("RO") following an administrative hearing held pursuant to section 120.57(1), Florida Statutes. Subsequent to the RO, the parties entered into a settlement agreement which is attached as Exhibit A and is incorporated by reference into this Final Order.

Filed August 23, 2017 9:28 AM Division of Administrative Hearings

PRELIMINARY STATEMENT

Plants of Ruskin, Inc. ("Ruskin") and Tornello Landscape Corp. d/b/a 3 Boys Farm ("Tornello") each applied for a license to operate a low-THC cannabis dispensing organization ("DO") under section 381.986, Florida Statutes (2014), and Chapter 64-4 of the Florida Administrative Code.

On November 23, 2015, the Department notified each Petitioner that its

application was denied. Ruskin and Tornello each timely filed a petition for a formal administrative hearing. The cases were consolidated and the three week hearing was held in August of 2016.

On July 31, 2017, the parties entered into a settlement agreement that resolves all disputes between the parties.

On August 8, 2017, each Petitioner filed a notice of dismissal, voluntarily dismissing its petition for an administrative hearing in this matter.

The settlement agreement resolves all controversies between the parties and renders the 120.57(1) proceeding and the resulting RO moot.

Nevertheless and before dismissing this matter as moot, certain matters raised in the RO should be addressed. Certain findings and conclusions in the RO are contrary to the Department's interpretation of statutes and administrative rules over which the Department has substantive jurisdiction and are contrary to standards applied by DOAH and the Department in other proceedings regarding license decisions in the same 2015 batch. Those matters are addressed in this Final Order.1

1 In the Settlement Agreement, Ruskin and Tornello waived the right to appeal this Final Order. Nothing in this Final Order is contrary to the terms of the Settlement Agreement.

FINDINGS OF FACT.

1. With regard to findings of fact, the ALl failed to articulate with particularity any findings of fact specific to Petitioners on which the ALl's application scores or recommendations were based; therefore, this Final Order will not address any findings of fact in the RO.

2. As part of the settlement agreement, Ruskin and Tornello submitted affidavits documenting their compliance with section 381.986(8)(a)(2)a., Florida Statutes (2017).

3. As part of the settlement agreement, the Department agreed to grant to each Petitioner a license to operate as a medical marijuana treatment center ("MMTC") under section 381.986(8)(a)(2)a., Florida Statutes (2017).

   CONCLUSIONS OF LAW

4. The Department has the authority to reject or modify conclusions of law over which it has substantive jurisdiction and interpretation of administrative rules over which it has substantive jurisdiction. See § 120.57(1)0), Fla. Stat. When rejecting or modifying such conclusion oflaw or interpretation of administrative rule, the Department must state with particularity its reasons for rejecting or modifying such conclusion oflaw or interpretation of administrative rule and must make a finding that its substituted conclusion of law or interpretation of administrative rule is as or more reasonable than that which was rejected or modified. See id. The Department has substantive jurisdiction over the statutes and administrative rules that govern the licensing of DOs, including the application and selection process. See§ 381.986(5)(b), Florida Statutes (2014).

   The ALl's Scoring Methodology is Rejected

   
   

5. In paragraphs 26 to 50 of the RO, and in the Informational Order incorporated into the RO, the ALl concluded that the Department's methodology for scoring the applications for DO licensure was arbitrary, capricious, an abuse of discretion, and contrary to Rule 64-4.002 of the Florida Administrative Code. The ALl created his own scoring methodology which he applied to the Petitioners' applications, concluding that his own scoring methodology was consistent with section 381.986, Florida Statutes (2014), and Rule 64-4.002, and was better than the Department's method. Although all of these paragraphs are listed under the heading "Findings of Fact," these are conclusions of law. The ALl's substituted scoring methodology is not more reasonable than that of the Department's, is not based on law, and is contrary to Rule 64-4.002 of the Florida Administrative Code. And in any event, the use of a methodology different than the one the Department used pursuant to its own rules and statutes departs from the essential requirements of law, as it is different than the methodology applied to grant licenses to other applicants in the same batch and different from the methodology in other proceedings. See Cent. Fla. Reg. Hosp., 582 So. 2d at 1196 .

6. Section 381.986(5)(b), Florida Statutes (2014), required the Department to award one DO license in each of the five regions in the state. The Department was required to create the application and selection process through rulemaking. See § 381.986(5)(d), Fla. Stat. (2014). The Department promulgated Chapter 64-4 of the Florida Administrative Code through an extensive negotiated rulemaking process and the resultant rules were upheld in a rule challenge. See Baywood Nurseries Co., Inc. v. Dep't of Health, Case No. 15-1694RP (Fla. DOAH May 27, 2015).

7. Rule 64-4.002 and the incorporated "Application for Low-THC Cannabis Dispensing Organization Approval" (hereinafter "Application Form") and "Scorecard for Low-THC Cannabis Dispensing Organization Selection" (hereinafter "Scorecard") divides the application into main topics and subtopics. The main topics and subtopics are assigned percentages of the total application score. See Fla. Admin. Code R. 64-4.002 (percentages are listed on the Application Form and Scorecard). Listed under the main topics and subtopics are multiple factors, specific items that the applicant was required to address. See id. The individual factors are not assigned a weight, percentage, or value. See id.

8. The rule required that the applications be compared against each other and scored independently by three individuals with specific qualifications: (1) The Director

   of the Office of Compassionate Use; (2) A member of the Drug Policy Advisory Council

   i

   
   

   appointed by the State Surgeon General; and (3) A Certified Public Accountant appointed by the State Surgeon General. See Fla. Admin. Code R. 64-4.002(5)(a). Scorecards from each reviewer were to be combined to generate an aggregate score. See Fla. Admin. Code

   R. 64-4.002(5)(b). The applicant with the highest aggregate score in each region was to be selected as the region's DO. See id.

9. Based on Rule 64-4.002, the Department ranked the applications within each region by topic and subtopic, considering the various factors. Each rank was assigned a score based on the number of applicants per region. If there were five applications, the highest ranking applicant received a 5 and the lowest a 1. Using the various rank-based scores assigned by the three evaluators, the scores were aggregated.

10. The ALJ concluded that the Department's actions were arbitrary and contrary to Rule 64-4.002 because the Department directed its evaluators to use an

    ordinal scale to rank the applications. The ALl described, in detail, the difference between a cardinal number and an ordinal scale, and concluded as a matter of law that ranking was not scoring. This issue was not raised in the pleadings. The Petitioners did not present a single witness to address this issue, nor were any exhibits offered or admitted on this.issue. The issue was raised sua sponte by the ALl after the final hearing and without allowing any parties notice or the opportunity to present evidence on the

    issue

    
    

11. The ALl based his legal conclusions on the definition of the term "score," a

    
    

    term that is not defined in section 381.986 or in Rule 64-4.002. The ALl used the Merriam Webster dictionary definition of score, quoting that definition with omissions and stating in paragraph 27 of the RO that "score" is a "number that expresses . excellence (as in quality) ... by comparison to a standard."

12. The relevant Merriam Webster dictionary definition, if quoted in its entirety, states, "a number that expresses accomplishment (as in a game or test) or excellence (as in quality) either absolutely in points gained or by comparison to a standard." See https://www.merriam-webster.com/dictionary/score, (last visited July 28, 2017). The ALl omitted relevant portions of this definition in his quote. Using his interpretation of an incomplete dictionary definition, the ALl concluded that a number value based on an ordinal scale cannot be a score as a matter oflaw. The ALl did not cite any evidence presented at the hearing, caselaw, statute, or administrative rule supporting his conclusion. Rule 64-4.002 of the Florida Administrative Code does not define score and does not forbid using rank-based scores. The rule required that the applicants be compared against one another and not against some external benchmark. The Application Form, incorporated into Rule 64-4.002, states, "[i]t is important for each

    Applicant to remember that the Applicant is competing with other Applicants. not with any mandatmy minimum criteria set by OCU."

13. The ALl opined that the Department's scoring methodology was erroneous because it did not measure the degree of difference in quality between the applicants and because the Department did not use an external benchmark for assigning the scores. The AL.J's reasoning, however, is not based on any evidence presented at the hearing, statute or rule. Rule 64-4.002 does not include an external benchmark or scoring scale. Instead, the Application Form directs that the applications be compared to each other. See id. The AL.J's conclusion appears to be based on the AL.J's opinion that he could come up with a better scoring system.

14. After concluding that the Department's method was not correct, the ALl created his own scoring method by creating a grading scale for scoring the factors, ignoring the fact that Rule 64-4.002 and its incorporated Application Form and Scorecard does not assign a value or weight to the factors. The ALl created the criteria the applicant must meet for each score. For example, the ALl determined that for an applicant to attain the highest score of 5, it must have "[p]roved not only the existence or satisfaction of, or compliance with, the Factor, but also mastery or preeminence (if, e.g., knowledge, experience, or qualifications) or 'state of the art' quality or development (if, e.g., device, technique, facility)." The AL.J's criteria for assigning scores does not exist in Rule 64-

    4.002 of the Florida Administrative Code and is in direct conflict with Rule 64-4.002 which does not assign a weight or value to the individual factors. The AL.J's scoring method has never gone through the rulemaking process.

15. The ALl scored the applications using his own methodology. This is in direct conflict with Rule 64-4.002, because the ALl cannot take the place of the three

    specifically qualified individuals who were to perform the review, evaluation, and scoring of the applications. The ALJ is not a certified public accountant, the director of the Office of Compassionate Use, and a member of the Drug Policy Advisory Council all in one.2 Finally, the ALJ's methodology contradicts the Final Order from DOAH approving the construct of the Department's rules.3

    
    

    2 After constructing his own scoring methodology, the ALJ all but admitted that his own methodology was not workable, stating that his score results were "not falsifiable[,]" that "no one could perform this evaluation to the satisfaction of all reasonable observers" and "[i]f the undersigned were to burden this [RO] with explanations of each scoring decision, therefore, those dissatisfied with the result could easily pick them apart, while others could just as easily find ample support for them in the record. The game's not worth the candle." See RO ,r 46.

    
    

    Second, there is no required minimum level of experience or knowledge for any item. As provided in the application, a description of the items is mandatory, but an applicant need not possess each item in its experience or operation. Thus, each applicant is competing with other applicants, not with any mandatory minimum criteria set by the Department. In fact, to make any of the items mandatory would exceed the Department's authority under the Act, as only the basic elements, such as "cultivation," are listed in the Act. See also Costa, DOAH Case No. 14-4296RP, ,r 81 (concluding that imposing mandatory qualifications not specified in Act impermissibly modifies or enlarges Act).

    
    

    Third, there is no percentage score assigned to every single item in the application (only the categories and subcategories are assigned percentages); the items are not weighted, but are simply things each applicant must address to demonstrate its knowledge of and experience in an area. This will allow the Department to evaluate the applicant against other applicants in predictable areas and will inform the applicant as to what the Department is looking for. The decision not to assign weights or percentages to items (as opposed to categories and subcategories) was made by the negotiated rulemaking committee, whose grower members believed the Department's expectations as to how applications would be evaluated were made clear in the rule and application. In developing this evaluation system, the Department was guided by the Prior Final Order, which concluded that the Act required the Department to undertake a comparative, qualitative review of each applicant. Costa, DOAH Case No. 14-4296RP ,r,r 84-87.

    
    

    The weighting system clearly set forth in the application form sufficiently informs would-be applicants as to the relative importance of each category and subcategory. The decision not to assign weights or percentages to individual items (as opposed to categories and subcategories) was made by the negotiated rulemaking committee, is reasonable, and does not vest unbridled discretion in the Department.

16. The AL.J's scoring methodology is contrary to Rule 64-4.002 and is rejected. The Department's scoring methodology is as or more reasonable than that used by the ALJ.

    The AL.J's Interpretation of Chapter 2016-123, Laws of Florida, is Rejected

    
    

17. The ALJ concluded in paragraphs 61-80, that the language in chapter 2016- 123, section 3(2), Laws of Florida, does not provide for a backward-looking retrospective assessment of the applications at the time they were filed and reviewed by the Office of Compassionate Use. Rather, the ALJ concluded that the applications could be amended, and even completely changed, up until the time of the administrative hearing.

18. Chapter 2016-123, section 3(2) states:

    
    

    If an organization that does not meet the criteria of subsection (1) receives a final determination from the Division of Administrative Hearings, the Department of Health, or a court of competent jurisdiction that it was entitled to be a dispensing organization under s. 381.986, Florida Statutes, and applicable rules, such organization and an organization that meets the criteria of subsection (1) shall both be dispensing organization in the same region.

    
    

19. The ALJ based his conclusion concerning application amendments on Lavernia v. Dep't of Profl Regulation, Bd. of Med., 616 So. 2d 53 (Fla. 1st DCA 1993). The court in Lavernia was not applying chapter 2016-123, section 3(2), Laws of Florida. The AL.J's conclusion renders the phrase "was entitled to be a dispensing organization" meaningless and is rejected. The Department's interpretation of chapter 2016-123,

    
    

    The application form and scorecards, in conjunction with the proposed rule, adequately inform D.O. applicants as to criteria to be considered and comparatively evaluated among competing applicants. In developing this evaluation system, the Department was guided by the Prior Final Order, which concluded that the Act required the Department to undertake a comparative, qualitative review of each applicant. Costa, '11'11 84-87.

    Baywood Nurseries, Case No. 15-1694RP, ,r,r 60, 61, 128.

    section 3(2), Laws of Florida, permits additional DO licenses to be granted to those applicants that are determined, through an adjudicatory proceeding, that they met the qualifications of licensure at the time those applications were submitted. The Department's interpretation is as or more reasonable than that of the ALJ, and is consistent with the plain language of the law and the overall statutory scheme that limited the number of DO licenses that could be granted. The Department agrees with the reasoning of ALl R. Bruce McKibben that chapter 2016-123, section 3(2), Laws of Florida, creates a backward-looking, retrospective assessment of the applications at the time they were submitted. See Loop's Nursery & Greenhouses, Inc. v. Dep't of Health, Office of Compassionate Use, Case 15-7274 (Fla. DOAH Oct. 7, 2016, Fla. DOH Jan. 5, 2017).

    Petitioners Qualify for Licensure Under the 2017 Law

    
    

20. The Department has determined that Ruskin and Tornello each qualify for a license as an MMTC under section 381.986(8)(a)(2)a., Florida Statutes (2017).

ORDER

Based on the foregoing, Ruskin's Petition for Formal Administrative Hearing and Tornello's Petition for Formal Administrative Proceeding are dismissed with prejudice.

Ruskin and Tornello both satisfy the requirements of section 381.986(8)(a)(2)a., Florida Statutes (2017). Each are granted a license to operate as an MMTC in accordance with the settlement agreement.

The settlement agreement attached as Exhibit A is approved, adopted, and incorporated by reference in this Final Order.

DONE AND ORDERED in Tallahassee, Leon County, Florida this .:ll!a.ay of August 2017.

Celeste M. Philip, MD, MPH Surgeon General & Secretary Florida Department of Health

Copies furnished to:

Douglas P. Manson, Esq. Craig D. Varn, Esq.

Paria Shirzadi, Esq.

Manson Bolves Donaldson Varn, P.A. 1101 West Swann Avenue

Tampa, Florida 33606

J. Stephen Menton, Esq. Tana D. Story, Esq. Rutledge Ecenia, P.A.

119 South Monroe Street, Suite 202

Tallahassee, Florida 32301

Eduardo S. Lombard, Esq.

W. Robert Vezina, III, Esq. Megan S. Reynolds, Esq.

Vezina, Lawrence & Piscitelli, P.A. 413 East Park Avenue Tallahassee, Florida 32301 Nichole Geary, General Counsel Department of Health

4052 Bald Cypress Way, Bin A-02 Tallahassee, Florida 32399-1703

John G. Van Laningham Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Order has been sent by electronic mail and regular U.S. mail and/or by inter-office mail to each of the above-named persons this ay of August 2017.

Agency Clerk Department of Health

4052 Bald Cypress Way, BIN A-02 Tallahassee, Florida 32399-1703

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY ADVERSELY AFFECTED BY THIS ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. A REVIEW PROCEEDING IS INITIATED BY FILING A NOTICE OF APPEAL WITH THE CLERK OF THE DEPARTMENT OF HEALTH AND A COPY ACCOMPANIED BY THE FILING FEE WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES OR IN THE FIRST DISTRICT COURT OF APPEAL. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF THE FILING DATE OF THIS ORDER.

Docket for Case No: 17-000116

Orders for Case No: 17-000116