Findings Of Fact On September 12, 1985, the LCSB issued a Request for Proposals ("PEP") for a telephone system to serve its Administrative Complex and Lively Area Vocational-Technical Center Main Campus ("the proposed telephone system"). Subsequently, several addenda and supplemental materials were forwarded to all participating vendors of handwritten portion. The PEP scheduled a vendor's conference for September 19, 1985. It required any "discrepancies, errors, omissions, or ambiguities in the specifications or addenda (if any)" to be reported to the LCSB no later than September 25, 1985. Similarly, the PEP required vendors to "submit written requests for clarification of terminology, if necessary, no later than September 25, 1985." Responses to the PEP were required by the time set for opening the vendors' proposals at 10:00 a.m. on October 4, 1985. The compressed time frames were imposed in an effort to be able to complete the PEP process, award the contract and have a telephone system installed by the first week of January 1986. This target date for installation was established because, although budgetary and other problems delayed the start of the PEP process, the LCSB had decided by September 1985 to change its telephone listings in the December 1985 to December 1986 edition of the Official Telephone Directory For Tallahassee, Florida, in anticipation of a new telephone system. Pursuant to a requirement of the PEP, ten letters of intent to submit proposals were received on or before September 19, 1985, including letters of intent from Petitioner, Telecom Plus of Florida, Inc. ("Telecom Plus"), and Intervenor, Centel Business Systems ("Centel"). Telecom Plus, Centel, and three other vendors submitted proposals on or before the deadline of October 4, 1985. By letters dated October 10, 1985, the LCSB Director of Purchasing notified the five proposing vendors that the Superintendent intended to recommend to the LCSB that the contract be awarded to Centel based on the bid tabulation prepared by the LCSB telecommunications consultants. Attached to those letters was a copy of the evaluation summary (bid tabulation). The letter was written on LCSB stationery on behalf of the LCSB and, under Rule 6g x 37-6.09, Rules of the LCSB, had the effect of announcing the intention of the LCSB to award the contract to Centel. The proposed telephone system will serve two locations, the LCSB Administration Complex and the Lively Area Vocational-Technical Center Main Campus. These two locations are separated by a distance of approximately 4,500 feet. The PEP required the proposed telephone system to provide telephone service to each location, as well as to interconnect the two locations. The cable(s) for the interconnection between the two locations will be housed in a 4,500-foot long, four-inch PVC conduit to be installed as part of the proposed telephone system. To satisfy the needs of the LCSB, the proposed telephone system could be in one of several configurations. At least one Electronic Private Automatic Branch Exchange (EPABX, commonly referred to as a "switch") is necessary to provide for intra- and inter-facility communications and to connect the Administration Complex and Lively Area Vocational-Technical Center Main Campus to the outside world. The PEP indicated that the possible configurations for the proposed telephone system included: (1) a single switch at the Administration Complex with cables extending at least 4,500 feet to each telephone instrument at the Lively location; (2) a single switch at the Administration Complex with remote peripheral equipment ("RPE," means a portion of the single switch which is remotely located) located at the Lively location and connected to the switch by 4,500-foot long cables, and (3) two switches, one at the Administration Complex and one at the Lively location, interconnected by 4,500-foot long cables. Telecom Plus filed a protest after the posting of the bid tabulations on or about October 16, 1985. 2/ In its letter of protest, as further explicated in the Prehearing Stipulation, Telecom Plus raised three basic issues. First, Telecom Plus complained that the RFP specifications were ambiguous and not well enough defined, resulting in comparisons between vendors' systems which were not "apples to apples." Second, Telecom Plus claimed that Centel's Call Accounting System, a required subcomponent of the proposed telephone system, fails to meet the FFP's specifications. Finally, Telecom Plus challenged the subjectivity of the point awards in the equipment evaluation, claiming that the point awards for equipment did not accurately reflect the proposals of Telecom Plus and Centel. The LCSB used a request for proposals to solicit vendors' suggestions on how its proposed telephone system needs could best be met because, in the opinion of the LCSB telecommunications consultants, an invitation to bid setting forth precise specifications for equipment in a given configuration would have eliminated all competition among vendors. While the telephone systems proposed by Telecom Plus and Centel differed in the mechanisms used to meet the LCSB needs, the systems were capable of comparison in an evaluation of whether and the extent to which they met the LCSB needs. Each of the alleged ambiguities raised in the Telecom Plus letter of protest were apparent on the face of the FFP. Telecom Plus did not avail itself of several opportunities to have any such perceived ambiguities in the RFP specifications cleared up. On September 19, 1985, the LCSB conducted a vendors' conference to answer vendor questions concerning the PEP and to clarify the vendors' understanding of the PEP. Representatives of Telecom Plus and Centel, as well as several other vendors, attended the vendors' conference. Notes from the vendors' conference setting forth questions raised and the LCSB's answers were distributed as supplemental material to all PEP specifications. In addition to the clarifications made as a result of the vendors' conference, the PEP included an invitation to vendors to submit written requests for clarification of terminology, if necessary, by no later than September 25, 1985. No such written requests were received by LCSB. The PEP also provided that any discrepancies, errors, omissions, or ambiguities in the specifications, errors, omissions, or ambiguities in the specifications or addenda should be reported in writing to the LCSB by no later than September 25, 1985. No such written notification was received by the LCSB. Despite complaints in its protest that these time frames were inadequate, Telecom Plus acknowledged the time frames in its response to the PEP and neither made objection nor took exception to them. On the merits, the PEP clearly and accurately communicated that no system architecture was "preferred" over another. The LCSB wanted the vendor's to propose their solutions to the peculiar communications problems faced by the LCSB. Neither single switch, double switch nor switch with remote peripheral equipment (RPE) configuration was to be excluded from consideration. Regarding the system features, the PEP required electronic multi-line key sets "providing for combinations of five or more lines and/or programmable feature access buttons." Although it may have been wiser to specify the maximum number of lines and feature access buttons, there is nothing ambiguous about the PEP. It requires a minimum of five lines or feature access buttons. Telecom Plus asserted that the Call Accounting System proposed by Centel did not comply with the RFP specifications in that the Call Accounting System proposed by Centel only provides 40,000 call records. The LCSB indicated in the notes from the vendors' conference that a 60,000 capacity in number of calls recorded was "desired"; no 60,000 capacity was specified in the EFP itself. Even if the desired target of 60,000 call records contained in the vendors' conference notes was considered a specification of the RFP, vendors had the option of adding or deleting items from the system requirements in their proposal as long as the additions or deletions are clearly indicated. Centel clearly indicated that its proposed SUMMA IV Call Accounting System would provide only 40,000 call records, complying with the addition/deletion provision of the RFP. 3/ In recognition of the fewer call records provided by Centel's Call Accounting System, the LCSB telecommunications consultants awarded Centel seven fewer points than possible. Telecom Plus, on the other hand, received all of the available points for its Call Accounting System that exceeded the desired target of 60,000 call records. The RFP described the criteria to be used by the LCSB in evaluating proposals. A maximum of 1,000 points would be awarded to each proposal--300 points for equipment considerations, 300 points for vendor considerations and 400 points for financial considerations. The equipment considerations included the system's fulfillment of the minimum size, feature, capacity and performance characteristics contained in the RFP, as well as the availability and functionality of specified items, such as the availability of features, ease of systems operation, and projected longevity. The vendor considerations included the vendor's capability and qualifications to provided installs and maintain the system, which would involve an evaluation of the vendor's experience (particularly with other installations of comparable size and complexity), available manpower, financial stability, and proposed installation and maintenance plans. The financial considerations included initial and recurring costs of the system, which would involve an evaluation of the cost of lease or purchase, cost of maintenance, cost of future additions based upon an assumed annual average growths cost of insurance, cost of systems administration, and any other determinable costs associated with the acquisition, installations or operation of the proposed system. In evaluating proposals, some effort was made to relate points to a dollar value. Since Centel's proposal would cost a total of $1,164,528 over seven years and Telecom Plus' would cost a total of $1,223,281 over seven years, it was borne in mind that each point in the equipment or vendor categories would relate to roughly $4,000 in the financial category. In other words, if a proposal fell short of optimal in an equipment category, for example, the proposal would receive enough fewer points in the equipment category to correspond to the value in dollars by which the proposal was thereby reduced figured at roughly $4,000 per point. By submitting a proposal in response to the PEP, Telecom Plus signified that it understood and accepted the criteria upon which proposals were to be evaluated and the sole discretion of the LCSB evaluators to determine the bid rankings. 4/ Extensive testimony was received regarding the capabilities and features of both Telecom Plus' proposed NEAX 2400 telephone system and Centel's proposed SL-1N telephone system. In addition, the LCSB telecommunications consultants who performed the technical evaluation of the proposals detailed the relative merits of the two systems in their Evaluation Of Proposals dated October 11, 1985. In the Evaluation Of Proposals, points were awarded as follows: Centel Telecom Plus A. Equipment Proven Reliability (of 40) 40 35 System Architecture (of 40) 39 35 Reliability Considerations (of 40) 37 35 System Capacities (of 40) 32 40 System Features (of 35) 35 33 Instruments (of 35) 28 30 Data Considerations (of 35) 34 30 Call Accounting System (of 35) 28 35 TOTAL 273 273 B. Vendor 292 290 C. Financial 384 366 GRAND TOTAL 949 929 The points awarded in the equipment evaluation were justified with one minor exception. The LCSB consultants based their award of points in the "System Features" category on the assumption that the system proposed by Telecom Plus provided for 100 speed call assignments. Actually, that system provides 200 speed call assignments. Accordingly Telecom Plus should have been awarded an additional point. Since the Telecom Plus system received 20 points overall less than Centel's proposed system, the addition of one point to Telecom Plus' total point award would not change the outcome. Regarding proven reliability of the equipment proposed, Centel's proposed switch was first marketed by Northern Telecom in 1975. The switch was improved and modified over the years, and much of the SL-1N is "backward compatible" (i.e., uses components that could be used in prior versions of the switch) Telecom Plus' proposed NEAX 2400, in contrast, has been on the market only approximately 18 months. This gave Centel's proposal the advantage in this category. Regarding Systems Architecture, Centel's RPE proposal gave it the advantage in solving the peculiar need of the LCSB to provide an EPABX to serve two buildings at least 4500 feet apart (but especially in comparison with the Telecom Plus proposal). Regarding reliability considerations, Telecom Plus did not prove (either by documentation in its proposal or by evidence at the hearing) that its D Term telephone instruments will operate reliably at 4500 or more feet from its single telephone switch, as was proposed to provide telephone service for the Lively building. Telecom Plus did, however, delete from the manufacturer's literature included in its response to the RFP the manufacturer's recommendation that the D Term not be used more than 4500 feet from the switch. All these facts and circumstances result in an advantage to the Centel proposal. In the categories System Capacities, Instruments and Call Accounting System, Telecom Plus' proposal deserved and was given the advantage. Telecom Plus did not prove that its advantage should have been larger. In System Capacities, Telecom Plus' proposal received eight more points (worth roughly $32,000) for being "non-blocking" (i.e., all telephone instruments could be off- hook at the same time) although Centel's proposal met all specifications of the RFP. Centel's Call Accounting System is capable of less-than-desired 40,000 call records; Telecom Plus' has the desired 60,000 call record capacity and was given the maximum 35 points in this category. Telecom Plus did not prove that its Call Accounting System was worth more than seven points (roughly $28,000) more to the LCSB, especially since lack of capacity can be addressed by simply "dumping" call records twice as often. (See also footnote 3 above.) Regarding the financial category, Telecom Plus proved that the LCSB consultants erroneously used the pre-cutover price of $240 instead of the post- cutover price of $281 in figuring the cost of additional telephone sets anticipated to be needed during the first seven years of operation under the Centel proposal. This error deflated the total cost of the Centel proposal by approximately $3,000 over seven years. In light of the actual total cost of the Centel proposal, Centel should have received only 383 points in the financial category instead of 384 points, not enough of a difference to change the outcome of this case.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the Leon County School Board enter a final order awarding a contract to Centel Business Systems to install the telephone communications system proposed in its response to the Request For Proposals in this case. RECOMMENDED this 5th day of December 1985, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of December 1985.
The Issue Whether Respondents violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers' compensation coverage, as alleged in the Stop-Work Orders, and, if so, what penalty is appropriate.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440, Florida Statutes, that employers in Florida secure workers' compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondents are gas station/convenience stores located in South Florida. Northlake was created by Nazma Akter on May 6, 2014. MB was created by Ms. Akter on March 23, 2010. Congress Valero was created by Muhammad Saadat on July 21, 2011. Hena was created by Ms. Akter and Abu Ahsan on December 14, 2011. Hayma was created by Ms. Akter on December 14, 2011. Blue Heron was created by Ms. Akter on August 4, 2009. At all times relevant hereto, Respondents were duly-licensed to conduct business in the state of Florida. On February 2, 2015, the Department's Compliance Investigator Robert Feehrer, began a workers' compensation compliance investigation of Gardenia, LLC. Investigator Feehrer called the number listed for Gardenia, LLC, and was provided with a corporate office address. On February 10, 2015, upon arrival at Gardenia, LLC's, corporate office located at 165 US Highway 1, North Palm Beach, Florida, 33408, Investigator Feehrer spoke with Operations Manager Mohammad Hossain. Mr. Hossain stated that Gardenia, LLC, was a paper corporation and existed only for the purpose of paying unemployment taxes on the "six stores." Mr. Hossain went on to provide Investigator Feehrer with a list of Respondents and names of the employees that worked at each store. As an employee of Gardenia, LLC, and Respondents, Mr. Hossain's statements are party opponent admissions and bind Respondents. Lee v. Dep't of Health & Rehab. Servs., 698 So. 2d 1194, 1200 (Fla. 1997). With Mr. Hossain's statements and the list of Respondents' employees, Investigator Feehrer then consulted the Division of Corporations website, www.sunbiz.org, and confirmed that Respondents were current, active Florida companies. Investigator Feehrer then consulted the Department's Coverage and Compliance Automated System ("CCAS") for proof of workers' compensation coverage and exemptions associated with Respondents. Investigator Feehrer's CCAS search revealed that Respondents had no workers' compensation policies and no exemptions. On February 24, 2015, Investigator Feehrer conducted site visits at each of the six stores. Ms. Akter and Mr. Hossain accompanied Investigator Feehrer during these site visits. At all times material hereto, Ms. Akter was a corporate officer or managing member of each of the six Respondents. Muhammed Saadat and Abu Ahsan were corporate officers or managing members of Congress Valero, Hena, and Blue Heron. Kazi Ahamed was a corporate officer or managing member of Congress Valero and Hayma. Kazi Haider and Mohammed Haque were managing members of Hayma. All received compensation from the companies with which they were involved. Although Investigator Feehrer only personally observed one employee working at each location during his site visits, the payroll records revealed that at least four employees (including corporate officers or managing members without exemptions) received compensation for work at each location during the relevant period. Investigator Feehrer required additional information to determine compliance, and with Respondents' permission, contacted Respondents' accountant. Investigator Feehrer met with the accountant at least two times to obtain relevant information prior to March 30, 2015. Upon Ms. Akter's authorization, the accountant provided tax returns and payroll information for Respondents' employees. Information from Ms. Akter and Mr. Hossain also confirmed the specific employees at each of the six stores during the period of March 30, 2013, through March 30, 2015. On March 30, 2015, based on his findings, Investigator Feehrer served six Stop-Work Orders and Orders of Penalty Assessment. The Stop-Work Orders were personally served on Ms. Akter. Mr. Hossain was present as well and confirmed the lists of employees for each of the six stores were accurate. In April 2015, the Department assigned Penalty Auditor Christopher Richardson to calculate the six penalties assessed against Respondents. Respondent provided tax returns for the audit period and payroll transaction details were provided, as well as general ledgers/breakdowns, noting the employees for each Respondent company. Based on Investigator Feehrer's observations of the six stores on February 24, 2015, Auditor Richardson used the classification code 8061 listed in the Scopes® Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021(1). Classification code 8061 applies to employees of gasoline stations with convenience stores. Classification codes are four-digit codes assigned to various occupations by the National Council on Compensation Insurance to assist in the calculation of workers' compensation insurance premiums. In the penalty assessment, Auditor Richardson applied the corresponding approved manual rate for classification code 8061 for the related periods of non-compliance. The corresponding approved manual rate was correctly utilized using the methodology specified in section 440.107(7)(d)1. and rule 69L-6.027 to determine the final penalties. The Department correctly determined Respondents' gross payroll pursuant to the procedures required by section 440.107(7)(d) and rule 69L-6.027. On January 14, 2016, the Department served the six Amended Orders of Penalty Assessment on Respondents, assessing penalties of $1,367.06 for Northlake, $9,687.00 for MB, $12,651.42 for Congress Valero, $18,508.88 for Hena, $7,257.48 for Hayma, and $4,031.60 for Blue Heron. The Department has demonstrated by clear and convincing evidence that Respondents were engaged in the gasoline station, self-service/convenience store industry in Florida during the periods of noncompliance; that Respondents failed to secure the payment of workers' compensation for their employees, as required by Florida's Workers' Compensation Law; and that the Department correctly utilized the methodology specified in section 440.107(7)(d)1. to determine the appropriate penalties.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a consolidated final order upholding the Stop-Work Orders and the Amended Orders of Penalty Assessment in the amounts of $1,367.06 for Northlake Mobile Enterprises, Inc.; $9,687.00 for MB Food and Beverage, Inc.; $12,651.42 for Congress Valero, Inc.; $18,508.88 for Hena Enterprises, Inc.; $7,257.48 for Hayma Enterprises, Inc.; and $4,031.60 for Blue Heron BP, Inc. DONE AND ENTERED this 16th day of June, 2016, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 2016.
Findings Of Fact On December 11, 1974 Rule 12A-1.32 F.A.C. became effective following notice (Exhibit 6) that numerous sections of the Revenue Code were being revised and that a public hearing on the revisions was being held by the Governor and Cabinet. At the time this rule became effective, rulemaking was governed by 120.041 F.S. and the procedure required in that section (which was replaced by 120.54 F.S. on January 1, 1975) was followed. Section 120.011 F.S., also repealed on January 1, 1975, provided that no rule enacted pursuant to Chapter 120 could be retroactive unless expressly so stated. Assessments against Petitioner resulting from the audit taken in 1975 covered the period January 1, 1973 to November 30, 1975. Petitioner's and Intervenor's business is "data conversion contracts and projects" by way of keypunching, key verifying, typing, key tape, key disk, and direct computer entry, or a combination depending on relative efficiencies and machine availability, with or without computer printed reports. More specifically, Petitioner's business of data conversion is the conversion of data from the written or spoken word or symbol into a communication medium (card, tape, disk, paper tape, paper, and direct to computer) through personal services. In connection therewith from time to time Petitioner purchases custom computer systems and programs. In essence, Petitioner converts data received from his customers into a form that can be placed in a computer and thereafter retrieved for such purposes as the customer may desire. In performing this function Petitioner uses paper tape, punch cards, magnetic tape, key tapes, keypunch, typewritten sheets, telephone lines, and other means of transmitting the information or data direct to the computer. The latter methods have been referred to as third generation computer software as the data is transmitted through a cathode ray tube by the operator direct to the computer rather than by means of cards, tape, or other tangible property on which the data is placed for transmission into the computer. The computer program in its operating environment is a product of human intelligence reduced to binary pulses, which are interpreted by the computer machinery to cause human knowledge to be transposed into desired and meaningful output. The basic issue to be resolved is the nature of computer software. Computer hardware refers to the tangible parts of the computer itself while software denotes the information loaded into the computer and the directions given to the computer as to what to do and upon what command. In its assessment Respondent has demanded payment for sales tax involving software processed and sold by Petitioner and Intervenors transmitted on punched cards, paper tape, and typed sheets. Respondent abated the assessment involving magnetic tapes because the tape was owned by Respondent and returned to him when the data superimposed thereon had been stored in the computer. Respondent does not assess sales taxes for computer information supplied to the customer unless tangible property on which the data is superimposed is used and which tangible property is not reusable because of the changes to the tangible property produced when the information or data was placed thereon. Since the magnetic tape was returned to Petitioner in a reusable state and title was never transferred to the customer, Respondent abated the assessment for sales taxes resulting in sale of software via magnetic tape. Similarly Respondent does not claim sales taxes are due when data is fed direct to the computer as no tangible property is transferred. However, when the identical data is transmitted to the computer by means of punched cards, paper tape or other tangible property which is physically changed by the addition of the intelligible data, sales taxes are collected pursuant to Rule 12A-1.32(4) and (7) F.A.C. The tangible property on which the data is superimposed has a value of less than five percent of the total sales price charged for the services. The same type of service is performed by Petitioner whether the data is ultimately entered into the computer by punched cards, magnetic tape, or direct.
The Issue Whether the Respondent, the Department of Revenue, acted in a fraudulent, arbitrary, illegal or dishonest manner in deciding to award a contract to the Intervenor, Recognition Equipment Incorporated, based upon the Intervenor's response to Request for Proposal No. 90/91-261?
Findings Of Fact The Parties. The Respondent, the Department of Revenue (hereinafter referred to as the "Department"), is an agency of the State of Florida. On or about June 24, 1991, the Department issued Request for Proposal on No. 90/91-261 (hereinafter referred to as the "RFP"). The Petitioner, Scan-Optics, Inc. (hereinafter referred to as "Scan- Optics"), is an unsuccessful responder to the RFP. The Intervenor, Recognition Equipment Incorporated (hereinafter referred to as "REI"), is the successful responder to the RFP. Scan-Optics and REI have standing to participate in this proceeding. Development of the RFP. For a number of years prior to the formal hearing of this case, the Department has been interested in purchasing optical scanning equipment for use in processing certain tax returns filed with the Department. The Department made inquiries and performed investigations concerning available optical scanning equipment as a result of its interest in the equipment. The Department contacted private producers of optical scanning equipment, including Scan-Optics and REI, and other state agencies that already had acquired optical scanning equipment. The Department observed Scan-Optics and REI optical scanning equipment in use by purchasers of the equipment in Florida and other States. During the Spring of 1991, the Department's budget was sufficient to allow the Department to purchase optical scanning equipment and the Department actually began to plan for such a purchase. The Department ultimately decided to acquire the equipment through a request for proposal instead of an invitation to bid because the Department knew what function the equipment was to serve but not how best to fulfill this function. James R. Evers, the Assistant Director of the Department's Division of Tax Processing, was assigned responsibility for drafting the specifications for the equipment to be acquired through the request for proposal. Mr. Evers travelled to several States with agencies that already had acquired optical scanning equipment, observed the equipment in use and discussed the equipment with personnel familiar with the equipment. Mr. Evers acquired and reviewed the specifications used in Florida and in other States in purchasing optical scanning equipment. Mr. Evers acquired requests for proposals and invitations to bid from other States and reviewed them. After preparing the specifications for the equipment to be included in the RFP, the Department submitted the specifications to the Information Technology Resource Procurement Advisory Council (hereinafter referred to as the "ITRPAC"). The ITRPAC was created pursuant to Section 287.073(5), Florida Statutes, and is composed of the Director of the Division of Purchasing of the Department of General Services, the executive administrator of the Information Resource Commission and the Director of the Governor's Office of Planning and Budgeting. The ITRPAC, pursuant to the duty imposed on it by Section 287.073(5)(b), Florida Statutes, reviewed and approved the Department's specifications. The weight of the evidence failed to prove that the Department's actions in drafting the RFP were fraudulent, arbitrary, illegal or dishonest. Issuance of the RFP. On June 24, 1991, the Department issued the RFP, No. 90/91-261, "Scanning Equipment Operation". Scan-Optics reviewed the RFP and concluded that several of the requirements of the RFP were product-specific; that only REI's equipment could meet some of the specifications. Based upon Scan-Optics' concerns, Scan-Optics sent a letter to the Department objecting to the RFP as "being a directed procurement to an individual company, namely Recognition Equipment Incorporated." In particular, Scan-Optics questioned why the features on pages 10 through 13 "which define a single vendor's product specifications . . . " were "mandatory" features. Scan- Optics requested that all REI-specific requirements be removed from the RFP. Pursuant to the RFP, a pre-proposal conference was held by the Department on July 16, 1991. This conference was attended by, among others, representatives of Scan-Optics and REI. The purpose of the pre-proposal conference was to provide written responses to written questions submitted by prospective vendors. Prospective vendors were informed through provisions of the RFP of the following concerning modifications to the RFP: Any question concerning the RFP was required to be submitted in writing. No interpretation of the RFP would be considered binding unless issued in writing by the Department. See paragraph 5 of the General Conditions of the RFP. Paragraph 5 of the General Conditions of the RFP also provided that protests to any part of the RFP were to be filed in writing as specified in Rule 13A-1.006, Florida Administrative Code. Section 1.4 of the RFP provided the following: No negotiations, decision, or action shall be initiated or executed by the offeror as a result of any discussions with any Department employee. Only those communications which are in writing from the purchasing office may be considered as a duly authorized expression on behalf of the Department. During the pre-proposal conference written questions that had previously been submitted by prospective vendors, including Scan-Optics' question concerning the "mandatory" features of section 3 of the RFP, and the Department's written responses thereto were distributed. Some discussion of the questions and responses also took place and some oral questions were answered. During the pre-proposal conference the Department's representative answered specific questions concerning the Department's desire to acquire "full multifont, set upper case, lower case alpha/numeric and hand print" capability. The questions to, and the comments of, the Department's representative during the pre-proposal conference were not reduced to writing or otherwise included in the RFP. Although the Department answered the oral questions asked during the pre-proposal conference, the Department's answers were not inconsistent with the intent of the Department evidenced in the RFP as discussed, infra. The evidence failed to prove that the Department's actions during the pre-proposal conference were fraudulent, arbitrary, illegal or dishonest in light of the clear directions of the RFP concerning modifications thereto being in writing. In response to Scan-Optics' initial complaint about the RFP, the Department changed its "mandatory" features, beginning at Section 3.2 of the RFP, to "desired" features. This the Department did through the issuance of Addendum No. 1, which was issued by the Department after the pre-proposal conference on July 17, 1991, and included all written questions submitted prior to the conference and the Department's responses thereto. No other written modification to the RFP was made by the Department other than Addendum No. 1 and the attached written questions and responses. Other than the questions raised by Scan-Optics concerning the vendor- specific issue and the written questions attached to Addendum No. 1, no written clarification of the RFP was requested by Scan-Optics or any other prospective vendor. No written protest to the RFP was filed by Scan-Optics or any other prospective vendor. The evidence failed to prove that the Department's actions in issuing the RFP or it actions between the issuance of the RFP and the filing of proposals by vendors (i.e., the conduct of the pre-proposal conference) were fraudulent, arbitrary, illegal or dishonest. Purpose of the RFP. The RFP included the following "overview" of why the Department issued the RFP: The Department of Revenue is planning the purchase of scanning equipment to enhance its data entry capabilities. The Department currently utilizes the Tartan Data Entry System to capture data from tax returns and related documents in a key to disk environment. . . . Scanning equipment would enable the Department to capture handwritten or typed data through optical character recognition. It is estimated that over 90% of typed data and 70% of handwritten data can be captured through optical character recognition. The initial application of Intangible Tax Returns represented over 68 million keystrokes during the last year. . . . . Joint Exhibit 1 (Tab D), section 1.2, page 1. The Department provided the following more specific indication with regard to what it was seeking through the RFP: It is the intent of the State to procure a total turn-key system comprised of all equipment, software, and services associated with optical scanning/optical character recognition of source data to provide output data for further processing at Florida Department of Revenue via magnetic tape or telecommunications. The system must be current state-of-the-art, allowing for future integration of imaging techniques into the scanner system as a field upgrade without replacing installed equipment. . . . A turn- key proposal is envisioned which will include installation, the design of the initial forms, scanner and edit and reject/re-entry system programming, operations and programmer training on-site, and any other support services essential to the successful operation of the system. It is requested that the successful vendor propose a minimum of 100 hours of software support for future applications to be allocated at the discretion of the Department. Reference Current System for details regarding the two Intangible Tax Form(s) and Documentary Tax Forms which we propose as initial scanning applications. We believe that the Section below appropriately sets forth the hardware and software sub-objectives including a scanner/imaging system, but we would like any potential Offerors to know that our overall objectives are a continuing improvement in all areas of operation at Florida Department of Revenue. In order of importance, the following are our goals: . . . . Joint Exhibit 1 (Tab D), section 3.1, page 9. The RFP went on to list a number of objectives (generally referred to as lower costs, enhance taxpayer service, improve quality, accelerate cycle time and decrease paper handling) and approximately 30 "desired" features the Department wanted vendors to address. Joint Exhibit 1 (Tab D), sections 3.2 through 3.31, pages 10-16. There were three forms attached to the RFP which the RFP indicated the Department intended to process with the system initially purchased pursuant to the RFP. Each form was identified and the potential data to be collected was identified by indicating the data elements currently captured, their size and their class. Although the data elements currently captured included only numeric data for two of the forms and numeric and some alpha data for the third form, the RFP did not specify that all data currently captured would necessarily be captured as a result of the RFP. The RFP also indicated that "[s]ubstantial changes to the layout will occur at design time" indicating that the forms were to be redesigned to accommodate a vendor's proposed method of collecting data from the forms. The RFP did not require that the Department acquire equipment which would read all Department forms which may ultimately be processed with optical scanning equipment or even that the exact three forms attached to the RFP for initial processing be processed as a result of any purchase under the RFP. The intent of the Department reflected in the RFP and as explained during the hearing of this matter was for vendors to provide the Department with details concerning their full capability (equipment and costs) to process Department materials with their optical scanning equipment and allow the Department to select a combination of equipment which would initially allow the processing of the three forms, in whatever format could best serve the Department's needs, and allow the Department to later upgrade and increase its use of optical scanning equipment. The RFP requested that vendors identify each component of their systems, including all recommended features for the initial task. Joint Exhibit 1 (Tab D), section 5.2, page 19. Vendors were also required to provide itemized prices for all components of their proposals: This tab must show the itemized prices for all components to include hardware, software, cables/connectors, shipping, installation, training, maintenance, start-up supplies/ equipment and any other goods/services. Pricing information must include all items that may be needed to provide a configuration of equipment and software to the Department. Any recurring charges must also be shown. Any quantity or price discounts offered in the proposal should be clearly stated. Pricing information must be submitted in the formats provided. It is imperative that adequate pricing information be included in the proposal. The Department cannot purchase any item against the proposal if adequate pricing information is not included in the proposal. Therefore, pricing information should be provided for optional features, equipment, software and services that are not a required part of any particular configuration herein, but may be desired if changes become necessary to any configurations purchased by the Department. . . . . . . . Joint Exhibit 1 (Tab D), section 5.2, page 20. Responses to the RFP. On or about August 6, 1991, Scan-Optics, REI and GTE Vantage Solutions submitted responses to the RFP. All responses to the RFP were determined to be responsive to the RFP and were evaluated and scored. The evidence failed to prove that the Department's determination that the responses to the RFP were responsive was fraudulent, arbitrary, illegal or dishonest. Evaluation of the Proposals to the RFP; General. Section 4.3 of the RFP established the criteria for evaluation of proposals to the RFP. A total of 35 points were available for "costs", 30 points for "functional requirements", 30 points for "future requirements" and 5 points for "tax related experienced". The Department established a four person committee (hereinafter referred to as the "Committee"), to review and evaluate proposals to the RFP. Those individuals were Mr. Evers, George Brown, Larry Neilson and Gerald Johnson. Pat Gonzalez, an employee of the Information Resources Commission, also served as a non-voting member of the Committee. Subsequent to the filing of the proposals to the RFP, the Committee met on several occasions to discuss scoring criteria and to review lists of equipment submitted by each vendor. The members of the Committee reviewed and scored each proposal individually. After individually scoring each proposal, the Committee met and reviewed the individual scores. The individual scores were averaged and tabulated by Ms. Gonzalez. REI received an average score of 30 points for the functional requirements of section 3 of the RFP, an average score of 23 points for section 5 of the RFP and 5 points for section 6 of the RFP. Scan-Optics received average scores of 24.19, 12.5 and 5, respectively, for these three categories. Adding the scores for cost, discussed infra, the final tabulation of scores was as follows: REI 85.16 Scan-Optics 76.69 GTE Vantage 54.72 Based upon the foregoing, the Department decided to award the contract under the RFP to REI. Evaluation of the Proposals to the RFP; Costs. On August 6, 1991, when the proposals to the RFP were first opened, a preliminary bid tabulation sheet was completed. REI's proposed unit price was $1,389,025.00, and Scan-Optics' proposed unit price was $774,868.00. The Committee subsequently reduced the unit price of REI's proposal by $440,658.00, from $1,389,025.00 to $948,367.00. This reduction was made based upon a decision of the Committee, after a review of the REI proposal, to select a configuration of REI's equipment which the Committee believed comported with the Department's intent as evidenced by the RFP and would perform the tasks envisioned in the RFP. This decision was reasonable and consistent with the RFP in light of the following: The RFP informed vendors that the Department reserved the right to select any configuration of equipment submitted by vendors. Paragraph 7, General Conditions of the RFP, provided, in pertinent part: As the best interest of the State may require, the right is reserved to make award(s) by individual item, group of items, all or none, or a combination thereof; to reject any and all proposals or waive any minor irregularity or technicality in proposals received. . . . At Tab 11, Section 5 of the RFP, it was provided, in pertinent part: Offerors are required to include all equipment and software availability for their series or family of equipment proposed. The Department shall use these to determine the final ordered configuration from the selected proposal and from time to time, for additional equipment or software. This will also allow the Department the option of selecting equipment from State contract or under this RFP/Contract. This will also allow the Department to implement functions either undefined or unforeseen. The Department reserves the right to acquire any and all of the equipment, software and services necessary to meet the requirements of this proposal. Vendors were also required by Tab 11, Section 5 of the RFP to submit itemized prices for all components of a proposal: "Pricing information must include all items that may be needed to provide a configuration of equipment and software to the Department." REI's proposal included its entire array of equipment with itemized prices. This information allowed the Committee to equalize the vendors' proposals and, thus, allow a fair comparison of the two vendors. It also allowed the Committee to perform its task of deciding what configuration of equipment would best meet the Department's needs. Scan-Optics' proposal did not include separate itemized prices. Therefore, the Department was not able to decide the most advantageous configuration of Scan-Optics' equipment. Without the reduction in costs, REI's proposal was more extensive and more expensive than Scan-Optics' proposal. The Committee discussed the matter and questioned the Department's purchasing director as to whether REI's proposal could be reduced pursuant to the RFP to make it more compatible with the RFP. After being assured that such a reduction was permissible under the RFP, the Committee removed some of the REI proposed vocabulary kits and the costs of those kits. The Committee was unable to make a similar reduction to Scan- Optics' proposal because Scan-Optics had not itemized the cost of its equipment. With the reduction in REI's unit price made by the Committee, REI received a total of 27.16 points for the cost component during the evaluation process. The total score awarded to REI was 85.16. If the Committee had not given REI the reduction in unit price, REI would have only received 7.26 points for cost and its total score would have been 65.26. Scan-Optics received 76.69 total points (including 35 points for "cost"), which is higher than the points REI would have received but for the Committee's reduction of REI's unit price. REI was contacted by the Department to verify that the Department's understanding of the pricing information contained in REI's response to the RFP was correct. The evidence failed to prove that this contact allowed REI to provide any additional information to the Department or was otherwise improper. The Department did not contact Scan-Optics because Scan-Optics had not provided any information upon which the Department could have evaluated Scan-Optics' proposal in a similar manner as it had REI's. Therefore, there was no similar conclusion reached concerning Scan-Optics to be verified. The evidence failed to prove that the Department's evaluation of the costs of the vendors or the award of cost points to REI or Scan-Optics was fraudulent, arbitrary, illegal or dishonest. Evaluation of the Proposals to the RFP; An Oklahoma Tax Commission Evaluation Form. Prior to the evaluation of the proposals to the RFP Mr. Evers requested that an evaluation form used by the Oklahoma Tax Commission be provided to him. Mr. Evers made this request because he wanted to use the evaluation format he knew the Oklahoma Tax Commission had used. The evaluation form provided to Mr. Evers included the actual results of the Oklahoma Tax Commission's evaluation of proposals it had received. REI was awarded the Oklahoma Tax Commission contract. Mr. Evers provided a copy of the Oklahoma Tax Commission's evaluation to one of the members of the Committee and told him to give a copy to one other member. The evidence failed to prove if the fourth member and Ms. Gonzalez were provided a copy. The evaluation general point scale on the Oklahoma Tax Commission evaluation form was used by the Committee: Item not bid or does not meet specifications. Partially meets specifications. Meets specifications. Exceeds specifications. Substantially exceeds specifications. ? Need additional information from vendor. Although Mr. Evers could have avoided all appearance of impropriety by distributing a blank Oklahoma Tax Commission evaluation form, the weight of the evidence failed to prove that Mr. Evers' actions in distributing the Oklahoma Tax Commission evaluation form was fraudulent, arbitrary, illegal or dishonest. The evidence failed to prove that the Committee was in fact influenced by the Oklahoma Tax Commission evaluation form in any substantial way. I. Evaluation of the Proposals to the RFP; REI's TARTAN XP80. REI's proposal included equipment named the TARTAN XP80. This equipment is the basic optical scanning system of REI. The XP80 system proposed by REI is capable of including from 40 to 720 templates. The Department, after evaluation of the proposals, decided that the XP80 with only 40 templates would be sufficient to meet the Department's initial goal as set out in the RFP. The Department concluded that it was not necessary to acquire the XP80 with its 720 template capacity. The 40 template system is the system which the Committee evaluated with regard to the cost of the REI proposal. Section 3.17 of the RFP included the following desired characteristic: Optical Character Recognition - The document scanning system must be capable of employing both feature matching and feature analysis recognition techniques. The system must be capable of processing all standard OCR fonts in single font, multiple font, or multi-font mode under program control. The Offeror must provide a list of all fonts recognized by their system and any restrictions that apply. Vendor to define number of fonts recognized by his system, i.e., single font, multiple font, omnifont, and multifont. The specifications of Section 3.17 of the RFP were not "mandatory" requirements of the system ultimately to be acquired by the Department. The Department requested information concerning these capabilities, but did not specify in the RFP that the system it would ultimately purchase for its initial project would contain the specifications of Section 3.17 of the RFP. In light of Scan-Optics own challenge to the provisions of section 3 of the RFP as "mandatory" and the Department's decision to eliminate the reference to the provisions of section 3 as "mandatory", it is clear that there was no requirement that the ultimate system acquired pursuant to the RFP had to be capable of processing all standard OCR fonts in single font, multiple font, or multifont mode under program control. The evidence failed to prove that REI did not provide information concerning its capabilities to meet the specifications set out in Section 3.17 of the RFP or that the information provided was inaccurate. Two of the forms to be initially processed (forms 601I and 601C) only required capability to read numeric characters. The third form (form 219) could, in a limited number of instances, contain numeric and alpha characters. In evaluating the proposals, the Department decided that, to the extent that alpha characters may be contained on form 219's, the alpha characters could be ignored without creating significant problems in processing. The Department's conclusion that the XP80 with only 40 templates can handle the initial task contemplated by the RFP was based upon the fact that the forms may be redesigned and the conclusion that the number of instances when alpha characters appear will be insignificant enough to ignore. There was evidence presented that the XP80 with only 40 templates cannot efficiently and successfully process the three forms to be initially processed. There was also evidence that the XP80 with only 40 templates will not be successful even if the forms are redesigned. The weight of the evidence failed, however, to substantiate this claim. Whether the XP80 with only 40 templates can successfully process the three forms depends upon the environment in which the forms are completed. It is possible that if the exact environment is known so that the number and type of fonts that may be used is known, only 40 templates can process the forms coming from that environment. The Department has not determined what exactly the environment in which the forms will be completed is. The Department did, however, consider the probable environment in reaching its decision. More importantly Scan-Optics did not prove what that environment is. Nor did Scan- Optics prove that the environment is, or will be, one which will prevent the XP80 with only 40 templates from being successfully used as contemplated by the RFP. The evidence proved that an XP80 with a minimum of 200 templates up to a maximum of 350 templates could be used to successfully carry out the task contemplated in the RFP even in a random environment (one in which any number of fonts might be used to complete a form). If up to at least 280 templates were purchased the XP80 could handle the processing of the forms and, adjusting the score of REI for the additional costs and additional performance characteristics of an XP80 with up to 280 templates, REI would still be the highest scorer. Exactly where the cut-off between the number of additional templates which it may be necessary to acquire according to evidence presented by Scan-Optics (between 200 and 350) and the resulting reduction in REI's score to below Scan- Optic's score would occur was not proved. The evidence failed to prove that the actions of the Department with regard to its decision to acquire an XP80 with as low as 40 templates was fraudulent, arbitrary, illegal or dishonest. Evaluation of the Proposals to the RFP; Table C. Table C of the RFP required that vendors list any optional features, which would enhance optical scanning operations: "LIST ANY OPTIONAL FEATURES WHICH ENHANCE PERFORMANCE OF THE SCANNING EQUIPMENT OPERATION". Joint Exhibit 1 (Tab D), page 30. REI did not provide a completed Table C with its proposal. REI's proposal included additional vocabulary kits containing from 40 to 720 templates and the cost of those kits in Table B of its proposal. Table B was to be used to provide the following: "LIST EACH AND EVERY COMPONENT AND FEATURES REQUIRED FOR INSTALLATION AND FULL OPERATIONAL STATUS." REI's proposal was consistent with these instructions. The fact that the vocabulary kits involved in the award of points for costs were included on Table B and were not included on Table C does not mean that the Department could not reject vocabulary kits as unnecessary for its initial purchase based upon other information contained in REI's proposal. The inclusion of the kits on Table B merely indicates that, to acquire REI's total capability with an XP80, up to 720 templates are required for "FULL OPERATIONAL STATUS." That does not mean that the Department intended or was required by the RFP to actually acquire "FULL OPERATIONAL STATUS." Section 3.9 of the RFP provided the following desired feature: Document Imaging - The proposed document scanning system must be capable of being field upgraded with image cameras for both front and back imaging of documents. Imaging must occur on both sides of the document in a single pass. The proposed system must be capable of taking partial images of the document within the confines of windows, zones, or strips. When and if imaging is added to the proposed system, it must not slow any other operations or functions of the system below that of normal throughput speed of the identical system without the added imaging capability. The following question, submitted in writing to the Department, and the following written answer from the Department, were included in Addendum No. 1: 48. Is the cost to retrofit to imaging included in evaluation criteria? Answer: Future costs will be considered. REI responded to section 3.9 as follows: Exceeds Requirement: The proposed TARTAN XP80 can be upgraded to imaging exactly as defined in Section 3.9. In addition, image output can be passed to an extremely wide range of image processing systems including those from IBM, NCR, Unisys, FileNet, Plexus and many others. Joint Exhibit 3 (Tab H), page 5. REI failed to list the equipment necessary to meet the desired feature of section 3.9, or the price of such equipment, on Table C of its proposal. This information, however, was included by REI on Table B according to the testimony of Mr. Evers. To the extent that Table C was not provided, REI's failure to provide the information to be contained thereon was a minor irregularity. The RFP did not require that the Department evaluate the proposals based upon the cost of future upgrades. The RFP only required that the Department determine the ability of vendors to upgrade and REI's proposal gave the Department sufficient information to accomplish this requirement. The evidence failed to prove that the Department's failure to reject REI's proposal because of its failure to provide Table C or that the Department's grading of REI's proposal in light of the failure to include a Table C with its proposal was fraudulent, arbitrary, illegal or dishonest. Evaluation of the Proposals to the RFP; The One- Year Warranty. The RFP required that a one-year warranty be included with each proposal. REI's proposal only included a 90-day warranty. REI's proposal, however, included the cost of one-year's maintenance costs of $61,587.00. The evidence failed to prove that the Department's acceptance of REI's warranty and maintenance costs was fraudulent, arbitrary, illegal or dishonest. Evaluation of the Proposals to the RFP; Grading of Sections 3.2 through 3.31. Addendum No. 1 to the RFP modified, among other things, three of the desired features of section 3 of the RFP. In particular, sections 3.5, 3.11 and 3.20 of the RFP were modified. The scores awarded to Scan-Optics by some of the members of the evaluation committee for its response to sections 3.5, 3.11 and 3.20 were lower than the scores awarded to REI. The evidence failed to prove the actual reason why the scores awarded to Scan-Optics pursuant to sections 3.5, 3.11 and 3.20 of the RFP were lower than the scores awarded to REI or that the lower scores were based upon the requirements of those sections without regard to the modifications of Addendum No. 1. The impact on the scores of Scan-Optics, even if attributable to error by the Department, would be minimal. The evidence failed to prove that even if the Department had graded Scan-Optics' proposal without taking into account the modifications of Addendum No. 1 to sections 3.5, 3.11 and 3.20, that the Department acted in a fraudulent, arbitrary, illegal or dishonest manner. Conclusion. Based upon the foregoing, it is concluded that the evidence failed to prove that the Department's actions from the time that it developed the RFP to the announcement of its proposed award of the contract under the RFP to REI was fraudulent, arbitrary, illegal or dishonest. Any unfairness to Scan-Optics was a result of the Department's broad discretion pursuant to the RFP to decide what to acquire as a result of the RFP and the apparent confusion of Scan Optics, and probably REI, caused by the RFP. The RFP was not, however, challenged.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a Final Order dismissing the Formal Written Protest and Petition for Formal Administrative Hearing filed by Scan-Optics, Inc. DONE and ENTERED this 17th day of January, 1992, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of January, 1992. APPENDIX Case Number 91-6545BID Scan-Optics and REI have submitted proposed findings of fact. The Department has indicated its intent to adopt the proposed findings of fact of REI. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Scan-Optics' Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 3 and 5. 2 4-5. 3 See 31-37. See 32. See 33. 6-7 Hereby accepted and see 33 and 64-69. Not supported by the weight of the evidence. See 31-37 and 64-69. 11 and 13. The third, fourth and seventh sentences are not relevant. The fifth and sixth sentences are misleading and not totally accurate--there was only one RFP and one ITB and they were included in Mr. Evers' file on REI. See 19-20. The last sentence is not relevant. 11-12 20 and 26. 13 26. 14 22-23 and 26. 15 Hereby accepted. 16 See 20. But see 22, 25 and 27-30. 17-19 See 22, 25 and 27-30. 48, 58 and hereby accepted. Hereby accepted. But see 31-37. 58 and hereby accepted. 32, 70-71 and hereby accepted, except the fourth sentence, which is not supported by the weight of the evidence, and the last sentence, which is not relevant to this proceeding. 24-28 Hereby accepted. Not relevant. Hereby accepted. 31 32. 32 41. 33 44. 34 48 and 50-51. 35 See 47-48 and 51 and hereby accepted. 36 50-51. 48-49 and 51 and hereby accepted, except the fifth and last sentences, which are not supported by the weight of the evidence. See 54-57. The third sentence mischaracterizes Mr. Evers' testimony and is, therefore, not supported by the weight of the evidence. Not supported by the weight of the evidence or not relevant. 40 56. 41-42 Not supported by the weight of the evidence. 43 See 60. 44 See 60-63. 45 Not relevant. 46-47 Not relevant. See 60-63 48 49-51 Not relevant. See 66-69. Not supported by the weight of the evidence. See 66-69. 52 See 45. But see 83-86. 53 Hereby accepted. 54 See 83 and hereby accepted. 55 Hereby accepted. 56 See 84-86. 57 Hereby accepted. 58 See 83 and hereby accepted. 59 See 84-86. 60-62 Hereby accepted. 63 See 84-86. 64 32. 65 74. 66 75. 67 76. 68 See 70-71 and hereby accepted. 69 Not supported by the weight of the evidence. See 77. 70 First sentence: hereby accepted. Second sentence: not supported by the weight of the evidence. Third sentence: hereby accepted as to the scores given REI; the rest of the third sentence is not supported by the weight of the evidence. 71 Not relevant. 72 See 80-81. The computation of maintenance cost ignores the apparent discount which is given, depending on the length of the maintenance period purchased. For example, if a year's maintenance is purchased, the costs is less than the monthly rate times. 73 Not relevant. See 60-63. 74 58. 75 Not relevant. See 31-37 and 60-63. 76 Not supported by the weight of the evidence. 77-79 and 81 Although these proposed findings of fact include correct quotations, other evidence was more persuasive. 80 Hereby accepted. 82 Not supported by the weight of the evidence. See 68. 83 Not supported by the weight of the evidence. See 65 and 68. 84 See 67. 85 67. 86 See 67. 87-88 Not supported by the weight of the evidence. See 68. Not relevant. See 68. 92 52. 93 Not supported by the weight of the evidence. See 31-37. REI's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 6. 2 7. 3 8. 4 9. 5 10. 6 11 and 13. 7 14. 8 15. 9 There was no proposed finding of fact 9. 10 18. 11 19-20. 12 20 and 26. 13 22 and hereby accepted. 14 22. 15 22 and hereby accepted. 16 29. 17 21. 18 26. 19-20 28. 21 24-25. 22 38. 23 41. 24 Hereby accepted. 25 42. 26-30 48. 31-32 48-49. 33 43. 34 40. 35 50-51. 36 44. 37 43. 38 45. 39 46. 40 39. 41 Hereby accepted. 42 59. 43 Hereby accepted. 44 See 61-63. 45 Hereby accepted. 46 See 37, 70 and 78. 47 77. Not relevant. Hereby accepted. 50-51 64. 52 59 and 65. 53 33 and 65. The last sentence is not supported by the weight of the evidence--there was some evidence presented. 54 67. 55-59 See 68. 60 See 83-86. 61 87. 62 Hereby accepted. 63 81. COPIES FURNISHED: James W. Linn, Esquire Rosa H. Carson, Esquire 1711-D Mahan Drive Tallahassee, Florida 32308 William E. Williams, Esquire Rex D. Ware, Esquire Post Office Box 1794 Tallahassee, Florida 32302 Gene T. Sellers Assistant General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Vicki Weber, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 J. Thomas Herndon Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issues are whether Respondent was substantially justified in issuing an initial Stop Work Order and Order of Penalty Assessment against Petitioner for failing to comply with a Business Records Request, followed by an Amended Stop-Work Order and an Amended Order of Penalty Assessment to Petitioner for alleged noncompliance with workers’ compensation coverage requirements, and if so, is an award of attorneys’ fees and costs appropriate.
Findings Of Fact Respondent is the state agency charged with enforcing the requirements of Section 440.107, Florida Statutes, requiring that employers in Florida secure the payment of workers’ compensation insurance coverage for their employees. Petitioner is a Florida corporation that conducts business in Florida, with headquarters in Pensacola, Florida. Petitioner’s business involves the transportation of vehicles, utilizing a fleet of approximately 61 tractor-trailers and accompanying auto transport trailers. Michelle Newcomer is a compliance investigator for Respondent. Her duties focus on conducting inspections/investigations of Florida businesses to ensure compliance with Florida’s workers’ compensation coverage requirements. She also issues Stop Work Orders (SWOs) and Orders of Penalty Assessment (OPAs) when Respondent believes a business is non-compliant with Florida’s workers’ compensation law. Ms. Newcomer and her supervisors are familiar with the definition of "independent contractor" set forth in Sections 440.02(15)(d)1a and 440.02(15)(d)1b, Florida Statutes. However, they never tested Petitioner’s claim that its truck drivers were independent contractors and not employees against the criteria in that definition. On March 16, 2009, Ms. Newcomer received information from an anonymous source that Petitioner was not in compliance with the workers’ compensation laws in Florida. The anonymous source asserted that Petitioner’s drivers were being misclassified as independent contractors. Ms. Newcomer performed a search of Respondent’s database. She learned that Tracie Hedges and George Hedges, as corporate officers, were exempt from having workers’ compensation insurance. She found that Petitioner had no workers’ compensation coverage for any employees. On March 18, 2009, Ms. Newcomer visited Petitioner’s office. Upon arrival, she met Ms. Hedges. During the meeting, Ms. Newcomer inquired about the company, its operations, and its truck drivers. Ms. Hedges told Ms. Newcomer that Petitioner had about 50 to 60 truck drivers who were independent contractors. Seeing only one other employee, Ms. Newcomer left and terminated her investigation. On April 8, 2009, Ms. Newcomer received a referral from Respondent’s Employee Assistance Office. The referral indicated that one of Petitioner’s former drivers, Mike Borders, had suffered an injury while working for Petitioner, but was not receiving workers’ compensation benefits. The referral included a copy of one of Mr. Borders’ pay stubs. Upon reviewing Mr. Borders’ pay stub, Ms. Newcomer noticed that federal income tax withholding was deducted along with various deductions for Social Security and Medicare. The federal payroll deductions were identical to those any employer would deduct from an employee’s wages. Ms. Newcomer performed another search of Respondent’s database, finding that Petitioner had workers’ compensation insurance through Allstates Employer Services, effective March 17, 2009. Ms. Newcomer then contacted Allstates Employer Services and requested a copy of Petitioner’s employee roster. When she received the roster, Mr. Borders’ name was not on the roster. Ms. Newcomer next interviewed Mr. Borders, inquiring about Mr. Borders’ relationship with Petitioner. She wanted to know the following: (a) whether he drove Petitioner’s vehicle; (b) whether he signed any employment contracts; and (b) whether he considered himself Petitioner’s employee. Mr. Borders responded as follows: (a) he considered himself an employee of Petitioner; (b) he had signed an employment application; (c) he drove Petitioner’s truck; and (d) he took orders from Petitioner as to when and where to pick up the cars that needed to be transported. After speaking with Mr. Borders, Ms. Newcomer conducted further review via various state databases. She researched the database maintained by the Florida Department of State, Division of Corporations, to determine the relationship of Petitioner to Transport TK 131, LLC, another company listed on Mr. Borders’ pay stub. This search revealed 21 limited- liability companies using the Transport TK name. Ms. Newcomer learned that Transport TK 131’s managing member was Gary Hedge. Ms. Newcomer believed that Mr. Hedge also was a principal of Petitioner. Ms. Newcomer also reviewed the database maintained by the Florida Department of Revenue to determine who was paying the unemployment compensation tax for Petitioner’s drivers. She learned that Transport TK 131, LLC, listed two to three employees for purposes of unemployment withholdings. The same was true for all of the other Transport TK companies. Ms. Newcomer believed her investigation presented numerous inconsistencies with statements made by Ms. Hedge. Ms. Newcomer presented her findings to her supervisors. They gave her approval to investigate Petitioner. Ms. Newcomer prepared a Business Records Request Form 1 (BRR#1) for Petitioner and Transport TK 131, LLC. Both BRRs requested the companies to provide payroll information for employees and any forms of workers’ compensation coverage for its employees for the period January 21, 2009, through April 21, 2009. The BRRs also made the following request: Record Category #12--For each independent contractor who performs any service with regard to the completion of a contractual obligation of the employer listed above, at any time during the period specified above: all contracts for work, licenses, invoices, ledgers, payments made pursuant to that contract, and any other documents that support the status of an independent contractor under section 440.02(15)(d), F.S. The request for records did not give the companies the option of creating and providing affidavits or other documents to support the status of independent contractors if no written contracts for work existed. The BRRs were sent to Petitioner and Transport TK 131, LLC, by certified mail on April 22, 2009. Petitioner failed to provide all of the requested records within the required five-day time period. Accordingly, Respondent issued a SWO and an OPA to Petitioner. Ms. Newcomer posted the SWO and OPA at the worksite on May 5, 2009. While Ms. Newcomer was at Petitioner’s headquarters, Ms. Hedges provided her with some records, including Petitioner’s QuickBooks registry, showing all checks written for a three-month period. Ms. Hedges also answered Ms. Newcomer’s questions about the records, including questions about DTS, LLC, a company described by Ms. Hedges as a payroll account. Ms. Hedges explained that before August 2008, Petitioner paid DTS, LLC, for work performed by “employees” of the Transport TK companies. DTS, LLC, would then pay the truck drivers. However, when DTS, LLC, ran out of checks in August 2008, Petitioner began paying the Transport TK employees directly. The documentation and information provided by Ms. Hedges, resulted in the SWO being revoked for Transport TK 131, LLC. The revocation was based on a showing that Transport TK 131, LLC, and other Transport TK companies did not have bank accounts. The SWO against Petitioner, for failing to produce sufficient records, remained in place, pending further review. Ms. Newcomer continued to have discussions with Ms. Hedges relative to Petitioner’s business. Ms. Newcomer discussed the case again with one of her supervisors. She explained that Petitioner was paying individuals that were reported as employees of the Transport TK companies. She also stated that Petitioner pays its corporate officers, Bradley Hedges, Gregory Hedges and Teri Forret, who did not have workers’ compensation exemptions and were not covered by Allstates Employer Services workers’ compensation coverage. Ms. Newcomer and her supervisor decided to amend the SWO to add the charge of failure to provide workers’ compensation coverage for employees. On May 6, 2009, Respondent sent the SWO, the Amended Stop Work Order (ASWO,) and a Business Records Request Form 2 (BBR#2) to Petitioner by certified mail. Petitioner received the documents the next day. Ms. Newcomer had a meeting with Ms. Hedges on May 8, 2009. During the meeting, Ms. Hedges explained that DTS, LLC, is just a bank account, used to pay the employees of the Transport TK companies. Ms. Hedges also stated that Petitioner has full control of its customer contracts and directs the drivers where to go for work. On May 11, 2009, Ms. Newcomer received Petitioner’s Quickbook report for the period of the BBR#2 records request. On May 13, 2009, Ms. Newcomer staffed the case with Respondent’s legal counsel. On May 14, 2009, Ms. Newcomer received some contracts between Petitioner and truck drivers who owned and operated their own trucks. Respondent calculated Petitioner’s penalty using the Quickbooks report, in conjunction with W-2 documents provided for tax years 2007 and 2008. As of May 18, 2009, Petitioner’s penalty was $1,496,680.40. Ms. Newcomer requested and received approval to issue an Amended Order of Penalty Assessment (AOPA) for that amount. The AOPA was served on Petitioner by hand delivery on May 19, 2009. Ms. Newcomer did not include Petitioner’s office staff/dispatchers, including Ms. Hedges, in calculating Petitioner’s penalty. Ms. Newcomer was able to confirm that those individuals had workers’ compensation coverage through the employee leasing company. Ms. Newcomer did not include the owner/operator truck drivers in calculating Petitioner’s penalty. Ms. Newcomer had copies of contracts indicating that they were independent contractors. Ms. Newcomer did include the 50 to 60 truck drivers who drove Petitioner’s trucks in calculating the penalty. Ms. Newcomer knew that Petitioner was paying those individuals by check and that their pay-stubs showed various deductions, including withholdings for federal income taxes, Social Security, Medicare, and even deduction options for various forms of Individual Retirement Accounts, both standard and “Roth” versions. For some of the drivers, Petitioner deducted child support payments. If Ms. Newcomer had asked more questions or talked to more drivers, she would have learned that Petitioner made the deductions from the checks of drivers who drove Petitioner’s trucks at their request and in exchange for a smaller commission. Petitioner did not make the deductions as an employer. Ms. Newcomer also learned that all individuals driving Petitioner’s trucks signed employment applications. Apparently, Ms. Newcomer did not believe Ms. Hedges when she explained that the employment applications were used as forms to comply with the Federal Motor Vehicle Carrier Safety Act for drivers of trucks with Petitioner’s name. Ms. Newcomer never attempted to find out whether the drivers of Petitioner’s trucks were independent contractors pursuant to oral contracts. She did not ask Ms. Hedges questions that track the definition of “independent contractor” status in Sections 440.02(15)(d)1a and 440.02(15)(d)1b, Florida Statutes. In other words, Ms. Newcomer did not try to ascertain whether and/or to what extent Petitioner or the truck drivers controlled or directed the manner in which the work was done. Ms. Hedges told Ms. Newcomer that Petitioner’s corporate officers had filed for workers’ compensation exempt status by delivering exemption application forms to one of Respondent’s offices in 2005. Ms. Hedges did not have a receipt showing delivery of the forms. Ms. Newcomer could not find the names of two of these officers in the state’s database of corporate officers electing exempt status. Therefore, Ms. Newcomer included the two corporate officers in the penalty calculation. Apparently, Ms. Newcomer never considered that Ms. Hedges was telling the truth about the exemption forms and that, pursuant to statute, the exemptions became effective 30 days after Ms. Hedges delivered them to Respondent even though Respondent never processed them. Ms. Newcomer also did not go back to Mr. Borders to question him about his claim of being Petitioner’s employee as opposed to an independent contractor, using the definition of independent contractor set forth in Sections 440.02(15)(d)1a and 440.02(15)(d)1b, Florida Statutes. Additionally, Ms. Newcomer did not attempt to interview any other individuals that drove Petitioner’s vehicles to determine whether they considered themselves employees or independent contractors. On or about June 5, 2009, Petitioner requested an administrative hearing to challenge the ASWO and AOPA. The hearing was held on November 3, 2009. On January 29, 2010, Administrative Law Judge P. Michael Ruff issued a Recommended Order, finding that Petitioner was compliant with Florida’s workers’ compensation coverage and recommending that a final order be entered dismissing the ASWO and AOPA. On April 28, 2010, Respondent entered a Final Order adopting Judge Ruff’s legal and factual findings. The parties stipulate as follows: (a) Petitioner is the prevailing party in the underlying case; (b) Petitioner was a small business at the time the ASWO and AOPA were served; and (c) The reasonableness of the amount of attorney’s fees and costs claimed by Petitioner, namely $50,000, is not in dispute.
The Issue The issue is whether General Electric Company (GE) engaged in an unlawful employment practice by discriminating against Petitioner, Shahla Evans (Evans), on account of sex or by retaliating against her for filing a complaint of sex discrimination.
Findings Of Fact At all times relevant to this proceeding, Shahla Evans was employed at GE's Simulation & Control Systems department in Daytona Beach, Florida. The Simulation & Control Systems department (SCSD) is part of GE's aerospace business group. Employees at SCSD are primarily engaged in the design, development and assembly of computer generated visual simulation systems and training programs and of automated ship control systems. GE and SCSD are employers within the definition relevant to this case. Evans received her master's degree in computer science from the University of Utah in 1974 and another master's degree in electrical engineering in Iran in 1970. After moving to Florida from California, Evans was hired by GE at a salary level 10 and began work at SCSD on August 16, 1982. In her previous job she had excellent reviews and had in excess of ten years of experience in engineering and two years as an instructor and teaching assistant prior to coming on board at the GE's Daytona Beach facility. Evans' technical abilities and intellect rendered her an extremely talented engineer. Although Evans was initially offered a position at SCSD as a senior engineering programmer analyst, she did not accept the job because she was afraid it was too regimental and required too much programming. Prior to informing GE of her decision, however, she was contacted and interviewed by Dr. Richard Economy, SCSD's manager of advanced engineering. Unaware of the outstanding offer until their interview, Dr. Economy offered Evans a position in research & development, which she accepted. Dr. Economy extended the job offer based on Evans' resume and his belief that she was talented and could be a contributor to the company. The Simulation & Control Systems department is divided into sections, subsections and units. During the relevant time frame, Dr. Economy was the manager of advanced engineering, a subsection of the engineering section. The advanced engineering subsection consisted of four units. Until mid-1986, Evans received good to excellent evaluations, but notations consistently showed a need for improvement in the areas of negotiating, particularly in selling a product, taking a more diplomatic approach to leadership, and integrating her work with related projects. In 1985 she was promoted to level 11 and rated as progressing upwardly in her subsection. Dr. Economy recommended Evans for a promotion to level 12 in early 1986, however that recommendation was never approved. Until mid-1986, Evans' work involved Research and Development in Data Base Generations Systems (DBGS). At times the thrust of the DBGS Research and Development was to unify the Data Base Generation Systems. At that point the Research and Development Project was called Unified Special Modeling Systems (USMS). The thrust of Evan's work always involved Research and Development on Data Base Systems. She was a leader of the Data Base Research and Development effort under Dr. Economy. In May, 1986, Dr. Kenneth Donovan became Evans'unit manager. At the time, Evans and Barry Fishman, a white male, were co-managers of the database research & development project. During the latter part of 1986, Dr. Donovan took over the project manager role for the database area and another project in the advanced engineering architectural area. Although Evans and Fishman were still considered the leaders of the database project, Dr. Donovan became the overall manager of the project and remained the functional manager of the unit to which Evans was assigned. During the 1986-87 time frame, the business needs at SCSD changed from an internal focus on projects and research to applying research to the products SCSD was producing. These changes required significant communication between Evans and Fishman and other engineers outside the database project. In June of 1987, Evans' performance was evaluated by Dr. Donovan. In this performance evaluation, Dr. Donovan addressed certain areas of Evans' performance that needed improvement in order for her and the database project to succeed. The areas noted by Dr. Donovan were Evans' ability to communicate and negotiate with people outside her project in order for them to understand the project's needs and requirements. Sometime in the latter part of 1987, Dr. Donovan proposed that Evans assume the project manager role of the database area in 1988. This proposal was made in conjunction with a career planning discussion between Dr. Donovan and Evans. In the fourth quarter of 1987, Dr. Donovan sought the assistance of Evans and Fishman in drafting the 1988 plan for the database research & development effort. As a result of meetings and discussions between Dr. Donovan, Evans and Fishman, it was apparent to Dr. Donovan that changes he had proposed for the project in 1988 were viewed by Evans and Fishman as unrealistic. Based on Dr. Donovan's perception that Evans had not made sufficient progress in the development needs he identified in the 1987 performance evaluation in terms of communication skills, willingness to negotiate, and a willingness to determine the needs of other projects, and because of Evans' handling of the interchanges with other project leaders, he did not feel she was suited for the project manager role at that time. Several memoranda were generated regarding the work necessary to finalize the 1988 plan. These memoranda, which are Petitioner's exhibits 7, 8 and 10, bear the names of Evans and Fishman and were distributed to Dr. Donovan, Dr. Economy and others. Although Fishman, and not Evans, drafted these memoranda, Evans agreed with their content and allowed them to be distributed with her name on them. Dr. Donovan responded to those memos from Evans and Fishman on February 9, 1988. On March 14, 1988, Dr. Donovan wrote Evans a memo entitled "Unsatisfactory Performance." Prior to this memo, Dr. Donovan had had several discussions with Evans regarding what Dr. Donovan felt were areas Evans needed to improve in order to build the support necessary to get the database project incorporated into GE's products. Dr. Donovan cited several events that concerned him, some of which were the three memoranda from Evans and Fishman. The March 14, 1988, memo addressed certain actions by Evans which were not constructive to the database project and were even derogatory towards the professionalism and views of other engineers. The memo indicated that Evans' behavior must change and that Dr. Donovan desired to meet with her as soon as possible to discuss the situation. Dr. Economy concurred with this memorandum. Dr. Donovan did not send a similar memo to Fishman because he was not Fishman's unit or functional manager. During that time, Fishman was in a unit managed by Randy Abidin. As Fishman's unit manager, Abidin believed the best way to address the derogatory comments and negative tone of the memos was in a direct meeting with Fishman. Although Fishman does not have a clear recollection of the memos being addressed by Abidin, he recalled a meeting with Abidin during this time frame where Abidin referred to problems between Evans and Dr. Donovan. Abidin told Fishman in a face to face meeting that the memos were unprofessional and to cease writing them. Dr. Donovan never took any action with respect to the USMS project that affected Evans only. Any changes in the direction or breadth of the project affected Barry Fishman just as much as Evans. On March 22, 1988, Evans sent a letter to the manager of SCSD's personnel department, Robert Tucker. In that letter, Evans complained about Dr. Donovan's March 14, 1988 memo. Nowhere in that letter did she complain that she believed she was a victim of gender discrimination. Mr. Tucker referred Evans' March 22, 1988, letter to Wayne Norfleet for a reply. Mr. Norfleet has been in employee relations with GE for 25 years. Through Norfleet's assistance, a meeting between Evans and Dr. Donovan was arranged in order to allow both of them the opportunity to air their grievances, concerns and criticisms of each other in a face to face session. Dr. Donovan documented the discussion process with a note and letter to Evans on May 16, 1988. Dr. Donovan was willing to continue the process; however, at Evans' request, she was transferred to a different unit in advanced engineering headed by Stanley Urbanek. This transfer took place in the summer of 1988. In June of 1988, Dr. Donovan became a consultant with the company and no longer had any supervisory responsibilities over Evans. After her transfer to Mr. Urbanek's unit in the summer of 1988, Evans continued to do the same work as before. GE has a policy that allows exempt employees such as Evans to self- nominate for open positions in the department. During 1988 and the early part of 1989, Evans applied for several posted positions. Ms. Evans was not selected for any posted position for which she applied. The persons selected for the positions were all males. The only position for which she applied that was the subject of much evidence was the position of Advanced Course Supervisor. While Evans was equally qualified on paper, Don Rollins was hired for that position because of his outgoing personality, his history of thoroughness and technical achievement, his performance as a student in the advanced courses, and his communication skills. Evans did not have a good interview for the position. No evidence was presented to show any discriminatory motive in GE's personnel selections for these positions. Evans remained in Urbanek's unit and continued to work on the USMS project until October, 1988. After Dr. Donovan's transfer, Dr. Economy selected Bob Ferguson to be project manager in the database area. Ferguson was selected for the project manager role because the USMS activity Evans had been working on was perceived by management not to be broad enough to cover all of GE's image generator business activities. Because Ferguson had image generator experience, he was selected. Because of Ferguson's concern about Evans' focus in research and development, he did not select her to work on the database project. Although Fishman was approached and asked to work part time on the project, he refused this offer. Ms. Evans claims that she was advised on two occasions by her managers to leave GE, once by Dr. Economy and then again by Mr. Urbanek. The managers who are alleged to have told Evans this deny any such statement. They both testified that leaving the company was mentioned in passing with Evans as a career option that any employee could choose if they were dissatisfied with the circumstances of their employment. Evans was openly expressing such dissatisfaction. After Dr. Donovan left the unit manager position in 1988, Dr. Economy acted as unit manager until March of 1989 when he selected Michael Nelson to fill the position. On at least two occasions, Nelson attempted to assign tasks to Evans. On both occasions, Evans told Nelson that she did not want to do the tasks. She told Nelson she was more qualified for other kinds of jobs and that she should be doing managerial type of work. She believed the tasks to be programming and she did not want to do programming. In April, 1989, Evans filed a complaint with the Florida Commission on Human Relations. In the complaint, Evans charged that projects were taken away from her and she was not being given any work, all because she was a female. From January, 1988, through September of 1989, Evans claims that she spent most of her time doing technical and professional studies and received no assignments from any GE managers. GE's aerospace business began a downturn in 1987, and by 1989, SCSD had more employees in advanced engineering than its business could accommodate. In the spring of 1989, GE identified several employees to be laid off. Other employees were transferred to different areas of the department. Evans was considered for layoff in 1989, but considering its affirmative action responsibilities, GE chose not to place Evans on lack of work status. In August, 1989, Dr. Economy told Evans that she should go see Tim Connolly because he had a job for her. Mr. Connolly was the manager of systems engineering, which is another subsection of the engineering section at SCSD. Dr. Economy encouraged Evans to take this job. Because of reductions in his subsection, Dr. Economy did not have a position for her in advanced engineering. Mr. Connolly's subsection was in charge of upgrading the software system from a microcomputer environment to a network environment in order to incorporate the database system into the product for delivery to customers by the end of the year. From discussions with Dr. Economy, Connolly was aware that there had been a relationship problem between Dr. Donovan and Evans. Connolly was not aware until told by Evans, however, that she had filed a discrimination complaint against the company. Ms. Evans claims that she made it clear to Mr. Connolly prior to accepting a position in his subsection that she would not do programming work. Prior to officially accepting a position in Connolly's subsection, Evans spoke with Mr. Urbanek, who was to be her unit manager. Although Evans claims to have informed Urbanek that she would not do any programming, Urbanek recalls that Evans said she did not want to be a programmer. Mr. Urbanek and Evans discussed the fact that essentially all of the positions in his unit involved some aspect of software engineering or programming. A programmer is an employee whose entire job consists of operating a keypunch machine. A programmer takes a design given to them by someone else and puts it into programming language. On the other hand, a software engineer is someone who designs and selects requirements for other aspects of software engineering. Part of a software engineer's tasks includes programming. Evans officially joined Connolly's subsection on September 11, 1989. Prior to her joining Connolly's subsection, Urbanek was transferred. Accordingly, Evans reported directly to Connolly after she joined the advanced database engineering unit. Upon joining the unit, Connolly gave Evans tasks to be accomplished. Ms. Evans' initial reactions was that she did not want to perform many of the tasks because they involved programming. According to Connolly, the tasks were high level systems tasks that required implementation and testing of the computer systems in order to put the systems in the product for sale to the customer. Ms. Evans felt that the tasks assigned to her constituted a demotion. She felt like she was not qualified to do the tasks and she did not understand the system. While she was capable of doing tasks involving some programming, Evans simply believed that she should not have to do any programming. Ms. Evans told Mr. Connolly that she would not and could not do the tasks he assigned her. Upon learning that Evans needed more time to understand how the system worked, Connolly agreed to give her more time, and in fact, gave her more time to understand tasks than any person that had come into his area from another area. Because of Evans' continued refusal to do the work assigned and because in several of the conversations between her and Connolly she made outbursts about the assignments and GE in general, Connolly went to see Norfleet in employee relations. Norfleet recommended that a work package be put together that involved tasks indisputably within Ms. Evans' expertise and skill level. It was decided that if Evans refused to accept the assignment, it would be explained to her that he actions left Connolly no choice but to recommend that she be terminated. After Connolly's meeting with Norfleet, Connolly assigned Evans a detailed design, implementation, validation and documentation task involving DMA manuscript files. Ms. Evans refused to do this task. These tasks were within her expertise, training and experience. Mr. Connolly told Evans that she should go home and consider the consequences of her refusal to perform the work assigned to her. When she returned the next day, she again refused to perform any task involving detailed design, implementation, validation or documentation, because she incorrectly classified the tasks as being programming. After seeking and receiving the approval of his immediate manager, Connolly notified Evans that her employment was terminated on October 6, 1989.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a Final Order determining that Shahla Evans has failed to establish that GE discriminated against her on the basis of her sex in the decisions affecting her employment. DONE and ENTERED this 23rd day of October, 1992, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of October, 1992. APPENDIX TO THE RECOMMENDED ORDER IN CASE NOS. 91-6396 AND 91-6879 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Shahla Evans 1. Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 3(1); 4&5(2); 6&7(3); 8(4); 9(5); 11(5); 12(2); 19&20(7); 24(8); 30(9); 31(10); 107(42); and 127(50). 2. Proposed findings of fact 1, 2, 13-17, 21, 23, 25, 34-36, 40- 50, 52-54, 57-68, 72, 75-89, 95, 98-104, 106, 108, 113, 115- 118, 122-126, 128-131, 136, 137, 139, 140, 142-149, 152-155, 157-160, 164, and 165 are subordinate to the facts actually found in this Recommended Order. 3. Proposed findings of fact 10, 18, 22, 27, 28, 32, 33, 37-39, 51, 55, 56, 69-71, 73, 74, 90-94, 96-both 97s, 105, 111, 112, 114, 119-121, 132-135, 138, 141, 151, and 156 are unsupported by the credible competent and substantial evidence. Proposed findings of fact 26, 29, 109, 110, 150, and 162 are irrelevant. Proposed findings of fact 161, 163, and 166-168 are unnecessary. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, General Electric Company 1. Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(1); 2(2); 3-5(4-6); 6-10(11-14); 11-15(15-18); 16-25(19-27); 26-30(28-31); 31-34(32-34); 35- 49(35-47); and 50-63(48-61). COPIES FURNISHED: Rick Kolodinsky Attorney at Law 1055 N. Dixie Highway, Suite 1 New Smyrna Beach, Florida 32169 Francis M. McDonald, Jr. Attorney at Law Olympia Place, Suite 1800 800 North Magnolia Avenue Post Office Box 2513 Orlando, Florida 32802-2513 Dana Baird, General Counsel Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32303-4113 Margaret Jones, Clerk Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32303-4113
Findings Of Fact The Petitioner and a business associate formed a partnership for the purpose of publishing an administrative reporter. In pursuit of that purpose the Petitioner's partner, in October, 1978, requested from the Division of Personnel, Department of Administration, (hereinafter referred to as "Respondent") copies of several Career Service Commission orders. On October 16, 1978, Petitioner's partner received a packet from Respondent containing the requested orders. The orders totaled 183 pages for which Petitioner and his partner were charged fifty cents a page. Petitioner paid Respondent $91.50 for the copies. The charge of fifty cents a page was assessed by Respondent pursuant to its Rule 22-1.115(1), Florida Administrative Code. It was undisputed at the final hearing that the actual cost of the materials, rental on the copying machine, and the cost to Respondent of its service agreement on the copying machine was less than two cents per page copied. One of Respondent's employees expended time in pulling the requested orders from the files and copying the orders pursuant to the request. The employee did not record nor clearly remember how much time she spent responding to the request for copies. On the evidence presented it is reasonable to conclude that the employee expended one hour of time at the rate of $6.95 per hour, and two hours of time at the rate of $4.63 per hour. Petitioner paid the $91.50 charqe by warrant. Respondent's fiscal officer testified that he did not have at head the cost to Respondent of processing a warrant but he roughtly estimated that cost to be $5.00. The cost items set forth in paragraphs 3, 4, and 5 above are the only elements of the cost of copying for which Petitioner or Respondent could establish a firm dollar value. These elements total $24.87 for the 183 copies. Respondent charged Petitioner $91.50 for the 183 copies. The Respondent presented evidence showing that there are many indirect, "incalculable" costs attributable to the production of copies of public documents pursuant to a request from a member of the public. As examples of these "incalculable" costs Respondent referred to state auditing procedures; budgeting procedures; administrative hearings, such as the instant proceeding; bookkeeping required by the Comptroller's office and Treasurer's office; the cost of obtaining legal opinions; the cost of space for the copying machine; and the cost of electricity for the copying machine. Respondent's witnesses testified that these costs are "incalculable" and therefore have to be estimated. No evidence was presented which would establish that but for the necessity of providing copies to the public these "incalculable" costs would not be incurred. On the contrary, the evidence indicated that these "incalculable" costs would, in large part, be incurred by the agency in the pursuit of their responsibilities without regard to providing the public copies of public records. Respondent's evidence established that, with regard to the challenged rule, these "incalculable" costs were estimated by the Secretary of the Department of Administration and several of his division directors, including the State Budget Director and the State Personnel Director. No evidence was presented to show that these persons had the benefit of any formal or informal estimate or study of these "incalculable" costs. No evidence was presented to establish that these persons made an attempt, beyond their discussion of the matter at a meeting, to accurately and finitely estimate these "incalculable" costs. Other than the fact that these persons occupied senior management positions in State government, no evidence was presented which would establish their expertise or experience in estimating the "incalculable" costs appurtenant to copying public records pursuant to requests from members of the public. No evidence was presented which would establish that the price of fifty cents for the first copy of each page and twenty cents for each additional copy of each page, set forth in Rule 22-1.115(1), Florida Administrative Code, is based on any accounting study or other detailed inquiry into the cost of providing, to the public, copies of public records. Those elements of that price for which known dollar amounts have been established include the costs of the machine, which total less than two cents per copy; the cost of labor involved to produce the copies, which in this case has been established to be 8.86 cents per copy; and the cost of processing the payment warrant, which in this case has been established as 2.7 cents per copy. These identifiable costs with regard to the instant case total approximately 13.6 cents per copy. Respondent argues that the other 36.4 cents charged per copy are accounted for by the above-referenced "incalculable" costs which have been estimated without benefit of any studies as heretofore mentioned.
The Issue Whether Respondent violated statutory and rule provisions relating to record-keeping requirements for licensed check cashers, and if so, what penalty should be imposed.
Findings Of Fact Petitioner, Office of Financial Regulation (the Office or Petitioner), is the state agency charged with administering and enforcing chapter 560, Florida Statutes, related to licensing of Money Services Businesses, a term that includes check-cashing businesses. Respondent, Capital City Check Cashing (Capital City or Respondent), has been a licensed check casher, pursuant to chapter 560, Part III, Florida Statutes, since March 2007. Capital City is located at 458 West Tennessee Street in Tallahassee, Florida. John O. Williams is the owner of Capital City and appeared as counsel for Capital City throughout these proceedings. Kane Fuhrman is the manager and sole employee of Capital City and directly provides check-cashing services to Capital City’s customers. Capital City Examination William Morin is employed by the Office as a Financial Examiner/Analyst Supervisor. On October 23 and 24, 2012, Mr. Morin conducted an examination of Capital City’s records for the period of January 1, 2010 through October 23, 2012. The examination was conducted on the premises of Capital City. Mr. Morin was accompanied by Matt Manderfield, a field analyst in training. Mr. Morin conducted the examination using an examination module designed by the Office as both a checklist of required records and an electronic notebook for recording the examiners notes. Mr. Fuhrman was present for the examination. Mr. Fuhrman provided voluminous records to Mr. Morin, which Mr. Morin scanned into his computer while on site at Capital City. Prior to leaving the premises on October 24, 2012, Mr. Morin explained to Mr. Fuhrman that some statutorily- required documents were missing and presented Mr. Fuhrman with a written records request. The written request indicates that the missing documents were needed by October 29, 2012. Through the records request, the Office sought the following documents for the examination period: (1) complete customer files for Capital City clients JNJ Service, LLC; Swift Delivery; Johnson Maintenance Service; and Charlie’s Electric Service; (2) copies of payment instruments cashed, including the back of the payment instruments showing endorsement; (3) daily electronic check-cashing logs; and (4) customer thumbprints on checks cashed. Customer Files Florida Administrative Code Rule 69V-560.704(4)(d) (2009),1/ reads as follows: (4) In addition to the records required in subsections (1) and (2), for payment instruments exceeding $1,000.00, the check casher shall: * * * (d) Create and maintain a customer file for each entity listed as the payee on corporate payment instruments and third party payment instruments accepted by the licensee. Each customer file must include, at a minimum, the following information: Documentation from the Secretary of State verifying registration as a corporation or fictitious entity showing the listed officers and FEID registration number. If a sole proprietor uses a fictitious name or is a natural person, then the customer file shall include the social security number of the business owner and documentation of the fictitious name filing with the Secretary of State. Articles of incorporation or other such documentation which establishes a legal entity in whatever form authorized by law. For purposes of this rule a sole proprietor operating under a fictitious name registered with the Secretary of State shall not have to present such documentation. Documentation of the occupational license from the county where the entity is located. A copy of the search results screen page from Compliance Proof of Coverage Query Page webpage from the Florida Department of Financial Services – Division of Workers’ Compensation website (http://www.fldfs.com/WCAPPS/Compliance_POC/ wPages/query.asp) Documentation of individuals authorized to negotiate payment instruments on the corporation or fictitious entity’s behalf including corporate resolutions or powers of attorney. Payment instruments for insurance claims where there are multiple payees shall be exempt from this provision provided that the maker of the check is an insurance company and the licensee has obtained and retained documentation as to the identity of the natural person listed as payee on such payment instrument. Capital City requires its customers to complete and sign a “Check Cashing Agreement” (Agreement). The second page of the Agreement is a form soliciting customer information, including the name, address, phone numbers, address, social security number, and driver’s license number of the conductor (the person cashing the check on a corporate check), as well as the name of the person’s employer, their business address and phone number. The form includes fields for information about the check being cashed, such as the check number and amount, as well as the payor and payee names. Customers are required to sign and date the Agreement, as well as place their thumbprint in a designated box on the face of the Agreement. By signing the Agreement, the customer agrees to release their personal and business information to a third-party verifier, to pay a fee for said verification, and to pay Capital City three times the face value of any instrument cashed which is returned for insufficient funds. During the on-site examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, JNJ Service, LLC: a copy of an executed Agreement, copies of the photographic identification and social security card of the conductor, a copy of the face of a check for $4,471.68 cashed, a copy of the receipt for the check, and a printout from the Secretary of State’s Sunbiz website for corporate status of JNJ Service, LLC. The printout shows the FEIN number for JNJ Service, LLC, and reports corporate status as “Inactive” with last event shown “Administrative Dissolution for Annual Report” on September 23, 2011. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Swift Delivery, LLC: copies of the face of three checks cashed in amounts exceeding $1,000.00 and three accompanying executed Agreements. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Johnson’s Maintenance Service: copies of two checks cashed in amounts exceeding $1,000.00, accompanying executed Agreements, and copies of the photo ID and social security card of the conductor. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Charlie’s Electric: a copy of the face of a check cashed for $28,000.00, an executed Agreement, and a receipt for the check cashed. Prior to the examination, Capital City did not routinely keep copies of the corporate information from the Secretary of State’s website as part of the customer files. Prior to the examination, Capital City did not request, or otherwise obtain, the Articles of Incorporation for its corporate clients. Prior to the examination, Capital City did not request copies of its corporate clients’ occupational license. If a corporate client presented its occupational license, Capital City kept a copy. Prior to the examination, Capital City did not request, or otherwise obtain, information regarding its corporate clients’ compliance with workers’ compensation insurance requirements. On October 29, 2012, in response to Mr. Morin’s written records request, Mr. Fuhrman printed from the Secretary of State’s website, the corporate detail page for JNJ Service, LLC, Swift Delivery, LLC, Johnson Maintenance, Inc., and Charlie’s Electric Company, Inc. The information showed that JNJ Service, LLC, was an active corporation having been reinstated on September 10, 2012; Swift Delivery, LLC, had been administratively dissolved on September 23, 2011; Johnson Maintenance, Inc., had been administratively dissolved on September 26, 2008; and Charlie’s Electric Company, LLC, had been administratively dissolved on September 15, 2006. Following the examination, and in response to Mr. Morin’s records request, Mr. Fuhrman obtained articles of incorporation for JNJ Service, LLC, and Johnson Maintenance, Inc.; articles of organization for Swift Delivery, LLC; and a corporate reinstatement application for Charlie’s Electric Company, Inc., filed February 29, 2008. Following the examination, and in response to Mr. Morin’s request for information, Mr. Fuhrman checked the Office of Financial Regulation – Division of Workers’ Compensation website, and queried the name of each of its four corporate customers. Mr. Fuhrman’s queries returned “O records found” for each client. Mr. Fuhrman printed a screen shot of each query return. On November 5, 2012, Mr. Morin returned to Capital City and picked up a package of documents from Mr. Fuhrman, as well as the records request form whereon Mr. Fuhrman had written the types of records which were being provided. There was conflicting testimony regarding whether the documents Mr. Fuhrman obtained in response to the records request were included in the package Mr. Morin obtained from Mr. Furhman on November 5, 2012. The Office maintains that the documents were not furnished. Mr. Fuhrman was unable to testify with certainty that the documents obtained were in the package of documents he gave to Mr. Morin. Whether or not the documents were sent to the Office is a red herring, and the extent of testimony on this issue was largely irrelevant. The issue is whether the documents were maintained by Capital City in its customer files during the examination period, not whether Capital City was able to produce the documents following the examination. Capital City admitted that it did not maintain those documents during the examination period. As such, Capital City did not maintain customer files for JNJ Service, LLC; Swift Delivery, LLC; Johnson Maintenance Service; and Charlie’s Electric Company, Inc., in compliance with rule 69V-560.704(4) during the examination period. Subsequent to the examination, Capital City developed a checklist for compiling customer files on corporate customers who cash checks of $1,000.00 or more. The checklist includes all of the information required by rule 69V-560.704. Check Copies Florida Administrative Code Rule 69V-560.704(2) reads, in pertinent part, as follows: Every check casher shall maintain legible records of all payment instruments cashed. The records shall include the following information with respect to each payment instrument accepted by the registrant: A copy of all payment instruments accepted and endorsed by the licensee to include the face and reverse (front and back) of the payment instrument. Copies shall be made after each payment instrument has been endorsed with the legal name of the licensee. Endorsements on all payment instruments accepted by the check casher shall be made at the time of acceptance. Prior to the examination, Capital City did not keep copies of the backs of checks cashed. Rather, Capital City relied upon its bank to maintain copies of the checks cashed with endorsement. Capital City introduced at final hearing, a binder containing the copies of the backs of all checks cashed, with endorsements, by Capital City during the months of July, September, and October 2012. These records were provided to Respondent from its banking institution after the examination and after the Office filed its original Administrative Complaint. It is unclear whether Capital City, subsequent to the examination, has changed its practice of relying upon its bank to maintain copies of the backs of checks cashed. Mr. Williams testified both that “we decided, after the audit that, to be safe, we’d go ahead and keep the backs of the checks”2/ and “[w]e pay $75 a month so that the bank will produce these for us each month, and we pay extra if we have to produce them on demand during the middle of the month if we have any issues that involves law enforcement. But they are producible.”3/ Capital City’s decision, prior to the examination, not to maintain copies of the backs of checks cashed, was due in part to Mr. Williams’ belief that the governing statute allows a check casher to designate its bank as a third-party maintainer of records. Section 560.310(3), Florida Statutes (2012),4/ reads as follows: A licensee under this part may engage the services of a third party that is not a depository institution for the maintenance and storage of records required by this section if all the requirements of this section are met. Capital City’s bank is a depository institution. Capital City’s decision not to maintain copies of the backs of the checks, prior to the examination, was also due in part to Mr. Williams’ belief that “there is certain information that’s added to the back of checks after they go through the bank”5/ that was more helpful to law enforcement authorities interested in the checks. Capital City offered no testimony to identify what information on the backs of the checks existed at the time the checks were deposited, and what, if any, information was added during bank processing. Mr. Morin prepared a Report of Examination (Report) dated January 22, 2013, summarizing the findings of the October 2012 Capital City records examination. The Report was delivered to Kane Fuhrman, on behalf of Capital City, by certified mail. The Report contains the following with regard to maintenance of copies of the backs of checks cashed: 5. Section 560.1105 F.S./ Section 560.310(1)F.S./Rule 69V-560.704(2)(a), F.A.C. – The licensee failed to maintain copies of the backs of payment instruments cashed: (Exhibit I-XV, XIX) The licensee claims that the bank keeps copies of the backs of payment instruments cashed for them. This is also confirmed on the records request form where the licensee notes that their bank keeps these records. After receipt of the Report, Mr. Williams prepared a letter to the Office with responses to the findings.6/ The Office did not respond in any way to his letter. Mr. Williams testified that he understood the lack of response to mean that the Office accepted his explanation that Capital City’s bank was the designated record-keeper of copies of the backs of checks cashed. Electronic Log Florida Administrative Code Rule 69V-560.704(5) reads as follows: (5)(a) In addition to the records required in subsections (1) and (2) for payment instruments $1,000.00 or more, the check casher shall create and maintain an electronic log of payment instruments accepted which includes, at a minimum, the following information: Transaction date; Payor name; Payee name; Conductor name, if other than the payee; Amount of payment instrument; Amount of currency provided; Type of payment instrument; Personal check; Payroll check; Government check; Corporate check; Third party check; or Other payment instrument; Fee charged for the cashing of the payment instrument; Branch/Location where instrument was accepted; Identification type presented by conductor; and Identification number presented by conductor. Electronic logs shall be maintained in an electronic format that is readily retrievable and capable of being exported to most widely available software applications including Microsoft EXCEL. During the examination, Mr. Fuhrman provided Mr. Morin with copies of Capital City’s daily payment instrument log from August 1, 2012 through August 31, 2012. Each log displays the face value of each check cashed, the net amount of cash provided to the customer, and the fee charged to the customer. The Capital City daily logs provided to Mr. Fuhrman do not include the payee and payor name; the conductor name, if different from the payee; the type of payment instrument; or the identification type or number presented by the conductor. Capital City argues that all the information required to be on the payment instrument log was in the possession of Capital City, thus, it is in substantial compliance with the rule. In fact, Capital City introduced at final hearing a payment instrument log for checks over $1,000.00 accepted in August 2012. The log includes all the information required by the rule. The information used to complete the fields was pulled from Capital City’s customer files, which include the copies of the face of the checks, as well as copies of conductor’s photo identification and social security card. The fact remains that Capital City did not maintain an electronic payment instrument log which complied with rule 69V- 560.704(5), during the examination period. Customer Thumbprint Florida Administrative Code Rule 69V-560.704(4) reads, in pertinent part, as follows: In addition to the records required in subsection (1) and (2), for payment instruments exceeding $1,000.00, the check casher shall: Affix an original thumbprint of the conductor to the original of each payment instrument accepted which is taken at the time of acceptance[.] During the examination period, Capital City obtained customer thumbprints on the customer Agreement, rather than on the surface of the check cashed. Subsequent to the examination, Capital City has begun obtaining customer thumbprints on the surface of the checks cashed. Capital City failed to maintain customer thumbprints as required by rule 69V-560.704(4) during the examination period. Due Process Issues Capital City maintains that the Office conducted the records examination in a manner that violated Capital City’s right to due process of law. First, Capital City complains that the Office was required to conduct an examination of its records within the first six months after licensure, and that the Office’s failure to do so prevented Capital City from a thorough understanding of the applicable record-keeping requirements. Between 2008 and 2012, section 560.109(1) required the Office to examine all licensees within the first six months after licensure. See § 560.109, Florida Statutes (2011). The 2012 Legislature amended section 560.109 to delete the requirement for examination within six months of licensure. See ch. 12-85, § 2, Laws of Fla. The Office conducted the instant examination in October 2012, after the effective date of chapter 12-85, Laws of Florida. Next, Capital City argues that the Office failed to comply with its own examination procedures. Capital City introduced into evidence Petitioner’s publication titled, “Chapter 560 Money Services Businesses, Examiner Manual” (Manual). The Manual is dated “Revised September 2012.”7/ The Manual requires the examiner to conduct an Exit Interview with the licensee’s manager, and lists issues which must be covered, at minimum, with the licensee. Section XIV of the Manual provides, in pertinent part, as follows: XIV. Exit Conference When the Examiner has completed the examination, an exit interview will be held with the manager or his or her designated representative. The exit interview should consist of at least the following: Identification and discussion of any findings noted and corrective action that will be requested. The manager should be allowed the opportunity to refute any finding identified. The Examiner should not engage in a debate over the law. Reiterate that the Examiner is only a fact finder. Advise the licensee that an examination report will be prepared and sent to them or their main office. Notify the licensee that a written response to the examination is not required; however, the licensee should be encouraged to notify the Office of any and all corrective action taken. If they decide to make one, it will be part of the file. Respondent claims Mr. Morin did not provide a meaningful exit interview with Mr. Furhman in which he explained the requirements with which Capital City was not in compliance. The record establishes that Mr. Fuhrman was confused about the record-keeping requirements and what the Office considered to be “customer files.” During the examination on October 23, 2012, Mr. Morin gave a copy of rule 69V-560.704 to Mr. Fuhrman to assist with his understanding. Mr. Morin testified that he spoke with Mr. Fuhrman “in general” about the rule and explained they were the minimum requirements for customer files. Mr. Morin spoke “minimally” with Mr. Fuhrman about the purpose of the Capital City Check-Cashing Agreement relative to the customer file rule. Mr. Morin told Mr. Fuhrman that designating the bank as the record-keeper of copies of the backs of checks cashed did not satisfy the rule requirement. Finally, Mr. Morin “generally” discussed the requirements with Mr. Fuhrman on October 24, 2012, when Mr. Morin left the written records request with Mr. Fuhrman. The Examiner’s Manual further provides, in pertinent part, as follows: XVI. REVIEW OF EXAMINATION TARGET’S RESPONSE Although there is no direct requirement to respond to the Office concerning corrective actions taken or to refute any finding, the licensee may do so. If a licensee does respond, the following should be accomplished: The Examiner who performed the examination should review the response, complete the response evaluation, and make comments as appropriate if directed to do so by the AFM or his or her designee. It is not the Examiner’s responsibility to determine whether the action taken by the licensee was appropriate to correct the situation. If the action is deemed to be inappropriate or insufficient by the AFM or Examiner Supervisor to correct the situation, comments should be made as to what additional action may be needed. * * * d. The completed response evaluation should be attached to the response and delivered to the AFM. * * * f. The Regional Office may either file the response or may, if required, issue a risk based examination follow-up on the information in the response. Respondent maintains the Manual requires the Office to respond in writing to Capital City’s response to the Office’s Report of Examination. Respondent argues that if the Office had responded to his explanation that the bank maintains copies of the checks cashed, he would have provided the copies to the Office. Nothing in Section XVI of the Manual requires the Office to respond to a licensee’s response to the Report of Examination. Finally, Respondent argues that the Office applies a strict compliance, rather than substantial compliance, standard to review of licensee’s records, and fails to collect information relative to mitigating circumstances, which can be applied in determining appropriate penalties for violations. The first argument is strictly a legal argument which is dealt with in the Conclusions of Law. Findings relative to the second argument are contained herein. Andrew Grosmaire, Chief of the Office’s Bureau of Enforcement, calculated the administrative sanctions to be imposed on Respondent for each respective rule and statutory violation. A violation of the customer file rule is a level B offense according to Florida Administrative Code Rule 69V- 560.1000. Level B corresponds with a fine ranging from $3,500.00 to $7,500.00 per violation. Mr. Grosmaire recommended a fine of $7,500.00 because all four customer files, or 100%, were deficient. A violation of the requirement to maintain copies of the backs of checks cashed could have been penalized pursuant to section 560.114(1)(a), failure to comply with any order of the Office, which is a B-level offense. However, Mr. Grosmaire chose instead to charge Respondent under 560.1105, failure to maintain all records for five years, which is an A-level offense with a fine amount ranging from $1,000.00 to $3,500.00. See Fla. Admin. Code R. 69V-560.1000(150). Mr. Grosmaire recommended a fine of $3,500.00 because all of the records reviewed, or 100% of the sample, failed to meet the requirement for copies of backs of checks cashed. A violation of section 560.1105 can subject a licensee to revocation, even for a first offense, pursuant to rule 69V- 560.1000(4), but Mr. Grosmaire did not recommend revocation of Respondent’s license. A violation of the electronic log requirement is also a B-level offense. In this case, Mr. Grosmaire considered that the electronic log produced by Capital City contained four of the 11 fields required, and translated that to 64% compliance. Applying that percentage to the range of fines, Mr. Grosmaire recommended a fine of $6,000. A violation of the requirement to obtain thumbprints on the face of checks cashed is a B-level offense. Mr. Grosmaire recommended a fine amount of $7,500.00 because 100% of the check records reviewed failed to meet the thumbprint requirement. Mr. Grosmaire considered the aggravating and mitigating factors listed in rule 69V-560.1000(148). He determined that two aggravating factors applied: “(f) [w]hether, at the time of the violation, the licensee had developed and implemented reasonable supervisory, operational or technical procedures, or controls to avoid the violation;” and “(i) the length of time over which the licensee engaged in the violations[.]” Mr. Grosmaire determined that (f) applied because three out of four violations were found in 100% of the samples examined. He determined that (i) applied because the violations existed for the entire examination period. Mr. Grosmaire recommended a total fine of $24,500.00. Mr. Grosmaire determined that one mitigating factor applied – “no disciplinary history for licensee.” Mr. Grosmaire applied that factor in determining what term of suspension to impose on Respondent. Mr. Grosmaire recommended the minimum suspension of 33 days for all violations because Respondent had no disciplinary history. Mr. Grosmaire testified that he relied upon the aggravating and mitigating factors “that the examiner has identified, that I’ve seen in the report, or the mitigating circumstances I’ve seen in the report.”8/ Mr. Morin testified that, during his examination, he does not make a determination of whether there are aggravating or mitigating factors.9/
Recommendation Based upon the aforementioned Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Office of Financial Regulation, enter a final order: Finding that Respondent, Capital City Check Cashing, violated subsections 560.310(1), 560.310(2)(a), 560.310(2)(c), and 560.310(2)(d), Florida Statutes; and Florida Administrative Code Rules 69V-560.704(2)(a), 69V-560.704(4)(a), 69V- 560.704(4)(d), and 69V-560.704(5)(a). Imposing an administrative penalty against Respondent in the amount of $24,500.00, payable to Petitioner within 30 calendar days of the effective date of the final order entered in this case. Suspending Respondent’s license for 33 days. The undersigned retains jurisdiction in this matter to rule on Respondent’s Motion for Sanctions pursuant to section 57.105, Florida Statutes (2014), should Respondent be the prevailing party in the final order entered in this case. DONE AND ENTERED this 27th day of August, 2014, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 2014.
