Findings Of Fact Introduction Petitioner, Stacey Health Care Centers, Inc. d/b/a Riverside Care Center (RCC or petitioner), operates an eighty bed nursing home at 899 Northwest Fourth Street, Miami, Florida. The facility is licensed by respondent, Department of Health and Rehabilitative Services (HRS). At all times relevant hereto, RCC was a participant in the Florida Medicaid Program. The facility has been in operation since March, 1983, and has always attained a superior rating. In July, 1984 it filled all eighty beds and has remained full since that time. As a Medicaid participant, RCC was required to submit to HRS a cost report for the fiscal year ending December 31, 1984. This was filed in the latter part of March, 1985. The report sets forth those costs which RCC claims it incurred in providing Medicaid services during the fiscal year. In 1985, HRS contracted with Grant Thornton, an independent accounting firm, to perform a field audit of RCC's books and records to verify whether RCC's reported costs for fiscal year 1984 were proper expenditures and therefore reimbursable. On May 7, 1986 an audit report and management letter were issued by Grant Thornton proposing that RCC's cost report be adjusted in nineteen respects. The report and letter were later forwarded by HRS to RCC on January 7, 1987. Contending that seven of the adjustments (2, 3, 5, 6, 7, 12 and 15) were not appropriate or justified, RCC requested a formal hearing to contest the report. This resulted in the instant proceeding. Audit Principles and Guidelines Under the Medicaid contract entered into by RCC and HRS, the provider agreed to conform with all pertinent rules and regulations governing Medicaid providers. These include, in order of importance, (a) relevant agency rules codified in the Florida Administrative Code, (b) the Florida Title XIX Long-Term Care Reimbursement Plan (Long Term Plan) then in effect, (c) the Health Insurance Manual (HIM-15), which is a compendium of federal cost reimbursement principles for nursing homes, and (d) where applicable, generally accepted accounting principles (GAAP). Of particular relevance to this proceeding is Subsection III.G.1. of the September 1, 1984 Long Term Plan which provides that "the 0wner administrator . . . compensation will be limited to reasonable levels determined in accordance with HIM-15." The latter document utilizes Bureau of Health Insurance (BHI)/2 data to determine reasonable compensation for owner- administrators in other similar sized institutions in the same geographic area. From this data, a cap or limitation is derived, and any owner compensation above this cap is disallowed and not reimbursed. The theory behind this cap is that an owner- administrator should receive no more compensation than does a non- owner administrator. Also relevant is the so-called prudent buyer concept embodied in section 2103 of HIM-15. Paragraph A of that section provides in part that "the prudent and cost- conscious buyer not only refuses to pay more than the going price for an item or service, he also seeks to economize by minimizing cost." Put another way, the buyer will pay no more than is necessary to procure a supply or service and if he does not, the expense is disallowed. The Concept of Hateriality (Items 2, 7 and 12) The audit report proposes to disallow items 2, 7 and 12 on the ground RCC did not provide adequate documentation to support the expenditures. In sum, the three items total $145. The parties have stipulated that the issue of adequate documentation is not yet ripe. Even so, petitioner suggests the expenses should be allowed since they are "immaterial to the overall cost report." However, the testimony herein reflects that even though an item is immaterial, it may still be disallowed if not in compliance with pertinent regulations. Put another way, there is no regulation or rule which requires an expenditure to be automatically approved simply because it is immaterial. Therefore, the proposed adjustments are proper. Owner's Compensation (Items 3, 5, 6 and 15) Corporate structure The majority (95 percent) of the capital stock of RCC is owned by Stacey Enterprises, Inc. (SEI) located in Cincinnati, Ohio. SEI also owns and operates a 63-bed skilled nursing facility, Gerrard Convalescent Home (GCH), in Covington, Kentucky which is subject to that state's regulatory jurisdiction. Under this corporate structure, which is called a "chain organization" in federal bureaucratese, SEI is considered to be a "home office" providing certain administrative and support functions to RCC. In theory, a home office managing more than one facility should be more efficient than a nursing home that provides its own administrative functions. This is because a home office should reduce costs through economy of scale. In the health care industry, a home office may provide such services as purchasing, personnel, payroll, accounting, computer, and the like. Ralph L. Stacey, Jr. (Stacey), who resides in Covington, Kentucky, is the president and sole stockholder of SEI. He is licensed as a nursing home administrator in Florida and Kentucky, and serves in that capacity at both RCC and GCH. However, in 1984 he had another full-time licensed administrator at RCC and consequently did not claim reimbursement for a full- time salary at either facility. Stacey is also the sole employee of the home office. As such, his duties for the three entities (RCC, GCH and SEI) overlap, and coupled with his place of residence, constitute the source of this controversy. Filing requirements Because of the chain organizational setup, HRS required the provider to file two annual cost reports, one in the name of RCC and the other by SEI as the home office. Both purported to reflect those costs which were properly allocated to Florida operations and were therefore reimbursable under the Florida Medicaid program. However, since the RCC report contains Florida's allocated portion of home office costs, the HRS audit refers only to RCC's 1984 Medicaid cost report. Content of two reports Since SEI claims it provided services in 1984 to both RCC and GCH, an allocation of its regulatory expenses ($7,504) was necessary in order to determine what portion applied to Florida operations. To do this, and for purposes of filing the home office report, SEI developed a ratio based on total patient days of the two facilities, an accepted method for making such an allocation. After removing $139 in non-regulatory expenses, SEI then allocated 54.4 percent of the remaining home office expenses to RCC, or a total of $4,007. Of that amount, over ninety-seven percent fell within the category of "travel." Included within this category are $2,103 in airline tickets, while the make up of the remaining expenses has not been identified. However, the parties have suggested they include primarily "living" expenses incurred by Stacey while living part- time in Miami in 1984. All were ostensibly incurred while Stacey served in the role of a home office employee. The home office charges are referred to on the audit report as adjustment number 5. In addition to the home office charges, RCC's cost report claims reimbursement for a pro rate portion of expenses incurred by Stacey while serving as administrator for both RCC and GCH in 1984. To allocate these costs, Stacey determined the amount of time devoted to each facility, and then assigned appropriate portions of his total expenses to each operation. The precise factor used is not of record. It is noted that the audit report classifies these expenses into three categories (gas and electric, other travel and rent) while the witnesses referred to them as rent, meals, utilities, motor vehicle expenses, supplies, salary, and other miscellaneous items. Whatever their nature, they are reflected on the audit report as adjustment numbers 3, 6 and 15. The controversy and HRS' Proposed action The principal controversy herein centers around Stacey's claimed expenses while commuting to and living in Florida in 1984, and which were charged to RCC as administrative costs or as indirect home office charges. The commuting was necessary since Stacey's primary residence was Covington, Kentucky, and he was also required to tend to duties as an administrator in Kentucky and a home office employee in Ohio. In its audit report, the agency has proposed to disallow all such costs on the general ground they were not related to patient care, relying principally on Sections 2102.3 and 2304 of HIM- 15 as authority for such action. As clarified at hearing, HRS then relied upon the prudent buyer concept and owner's compensation rule to combine Stacey's travel and lodging expenses and certain other minor items with his salary and treat them as part of owner's compensation. These items are characterized in the audit report as gas and electric charges ($2,114), "other" travel ($9,243), and rent expense ($5,910), and, as noted above, are identified as adjustments 3, and 15, respectively.2/ In addition, HRS concluded that all of the home office expenses ($4,007) were violative of the prudent buyer concept since none would be needed if RCC had used a Florida resident as administrator. Accordingly, it reclassified them as owner's compensation on the theory the expenditures benefited the owner and therefore constituted personal compensation to Stacey. These charges (both home office and administrative) collectively totaled $37,082/4 The agency then utilized what it perceived to be the proper cap under then-applicable BHI guidelines ($33,830) for owner's compensation, and applied a 55.9 percent factor to that amount./5 This produced a cap for RCC in the amount of $18,911. All expenses ($21,274) above that cap were disallowed. An analysis of the services provided During 1984, and as reflected in petitioner's exhibit 1, Stacey made numerous trips by airline between Cincinnati and Miami while visiting the RCC facility. Each month Stacey spent between nine and eighteen days in Miami. This is confirmed by his personal calendar introduced in evidence as petitioner's exhibit 1. He also executed a one-year lease on an apartment in Miami on February 1, 1984 at a cost of $465 per month. He did so on the theory it was cheaper to rent than to pay nightly motel charges. However, Stacey acknowledges that if he had elected to spend $50 per day on lodging, he would have spent $7,040, or $984 less than that amount claimed on the cost report for apartment rent and utilities. While in Miami, Stacey utilized the RCC station wagon to transport patients between the hospital and the facility, for screening purposes, and for errands to purchase supplies. This was not controverted. However, the vehicle was also used by Stacey to carry him from his apartment to the facility and return, a use considered personal by HRS. To separate the two functions, Stacey should have kept a record (e.g. a trip log) to show what part of the usage was personal, and what part was related to patient care. Here no such records were apparently maintained, and consequently a precise allocation cannot be made. But, since documentation is not in issue, this point is not now germane. In his role as administrator and home office employee, Stacey's duties included staffing the facility, dealing with governmental agencies, developing and implementing policies and procedures, handling payroll and purchasing, and approving vouchers for both reasonableness and payment. The duties and functions, if prudent and necessary, are clearly within the scope of those performed by an administrator and home office employee. However, the record is less than clear as to which duties were performed when and in what capacity. Reconciling what happened with HRS rules - A cost difficult task There is no rule or regulation that prohibits a Florida nursing home from employing a nonresident administrator. /6 Moreover, it is not uncommon for an administrator to serve in that capacity at more than one facility. At the same time HRS routinely reimburses a provider for legitimate, reasonable home office expenses such as travel, lodging and administrative functions that are incurred while performing necessary support. Notwithstanding the lack of a rule that prohibits Stacey from being administrator, his position must be viewed in light of the prudent buyer concept. Under this concept, Stacey must show that it is more efficient and economical to utilize his services as administrator than to hire one who lives in the Miami area. In this regard, the proof is lacking. More Specifically, other than self-serving statements that this type of setup was more economical and efficient, Stacey did not provide any concrete evidence that contradicted the testimony of HRS witness Donaldson./7 This is especially true since Stacey already had a full-time licensed administrator (Tim Newren) on RCC's payroll who was able to run RCC's day-to-day operations in Stacey's absence. Indeed, their functions seemed to be duplicative in nature, and Stacey, when asked to describe Newren's duties when both were in Miami, indicated that Newren "consults with me." There was also no evidence to show that Stacey performed special services that Newren could not, or that it was necessary he be in Florida around twelve days each month, particularly since Stacey acknowledged he was in daily telephonic contact with Newren when in Ohio and Kentucky. Therefore, with one exception noted hereinafter, the expenditures in adjustments 3, 6 and 15 were not prudent and were properly disallowed. As noted earlier, the RCC station wagon was used to transport and screen patients, and for errands related to patient care. Such usage would have occurred even if Stacey had not come to Florida. Because their reasonableness has not been questioned, and the expenses relate to patient care, they should be allowed subject to the provision by RCC of proper documentation. HRS regulations and acknowledged prior audit policy allow reimbursement for reasonable travel expenses associated with the provision of home office services. However, to prove their legitimacy, they must be shown to be necessary, and to ef- fectuate savings to the provider. In this case, the charges to Florida operations were principally airline tickets for periodic trips to Florida, and living expenses for Stacey while in Miami. Although the record is not altogether clear, these charges were incurred by Stacey to come to Florida where he presumably then performed certain tasks that would normally be provided by a home office. Here again, the provider did not show that it was essential to perform the services in Florida, or that they could not have been performed by Newren. As such, they were not prudent, and should be disallowed. Finally, HRS utilized the wrong BHI cap in computing compensation to be allowed the owner. Instead of using $35,824, HRS erroneously used the figure of $33,830. The former limitation is the correct amount, and results in an increase in owner's compensation of $1,131.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that petitioner's cost report be adjusted and reimbursement accordingly made in a manner consistent with this Recommended Order subject to the furnishing of proper documentation by the provider where necessary. DONE AND ORDERED this 17th day of September, 1987, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of September, 1987.
Conclusions Having reviewed the Notice of Intent to Impose Fine dated March 3, 2009, attached hereto and incorporated herein (Ex. 1), and all other matters of record, the Agency for Health Care Administration ("the Agency") has entered into a Settlement Agreement (Ex. 2) with the Respondent and being otherwise well-advised in the premises, finds and concludes as follows: ORDERED: The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. Each party shall bear its own costs and attorney's fees. The Respondent shall remit to the Agency, within ninety (90) days of this Final Order, the sum of Two Thousand Dollars ($2,000.00). A check should be made payable to the "Agency for Health Care 1 Filed November 9, 2009 11:58 AM Division of Administrative Hearings. Administration." The check, along with a reference to this case number, should be sent directly to: Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS # 14 Tallahassee, Florida 32308 Unpaid amounts will be subject to statutory interest and may be collected by all methods legally available. The above-styled case is hereby closed. DONE and ORDERED this s3 day o tJ-?t?<: ,2009, in Tallahassee, Leon County, Florida. Care Administrat1 A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW OF PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Ann Lisenby Parmer Lisenby Home Care, Inc. 412 North Cove Blvd. Panama City, Florida 32401 (U. S. Mail) Shaddrick A. Haston Assistant General Counsel Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 (Interoffice Mail) Jan Mills Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 (Interoffice Mail) Finance & Accounting Agency for Health Care Administration 2727 Mahan Drive, Bldg #2 Mail Stop Code #14 Tallahassee, Florida 32308 (Interoffice Mail) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this Final Order was served on the above-named person(s) and entities by U.S. Mail, or the method designated, on this _6ay of /}6 , 2009. Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 922-5873 Ce1t1f1ecl Article Number SENDERS RECORD CHARLIE CRIST GOVERNOR March 3, 2009 ANN LISENBY PARMER LISENBY HOME CARE, INC. 412 N COVE BLVD PANAMA CITY, FL 32401 JFlORl AAGENCY F,OR HIcAl.lCH CARE AOMAINISlllATION Better Health Care for all Floridians oqJ521 CASE #: 2009002407 NOTICE OF INTENT TO IMPOSE FINE Pursuant to Section 400.474 (6) (f), Florida Statutes (F.S.), a fine of $5,000 is hereby imposed for failure to submit the home health agency quarterly report within 15 days after the quarter ending September 30. As required in section 400.474(6) (f), F.S., the agency shall impose a fine of$ 5,000. TO PAY NOW, PAYMENT SHOULD BE MADE WITHIN 21 DAYS AND MAil.ED WITH A COPY OF THIS NOTICE OF INTENT TO: Agency for Health Care Administration Finance and Accounting, Revenue Section OMCManager 2727 Mahan Drive, MS #14 Tallahassee, FL 32308 Include License Number: 20651096 and Case Number: 2009002407 in check memo field. EXPLANATION OF RIGHTS Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION OF RIGHTS FORM. Agency for Health Care Administration By: Anne Menard, Manager Home Care Unit cc: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 2727 Mahan Drive,MS#34 Tallahassee. Florida 32308 Visit AHCA online at http://ahca.myfl · • I EXHIBIT I No Theme Page 1 ofl HOME HEALTH AGENCY QUARTERLY REPORT For the Quarter July 1 to September 30, 2008 Send an e-mail with this information to home.ti_ alth@ahca.myflorida.com by 5 p.m. on Wednesday, October 15, 2008 to avoid a $5,000 fme. NAME OF HOME HEALTH AGENCY Lisenby home Care, Inc LICENSE# 20651096 STREET ADDRESS & CITY: 412 N. Cove Blvd, Panama City, Fl 32401 On September 30, 2008, there were _3_ insulin-dependent diabetic patients receiving insulin injection services from my home health agency. On September 30, 2008 there were _36_ patients receiving home health services from my home health agency AND licensed hospice services. On September 30, 2008, there were a total of_77_ patients receiving home health services from my home health agency. The following professional nurses (RNs or LPNs), whose primary job responsibility is to provide home health services to patients, received remuneration from my home health agency in excess of $25,000 between July 1, 2008 and September 30, 2008. NONE Name Florida License Number Insert additional names and license numbers if necessary. http://webmail.att.net/wm/en-US/toolbar/advnotheme.html 10/2/2008 psPS - Track & Confirm Page 1 of 1 • !:fQ!DtltltlJllSlgn.J.n Track & Confirm Search Results Label/Receipt Number: 7160 3901984813801355 Status: Delivered Your item was delivered at 9:48 AM on March 19, 2009 in PANAMA CITY, FL 32401. Track &Confirm Enter Label/Receipt Number. N..-o---t-i--f-i-·c-··d·-·o·-·n- - -Q. rn·t·i01J$------- ---- Track & Confirm by email Get current event information or updates for your item sent to you or others by email. (Bo>) Return Receipt (Electronic) Verify who signed for your item by email. ( tJo>) Copyright© 1999-2007 USPS. All Rights Reserved. No FEAR Act EEO Data FOIA '\:,_· J-i t;.-,pe ; :;•,· • l.\!!.'-'l·/•. ;- t' ip!;,,; http://trkcnfrm1.smi.usps.com/PTSinternetWeb/InterLabellnquiry.do 03/24/2009 STATE OF FLORIDA
Findings Of Fact Respondent owns and operates a mobile home park in Winter Haven, Florida, known as Swiss Village Mobile Home Park, in which lots are leased to mobile home owners on an annual lease. There are 383 lots in this park and this park has held a permit issued by the Department of Health and Rehabilitative Services since 1980 (Exhibit 1). Edward G. Ackerman and his wife entered into a lease with Respondent for the use of a mobile home lot for the period January 15, 1981 until December 31, 1981, at a monthly rental of $75.07 (Exhibit 2). That lease provides for year-to-year renewal with rent for future years based on the Cost of Living Index as determined by the U.S. Government at the nearest reporting period to the end of each calendar year (Exhibit 2). A Guaranteed Lifetime Rent Agreement (Exhibit 3) was executed by the lessor concurrently with the lease in Exhibit 2, which guarantees the rental on the lot leased to Ackerman shall not be increased more than the U. S. Cost of Living Index as long as Ackerman resides in a mobile home located on the leased lot. Using the annual change and CPI to recompute Ackerman's monthly rental has resulted in the rent increasing from $75.00 per month in 1981 to $89.50 per month in 1985 (Exhibit 4). Prior to the time of this hearing Ackerman had purchased a condominium to which he had moved and he was no longer a tenant at the Swiss Village Mobile Home Park. All leases negotiated in years subsequent to 1981, have a similar escalation clause in the rent with the additional proviso that the monthly rent would be increased each year a minimum of $5.00 per month, with the maximum increase not exceeding the CPI. Respondent has used the October All Items Consumer Priced Index For All Urban Consumers (CPI-U) in determining the annual rent increase since operations commenced. This report is received in November and by promptly advising tenants the amount their rent will change, because of changes in the CPI-U, each. tenant receives approximately 30-days notice prior to the January 1 effective date. If the terms of the lease agreement are literally complied with and the December CPI is used, Respondent would have to calculate the rent due January 1 on the CPI which it receives in January. By the time tenants are notified of the effects of the CPI on their rent for the coming calendar year, they would already have paid an inadequate sum for the January rental, and perhaps for the month of February also, and would be billed for the deficiency. There is an active Home Owners Association at Swiss Village Mobile Home Park. This association has not complained of the failure of Respondent to provide 90 days notice prior to the automatic rent change which comes every January, nor have they requested arbitration. In order to insure tenants receive 90 days notice of the rental change, due to changes in the CPI, Respondent would have to use the July Consumer Price Index, which it receives in August. Had Respondent used the July CPI report and given tenants 90 days notice of the annual rental increases since 1981, these increases would have exceeded the increase computed using the October CPI (Exhibit 6). Exhibit 6 indicates the actual adjustments of rentals since 1981, has been $5.00 per month or the CPI, whichever is less.
Findings Of Fact Respondent, Phillip Harrison Bare, was first licensed as a registered general contractor by the State of Florida in December, 1974, when license number RG 0023484, was issued to him as an individual. This license was renewed on an annual basis until June 30, 1979. Effective July 1, 1979, Respondent's license went into delinquent status. It was suspended for one year by Petitioner, CILB, effective June 22, 1979. In addition to the suspension, the Board imposed a $500.00 fine on Respondent which, to this date, has not been paid. Respondent's license as a registered general contractor has not been revoked or voluntarily surrendered. He has never been licensed as a roofing contractor by the state. A search of the records of CILB also indicates that Southern Improvement and Siding Company, Inc., is not now, nor has it ever been, qualified by Respondent or any other licensee of the CILB. However, during the period 1980 and 1981, Respondent was doing business in the name Southern Improvement and Siding Company, Inc. His license has never been registered in Ocala, Marion County or Lake County. On or about May 21, 1980, Respondent, doing business as Southern Improvement and Siding Company, Inc. entered into a home improvement installment sales contract with Ethorn and Alberta Buie of Ocala, Florida. The contract called for Respondent to remove the existing kitchen cabinets, install new cabinets with trim, and a new counter top in their home. Work was to begin on or about April 25, and to be completed on or about April 26, 1980. Cash price for the work was $2,800.00. Some additional funds were advanced to the Buie's by Respondent for debt consolidation consisting of $600.00 due and payable on the Buie's van and $1,900.00 for sheet rock which Mr. Buie was to install, which brought the total amount to $5,300.00. The interest charged on the home improvement portion of the contract price was $1,476.60 and on the debt consolidation portion, $1,316.80, for a total of $2,793.40. This figure, when added to the base amount of the contract, brought about a total deferred payment price of $8,093.40 which was to be paid in 60 monthly installments of $134.89 each. This reflected an annual percentage rate of 18 percent interest. On the same date as the contract. Respondent also prevailed upon the Buie's to execute a mortgage on their home as security for the contract price. This mortgage was subsequently assigned eight days later to Mr. E. O. Hodge, Sir. Attached to the assignment of mortgage was a sworn certificate of completion dated April 28, 1980 which reflects that all material and labor called for in the contract were furnished and installed and the work satisfactorily completed. Consistent with the terms of the contract, Respondent ordered cabinets for the Buie kitchen from a local supplier. When they were delivered, however, the seller learned that Respondent was the individual who had purchased the cabinets, and he refused to leave them without payment. Mr. Buie subsequently borrowed $715.00 from the bank to pay for the cabinets which he, himself installed. Respondent performed no work whatever called for under the terms of the contract. All attempts by the Buie's to contact Respondent at his place of business by leaving phone messages on an answering machine were without any success. He never returned calls and never accomplished any work for them. Respondent got the Buies to sign the mortgage and the other papers without explaining to them what these papers were. Though Mrs. Buie denies that either she or her husband ever signed a mortgage for the Respondent, the mortgage in question bears what looks to her "kind of" like her and her husband's signatures. They were not given a copy of the contract, mortgage, or the notice of right of recission by Respondent. They do not recall signing a certificate of completion but Mr. Buie's signature appears thereon. There is, actually, no doubt that Respondent prevailed upon the Buies to signs the documents in question and that the signatures on them are theirs. On May 12, 1980, Respondent, still doing business as Southern Improvement and Siding Co., Inc., entered into a home improvement installment contract with Lillie Terry and Ollise Mitchell to do some work on their home in Citra, Florida. The work to be done consisted of the removal and replacement of the roof; the replacement of all rotten sheeting and facia boards; the replacement of flooring on the front porch; the installation of new front and back doors with locks; the installation of a new screen door at the front; the installation of paneling in two bedrooms; the installation of ceiling tile in the front room and kitchen: the leveling of concrete piers around the house, and the painting of the exterior of the house with one coat of latex paint. The total price for this work was $2,850.00 with interest at 18 percent for 60 months. Deferred payment price was $4,342.80 to be paid in the monthly amount of $72.38. On the same day that the contract was signed, both homeowners were given a notice of right of recission which they acknowledged, and they also executed a mortgage on their property to Southern Improvement and Siding Company, Inc. Several days later, on June 13, 1980, they executed the certificate of completion for the work and thereafter, on June 17, 1980, Respondent assigned the mortgage previously given to Southern to Mr. E. O. Hodge, Sr., identified previously. Work on the house was begun approximately one week after the contract was signed but was not completed nor was much done until late 1980 to mid 1981. The work was done in snatches and after mid 1981 Respondent quit work on their house and never returned. Repeated calls left on his answering machine were unanswered. All the work called for in the contract was done except the paneling in the two bedrooms and the screen door. Neither of these items was accomplished. The work that was done, however, was of poor quality. Though the evidence shows that these ladies signed a certificate of completion, Mr. Mitchell contends she did not know what it was when she signed it, and when she received the letter from Mr. Hodges reflecting that the mortgage had been assigned to him, Respondent was still working on the property. Mr. Hodges had indicated that he would not take an assignment of a mortgage until the work was completed and a certificate of completion furnished him. From the state of the evidence here, it is obvious that Respondent secured certificates of completion before completing the work. On or about May 21, 1980 Mr. LeRoy Pruitt, who can neither read nor write, was contacted by Respondent concerning doing some repair and modification to the Pruitt home in Ocala, Florida. Mr. Bare prepared a proposal on a form bearing the heading American General Corporation of Florida in which he proposed to build an addition to the existing house and do the finishing work thereon. On May 23, 1980, before any work was done, he came back to the Pruitts and secured from them an $800.00 down payment on the proposal, to be applied against the $7,700.00 total cash price of their project. On May 26, he came back and had the Pruitts sign two separate installment contracts with Southern Improvement and Siding Company, Inc. The first contract was to build the 11 by 24 foot addition for a cash price of $5,100.00 from which the down payment of $400.00 was deducted leaving an unpaid cash balance- of $4,700.00. Finance charges of $5,014.00, representing 10 years of interest at 16.75 percent, raised the total price of this contract to $9,714.00. The second contract, for the finishing work, in the amount of $3,400.00, from which $400.00 down payment was deducted was to be paid off over 5 years at an interest rate of 16.75 percent also. The total price on this contract was $4,449.60. The 10 year contract was to be paid at $80.95 per month and the 5 year contract was to be paid at $74.16 per month. That same day, May 26, 1980, Respondent also got the Pruitts to sign two separate mortgage deeds on their property - one for each of the two contracts. Mr. Pruitt signed all these documents because he believed the Respondent to be honest. He believed that all the work was to cost him $9,000.00 instead of the in excess of $14,000.00 total for the two contracts. Respondent didn't start work on the project until two months after the contract was signed. Even when work was begun, Respondent merely framed in the addition, put in the floor and the ceiling, and then quit. Mr. Pruitt had to have someone else finish the job at a cost of an additional $2,000.00. Respondent, at no time, pulled a permit for the construction work he did, or agreed to do, under the contract. The Pruitts received their mortgage payment books for the two mortgages from the assignee of the mortgage before the work was even started. They were surprised to see that the mortgages had been assigned to Mr. E. O. Hodge. Even after Respondent quit work on the project, they continued to make the monthly mortgage payments of $155.05 for both mortgages. On July 13, 1980, Respondent, still acting for Southern Improvement and Siding, Inc., entered into a home improvement installment contract with Susie and Shirley Williams to do repair work on their home in Ocala, Florida. This work was to include removing existing windows and installing aluminum ones; rescreening the front porch; installing an exterior and interior door; putting a ceiling in the bathroom with paneling; replacing some flooring and installing some floor joists; and installing sheet rock in the kitchen. The cash price for this job, which was supposed to have been started on July 21, and been completed on July 30, 1980, was $2,900.00. When interest at 16 percent for 5 years was added, the total price amounted to $4,419.00. On the same day the contract was signed, Respondent furnished to the Williams' a notice of right of recission, and he also secured a mortgage on their property in favor of Southern Improvement and Siding Company, Inc. Though Respondent did not fix the floor joists or flooring, on July 23, 1980, he secured from Susie Williams a certificate of completion. Thereafter, on July 24, 1980, he assigned the Williams mortgage to Mr. Hodge. Somewhat later, on January 7, 1981, Respondent, as owner of Southern Improvement and Siding Company, Inc., entered into a home improvement installment sales contract with John Fields for repairs to his home in Ocala, Florida. These repairs were to include installing a kitchen sink; hooking up a tub and commode; and installing facia boards in both the front and back of the house. The cash price for this work was to be $2,200.00 and it was to be completed by January 15, 1981. However, when an interest rate of 17.6 percent was applied, according to the terms of the contract, for 48 months, the total price of the work was raised to $3,079. 68. On the same day the contract was signed, Mr. Bare secured from Mr. Fields a mortgage on his property to cover the cost of the repairs. Thereafter, Respondent secured the signature of Mr. Fields on an undated Certificate of Completion form, and on January 7, 1981, the date of the contract and mortgage were signed by Mr. Fields, he assigned the mortgage to Mr. E. O. Hodge, Sr. No work was performed under the terms of this contract on the Fields property. On August 4, 1981, Micque Little, signed a mortgage note in favor of Southern Improvement and Siding Company, Inc. in the amount of $2,800.00 with interest at 18 percent, to be paid in monthly installments of $58.86 per month, for the Respondent to some repairs on her house in Okahumpaka, Florida. The work was to include reroofing the house on the north side; installing hot tar and gravel on the addition; repairing the existing plumbing; installing a new bathroom vanity and sink; installing 10 feet of kitchen base cabinets; replacing rotten facia boards; replacing a window pane in the bedroom; and putting a coating on the existing tin roof. On the same date, she signed the Notice Of Recission furnished her by Respondent and an affidavit stating that she understood her first payment was due on September 15, 1981. Though the work was not done to her satisfaction in that the roof still leaks as does the sink, on August, 19, 1981, she signed a certificate of completion. Once she signed the initial mortgage and agreement, she did not see the Respondent again. What work was done by other. At the time she signed the documents for the Respondent, be did not explain them to her nor did he give her time to read them. The terms of the mortgage were explained to her by Mr. Hodges at a later date. She signed the completion certificate for Respondent on his representation that he would get someone out to fix what had to be fixed but he never did this. Little had to pay extra to get someone else to fix the work that Respondent's crew was supposed to have done. Respondent failed to pull a permit for any of the work done or called for in the contract. In August, 1981, while doing business as Southern Improvement and Siding Company, Inc. (Southern), Respondent contracted with Ernest Gram, of Yalaha, Florida, to replace the roof on the Gram residence and install two outside doors and two steps. The contract price for this proposed modification was $8,000.00. Thereafter, Southern removed the old roof as required and installed ruled roofing in its place. The contract entered into by Respondent and Gram called for installation of shingle roofing. Shingle roofing is different than ruled roofing. Respondent at no time installed the doors or the steps as called for in the contract. Respondent failed to pull a permit for any of the work done or called for in the contract. Mr. E. O. Hodges, Sr. of Clermont, Florida started investing with the Respondent in 1973. When he started buying Respondent's mortgages, he found Respondent to be quite reliable based on his personal checking of Respondent's projects. He found Respondent to be timely in getting the work done and on the basis of his own observation, developed a trust in Respondent that made him quit checking out the individual jobs. Mr. Hodge contends that every mortgage that he bought was contingent upon his receiving a certificate of completion and that he would not buy a mortgage without one. He also contends that on most of the mortgages, he did not know that the work was not completed and did not learn of the difficulties until as much as a year after the Respondent walked off the job. Mr. Hodge's testimony, however, is unworthy of belief in that he contends that he personally checked the Fields job in January, 1981 before he bought that mortgage. No work was done by Respondent at all under the Fields contract.
Recommendation Based on the foregoing, it is, therefore: RECOMMENDED THAT Respondent's license as a registered general contractor in the State of Florida be revoked and that he be fined $1,000.00. RECOMMENDED this 6th day of September, 1984, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK 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 6 day of September, 1984. COPIES FURNISHED: Douglas A. Shropshire, Esquire Department of Professional Regulation 130 North Monore Street Tallahassee, Florida 32301 Mr. Phillip H. Bare 3920 S.W. Sixth Avenue Ocala, Florida 32674 James Linnan, Executive Director Post Office Box 2 Jacksonville, Florida 32202 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Stephanie Daniels, Esquire 130 North Monroe Street Tallahassee, Florida 32301
Findings Of Fact The Respondent, Sarah R. Hunter, is licensed as a certified residential contractor and holds license number CR C004453. At the time of the events which are the basis of the Administrative Complaint, the Respondent was the qualifying agent of Hunter Homes, Incorporated, a Florida corporation (Hunter Homes). Hunter Homes entered into a contract with Ludon and Donna Williams to build them a house for $31,550. The Williams placed $31,550 in escrow, and the escrow agent paid to Hunter Homes a total of $31,040 before September 25, 1979. Hunter Homes contracted in April 1979 to build a house for Marsha Montgomery for $38,500. On August 2, 1979, Montgomery paid to Hunter Homes a total of $1600 down on the contract. The Respondent's husband, Robert Hunter, was the president and chief operating officer of Hunter Homes. He was responsible for the financial aspects of the corporate business, and the Respondent was responsible for design of the structures and sales. The Respondent held the office of secretary in the corporation and worked daily in the company's offices. Hunter Homes had built homes in the Fort Myers area for a number of years and was a reputable home building corporation. It began selling its homes faster than it could build them. Because of the delay in construction time and inflationary increases in construction costs, Hunter Homes began to lose money on its sales. Mr. Hunter kept this information from the Respondent and instructed the office staff, under threat of being fired, not to advise his wife about the financial status of the company. The office staff kept this information a secret from the Respondent until Mr. Hunter was hospitalized with a serious heart condition. At that point, the clerk in charge of keeping the books had to tell the Respondent about the situation because the corporation could not meet its payroll. In mid-August of 1979, when the Respondent became aware of the financial situation, she contacted the local building official and the companies through which Hunter Homes had obtained financing to discuss the financial situation of the corporation and what should be done to protect the persons who had contract to have houses built. The Respondent did not know the exact state of the corporation's finances until after completion of a survey by the auditors of one of the corporation's mortgage lenders. Hunter Homes' problem was primarily that of cash flow and being able to manage current liabilities until the transactions were closed on several houses which were almost complete. The Respondent was almost able to obtain an agreement which could have permitted the corporation to continue in business. However, one of the materialmen would not agree to the plan and commend an action on its liens, which caused the rest of the creditors to rush to protect their interests. This forced Hunter Homes out of business. The local building official testified concerning the actions of the Respondent with regard to his office and the creditors. After she became aware of the financial problem, the Respondent did all she could to protect all of the creditors of Hunter Homes. After Hunter Homes closed, the building official hired the Respondent because of her skills as a draftsman and her knowledge of construction. Within two to three weeks of the date that Montgomery paid her down payment, Hunter Homes went out of business and never had the opportunity to begin construction of her own home. The corporation was unable to repay Montgomery's down payment. Because Hunter Homes went out of business, the Williams home was not completed. The windowsills, toilets and lavatories, a sliding glass door, a garage door, a stove and dishwasher, and the carpet were not installed in the home. The driveway had not been poured, and the sod had not been laid. The Williams obtained a default judgment in the amount of $17,025.91 against Hunter Homes. However, the amount of this judgment exceeded the reasonable cost of those things required to finish the house and required under the construction contract. On September 25, 1979, the Williams paid the final draw on their house to the Respondent. Hunter Homes closed its doors on September 26, 1979.
Recommendation Having found the Respondent not guilty of violating Section 489.129(1)(h) and (k), Florida Statutes, as alleged in Counts I and II of the Administrative Complaint, it is recommended that the charges against the Respondent, Sarah R. Hunter, be dismissed. DONE and RECOMMENDED this 24th day of October, 1983, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, 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 24th day of October, 1983. COPIES FURNISHED: Douglas A. Shropshire, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Thomas Brondstetter, Esquire Post Office Box 2258 Fort Myers, Florida 32902 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 James Linnan, Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202
