Findings Of Fact The Florida Department of Insurance (Department) is responsible for regulation of insurance transactions in the State of Florida. In 1996, the United States Supreme Court held in Barnett Bank of Marion County, N. A. v. Nelson, 517 U.S. 25 (1996) that nationally chartered banks located in towns with populations of 5000 or less were authorized to own insurance agencies. In response, the 1996 Florida legislature revised Section 626.988, Florida Statutes (the "anti-affiliation" statute) to conform to the Court's ruling in the Barnett case The 1996 legislature also enacted Section 626.5715, Florida Statutes, informally identified as the "parity statute." Section 626.5715, Florida Statutes, provides as follows: The department shall adopt rules to assure the parity of regulation in this state of insurance transactions as between an insurance agency owned by or an agent associated with a federally chartered financial institution, an insurance agency owned by or an agent associated with a state- chartered financial institution, and an insurance agency owned by or an agent associated with an entity that is not a financial institution. Such rules shall be limited to assuring that no insurance agency or agent is subject to more stringent or less stringent regulation than another insurance agency or agent on the basis of the regulatory status of the entity that owns the agency or is associated with the agent. For the purposes of this section, a person is "associated with" another entity if the person is employed by, retained by, under contract to, or owned or controlled by the entity directly or indirectly. This section does not apply with respect to a financial institution that is prohibited from owning an insurance agency or that is prohibited from being associated with an insurance agent under state or federal law. (Emphasis supplied.) The 1996 legislature also amended to Chapter 120, Florida Statutes (the Administrative Procedures Act) to restrict agency authority to promulgate rules, so as to prohibit the adoption of rules which, although perhaps rationally related to the purpose of an implementing statute, were not specifically authorized by the legislature. In the summer of 1996, the Department began circulating a draft of rules intended to address issues related to the sale of insurance in financial institutions. Beginning in January 1997, the Department began the formal process of adopting rules intended to address the "parity" of insurance regulation between insurance agencies affiliated with financial institutions and agencies which are unaffiliated. The Petitioners challenged parts or all of the proposed rules as invalid exercises of delegated legislative authority. As set forth in the Final Order entered June 29, 1998, in the consolidated rule challenges, Proposed Rules 4-224.002, 4-224.004, 4-224.007, 4-224.012, 4-224.013 and 4-224.014, Florida Administrative Code, were determined to be invalid exercises of delegated legislative authority. Although the challenged rules were determined to be invalid exercises of delegated legislative authority for various reasons, all were determined to be outside the Department's specific statutory authority as set forth by the legislature. There was no appeal of the Final Order. Prior to the hearing on the fee issue, all parties signed and filed a Prehearing Stipulation. According to the Prehearing Stipulation, "[t]he Department disputes entitlement to fees as a matter of law. It does not dispute the reasonableness of the fees, as capped by statute. It disputes the reasonableness of the costs sought by Florida Bankers Association. " The applicable statute provides that "a judgment or order shall be rendered against the agency for reasonable costs and reasonable attorney's fees, unless the agency demonstrates that its actions were substantially justified or special circumstances exist which would make the award unjust." The Department asserts that the agency's actions in adopting the challenged rules were substantially justified and that special circumstances exist which make the award unjust. The greater weight of the evidence fails to support the assertion. The evidence establishes that, from the initiation of the rule drafting process, the issue of whether the Department had the authority to adopt the proposed rules was of concern to the parties in this case. In response to an early draft of the rule circulated by the Department, the Florida Bankers Association (FBA) in June 1996 asserted that the proposed rules were outside the Department's authority under the parity statute. The FBA continued to maintain this position throughout the rule-drafting process and the subsequent rule challenge cases. The Department was apparently also concerned about whether the agency had authority to adopt the rules. In response to a question raised by Department legal staff, a December 31, 1996, letter to the Department from an attorney at the Joint Administrative Procedures Committee on the issue of authority indicates that the Department's general authority to adopt rules was restricted by the 1996 APA amendment to Section 120.536(1), Florida Statutes, and that additional specific authority would be required to support the promulgation of rules. At the fee hearing, the Department conceded that the parity statute alone did not grant the agency with the specific authority to prescribe or proscribe specific acts or actions of an insurance agent. The Department asserted that the authority for the proposed rules was set forth by the combination of Section 626.988, Florida Statutes, under which pre-existing rules had been adopted, with the Department's previous legal actions related to insurance sales by agents affiliated with financial institutions, and the presumed effect of the parity statute on the Department's otherwise-existing authority. The evidence fails to establish that the Department's reliance on historical authority to promulgate rules and the authority provided under the parity statute was reasonable given legislative restrictions on agency rulemaking set forth in the 1996 legislature's amendments to the Administrative Procedures Act. There was no credible evidence presented at the rule challenge hearing or during the fee hearing which suggested that an emergency, either existing or potential, which required the Department to take immediate action to protect insurance consumers. There was no credible evidence presented at the rule challenge hearing or during the fee hearing that insurance consumers were threatened by an availability of insurance products in settings other than in insurance agencies. There are no special circumstances that make an award of fees and costs unjust. The Department apparently asserts that because the FBA participated in the rulemaking process, special circumstances exist which make an award of fees unjust. Although the FBA participated in the workshop process, the FBA consistently asserted, as stated earlier, that the proposed rules were outside the Department's authority under the parity statute. By letter of June 5, 1996, the FBA specifically filed written objections to the proposed rules, asserting that they were inconsistent with the APA amendments and the authority granted by the parity statute. Further, the FBA noted in the June letter and again in a letter of September 27, 1996, that the purpose and authority of the parity statute was met by a single proposed rule which, in essence, stated that the provisions of the Florida Insurance Code were applicable equally to all agents and agencies, regardless of ownership or affiliation. At the fee hearing, the Department acknowledged that the FBA had raised specific objections regarding the agency's lack of statutory authority during the rule process. The FBA consistently asserted during the rulemaking process that the proposed rules were outside the Department's authority under the parity statute. The FBA pursued the assertion throughout the rulemaking process and successfully challenged the rules on the same basis. There was no evidence presented during the rule challenge or the fee case suggesting that the FBA retreated from the objection at any point in the rulemaking process. According to the Prehearing Stipulation signed and filed by the parties, the disputed issues of fact are whether the expert witness fee paid to Dr. Michael White was reasonable and whether other costs sought to be recoverable are reasonable. The only specific challenge presented by the Department to costs is directed towards Dr. White's fees. The evidence establishes that under the circumstances of this matter, Dr. White's fee is reasonable. At the fee case hearing, the FBA presented the deposition testimony of William B. Graham, an attorney practicing in Tallahassee, Florida, in support of Dr. White's fees. Mr. Graham's testimony is accepted and credited as to the amount of Dr. White's fee and to the time required to prepare for and participate in this proceeding. Based on Mr. Graham's testimony, Dr. White's fee of $320 per hour is reasonable for an expert of Dr. White's credentials. There is no credible evidence to the contrary. According to the three dated invoices submitted to the FBA by Dr. White, Dr. White expended a total of 106 hours and five minutes in rule challenge-related activities on behalf of the FBA. Based on Mr. Graham's testimony, the time recorded by Dr. White of 106 hours and five minutes for his services is reasonable under the circumstances of the rule challenge. There is no credible evidence to the contrary. The total amount of time billed by Dr. White results in a fee of $33,946.66. The three invoices submitted by Dr. White also bill the FBA for expenses totaling $2,643.72. There is no credible evidence that the Dr. White's expense billings are unreasonable. The total amount of fees and expenses charged by Dr. White to the FBA is $36,590.38. The FBA paid to Dr. White the total amount reflected on his invoices. By comparison with the fees charged by its own expert, the Department asserts that Dr. White's fees are unreasonable. The fact that the Department paid its expert less than the FBA paid to its own does not establish that payments to Dr. White were unreasonable. The amount of the attorney's fees to which the successful parties are entitled is not at issue in this proceeding. According to the Prehearing Stipulation, the Department "while contesting entitlement to any award of fees . . . does not dispute that the fees sought, as capped by the statute, is reasonable for the efforts of all counsel in this proceeding." The FBA, by affidavit, identified attorney's fees totaling $145,683.01, and seeks an award of $15,000, the statutory limit. By stipulation of the parties, the FBA is entitled to an award of attorney's fees in the amount of $15,000. The FBA identified total costs of $40,537.53, including the fees and expenses paid to Dr. White. There is no evidence that the costs of $3,947.15 set forth in the attorney billing records (and unrelated to costs related to Dr. White) are unreasonable. Based on the foregoing, the FBA is entitled to receive a total of $55,537.53. The Community Bankers Association identified attorney's fees totaling $10,290.00, and costs of $806.23. By stipulation of the parties, the Community Bankers Association is entitled to an award of attorney's fees in the amount of $10,290.00. There is no evidence that the Community Bankers Association costs of $806.23 are unreasonable. Based on the foregoing, the Community Bankers Association is entitled to receive a total of $11,096.23. The Department asserts that, due to "untimeliness" of the Petitions for Fees filed in these cases, an award of fees in this case is unjust. There is no issue of timeliness to be addressed in this matter. The Petitions for Fees were filed approximately 60-90 days after the time for appeal of the Final Order in the rule challenge cases had passed. The Final Order entered in the rule challenge proceeding specifically retained jurisdiction for an award of fees. There is no evidence that the Department was adversely affected by any delay in filing the Petitions for Fees.
Conclusions Based on the foregoing Findings of Fact and Conclusions of Law, the Department of Insurance shall pay total fees and costs as follows: The Florida Bankers Association shall receive a total of $55,537.53 The Community Bankers of Florida shall receive a total of $11,096.23. DONE AND ORDERED this 6th day of December, 2000, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of December, 2000. COPIES FURNISHED: Virginia B. Townes, Esquire Akerman, Senterfitt & Eidson, P.A. Post Office Box 231 Orlando, Florida 32802-0231 Counsel for Florida Bankers Association Michael H. Davidson, Esquire Department of Insurance 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Counsel for Department Martha J. Edenfield, Esquire Pennington, Moore, Wilkinson & Dunbar, P.A. Post Office Box 10095 Tallahassee, Florida 32302-2095 Counsel for Community Bankers of Florida Eli S. Jenkins 3330 Overlook Drive, Northeast St. Petersburg, Florida 33703 Authorized Representative of Specialty Agents, Inc. Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300 Honorable Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
The Issue The issue is whether Petitioner showed by a preponderance of the evidence that it is entitled to a refund of $1,500,216.60 in sales and use tax paid during the period from January 2005 through January 2007 to purchase industrial printing machinery that allegedly satisfied the statutory requirement for a 10 percent increase in productive output for printing facilities that manufacture, process, compound or produce tangible personal property at fixed locations in the state within the meaning of Subsection 212.08(5)(b), Florida Statutes (2005), and Florida Administrative Rule 12A-1.096.1/
Findings Of Fact Respondent is the agency responsible for administering the state sales tax imposed in Chapter 212. Petitioner is a "for profit" Florida corporation located in St. Petersburg, Florida. Petitioner is engaged in the business of publishing newspapers and commercial printing. Petitioner derives approximately 85 percent of its revenue from advertising and approximately 15 percent of its revenue from circulation subscriptions. In April, 2007, Petitioner requested a refund of $403,780.05 in sales and use taxes paid for the purchase of industrial machinery and equipment during the period from January, 2005, to January, 2006. In October, 2007, Petitioner requested a refund of $1,096,436.61 in sales and use taxes paid for the purchase of industrial machinery and equipment for the period from January, 2006, to January, 2007. The first refund request in April, 2007, became DOAH Case Number 08-3938, and the second refund request in October, 2007, became DOAH Case Number 08-3939. The two cases were consolidated into this proceeding pursuant to the joint motion of the parties. The parties stipulated that the only issue for determination in this consolidated proceeding is whether Petitioner satisfied the requirement for a 10 percent increase in productive output in Subsection 212.08(5)(b) and Rule 12A- 1.096. If a finding were to be made that Petitioner satisfied the 10 percent requirement, the parties stipulate that the file will be returned to Respondent for a determination of whether the items purchased are qualifying machinery and equipment defined in Subsection 212.08(5)(b) and Rule 12A-1.096. The issue of whether Petitioner satisfied the statutory requirement for a 10 percent increase in productive output in Subsection 212.08(5)(b) and Rule 12A-1.096 is a mixed question of law and fact. The ALJ concludes as a matter of law that Petitioner did not satisfy the 10 percent requirement. The ALJ discusses that conclusion briefly, for context, in paragraphs 6 and 7 of the Findings of Fact, and explains the conclusion and the supporting legal authority more fully in the Conclusions of Law. It is an undisputed fact that Petitioner counts items identified in the record as "preprints," "custom inserts," and "circulation inserts" separately from the "newspaper" as a means of exceeding the 10 percent requirement in Subsection 212.08(5)(b). Respondent construes the 10 percent exemption authorized in Subsection 212.08(5)(b) in pari materia with the exemption authorized in Subsection 212.08(5)(1)(g) for "preprints," "custom inserts," and "circulation inserts" (hereinafter "inserts"). The latter statutory exemption treats inserts as a "component part of the newspaper" which are not to be treated separately for tax purposes. For reasons stated more fully in the Conclusions of Law, the ALJ agrees with the statutory construction adopted by Respondent. That conclusion of law renders moot and, therefore, irrelevant and immaterial, the bulk of the evidence put forth by the parties during the two-day hearing because the evidence assumed arguendo that Petitioner's statutory interpretation would be adopted by the ALJ, i.e., inserts would be counted separately from the newspaper for purposes of satisfying the 10 percent requirement in Subsection 212.08(5)(b). In an abundance of caution, the fact-finder made findings of fact based on the legal assumption that inserts are statutorily required to be counted separately for purposes of the 10 percent requirement in Subsection 212.08(5)(b). Those findings are set forth in paragraphs 9 through 11. The verification audit by Respondent's field office was able to verify an output increase of only 4.27 percent for 2005 and only 8.72 percent for 2006. A preponderance of evidence in this de novo proceeding did not overcome those findings. The trier of fact finds the evidence from Petitioner during this de novo proceeding to be inconsistent and unpersuasive. For example, Petitioner inflated production totals by counting materials printed for its own use, and materials in which the unit of measurement was inconsistent. In other instances, production totals for printing presses identified in the record as Didde and Ryobi presses varied dramatically with circulation. In other instances, Petitioner's reporting positions changed during the course of the proceeding. There is scant evidence that the alleged increase in production created jobs in the local market in a manner consistent with legislative intent. Rather, a preponderance of evidence shows that when Petitioner placed the equipment in service it was job neutral or perhaps reduced jobs.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order finding that Petitioner did not satisfy the requirement for a 10 percent increase in productive output defined in Subsection 212.08(5)(b) and Rule 12A-1.096, and denying Petitioner's request for a refund. DONE AND ENTERED this 20th day of October 2009, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of October, 2009.
Findings Of Fact Both parties filed proposed findings of fact. Except as noted below, I have incorporated the substance of these proposed findings into my findings of fact. Rejected DOT Proposed Findings of Fact The following proposed findings are rejected because they are not facts but only recitations of testimony: Rule 22I-6.006 - proposed finding 1 - second and third sentence. Rule 22I-6.037 - proposed finding 1 - second sentence. proposed finding 2 - first and second sentence. The following proposed findings are irrelevant to the resolution of this case: Rule 22I-6.006 - proposed finding 4 and 5 because the proposed rule applies to other agencies than DOT. proposed finding 6 because whether another method of notifying all bidders is more efficient is not the standard to determine validity of the rule. Rule 22I-6.037 - proposed finding 3, 5, and 7. Rejected DOAH Proposed Finding of Fact The following proposed finding of fact are rejected because these are more in the nature of legal argument or conclusions of law rather than findings of fact: Proposed finding 5 - sentences 5 and 6. Proposed finding 6 - second paragraph, sentences 1 and 2; third paragraph, sentence 4 and 5; and fourth paragraph Proposed finding 7 - second paragraph; third paragraph; and fourth paragraph, fifth sentence Proposed finding 8 - fourth paragraph; fifth paragraph; and sixth paragraph The follow proposed findings are rejected as being irrelevant to the resolution of the issues presented in this case. Proposed finding 1 - fourth sentence Proposed finding 6 - second paragraph, sentence 5 and 6 Proposed finding 7 - fourth paragraph, sentence 1 through 4 The following proposed finding is rejected as not supported by the record evidence: Proposed finding 6 - fourth paragraph, sentence 4 fifth paragraph, sentence 4 ANALYSIS Standing The first issue that must be addressed is DOT's standing. DOAH asserts that Dot lacks standing to challenge Proposed Rules 22I-6.035 and 22I-6.037. DOT has the burden to establish that it would be substantially affected by the proposed rules should they be adopted by DOAH. Section 120.54(5)(b), Fla. Stat. (1985); Department of Health and Rehabilitative Services v. Alice P., 367 So.2d 1045, 1052 (Fla. 1st DCA 1979). In order to resolve whether DOT has met its burden, a review of the pertinent decisions on standing is appropriate. 5/ The case cited most often on standing is the First District Court of Appeal's decision in Florida Department of Corrections v. Jerry, 353 So.2d 1230 (Fla. 1st DCA 1978), cert. denied, 359 So.2d 1215 (Fla. 1978). The court held that an inmate who had been confined for committing an assault while in prison lacked standing to challenge an existing rule concerning disciplinary confinement and forfeiture of gain-time. Because the inmate was no longer confined under the rule and had not lost any gain-time when he filed the rule challenge, the court reasoned that the inmate had not suffered an injury in fact at the time of the challenge, end therefore, was not substantially affected by the existing rule. Whether the inmate would be subject to the rule again depended on the likelihood he would commit another infraction. The court deemed this too speculative and subject to conjecture to grant standing. 353 So.2d at 1236. In a later case, the Florida Supreme Court overruled Jerry to the extent it required associations to demonstrate a specific injury to the organization itself rather then to some of its members. Florida Home Builders' Association v. Department of Labor and Employment Security, 412 So.2d 351 (Fla. 1982). In reaching its decision, the court warned against an overly restrictive application of the concept of standing in the rule challenge cases by noting: "Expansion of public access to activities of governmentally agencies was one of the major legislative purposes of the new Administrative Procedure Act." 412 So.2d at 352-53. Standing to challenge proposed agency rules was addressed in Department of Health and Rehabilitative Services v. Alice P., 367 So.2d 1045 (Fla. 1st DCA 1979). There, the court held that all women of child bearing age who received medicaid benefits were not substantially affected by a proposed rule denying medicaid payments for abortions except under limited circumstances. In denying standing to a woman who was not pregnant at the time of the rule challenge, the court specifically rejected the argument that standing to challenge a proposed rule under Section 120.54(4), Florida Statutes (1985), is less restrictive than standing to challenge an existing rule under Section 120.56, Florida Statutes (1985), by stating: There is no difference between the immediacy and reality necessary to confer standing whether the proceeding is to challenge an existing rule or a proposed rule. 367 So.2d at 1052. In Professional Fire Fighters of Florida v. Department of Health and Rehabilitative Services, 396 So.2d 1194 (Fla. 1st DCA 1981), the court held that a group of paramedics had standing to challenge rules establishing additional requirements for renewal of a paramedical certification. There was no showing on any of the individual paramedics had attempted to comply with the new rules or that anything in the new rules would disqualify them from retaining their certification. In rejecting the hearing officer's ruling that these individuals could not claim an injury because they had not yet applied for certification under the new rules, the court stated: The order below would preclude a challenge by anyone who had not first complied with a rule and suffered injury, no matter how clear the rule's applicability to, or substantial its effect on, the challengers... The APA permits prospective challenges to agency rulemaking and does not require that an affected party comply with the rule at his peril in order to obtain standing to chal- lenge the rule. A party may demonstrate standing by showing that a rule has a real and immediate effect upon his case as well as by proving injury in fact. 396 So.2d at 1195-96 (citations omitted) see also 4245 Corp., Mother's Lounge Inc. v. Department of Beverage, 345 So.2d 934 (Fla. 1st DCA 1977). The court distinguished Jerry and Alice P. on the grounds that the petitioners in the case before it were immediately subject to the rule which rendered their continued employment as paramedics unlawful without compliance with the rule. The individuals were presently affected by the rule because they worked in the area to be regulated. 396 So.2d at 1196. In Village Park Mobile Home Association v. Department of Business Regulation, 506 So.2d 426, 412 (Fla. 1st DCA 1987), the court on rehearing emphasized under the test for standing set forth in Fire Fighters that a party may show "that a rule has a real and immediate effect upon his case, as well as injury in fact." Standing was not found in Village Park for certain mobile home owners to challenge agency approval of the prospectus for a mobile home park because the prospectus only disclosed the method for raising rents and reducing services in the future. It was up to the landlord to implement the prospectus at some unspecified date in the future. 6/ Thus, no standing was found because the alleged injury was contingent upon the future actions of a third party. 506 So.2d at 433-34; see also Boca Raton Mausoleum v. Department of Banking, 511 So.2d 1060 (Fla. 1st DCA 1987). In this case, DOT has not alleged that it has suffered an injury in fact by Proposed Rules 22I-6.035 and 22I-6.037. That is not surprising with respect to Proposed Rule 22I-6.037 since it is a new rule that has not been implemented. However, with respect to the proposed amendments to Rule 22I-6.035, dealing with attorney's fees and costs, most of DOT's challenges concern portions of the rule that were not substantially changed in the proposed rule. For example, DOT objects to the provisions requiring an agency to file a response or affidavit and the provisions which allow for a waiver of the right to an evidentiary hearing when one is not affirmatively requested by either party. Rule 22I-6.035 presently contains such provisions. Therefore, the injury in fact test would be applicable. However, DOT has not presented any facts indicating that a prevailing small business party has ever filed a petition seeking costs and attorney's fees from DOT under Florida Equal Access to Justice Act. Consequently, no injury exists. The alternative test for standing is whether the proposed rules would have a "real and immediate effect" upon DOT. With respect to Proposed Rule 22I- 6.035, DOT has not met this test merely by demonstrating that it is a party to pending cases involving small business parties. In order for DOT to be affected by Proposed Rule 22I-6.035, a small business party would first have to prevail against DOT and then file a petition for costs and attorney's fees based upon its belief that DOT was not "substantially justified" in bringing the administrative action. Whether these contingencies, which are controlled by a third party, will occur in the future is open to conjecture and speculation. The type of immediacy envisioned by the court in the Fire Fighters case does not appear to be present with respect to Proposed Rule 22I-6.035. Therefore, DOT does not have standing to challenge this proposed rule. On the other hand, I conclude that DOT has standing to challenge Proposed Rule 22I-6.037. DOT presently has at least nine pending cases involving administrative complaints. The proposed rule on voluntary dismissals would be immediately applicable to DOT's ability to take a voluntary dismissal on those cases without being contingent upon the acts of a third party. Such a real and immediate effect on pending cases involving DOT is sufficient to provide DOT with the requisite standing. DOT does not have to invoke the rule by seeking a voluntary dismissal in order to have standing to challenge the rule as suggested by DOAH. See Professional Fire Fighters of Florida, 396 So.2d at 1195. Invalidity of Proposed Rules 22I-6.006 and 22I-6.037 The Florida Legislature has recently defined what constitutes an invalid exercise of Legislative authority. Section 120.52(8), Florida Statutes, as amended by Chapter 87-385, Section 2, Laws of Florida, provides: (8) "Invalid exercise of delegated legisla- tive authority" means action which goes beyond the powers, functions, duties delegated by the Legislature. A proposed existing rule is an invalid exercise of delegated legislative authority if any one or more of the following apply: (a ) The agency has materially failed to follow the applicable rulemaking procedure set forth in s. 120.54; The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(7); The rule enlarges, modifies, or con- travenes the specific provisions of law implemented, citation to which is required by s. 120.54(7); The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency; or The rule is arbitrary or capricious. These standards are similar to those used by the courts in Florida to test the validity of agency rules. See e.g., Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1978), cert. denied, 376 So.2d 74 (Fla. 1979); Humana Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985). In Agrico Chemical Co., the First District Court of Appeal stated: [I]n a 120.54 hearing, the hearing officer must look to the legislative authority for the rule and determine whether or not the proposed rule is encompassed within that grant. The burden is upon one who attacks the proposed rule to show that the agency, if it adopts the rule, would exceed its author- ity; that the requirements of the rule are not appropriate to the ends specified in the legislative act; that the requirements contained in the rule are not reasonably related to the purpose of the enabling legislation or that the proposed rule or the requirements thereof are arbitrary or capricious. A capricious action is one which is taken without though or reason or irration- ally. An arbitrary decision is one not supported by facts or logic, or is despotic. Administrative discretion must be reasoned and based upon competent substantial evi- dence. Competent substantial evidence has been described as such evidence as a reason- able person would accept as adequate to support a conclusion. The requirement that a challenger has the burden of demonstrating agency action to be arbitrary or capricious or an abuse of administrative discretion is a stringent one. 365 So.2d at 763. In this case DOT has the burden to demonstrate that adoption of Proposed Rules 22I-6.006 and 22I-6.037 would constitute an invalid exercise of legislative authority. Proposed Rule 22I-6.006 DOAH is statutorily authorized "to adopt reasonable rules to carry out the provisions of this act [Chapter 120]." Section 120.65(7), Fla. Stat. (1985). Regarding bid protests, an agency is required to forward a protest to DOAH for an evidentiary hearing in accordance with Section 120.57(1), Florida Statutes (1985), whenever there is a disputed issue a material fact. Section 120.53(5)(d)2, Fla. Stat. (1985). Section 120.57(1) sets forth certain procedures for conducting evidentiary hearings and proceedings where the substantial interests of a party are determined. In light of these statutory provisions, DOAH proposes to amend Rule 6.006 by requiring that an agency send a copy of the notice of hearing to all bidders, other than the protesting bidder, and attempt to telephonically notify these bidders of the date, time, and place the hearing. The purpose of this requirement is to give notice of the deadline to file a motion to intervene in the protest proceeding to the successful bidder, as well as all other bidders who had not filed a timely protest. Motions to intervene must be filed within five days prior to start of an evidentiary hearing. Fla. Admin. Code Rule 6.010. DOT persuasively argues that this portion of Proposed Rule 22I-6.006 requires an agency to do a useless act because any bidder that has not flied a timely protest is precluded from gaining party status in a bid protest proceeding by filing a motion to intervene. I agree. Section 120.53(5), Florida Statutes (1985), requires an agency to provide notice of its decision, or intended decision, concerning a bid solicitation. The notice must contain the following statement: "Failure to file a protest within the time prescribed in s. 120.53(5), Florida Statutes, shall constitute a waiver of proceedings under chapter 120, Florida Statutes." Paragraph (b) of Section 120.53(5), provides: Any person who is affected adversely by the agency decision or intended decision shall file with the agency a notice of protest in writing within 72 hours after the posting of the bid tabulation or after receipt of the notice of the agency decision or intended decision and shall file a formal written protest within 10 days after the date he filed the notice of protest. Failure to file a notice of protest or failure to file a formal written protest shall constitute a waiver of proceedings under chapter 120. The formal written protest shall state with particularity the facts and law upon which the protest is based. These statutory provisions are clear and unequivocal. An unsuccessful bidder must file a protest within the 72 hour limitations period in order to participate in further Chapter 120 proceedings. Xerox Corp. v. Florida Department of Professional Regulation, 489 So.2d 1230 (Fla. 1st DCA 1986); see also Capelletti Brothers v. Department of Transportation, 499 So.2d 555 (Fla. 1st DCA 1986)(72 hour deadline applies to protest challenging bid specifications). An adversely affected bidder cannot, and should not be allowed to, gain a back door point of entry to obtain party status in a bid protest proceeding by filing a motion to intervene when the bidder has already waived its right to participate in the proceeding. The only substantially effected entity that would be entitled to intervene in a bid protest proceeding is the successful bidder. Therefore, there would be a valid purpose in adopting a rule that required the successful bidder to receive the notice of hearing so that it would be aware of the deadline for filing a motion to intervene. However, as to all other non-protesting bidders, there is no statutory basis for providing the notice of hearing to them in light of what appears to be a clear prohibition against allowing those bidders to obtain party status after failing to file a timely protest pursuant to Section 120.53(5)(b), Florida Statutes (1985). DOAH argues that the need for subsection (2) of Proposed Rule 22I-6.006 is dramatized by the case of Spillis Candella and Partners, Inc. v. School Board of Dade County, No. 86-3002 Bid. There, the hearing officer determined that the agency never complied with the notice requirements triggering the 72 hour limitations period. Therefore, the protest filed in that case was determined to be timely since the 72 hour time limit had not expired. This single case does not provide justification for requiring agencies to give notice of the evidentiary hearing to all unsuccessful bidders in all bid protest cases. No evidence was adduced indicating that the failure to provide the requisite statutory notice issue raised in the Spillis Candella case had ever occurred in any other bid protest proceeding that had come before a DOAH hearing officer. Even if this had been a recurring problem, subsection (b) of the Proposed Rule 22I-6.006 could have been more closely tailored to remedy issues similar to that raised in Spillis Candella. The rule should have limited an agency's responsibility to provide a notice of hearing to all unsuccessful bidders if the agency had not previously complied with the notice requirements of Section 120.53(5), Florida Statutes (1985). 7/ In light of the foregoing, I conclude that subsection (2) of Proposed Rule 22I-6.006 is arbitrary because it requires agencies to provide notice of a bid protest hearing to bidders who have waived their right to become parties in the proceeding. The rule also contravenes Section 120.53(5)(b), Florida Statutes (1985), which contemplates that only timely protestors may participate as parties in a bid proceeding. 8/ Subsection (3) is also invalid because it requires that an agency provide to the hearing officer proof that it has complied with subsection (2). DOT's remaining objections to Proposed Rule 22I-6.006 are without merit. The fact that all agencies involved in bid protests must adopt rules end procedures for the resolution of such protests, and that the Administration Commission shall also adopt model rules on the same subject, does not indicate a legislative intent to preempt DOAH from adopting rules pertaining to the procedures for conducting bid protest hearings. Section 120.53(5)(a) and (f), Fla. Stat. (1955). In addition, Section 120.57(1)(b), Florida Statutes (1985), does not prohibit non-parties from receiving notice of an evidentiary hearing. Proposed Rule 22I-6.037 DOT advances numerous arguments in support of its contention that subsections (2) and (3) of Proposed Rule 22I-6.037 constitute an invalid exercise of legislative authority. I am persuaded by two of these arguments that DOT's position has merit. First, with respect to subsection (2), the proposed rule provides a hearing officer with the discretion to grant a motion for voluntary dismissal "upon such terms and conditions as the hearing officer deems just and proper." This language fails to provide any guidance to a hearing officer or to the parties in an administrative complaint proceeding as to what conditions a hearing officer could impose for allowing the agency to withdraw its complaint without prejudice. Instead, the rule gives the hearing officer unlimited discretion to impose any condition the hearing officer subjectively believes is "just and proper." These words cannot be construed as words of limitation because it must always be presumed that a hearing officer will rule in a manner that he or she believes is just and proper. Thus the elimination of the "just and proper" language from the rule would not give any more discretion to a hearing officer than is presently granted by the proposed rule. The fact that Florida Rule of Civil Procedure 1.420(2) provides that a trial court may grant a voluntary dismissal filed after submission of a case to the court "upon such terms and conditions as the court deems proper," does not provide a basis for concluding that subsection (2) of Proposed Rule 22I-6.037 is valid. The Rules of Civil Procedure were adopted pursuant to the inherent power of the courts, a power that administrative agencies do not possess. Hillsborough County Hospital Authority v. Tampa Heart Institute, 472 So.2d 748, 753-54 (Fla. 2nd DCA 1985). Agency rules may not violate the standards set forth in Section 120.52(8), Florida Statutes, as amended by Chapter 57-325, Section 2, Laws of Florida. In this case, subsection (2) of Proposed Rule 22I- runs afoul of paragraph (d) of Section 120.52(8), Florida Statutes, as amended, which provides that a rule is invalid if [t]he rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency." Therefore, subsection (2) of Proposed Rule 22I-6.037 is invalid. Subsection (3) of the proposed rule is also invalid but for a different reason. Unlike subsection (2), nothing is left to the parties' imagination as to the consequences an agency will encounter if it files a notice of voluntary dismissal of an administrative complaint containing nonjurisdictional allegations that were previously the subject of a voluntary dismissal. Those nonjurisdictional factual allegations contained in both complaints will be deemed dismissed with prejudice. The issue with regard to this rule provision is whether DOAH has the statutory authority to adopt a rule that requires dismissal of an administrative complaint with prejudice under these circumstances. Although no cases are directed on point, two district court of appeal decisions are instructive. In Great American Bank v. Division of Administrative Hearings, 412 So.2d 373 (Fla. 1st DCA 1981), the First District Court of Appeal revised a hearing officer's order imposing sanctions for a party's failure to make discovery and for a witness' failure to give responsive testimony. The court ruled that certain portions of the model rules, which purported to give such authority to a hearing officer, were invalid because they conflicted with the discovery enforcement provisions found in the Administrative Procedure Act. Section 120.58(3), Fla. Stat. (1981). The Legislature subsequently amended Section 120.58 to specifically grant hearing officers the authority to pose sanctions to effect discovery. Ch. 84-173, Laws of Florida. In Hillsborough County Hospital Authority v. Tampa Heart Institute, 472 So.2d 748 (Fla. 2d DCA 1985), the Second District Court of Appeal declared Model Rule 28-5.211 invalid to the extent the rule authorized a hearing officer to impose sanctions, including dismissal, to enforce procedural orders. The court rejected the argument that the same general rulemaking authority relied upon by DOAH as authority for Proposed Rule 22I-6.037, Sections 120.53 and 120.65(7), Florida Statutes (1985), authorized the model rule. Rather, any rule that provides a sanction in the form of a penalty must be based upon explicit statutory authority such as that found in Section 120.58(1)(b), Florida Statutes (1985), or Section 120.57(1)(b), Florida Statutes (Supp. 1986). 9/ 472 So.2d at 747-48. Subsection (3) of Proposed Rule 22I-6.037 imposes the sanction of dismissal with prejudice. However, in contrast to the specific saction authority granted to hearing officers in Sections 120.58(1)(b) and 120.57(1)(b)5, no provision in Chapter 120 specifically authorizes DOAH to impose a sanction under the circumstances set forth in subsection (3) of Proposed Rule 22I-6.037. Therefore, while I find the purpose of adopting subsection (3) of the proposed rule, to ensure failness, is laudable, this portion of the rule is invalid because DOAH does not possess the requisite legislative authority to adopt such a rule. Section 120.52(5)(b), Fla. Stat., as amended by Ch. 87-358, Section 2, Laws of Florida.
Findings Of Fact The RFP Respondent issued a request for proposals in October, 1988, entitled "Turnpike Bridge Replacement Design/Build Project, State Road 91 (Florida's Turnpike)" (the "RFP"). The RFP solicited technical and price proposals for state Project Nos. 97890-3325 and 97930-3324. The State Projects involved the design and construction of temporary detours and permanent replacement bridges over canal crossings at several locations on Florida's Turnpike. The RFP required bridges to be constructed as permanent structures at each of the project sites. Respondent advised interested parties at the scope of services meeting on October 18, 1988, that detour bridges would also be required at all of the project sites. Local permitting was a key factor in the scope of services required for the projects contemplated in the RFP. Respondent advised interested parties, including Petitioner and Intervenor, at the scope of services meeting that Respondent had done no coordinating with local agencies and that local permitting was the responsibility of each party responding to the RFP ("offeror"). The local agency with responsibility for issuing permits for a majority of the canal crossings in the RFP was the Lake Worth Drainage District ("Lake Worth"). Both Petitioner and Intervenor inquired of Lake Worth while preparing their respective technical proposals to confirm Respondent's representation that bridges would be required for both detours and permanent structures at all project sites. Lake Worth advised Petitioner that vertical clearances and hydraulics required bridges for both detours and permanent structures at all canal crossings subject to Lake Worth's jurisdiction. However, Lake Worth advised Intervenor, on or about October 26, 1988, that culverts would be acceptable for detours at three of the project sites. Kenneth Bryant was the President of DSA Group, Inc. ("DSA"). DSA is a consulting engineering firm that was retained by Intervenor to assist in the preparation of its technical and price proposals. Mr. Bryant asked Lake Worth why culverts would not be acceptable for permanent structures if culverts were acceptable for detours. Lake Worth responded that consultants for Lake Worth would look into the hydraulics of the entire system. Petitioner and Intervenor submitted their respective technical proposals on or about January 11, 1989. 2/ Intervenor used culverts in its technical proposal at those canal crossings where Lake Worth had approved the use of culverts for detours. Intervenor also included documentation of the approvals by Lake Worth. Petitioner included bridges in its technical proposal for all detours and permanent structures. The date for submitting price proposals was changed by Respondent several times. The original date was scheduled for 30 days after receipt of the technical proposals. After several delays, price proposals were timely submitted by Petitioner and Intervenor on June 21, 1989. The opening of price proposals was set for July 6, 1989, pursuant to a letter dated June 23, 1989, from Bill Deyo, Design/Build Coordinator for Respondent. The letter stated in relevant part: ... If approved by the Final Selection Committee the selected team will be posted on July 10, 1989, with the final awarding scheduled for July 14, 1989. Award and execution of this contract is contingent upon approval of budget by the Governor's office. Respondent selected Petitioner's proposal as number one and Intervenor's proposal as number two. The Final Selection Committee issued a "memo" on July 6, 1989, authorizing award of the contract. 3/ Award and execution of the contract was approved by the Governor's office. 4/ Rejection of All Proposals On July 10, 1989, Respondent sent a telegram to each offeror cancelling the posting of "bid" tabulations for that day. On August 31, 1989, the Final Selection Committee issued a memorandum rescinding its authorization to award the contract for the RFP, and requested its Contracts Administration Office to notify all "...Design/Build teams of the decision to REJECT all price proposals." On September 12, 1989, Respondent notified all offerors by certified mail of Respondent's decision to reject all "bids". No reason for Respondent's rejection of all price proposals was stated in the certified letter. At that time, offerors were not otherwise advised by Respondent of the reason for the rejection. Respondent rejected all price proposals based upon a substantial reduction in the scope of services required for the RFP. Between October, 1988, and August 31, 1989, Lake Worth determined that culverts would be acceptable instead of bridges at five of the six project sites within the jurisdiction of Lake Worth. Lake Worth's change in position substantially reduced the scope of services required in the RFP. The value of that reduction in the scope of services was approximately $3.6 million. 5/ Respondent knew or should have known from the technical proposal submitted by Intervenor on January 11, 1989, that the scope of services required in the original; RFP had been reduced to the extent Lake Worth had approved the use of culverts instead of bridges for the detours at some of the project sites. Respondent did not investigate the potential reduction in the scope of services until after the opening of price proposals on July 6, 1989. The parties stipulated at the formal hearing that Respondent's rejection of all price proposals was not at issue. Therefore, the question of whether Respondent's rejection of all proposals was arbitrary, capricious, or beyond the scope of Respondent's discretion as a state agency is not at issue in this proceeding. 6/ Respondent's Existing Rule The legislature required Respondent to adopt by rule procedures for administering combined design/build contracts. Section 337.11(5)(b), Florida Statutes. Accordingly, Respondent adopted Florida Administrative Code Rule 14- 91.006 on March 13, 1988 ("Rule 14-91.006"). 17. Rule 14-91.006(5) provided: The Deputy Assistant Secretary for Technical Policy and Engineering Services, jointly with the Deputy Assistant Secretary representing the District in which the project is located, may determine it is in the best interest of the state to provide funds to firms selected for preparation of technical and price proposals in response to the Design Criteria Package. Each firm selected shall receive identical fixed fees for this work. Specific Authority 334.044(2) 337.11(5)(b) F.S. Law implemented 337.11(5) F.S. History-New 3-13-88. (emphasis added) Rule 14-91.006(5) was adopted to facilitate competitive responses to a request for proposals by paying fixed fees to firms selected by Respondent to prepare technical and price proposals. Rule 14-91.006(5) was also adopted so that Respondent could compensate offerors, retain their technical proposals, and use the design concepts on similar projects. Rule 14-91.006 was amended on June 13, 1990, in relevant part, by repealing Rule 14-91.006(5). The repeal of Rule 14-91.006(5) occurred approximately 33 days after the date of the formal hearing but before the entry of a final order in this proceeding. 7/ Request for Payment After Respondent notified offerors of the rejection of all price proposals, Petitioner and Intervenor requested Respondent to make a determination of whether it was in the best interest of the state to provide funds to Petitioner and Intervenor for the preparation of their respective technical and price proposals in accordance with Rule 14-91.006(5). Petitioner and Intervenor requested on several occasions that the Deputy Assistant Secretary for Technical Policy and Engineering Services jointly with the Deputy Assistant Secretary for the Turnpike convene a meeting to make the determination authorized in Rule 14-91.006(5) Informal conferences with Respondent's representatives were requested on at least four occasions to discuss the issue of Petitioner's compensation for its technical and price proposals. Respondent's representatives met with Petitioner a few days before the formal hearing on May 10, 1990. Respondent stated that it had no statutory authority to compensate Petitioner for Petitioner's technical and price proposals in the absence of a contract. Respondent neither contracted with Petitioner and Intervenor to pay for their technical and price proposals nor offered to enter into such a contract. Petitioner offered to enter into such a contract and also offered to provide computer tapes containing plans and specifications required in the RFP if Respondent would agree to compensate Petitioner. Repeal of Respondent's Existing Rule Sometime between March 13, 1988, and October, 1988, Respondent considered the payment of funds pursuant to Rule 14-91.006(5) in a design/build project that preceded the RFP. 8/ Respondent requested funds from the comptroller but was advised by the comptroller that no funds could be provided pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent's general counsel confirmed that there was no statutory authority to provide funds pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent took no public action to repeal Rule 14- 91.006(5) until March 16, 1990, approximately two years after the earliest date Respondent could have received the directives from its comptroller and general counsel advising Respondent that Rule 14-91.006(5) exceeded its statutory authority. Instead of formally repealing Rule 14-91.006(5), Respondent followed the comptroller's recommendation to obtain legislative authority to pay funds pursuant to Rule 14- 91.006(5). Respondent unsuccessfully proposed such legislation to the House Transportation Committee during the 1989 legislative session. In November, 1989, Respondent drafted an amendment to Rule 14-91.006 which, in relevant part, repealed Rule 14-91.006(5). Notice of the proposed formal repeal of Rule 14- 91.006(5) was published in the Florida Administrative Weekly on March 16, 1990. The amendment to Rule 14-91.006 was adopted and Rule 14-91.006(5) was formally repealed through appropriate rulemaking procedures on June 13, 1990. During 12 design/build projects, Respondent never paid funds to any firm for technical and price proposals when the firm had not been awarded a contract pursuant to a request for proposals. Respondent never adopted standards for determining the proper timing for payment of funds pursuant to Rule 14-91.006(5). Respondent never adopted standards for determining when it would be in the best interest of the state to provide funds pursuant to Rule 14- 91.006(5). Respondent refused to apply Rule 14-91.006(5) and refused to determine if it would be in the best interest of the state to provide funds to Petitioner and Intervenor for their respective technical and price proposals. The sole reason given by Respondent for its refusal to apply Rule 14-91.006(5) was the lack of statutory authority to provide funds to firms selected for preparation of technical and price proposals in the absence of a contract. Respondent's representatives never considered applying Rule 14- 91.006(5). When Respondent's representatives met with Petitioner shortly before May 10, 1990, they stated that they would like to provide the requested funds and that such funds should be provided, but that no statutory authority existed for providing such funds in the absence of a contract. The signatories to the memorandum from the Final Selection Committee, dated August 31, 1989, never met until after the meeting that took place shortly before May 10, 1990, to discuss payment for the technical and price proposals submitted by Petitioner and Intervenor. When they did meet, it was determined that no statutory authority existed to provide funds pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent never intended to compensate either Petitioner or Respondent for their respective technical and price proposals in the absence of a contract. Respondent never conducted any review of the technical and price proposals prepared and submitted by Petitioner and Intervenor for the purposes described in Rule 14-91.006(5). Two significant factors to be considered in making such a determination, however, would have been the benefit derived by Respondent from the technical and price proposals submitted and the effect that the provision of such funds would have on competition. Best Interest of the State Payment of funds to Petitioner and Intervenor would have been in the best interest of the state within, the meaning of Rule 14-91.006(5). 9/ Respondent derived substantial benefit from the technical and price proposals submitted by Petitioner and Intervenor including a reduction in the cost of State Project Nos. 97890-3325 and 97930-3324 in the approximate amount of $3.6 million. The fair market value of the proposals submitted by Petitioner and Intervenor was between $500,000.00 and $700,000.00 for each of the two proposals. All of the plan sheets and drawings were completed. The plans were prepared in accordance with Respondent's criteria for plan preparation. Every detail was followed and a complete maintenance of traffic plan was included. Where bridges were designed, the bridge calculations were included. Very little work was left to be done. In order to price out a project of the magnitude and scope required in the RFP, the technical proposals had to be very close to final design. Petitioner's technical proposal for both projects contemplated in the RFP was recorded on magnetic media in Petitioner's computer automated drawing machine. The magnetic media files could be easily transferred to Respondent. Petitioner at all times was ready, willing, and able to make such a transfer if Respondent had agreed to provide funds to Petitioner pursuant to Rule 14- 91.006(5). A great deal of valuable information was contained in the technical proposals prepared and submitted by Petitioner and Intervenor. Eighty to 90 percent of the engineering decisions were made and depicted either on the preliminary drawings or within the calculations included in the technical proposals. Information gathering and coordination with local permitting agencies, including Lake Worth, was a major component of designing and building the projects described in the RFP. Those kinds of activities required a good deal of time from higher level personnel in each organization. Respondent derived benefit from the technical proposals prepared by Petitioner and Intervenor irrespective of whether bridges or culverts are ultimately used at the canal crossings in the RFP. The only change that would be required would be to erase the bridges and insert details for a culvert crossing. Respondent derived benefit from the technical proposals prepared by Petitioner and Intervenor with respect to the projects contemplated in the RFP and similar projects in the future. Respondent can "relet" the project in the future and intends to do so. 10/ Respondent has retained the technical and price proposals submitted by Petitioner and Intervenor pending the outcome of this proceeding. Respondent's unwritten policy is to either return technical and price proposals to their offerors or destroy such proposals upon the concurrence of the, appropriate offeror. After this proceeding is concluded, Respondent intends to either return or dispose of the technical and price proposals submitted by Petitioner and Intervenor in a manner consistent with its unwritten policy. Reliance On Respondent's Existing Rule Petitioner and Intervenor were aware of Rule 14-91.006(5) in preparing and submitting their respective technical and price proposals. Neither Petitioner nor Intervenor, however, presented evidence of the extent to which they may have relied on Rule 14-91.006(5). Petitioner and Intervenor did not demonstrate that they were induced by Rule 14-91.006(5) to respond to the RFP or that Rule 14-91.006(5) was even a material or significant consideration to them. Payment of funds pursuant to Rule 14-91.006 (5) was neither addressed in the RFP nor discussed by the parties prior to Respondent's rejection of all price proposals. The record leaves open to speculation whether Petitioner and Intervenor would not have responded to the RFP in the absence of Rule 14- 91.006(5).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner's written formal protest should be DENIED; Respondent should return the respective technical and price proposals to Petitioner and Intervenor; Respondent should not provide funds to either Petitioner or Intervenor pursuant to former Rule 14-91.006(5). DONE AND ORDERED in Tallahassee, Leon County, Florida, this 10th day of January, 1991. DANIEL MANRY 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 10th day of January, 1991.
The Issue Whether Florida Administrative Code Rule 61G16-9.001 is an invalid exercise of legislatively delegated authority in violation of Section 120.52(8), Florida Statutes, and whether certain statements of the Department of Business and Professional Regulation (DBPR or the Department) are "agency statements" defined as rules that should be adopted through the rulemaking process pursuant to Section 120.54, Florida Statutes.
Findings Of Fact Petitioner, Dr. Bacchus, is a hydroecologist with a multidisciplinary degree. While Dr. Bacchus lives in Georgia, she alleges that a substantial amount of her income comes from conducting environmental consulting services in Florida. According to her Amended Petition, Dr. Bacchus is not licensed by the Department. Respondent, Department of Business and Professional Regulation, is the state agency charged with the licensing and regulation of a variety of professions. The practice of geology is among the professions it regulates, pursuant to Chapters 455 and 492, Florida Statutes. Created within the Department is the Board of Geology. Petitioner is the subject of an Administrative Complaint issued on or about September 27, 2006, charging her with the unlicensed practice of geology in violation of Section 492.112(1)(a), Florida Statutes (2005). The Administrative Complaint, which is attached as an Exhibit to the Amended Petition, does not cite to any rules. As of the date of hearing, the Administrative Complaint had not been referred to the Division of Administrative Hearings Petitioner does not allege that she has any intention of seeking licensure from the Department. Florida Administrative Code Rule 61G16-9.001 Florida Administrative Code Rule 61G16-9.001 is a rule adopted by the Board of Geology, as opposed to the Department of Business and Professional Regulation. The rule, entitled "Disciplinary Guidelines," identifies the range of penalties normally imposed by the Board of Geology against licensees for violations of provisions in Chapters 455 and 492. All of the possible violations addressed by the Disciplinary Guidelines are statutory violations. The rule is lengthy and will not be repeated ver batim. The text of subsections (1) and (2) are tables of penalty ranges. Subsection (1) deals with violations of provisions in Chapter 492, whereas subsection (2) of the rule addresses violations of Chapter 455. Subsection (3) is entitled "The Usual Conditions" and outlines provisions that are included in all disciplinary orders; conditions imposed whenever fines and costs are imposed; conditions which may be imposed with probation; and conditions which may be imposed when a license is suspended. Subsection (4) identifies the purpose of the Disciplinary Guidelines, and states: (4) Purpose of guidelines -- The range of penalties set forth above is the range from which disciplinary penalties will be imposed upon licensees guilty of violations of the laws and rules. The purpose of these guidelines is to give notice of the range of penalties which will normally be imposed for specific violations. The guidelines are based upon a single count violation of the provision listed. Multiple counts of violations of the same provision, or unrelated provisions of the law or rules will be grounds for enhancement of penalties or imposition of additional penalties. [Emphasis supplied.] Subsection (5) of the rule addresses aggravating and mitigating circumstances to be considered when imposing penalty, and subsection (6) identifies those instances when the Department may issue a Notice of Noncompliance. The rule lists as its specific authority Sections 455.2273, 492.104(1), and 492.113(3), Florida Statutes. The laws implemented are Sections 455.227, 455.2273, 492.104(1), and 492.113(2), Florida Statutes. Section 455.227, Florida Statutes, identifies "across- the board" acts that constitute grounds for which disciplinary action may be taken by professional licensing boards or by the Department, where no professional licensing board exists. The penalties that can be imposed are the refusal to certify, or certify with restrictions, an application for a license; suspension or permanent revocation of a license; restriction of practice; imposition of an administrative fine; issuance of a reprimand; placement of a licensee on probation; or corrective action. Section 455.2273, Florida Statutes (2006), provides in pertinent part: 455.2273 Disciplinary Guidelines Each board, or the department where there is no board, shall adopt, by rule, and periodically review the disciplinary guidelines applicable to each ground for disciplinary action which may be imposed by the board, or the department where there is no board, pursuant to this chapter, the respective practice acts, and any rule of the board or department. Section 492.104(1), Florida Statutes (2006), provides: The Board of Professional Geologists has authority to adopt rules pursuant to ss. 120.536(1) and 120.54 to implement this chapter. Every licensee shall be governed and controlled by this chapter and the rules adopted by the board. The board is authorized to set, by rule, fees for application, examination, certificate of authorization, late renewal, initial licensure, and license renewal. These fees should not exceed the cost of implementing the application, examination, initial licensure, and license renewal or other administrative process and shall be established as follows: The application fee shall not exceed $150 and shall not be refundable. Section 492.113(2), Florida Statutes (2006), states that the Board of Geology shall specify what acts or omissions constitute a violation of section (1) of the section, which is entitled "Disciplinary Proceedings." Subsection (1) identifies several different grounds for which disciplinary action may be taken against a licensee. While Section 492.113(2) is listed as a law being implemented by Rule 61G16-9.001, the Rule does not specify any acts or omissions constituting a violation of Section 492.113(1), Florida Statutes. It simply paraphrases the statutory language of each statutory provision and gives a range of penalties for each violation. Agency Statements as Rules Petitioner also attempts to challenge agency statements and agency actions not adopted as rules. The Amended Petition states: 2. . . . Examples of the text and description of the statements and agency actions, pursuant to § 120.56(4)(a), F.S. and as defined in § 120.52, F.S., are provided in the Department's: Administrative Complaint against Petitioner, SYDNEY T. BACCHUS, Ph.D. (hereinafter "Dr. Bacchus") signed on September 27, 2006, attached and incorporated by reference hereto as Exhibit A; Undated Settlement Stipulation accompanying the above-referenced Administrative Complaint against Dr. Bacchus, attached and incorporated by reference hereto as Exhibit B. Cease and Desist Order against Dr. Bacchus signed on February 15, 2006, attached and incorporated by reference hereto as Exhibit C. Complaint No. 2005056737 against Dr. Bacchus signed on January 26, 2006 and threatening criminal charges, attached and incorporated by reference hereto as Exhibit D; and Complaint No. 2003063556 against Dr. Bacchus signed on May 22, 2003 and threatening criminal charges, attached and incorporated by reference hereto as Exhibit E. [Emphasis Supplied.] Failure to Adopt Rules Petitioner apparently also seeks to address the failure of the Department to adopt rules identifying what acts constitute the unlicensed practice of geology. The Amended Petition states in pertinent part: In 1987, the Board was authorized to govern and control every licensed professional geologist, pursuant to s. 4, ch. 87-403, Laws of Florida. The Board was not authorized to govern and control persons not licensed as a professional geologist. In 1987, the Department was mandated to "specify, by rule what acts or omissions constitute a violation" of the "[P]ractice of geology," pursuant to subsection (2) s. 12, ch. 87-403 Laws of Florida. * * * 46. The Department has failed to specify, by rule, "what acts or omissions constitute a violation" of the "[P]ractice of geology," to allow an unlicensed person to "know" what constitutes the practice of geology. In the absence of such specificities, a person cannot "knowingly" engage in the unlicensed "[P]ractice of geology" or "knowingly employ unlicensed persons to practice geology, pursuant to subsection (1) s. 12, ch. 87-403 Laws of Florida. [Emphasis in original.] Petitioner's Unilateral Pre-Hearing Statement does not mention Rule 61G16-9.001. Petitioner's statements identifying what she views as the scope of the proceeding state the following: Brief General Statement of Petitioner's Position The Department is regulating unlicensed members of the public under Chapters 492 and 455 Florida Statutes, using unpromulgated rules and rules that are an invalid exercise of delegated legislative authority. Such unlawful regulation violates the constitutional freedom of speech of unlicensed persons. The Department is impermissibly encroaching on the powers of the judiciary. * * * Issue of Fact that Remain to be Litigated 1. Whether the Department is regulating unlicensed members of the public under Chapters 492 and 455 Florida Statutes, using unpromulgated rules and rules that are an invalid exercise of delegated legislative authority. Issue of Law that Remain to be Litigated Whether the Department exceeded its lawful delegation of authority to regulate the "practice of professional geology" in the manner in which it is being regulated in Florida. Whether the Department has failed to give adequate notice to the public regarding what constitutes the unlicensed "practice of professional geology" in Florida. Whether the Department's rules are over- broad, vague, and are in invalid exercise of delegated legislative authority. . . . Whether the Department was required to promulgate rules to regulate the unlicensed "practice of professional geology" in Florida, but failed to promulgate those rules. Whether the Department has been engaged in a pattern of action that constitutes an unpromulgated rule. Whether the Department's recent regulation of the "practice of professional geology" in Florida constitutes selective enforcement. Petitioner was questioned at length during the consideration of the Motion to Dismiss regarding the basis of her challenge. She indicated not that she was concerned with the application of Rule 61G16-9.001 against her, but that she wished to challenge the entire regulatory scheme: THE COURT: . . . Doctor, all the disciplinary guideline rule does is name a statutory or rule violation. It paraphrases the statute itself. It doesn't provide any additional language to my knowledge and provides what penalty would be imposed should a licensee violate one of those statutory provisions. It doesn't -- and as I look at this, it doesn't even have any rule violations. Its statutory. DR. BACCHUS: Yes, Your Honor, I understand that, and I understand that it is confusing, but in fact I had received two charges from the department over a period of -- beginning -- I received the first notice in 2003 for a complaint filed I believe the previous year, and then second complaint that I received early in 2006 for a complaint filed against me in 2005 basically alleging that I was producing documents that in fact were required to have the seal and signature of a licensed geologist. So in fact the agency is regulating unlicensed persons using the language from 61G16 despite the fact that they are not referencing the rule citation. You know, I'm an unlicensed individual, complaints are being filed against me because I am producing documents that have only my name. No reference to the title of professional geology, no insinuation that I am a geologist, a professional geologist, a licensed professional geologist, no reference to that whatsoever, yet complaints are being filed against me with the department and they are taking action against me. THE COURT: But again, getting back to this rule. Even assuming -- and the merits of your administrative complaint are not before me and we're not going to talk about them. DR. BACCHUS: Yes, Your Honor, I understand. THE COURT: But even assuming that, even assuming that the department were going to take action against you based on whatever is charged in that administrative complaint, how is this rule -- you're not going to be -- this rule specifically says licensees. DR. BACCHUS: Yes, Your Honor, I understand that, but that's not how its being applied by the Department. I understand that this hearing is not a hearing to be addressing my complaints, but as I understand, my complaints are relevant with regard to my standing for this issue before the court today. And in fact because of the actions of the department against me, you know, multiple complaints can be filed against me for any written document that I have produced in the past or any written document that is pending, peer-reviewed publications that are pending to be released, because I don't have a license, they are using that language without referencing that rule to take action against me, your Honor. THE COURT: But again, you're saying they're not referencing that rule. DR. BACCHUS: That's correct, Your Honor. They're not referencing that, but because there is no comparable rule that has been promulgated and adopted and is being implemented for unlicensed activities, there is only the statute they are referencing, only 492 and 455, and because there isn't a comparable rule to 61G16 for unlicensed people, then by nature you have to look at what the licensed activity is to determine what the unlicensed activity is. Similarly, with respect to the actions taken by the Department against her personally, Dr. Bacchus asserted that these actions, which she characterizes as agency statements, give her standing to file this rule challenge. However, she does not allege that the Department's actions necessarily give her standing to challenge the specific rule alleged in the Amended Petition: THE COURT: So what is your position in terms of standing? These agency statements give you standing to challenge what? DR. BACCHUS: To challenge the regulation of unlicensed practice of professional geology in Florida. Because the broad sweeping net they are casting, Your Honor, encompasses every form of speech, every form of written document that I produce, whether it is a peer-reviewed publication, whether it is a comment letter to a public agency proposed action, I would have to challenge every single act. I literally cannot act until I am able to know what constitutes the practice of professional geology and the statute does not tell me that. Finally, with respect to what Dr. Bacchus describes as "illegal unpromulgated rules," Dr Bacchus described the unpromulgated rule as "this sweeping action, the fact that the statute does not define geological services, the statute does not define geological documents, yet the agency is taking action not only against me but against a myriad [of] other people for theoretically actions that constitute geological services."
The Issue Whether the Petitioners are entitled to an award of attorneys' fees and costs pursuant to Sections 120.569(2)(e) and 120.595(1), Florida Statutes, and, if so, in what amounts.
Findings Of Fact On October 3, 2001, AHCA served three Administrative Complaints on HHCI, apparently intending to revoke HHCI's licenses to operate nursing homes on the basis of a retroactive application of Section 400.121(3)(d), Florida Statutes (2001). The statute states in pertinent part: (3) The agency shall revoke or deny a nursing home license if the licensee or controlling interest operates a facility in this state that: * * * (d) Is cited for two class I deficiencies arising from separate surveys or investigations within a 30-month period. HHCI filed petitions challenging AHCA's allegations in the Administrative Complaints. On October 12, 2001, HHCI filed a challenge to the non- rule policy of retroactive application (DOAH Case No. 01-3935RU) and a hearing was scheduled for October 23, 2001. The Petitions in the Administrative Complaint cases were forwarded by AHCA to DOAH on October 19, 2001, and were consolidated under DOAH Case No. 01-4124. The Final Order in Case No. 01-3935 RU, declaring AHCA's policy of retroactive application invalid, was issued on October 31, 2001. HHCI filed a Motion for Award of Attorney's fees in DOAH Case No. 01-4124 on November 2, 2001. That motion forms the basis for the instant case. At the time the Administrative Complaints were filed, the three HHCI facilities held standard licenses and were apparently operating in compliance with applicable law, with no unresolved survey violations pending. The day after the Administrative Complaints were served, AHCA issued a press release and scheduled a telephonic "media call-in" to reply to questions from interested press representatives. The result of the media attention was to cause great concern to both HHCI and the residents of their facilities as to the proposed closure of the facilities. AHCA distributed a letter to residents indicating that unless HHCI challenged the action, the facility would be closed in approximately 60 days. The AHCA letter advised residents that if HHCI challenged the proposed action, the proposed action "may be delayed." The AHCA letter did not indicate that any resolution of the dispute other than facility closure was possible. The result of the attention and statements by AHCA's representative was to cause great concern among residents and their families as to what living arrangements would be available for residents of the facilities. AHCA also placed monitors in each facility to discuss the pending action with residents and their families, as well as to observe the facility operations. There is no evidence that the placement of monitors in the facilities offered any level of comfort to residents or families. The monitors also apparently began citing the facilities for alleged additional violations of various regulations. In response, HHCI officials immediately sought legal counsel to address the situation. Counsel at the Washington, D.C., law firm, Proskauer Rose, became involved in representing HHCI. HHCI also retained Counsel in the Tallahassee office of the Broad and Cassel law firm, with whom it had no prior relationship. HHCI directed its legal team to review all possible options to resolving the matter expeditiously. Counsel considered both federal and state court action and filed a request for injunction in state court. HHCI also attempted to resolve the matter informally. On October 8, 2001, HHCI obtained an opinion from the Joint Administrative Procedures Committee (JAPC), a standing committee of the Florida Legislature, which concluded that "a strong legal argument" could be made that the retroactive application of the statute was improper. There is no evidence that AHCA considered the JAPC opinion. In any event, because informal attempts to resolve the matter were unsuccessful, HHCI legal counsel began an intensive effort to defend the company against the AHCA action. The Final Order in Case No. 01-3935RU held that there was an absence of legal authority to apply the new law retroactively. There was no appeal of the Final Order. After the Final Order was issued, AHCA abandoned the Administrative Complaints that sought to revoke HHCI's licenses and close the facilities. In this proceeding, HHCI seeks fees it incurred for the Broad and Cassel and the Proskauer Rose law firms and for presentation of the testimony of Al Clark at the fee hearing. HHCI presented nine invoices from Broad and Cassel that were admitted as HHCI Exhibit 1. The invoices submitted in this case do not duplicate time that was invoiced as part of the rule challenge-related fee case. Invoice #469914 dated November 1, 2001, is for a total of $23,835.87, including fees of $23,565 and costs of $270.87. The majority of the work in these cases was performed in October. The invoice indicates time spent considering several theories of defense to the complaints. Invoice #474211 dated December 1, 2001, is for a total of $2,282.02, including fees of $1,981.50 and costs of $300.52. Invoice #479185 dated January 2, 2002, is for a total of $257.59, including fees of $245 and costs of $12.59. Invoice #491866 dated February 9, 2002, is for a total of $5,463.05, including fees of $5,116.50 and costs of $346.55. Invoice #496833 dated April 3, 2002, is for a total of $161.74, including fees of $147 and costs of $14.74. Invoice #505207 dated June 7, 2002, is for a total of $738.68, including fees of $735 and costs of $3.68. Invoice #507485 dated July 2, 2002, is for a total of $296.17, including fees of $294 and costs of $2.17. Invoice #515997 dated October 2, 2002, is for a total of $1,625.93, including fees of $1586 and costs of $39.93. Invoice #516952 dated October 16, 2002, is for a total of $2,903.35, including fees of $2878 and costs of $25.35. HHCI presented the testimony of Al Clark, who was accepted as an expert on the issue of attorney fees. Mr. Clark testified as to the reasonableness of the fees and costs charged to HHCI by the Broad and Cassel law firm. Mr. Clark's testimony was not contradicted and is credited. The time and labor expended by employees of the Broad and Cassel law firm were reasonable in light of the legal issues presented by the administrative actions proposed by AHCA. The presumed goal of AHCA's action was to revoke the licensure of HHCI's three nursing homes. Broad and Cassel provided the substantial skill and expertise required to supply the necessary legal services. Broad and Cassel billed HHCI at an hourly rate. The hourly rates charged by Broad and Cassel personnel are reasonable. The rates ranged from $245 per hour for lead counsel to $90 per hour for support counsel. There was no prior business relationship between Broad and Cassel and HHCI. Broad and Cassel counsel has significant experience and skill in health care law and provided their services efficiently throughout the dispute. Because the proposed sanction was severe, and because the agency publicized its legal action, HHCI required an immediate legal response resulting in an intense initial amount of work by Broad and Cassel. Broad and Cassel personnel represented HHCI legal interests throughout the administrative proceedings and prevailed in defending against the proposed administrative action. Subsequent to the hearing, HHCI submitted Mr. Clark's invoice for $1,012.50. Mr. Clark's invoice reflects a reasonable effort expended in addressing the costs and fees at issue in this case. At the hearing, Mr. Clark further testified that an amount up to $10,000 would be possible for the resolution of this fee case. At this time, none of this expense has been incurred and is not properly awarded. Based on the foregoing, HHCI has satisfied the factors set forth in Florida Bar Rule 4-1.5(b) related to awards of fees and costs in this case, and is entitled to an award of fees and costs for the Broad and Cassel billing and for Al Clark's invoice. Mr. Clark was not asked for, and did not offer, an opinion about the reasonableness of the Proskauer Rose fees. There is no credible evidence supporting an award of fees for work performed by the Proskauer Rose firm. Based on the testimony presented during the hearing, the evidence fails to establish that the charges by the Proskauer Rose firm as set forth on the exhibit are reasonable. Billing records admitted into evidence as HHCI Exhibit 3 contain references to regulatory matters not directly at issue in the proceedings giving rise to this request for fees. Such additional matters include nursing home surveys performed in October 2001, preparations for informal dispute resolution (IDR) meeting related to survey issues, and regulatory matters occurring in other states. The IDR preparations, although apparently prompted by alleged problems identified by the monitors, were not at issue in the Administrative Complaints that form the basis for this fee request. Although HHCI asserts that an Administrative Law Judge, hearing the Administrative Complaints seeking license revocation, could have considered the alleged problems, such allegations would have required amendment of the pending Administrative Complaints. More likely, the allegations would have been the subject of new Administrative Complaints that would have been litigated separately, and, as such, costs related to IDR preparation are not properly awarded in the instant case. Further, the Proskauer Rose invoices indicate that hours billed on one invoice in "File #84028.0014" for October 12 (description beginning with "review faxed 256") and October 22 (description beginning with "Meeting with S. Davis and C. Schessler re preparation for IDR") were also billed on another invoice in "File #84028.0015." Duplicate billings would not support an award of attorney fees. AHCA'S MOTION FOR SUMMARY JUDGMENT On April 9, 2002, HHCI, a foreign limited partnership operating in the State of Florida, canceled the registration of HHCI Limited Partnership with the Florida Department of State. HHCI Limited Partnership continues to operate in other states and is registered in Massachusetts.
The Issue Whether Petitioner, M.B. Doral, is entitled to attorneys’ fees and costs pursuant to section 120.595(4), Florida Statutes (2019); and, if so, the amount.
Findings Of Fact On December 21, 2018, Petitioner MB Doral filed a Petition Challenging Validity of Existing Rule 61A-4.020 and Determination Regarding Unadopted Rule, in DOAH Case Number 18-6768RX. On January 25, 2019, the undersigned entered an Order Granting Respondent’s Motion to Bifurcate and Stay Proceedings, which stayed MB Doral’s unadopted rule challenge pending the proposed rulemaking that would promulgate ABT Form 6017. On October 16, 2019, amendments to rule 61A-4.020 became effective, which promulgated ABT Form 6017. On November 6, 2019, the undersigned entered an Order Dismissing Unadopted Rule Challenge and Retaining Jurisdiction, which dismissed MB Doral’s remaining unadopted rule challenge and retained jurisdiction to consider a request for attorneys’ fees and costs, pursuant to section 120.595(4)(b). On December 3, 2019, MB Doral filed a Motion for Attorneys’ Fees and Costs (Motion), seeking an award of attorneys’ fees and costs incurred in the unadopted rule challenge pursuant to section 120.595(4)(b). The Motion alleges that MB Doral advised the Department, in writing on at least seven occasions prior to filing the rule challenge petition, and beginning on May 19, 2015, that the Department’s failure to adopt ABT Form 6017 constituted an unadopted rule. The Motion also alleges that the Department did not file a notice of rulemaking until January 28, 2019. The Motion further alleges that the Department has never alleged that the federal government required ABT Form 6017 to implement or retain a delegated or approved program or to meet a condition to receipt of federal funds. On December 10, 2019, the Department filed its Response in Opposition to Petitioner’s Motion for an Order Awarding Attorneys’ Fees and Costs. On February 11, 2020, the Department filed a Notice of Filing Joint Stipulation for Attorneys’ Fees and Costs, which included the Joint Stipulation for Attorneys’ Fees and Costs. The Joint Stipulation states that the Department agrees to the entry of a final order assessing the sum of $7,500.00 for attorneys’ fees and costs in the unadopted rule challenge, which the undersigned bifurcated from the existing rule challenge in DOAH Case No. 18-6768RX, which is currently pending before the First District Court of Appeal in Case Number 1D19-0820. The Joint Stipulation further states that the parties agree that this Final Order should direct the Department to seek immediate approval for payment within 30 days of this Final Order, and that the undersigned retains jurisdiction to enforce the terms of this Final Order.
The Issue Whether the Petitioner is entitled to fees and costs pursuant to Section 120.595(4), Florida Statutes.
Findings Of Fact The Respondent is the state agency responsible for licensing and regulating skilled nursing homes in Florida pursuant to Chapter 400, Florida Statutes. At all times material to the underlying case, the Petitioner operated or controlled three licensed skilled nursing facilities: Harborside Healthcare-Pinewood, Harborside Healthcare-Sarasota, and Harborside Healthcare-Naples. In October of 2001, the Agency filed Administrative Complaints against the Petitioner's three facilities. As to each complaint the Agency relied upon its interpretation of Section 400.121(3)(d), Florida Statutes. The Agency's interpretation of the statute went beyond the plain and unambiguous language of the law. Moreover, such interpretation had not been promulgated by rule. If the interpretation was intended to be the policy of the Agency, the implementation of the policy was not authorized by the statute. The Petitioner pursued three legal strategies: it filed an injunction proceeding in circuit court, a petition to challenge the unpromulgated rule, and vigorously defended the administrative actions filed against its facilities. In so doing, the Petitioner incurred legal expenses and costs necessitated by the Agency's implementation of a policy that had not been established through rule-making procedures. Petitioner's rule challenge alleged that the Agency had failed to follow any rule-making procedures; had enlarged, modified, and contravened the specific provisions of the law; and had implemented a policy that was arbitrary and capricious. Due to the severity of the penalties the Agency sought to impose against the Petitioner, the damage to its reputation in the communities it served, and the resident fear and uncertainty at the facilities, the Petitioner sought and was granted an expedited hearing on the rule challenge. The "Wherefore" clause of the Petitioner's rule challenge clearly stated that Petitioner sought an award of attorneys' fees and costs pursuant to Section 120.595, Florida Statutes. Petitioner had retained outside counsel to pursue each of its legal strategies. On October 31, 2001, a Final Order was entered in the underlying case that directed the Agency to cease and immediately discontinue all reliance on the policy that had not been promulgated through rule-making procedures. That Final Order has not been appealed. The Final Order did not retain jurisdiction for purposes of addressing the Petitioner's request for attorneys' fees and costs. The instant case was opened when the Petitioner filed a motion for attorneys' fees and costs subsequent to the entry of the Final Order in DOAH Case No. 01-3935RU. The matter was assigned a new case number as is the practice of the Division of Administrative Hearings in ancillary proceedings. Accordingly, the instant case, DOAH Case No. 01-4283F, was designated a "fee" case (hence the F at the end of the case number). The initial order entered through the DOAH clerk's office erroneously designated that the fees were sought pursuant to Section 59.11, Florida Statutes. Nevertheless, after the time for appeal of the Final Order (DOAH Case No. 01-3935RU) had elapsed, the matter was scheduled for final hearing. Carole Banks is an attorney employed by the Petitioner as an in-house counsel and director of risk management for the three facilities identified in this record. Ms. Banks is also a registered nurse and has been a member of the Florida Bar since April of 1998. Ms. Banks receives a salary from the Petitioner and is required to perform duties typically associated with her full-time job. Due to the filing of the Administrative Complaints against the facilities, Ms. Banks was required to expend additional time to assist outside counsel to defend the facilities. A portion of that time was attributable to the rule challenge case (DOAH Case No. 01-3935RU). Based upon the testimony of this witness and the exhibits received into evidence it is determined Ms. Banks expended 19.8 hours assisting in the prosecution of the rule challenge case. An appropriate rate of compensation for Ms. Banks would be $150.00 per hour. There is no evidence, however, that the Petitioner was actually required to pay Ms. Banks overtime or an appropriate rate of compensation for her additional work. K. Scott Griggs is an attorney employed by the Petitioner. Mr. Griggs serves as vice president and General Counsel for the Petitioner and is located in Massachusetts. Mr. Griggs did not testify, was not available to explain his time-keeping records, and none of the exhibits in this cause indicate how Mr. Griggs is compensated for his services or what his specific duties entail. While it is certain Mr. Griggs assisted counsel in the prosecution of the underlying case, without relying on hearsay, no determination as to the amount of time spent and the hourly rate that should be applied to such time can be reached. In order to fully protect the Petitioner's interests and those of its residents, the Petitioner retained outside counsel in the underlying case. The law firm of Broad & Cassel was hired to defend the administrative actions, seek injunctive relief, file the underlying case, and pursue other administrative remedies to assist the client. By agreement, Petitioner was to pay the following hourly rates: partners were to be compensated at the rate of $245.00 per hour, associates were to receive $175.00 per hour, and paralegals were entitled to $90.00 per hour. In this case, four partner-level attorneys from Broad and Cassel expended time in furtherance of the client's causes. After reviewing the time records and testimony of the witnesses, it is determined that the partners expended at least 172.6 hours associated with the underlying rule challenge. Additionally, an associate with the Broad & Cassel firm expended not fewer than 12.1 hours that can be directly attributed to the rule challenge case. Additional hours expended contributed to the success of the rule challenge. The Petitioner also incurred costs and expenses associated with the rule challenge. A paralegal expended 4.6 hours (with a $90.00 per hour rate) making copies of the documents used at the hearing. Other costs included court reporter fees, transcripts, telecopy charges, and expert witness fees. It is determined that the Petitioner has incurred $5819.15 in recoverable costs associated with this case and the underlying rule challenge. The hourly rates sought by the Petitioner are reasonable. The time and labor expended by the Petitioner to vigorously protect its legal interests was reasonable given the severity of the penalty sought by the Agency and the circumstances faced by the client. The Petitioner benefited from the efforts of counsel. Due to the time constraints and immediate ramifications faced by the Petitioner, special time and requests were made of the attorneys performing the work for the underlying case. In some instances, the attorneys were required to devote an extensive amount of time to address the client's interests to the exclusion of other work. This was the first time the Broad & Cassel firm had been retained to represent the client. As a result, the attorneys did not have the benefit of a long-term understanding of the facilities and the client's needs. The Broad & Cassel firm and the attorneys assigned to this matter have considerable experience and demonstrated considerable skill, expertise, and efficiency in providing services to the client. Had the Petitioner not prevailed, its ability to honor its hourly agreement with counsel may have been jeopardized. The Agency's expert recognized the difficulties presented by the case and opined that a proper fee would be $42,908. Such amount did not include attorney time spent in preparing for, conducting the fee hearing, or post-hearing activities. Such amount did not cover the amounts depicted in the billing statement from the Broad & Cassel firm. The Petitioner was required to retain expert witnesses to address the fees sought. The calculation of attorney's fees in this cause is complicated by the fact that none of the fees sought would have been incurred by the Petitioner had the Agency not implemented an unlawful policy. That is, had the non-rule policy not been utilized to support Administrative Complaints against the three facilities, none of the fees sought would have been incurred. The Petitioner presented a "shot-gun" approach pursuing every avenue available (including the underlying rule challenge) to dissuade the Agency from pursuing its action against the facilities. Only the rule challenge proved successful. Had the rule challenge not proved successful, residents would have been relocated from their homes. The Petitioner would have incurred extensive financial loss. William E. Williams and Carlos Alvarez testified as experts on behalf of the Petitioner. Their testimony has been considered and their opinions regarding the reasonableness of the fees sought by Petitioner has been deemed persuasive. Based upon the totality of the evidence presented, it is determined that the Petitioner prevailed in the rule challenge. The Agency has not demonstrated that the non-rule statement was required by the Federal Government to implement or retain a delegated or approved program or to meet a condition governing the receipt of federal funds. The formal hearing for fees in this cause lasted 4.75 hours. Petitioner's counsel expended time in preparation for the hearing and in post hearing activities. A reasonable fee associated with that time would not be less than $15,000.00.
