The Issue Whether petitioner should impose fines and other administrative sanctions against respondents, and order them "to cease and desist from further violating Florida laws and take appropriate corrective action," for the reasons alleged in the administrative complaint?
Findings Of Fact Credicorp, Incorporated (Credicorp) is a Texas corporation whose principal place of business is located in Dallas, Texas. Credicorp is not licensed pursuant to Chapter 520, Florida Statutes, and never has been. Originally incorporated in 1990 under the name FAFCO, Credicorp began mailing solicitations to Florida in November of 1990. John Rheinfrank was president of Credicorp from November of 1990 until October of 1992. T. at 15. Since then, Stevan Brown, who has been corporate secretary at all pertinent times, has served as president. Credicorp has no employees or agents in Florida, and owns no property in Florida. Credicorp has not registered to do business in Florida and does not collect Florida sales or use taxes. Credicorp mails solicitations, also called invitations, to Florida residents and others. Before the corporate name change, invitations sent to prospects read as follows: TELEGRAM APPROVAL NO: [account number specified] APPROVAL EXPIRATION DATE: [date specified] [Name and address of targeted individual] YOU HAVE BEEN PRE-APPROVED FOR A GOLD CARD WITH A $10,000.00 LINE OF CREDIT. *MAIL YOUR $29.95 ANNUAL FEE BY CHECK OR MONEY ORDER BY (specified date) ALONG WITH THIS SIGNED NOTICE TO ACTIVATE YOUR CREDIT IMMEDIATELY. FAILURE TO DO SO WILL RESULT IN OUR REEVALUATION OF YOUR ELIGIBILITY. PLEASE RETURN THIS TELEGRAM WITH PAYMENT BY (date specified). MAKE CHECK OR MONEY ORDER PAYABLE TO FAFCO GOLD CARD. SINCERELY, ROBERT J. ARMSTRONG, NEW ACCOUNTS MANAGER RESPOND TODAY! Petitioner's Exhibit No. 19. Robert J. Armstrong, the putative accounts manager, does not exist. T. at 121. Recently invitations have included a 60- day money-back guarantee and a disclaimer in small type disclosing Credicorp's lack of affiliation with a financial institution. Petitioner's Exhibit No. 19. The solicitation arrives in an envelope stamped "DATED MATERIAL: YOUR IMMEDIATE REPLY REQUESTED," and the return address is shown as "CREDIT APPROVAL DEPT." Petitioner's Exhibits Nos. 8 and 21; Admission No. 13. Ordinarily the solicitation contains all the information an individual receives before paying money to Credicorp to secure its services. Respondents offer potential customers residing in Florida a "Gold Card" with "a $10,000 line of credit" at a 12 percent annual interest rate, in exchange for a $29.95 fee. Petitioner's Exhibits Nos. 19 and 20; Admission 46. The services Credicorp in fact provides to members are offers to sell merchandise, loans for purchasing the merchandise that Credicorp sells, assorted coupons, and hotel and rental car discounts. Petitioner's Exhibits Nos. 15 and 29, line 23. Not one of these services is clearly identified on the initial solicitation sent to potential members. Petitioner's Exhibit No. 19; T. at 120- 121. After the customer submits a pre-approved application and pays the membership fee, Credicorp mails a "fulfillment package." Petitioner's Exhibit No. 15, p.77, line 22. The customer must pay a $29.95 fee before Credicorp performs any service on the customer's behalf. Petitioner's Exhibit No. 20; Admission No. 47. The fulfillment package contains a letter that states, in part: WELCOME TO CREDICORP, YOUR LINE OF CREDIT IS $10,000 HERE IS YOUR CREDICORP MEMBERSHIP CARD! ACCOUNT # START USING YOUR CREDICORP MEMBERSHIP AND BONUS COUPONS IMMEDIATELY TO PURCHASE NAME BRAND PRODUCTS FROM OUR HOME VALUES AND GIFT CATALOG. ENCLOSED IS OUR GIFT TO YOU, YOUR PREFERRED MEMBER SAVINGS COUPON BOOKLET WORTH UP TO $1,000.00 IN COUPONS REDEEMABLE IN YOUR AREA. ALSO SEE INFORMATION ENCLOSED ABOUT 50 percent DISCOUNTS AT THOUSANDS OF LOCATIONS THROUGH OUT THE U.S. Petitioner's Exhibit No. 6. This letter is the first notice Credicorp gives the "new member" that he or she has joined a catalogue shopping club. The fulfillment package also contains a second letter addressed "Dear New Credicorp Member," a copy of the Credicorp Rules and Regulations, a collection of Home Values and Gifts Bonus Coupons, a booklet of Super Saver coupons, and the Home Values and Gifts catalogue. For the past six months or so, Petitioner's Exhibit No. 16, p.44, the package has contained an application for a "Privilege Card." Petitioner's Exhibits Nos. 1, 2 6, and 15, p. 78 1. 22. A member can purchase merchandise listed in the Home Values and Gifts catalogue by completing order forms contained in the catalogue and mailing them, along with payment, to Credicorp. T. at 108. Credicorp extends members a line of credit of up to $10,000 to purchase this merchandise. T. at 108, 111. The member's "Gold Card" number must be included when ordering products from the catalogue. Petitioner's Exhibit No. 15, p. 83, line 9. A member cannot use the "Gold Card" to purchase goods or services from retail sellers other than Credicorp. T. at 111-114. Members cannot use their "Gold Cards" or their membership to obtain cash from anybody. The Better Business Bureau of Texas received over 34,000 inquiries in 1992 regarding Credicorp's activities. T. at 122-123. Credicorp receives a mark-up on the merchandise it sells members. Petitioner's Exhibit No. 16, p.60, line 5. Members who purchase merchandise on credit must initially submit a specified down payment with the order. Petitioner's Exhibits Nos. 1, 2 and 14. Two prices are available to a Credicorp member, a cash price and a "credit price," which reflects a 12 percent financing fee. Petitioner's Exhibits Nos. 1, 2, 14. Merchandise purchased on credit arrives with an installment coupon book for each item ordered. Petitioner's Exhibit No. 6, Credicorp Rules and Regulations p. 2. The Credicorp Rules and Regulations, the order forms contained in the catalogue, and all other materials Credicorp provides members make no mention of any contingency once the member completes, signs and sends in a form order for merchandise with the amount of money required. Petitioner's Exhibits Nos. 1, 2, 6, 12, 14, 17. Many Florida residents complete and sign these order forms in Florida. Petitioner's Exhibit No. 17. Credicorp has received at least 378 form orders for merchandise from Florida residents. Id. Approximately 1,600,000 individuals have submitted to Credicorp membership applications, each accompanied by $29.95. New members' names and addresses are entered into a computer data base and "batch edit sheets," each listing 100 names of new members, are printed. Petitioner's Exhibits Nos. 4 and 5; Petitioner's Exhibit No. 15, page 73, line 1; T. at 47. Sample batch edit sheets obtained from Credicorp by the Department listed the names of 640 Florida residents who had sent a membership application form and $29.95 to Credicorp to obtain membership. Petitioner's Exhibit Nos. 4, 5, 18. On a single day, June 24, 1992, money and membership application forms from 243 residents of Florida reached Credicorp. Petitioner's Exhibit No. 18.
Recommendation It is, accordingly, RECOMMENDED: That petitioner order respondents Credicorp, John Rheinfrank and Stevan Brown to cease and desist violating Chapter 687, Florida Statutes. That petitioner levy an administrative fine against Credicorp in the amount of three million five hundred seventy-eight thousand dollars ($3,578,000) to be paid within thirty (30) days of entry of the final order. That petitioner levy an administrative fine against respondent John Rheinfrank in the amount of two hundred fifty thousand dollars ($250,000) to be paid within thirty (30) days of entry of the final order. That petitioner levy an administrative fine against respondent Stevan Brown in the amount of two hundred fifty thousand dollars ($250,000) to be paid within thirty (30 days of entry of the final order. DONE AND ENTERED this 4th day of October, 1993, in Tallahassee, Florida. ROBERT T. BENTON, II 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 4th day of October, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-911 Petitioner's proposed findings of fact Nos. 1-22, 24-38, 40, 41, 42, and 43 have been adopted, in substance, insofar as material. With respect to petitioner's proposed findings of fact Nos. 23 and 39, extrapolation is problematic. Respondent's proposed findings of fact Nos. 1, 2, 3, 5, 7, 8, 9, 11, 16, 24, 25, 26, and 27 have been adopted, in substance, insofar as material. Respondent's proposed findings of fact Nos. 4 and 21 pertain to matters that are not material to petitioner's allegations. Respondent's proposed findings of fact Nos. 6, 22 and 23 pertain to subordinate matters. With respect to respondent's proposed finding of fact No. 10, it is clear from all the circumstances that it was Credicorp's intent to mislead recipients into believing that there was no such restriction. With respect to respondent's proposed finding of fact No. 12, Credicorp lends money to finance merchandise it sells on credit. With respect to respondent's proposed findings of fact Nos. 13 and 14, it is clear from all the circumstances that Credicorp used the term "Gold Card" to mislead recipients of its solicitations into believing they were being offered a credit card. With respect to respondent's proposed finding of fact No. 15, the evidence did not show that the "Credicorp Gold Card is useful to members as a reminder of their membership." With respect to respondent's proposed finding of fact No. 17, the word card does appear. With respect to respondent's proposed findings of fact Nos. 18 and 19, Credicorp so held itself out. With respect to respondent's proposed finding of fact No. 20, the sales contract comes into existence when the member mails the order and payment. COPIES FURNISHED: Honorable Gerald Lewis Comptroller, State of Florida Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350 Bridget L. Ryan, Esquire Department of Banking & Finance Suite 1302, The Capitol Tallahassee, Florida 32399 William E. Williams, Esquire Rex Ware, Esquire 106 East College Avenue Post Office Box 1794 Tallahassee, Florida 32301
The Issue The issue in this case is whether Respondent J & K Enterprises owes Petitioner money for sod.
Findings Of Fact On October 14, 1994, Petitioner sold Respondent J & K Enterprises 36 pallets of Floratam sod, as evidenced by two invoices. The first invoice shows $648 for 18 pallets of sod, $45.36 sales tax, and $90 for the 18 pallets themselves at $5 each, for a total of $783.36. The second invoice shows $648 for 18 pallets of sod, $45.36 sales tax, and $125 for a net of 25 pallets, for a total of $818.36. There is a mistake in the pallet calculation. The net pallets should be -25 because Respondent J & K returned more pallets (43) than it took (18). Even though Petitioner dropped its claim for pallets, Respondent J & K Enterprises is entitled to a setoff because, for both transactions, it returned 43 pallets and took only 36. Its setoff for seven pallets is $35. Each invoice imposes a service charge of 1.5 percent per month on balances unpaid 30 days after the invoice date. Each invoice requires that all claims be made within 24 hours of delivery or pickup. Respondent J & K Enterprises made no claims within 24 hours of delivery or pickup. Nor did J & K Enterprises make any payments in the two weeks following the purchase. On November 1, 1994, Petitioner sent Respondent J & K Enterprises a statement in the amount of $2090.31, which included the $1601.72 from the two October 14 invoices, as well as money due on previous purchases. Respondent J & K gave Petitioner a check in the amount of $2013.60 in satisfaction of the entire balance due. However, this check bounced on November 7, 1994. Evelyn Cooper, Petitioner's president, contacted a representative of Respondent J & K Enterprises and they agreed that she could drive to their office and exchange the bad check for a good one. Ms. Cooper obtained a new check for $2023.60. But this check also bounced on November 18. On November 15, 1994, Respondent J & K Enterprises paid Petitioner $500, and on December 20, it paid Petitioner another $250. These are the only payments that Respondent J & K Enterprises made on the November 1 balance. These payments reduced the balance to $1340.31. Reduced by the $35 for the return of seven pallets, the balance is $1305.31. At 1.5 percent monthly over eight months, Respondent J & K Enterprises owes an additional $156.64 in service charges, for a total of $1461.95.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order requiring Respondent J & K Enterprises of Lee County, Inc. to pay Petitioner $1461.95. ENTERED on September 1, 1995, in Tallahassee, Florida. ROBERT E. MEALE 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 on September 1, 1995. COPIES FURNISHED: Evelyn Cooper, President LaBelle Landscaping 905 Industrial Blvd LaBelle, FL 33935 J & K Enterprises of Lee County, Inc. 2290 Bruner Lane Ft. Myers, FL 33912-1907 Preferred National Insurance P.O. Box 40-7003 Ft. Lauderdale, FL 33340-7003 Preferred National Insurance P.O. Box 75-4502 Coral Springs, FL 33075-4502 Hon. Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard Tritschler, General Counsel Department of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Brenda Hyatt, Chief Bureau of Licensing and Bond Department of Agriculture 508 Mayo Building Tallahassee, FL 32399-0800
The Issue Whether Respondent, Department of Corrections' ("Department") intended decision to award contracts to Intervenors, Gateway Foundation, Inc. ("Gateway"), and The Unlimited Path, Inc. ("UPI"), for licensed in-prison substance abuse treatment services pursuant to Invitation to Negotiate FDC ITN 17-112 ("the ITN"), is contrary to the Department's governing statutes, rules, or the ITN specifications, and contrary to competition, clearly erroneous, arbitrary, or capricious.
Findings Of Fact The ITN, Site Visits, and Addenda The Department is a state agency responsible for the supervisory and protective care, custody, and control of all inmates incarcerated by the Department in each of its four regions. As of June 30, 2016, the Department had a total inmate population of 99,119, with 62 percent (61,454) of those inmates in need of treatment for a substance abuse disorder. The Department wants to strategically improve the manner in which it provides licensed substance abuse treatment services to inmates by focusing on maximizing the levels of treatment and individual inmate needs without increasing costs. The Department chose to utilize a flexible competitive procurement process to achieve its goals; specifically, an invitation to negotiate method of procurement rather than an invitation to bid or request for proposals, because it wanted industry leaders to craft individual and innovative solutions to address the problem.1/ Against this backdrop, on September 21, 2016, the Department issued the ITN, "In-Prison Substance Abuse Treatment Services," seeking replies from qualified vendors to provide licensed substance abuse treatment services to inmates incarcerated by the Department in each of its four regions. The Department reserved the right to make separate awards to each of its four regions, or to make a statewide award to a single vendor. The initial term of the contract(s) to be awarded under the ITN is five years. In addition, the Department may renew the contract(s) for up to one additional five-year term. The ITN separated substance abuse treatment services into five distinct service types: Prevention Services, Outpatient Substance Abuse Treatment, Intensive Outpatient Substance Abuse Treatment, Long-term Residential Therapeutic Community, and Aftercare. Additional services were also required, including motivation/readiness classes for program participants awaiting admission to Outpatient, Intensive Outpatient, or Residential Therapeutic Community services, and an alumni support group for program participants who have completed treatment services. The ITN required that the treatment services be provided in programs licensed pursuant to Florida Administrative Code Chapter 65D-30. The ITN identified the selection criteria as follows: The focus of the negotiations will be on achieving the solution that provides the best value to the State based upon the "Selection Criteria" and satisfies the Department's primary goals as identified in this ITN. The Selection Criteria may include, but is not limited to, the following. Selection Criteria: Respondent's articulation of their solution and the ability of the solution to meet the requirements of this ITN and provide additional innovations. Respondent's experience in providing the services being procured and the skills of proposed staff relative to the proposed approach and offering. Respondent's Technical Reply and Cost Reply, as they relate to satisfying the primary goals of the services identified herein. All interested vendors, before submitting their replies, were required to visit various sites within the regions covered by their reply. GEO attended these site visits, which were held in October to November 2016. During the visits, the topic of the budget was discussed. All vendors were informed that the Department "did not have any new money," and that it would be operating within the existing budget. Section 4.10, TAB A, of the ITN required that each vendor submit with its reply a letter from a surety company or bonding agent that documents the vendor's present ability to obtain a performance bond or irrevocable letter of credit in the amount of $1,500,000, per region. In Section 4.8 of the ITN, Pass/Fail Mandatory Responsiveness Requirements, the Department stated it would reject any and all replies that did not meet the pass/fail criteria. One of these criteria, Section 4.8e), specifically required each vendor to demonstrate its ability to meet the performance bond requirement. A vendor was likewise required to make this certification on Attachment IV to the ITN, Pass/Fail Requirement Certification and Non-Collusion Certification. Section 4.8e) stated as follows: The Vendor must be able to demonstrate its ability to meet the Performance Bond requirements. Prior to execution of prospective contract, Respondent will deliver to the Department a Performance Bond or irrevocable letter of credit in the amount equal to the lesser of $1.5 million dollars, per region, or the average annual price of the Contract (averaged from the initial five year Contract term pricing). The bond or letter of credit will be used to guarantee at least satisfactory performance by Respondent throughout the term of the Contract (including renewal years). Section 5.36 of the ITN, Performance Guarantee, also provided: The Vendor shall furnish the Department with a Performance Guarantee in the amount of $1,500,000, per region, on an annual basis, for a time frame equal to the term of the Contract. The form of the guarantee shall be a bond, cashier's check, or money order made payable to the Department. The guarantee shall be furnished to the Contract Manager within thirty (30) days after execution of the Contract which may result from this ITN. No payments shall be made to the Vendor until the guarantee is in place and approved by the Department in writing. Upon renewal of the Contract, the Vendor shall provide proof that the performance guarantee has been renewed for the term of the Contract renewal. Based upon Vendor performance after the initial year of the Contract, the Department may, at the Department's sole discretion, reduce the amount of the bond for any single year of the Contract or for the remaining contract period, including the renewal. The purpose of a performance bond is to mitigate the Department's risk should a vendor fail to perform on a contract. In Addendum 2, the Department identified six current contracts being replaced by the ITN, and provided links to those contracts and budgetary information on the Florida Accountability Contract Tracking System ("FACTS").2/ The Department also provided two rounds of formal questions and answers, which are reflected in Addenda 6 and 7. In Addendum 6, question 3, a vendor asked a question about cost. In response, the Department answered as follows: Vendors are encouraged to submit a Cost Reply in such a manner as to offer the most cost effective and innovative solution for quality services and resources, as both cost efficiency and quality of services will be a consideration in determining best value. In Addendum 6, question 77, a vendor asked a question about how to submit a reply. In response, the Department answered as follows: Vendor's shall only submit one Reply, and the Reply must be clearly labeled with the Region(s) included, or that the Reply is Statewide. In Addendum 7, question 2, the Department again addressed the issue of how many replies are required of a vendor who was interested in either a statewide or a regional award, through the following questions and answers: Question 2: In the responses to vendor questions (Addendum 006), Change to No. 6- "4.9 Submission of Replies" states that "In Reply to this ITN, each Vendor shall: Submit a separate Reply for each Region (bullet item a on page 8). However, under answer #77 (p.21), it states that "Vendor's shall only submit one Reply, and the Reply must be clearly labeled with the Region(s) included, or that the Reply is Statewide." Can you please confirm that a statewide proposal can be one, single proposal for the entire state rather than four separate proposals for each of the four regions? Answer: Yes. If submitting for a Reply for Statewide, the Reply can be submitted as one (1) Reply. If submitting a Reply for multiple Regions such as Regions 1 and 2, a Reply must be submitted for each Region. A separate Technical Reply and Cost Reply must be included for each submission. The Cost Replies must be sealed in a separate envelope from the Technical Replies, but they can all be submitted in the same package. Submission and Evaluation of Replies to the ITN On June 15, 2017, the Department received replies to the ITN from the following six vendors: GEO, Gateway, UPI, SMA Behavioral Health Services, Inc., Village South, Inc., and Bridges of America, Inc. GEO submitted five separate replies, one for each region and one for statewide. Gateway submitted a single statewide reply, but indicated in the reply that it wanted to be considered for a statewide award and one or more regional awards. Gateway also included a detailed budget breakdown by region with pricing for each region. The Department's instructions to the evaluators of the replies included a note reminding them that Gateway submitted a statewide response, but that it wanted to be considered for each individual region. UPI submitted three separate replies, one each for Regions 1, 2, and 3. UPI made the required certifications regarding the performance guarantee and submitted a letter from a surety company evidencing its ability to obtain a performance bond in the amounts required by the ITN. All of the replies were deemed to satisfy the pass/fail criteria and were then evaluated and scored. Negotiations Following the evaluation of the replies, the Department entered into the negotiation phase with GEO, Gateway, UPI, and Bridges of America, Inc. Negotiations commenced in August 2017 and continued through October 2017. The Department held a total of three negotiation sessions with each of these vendors. The ITN provided that the scores from the evaluation phase would not carry over into negotiations and that the negotiation team was not bound by the scores. The Department's negotiation team consisted of Kasey Faulk, chief of the Bureau of Procurement (lead negotiator); Patrick Mahoney, chief of the Bureau of Readiness and Community Transition; and Maggie Agerton, the assistant chief of In-Prison Substance Treatment in the Bureau of Readiness and Community Transition. Ms. Faulk has a master's degree in business administration from the University of Florida. She is also a Florida-certified project management professional; Florida- certified contract negotiator; and Florida-certified contract manager. In her tenure as chief of the Bureau of Procurement, she has overseen more than 130 competitive solicitations, including at least 80 invitations to bid, at least 30 requests for proposals, and approximately 17 invitations to negotiate. She has drafted procurement procedures at two different state agencies, and helped draft revisions to Florida Administrative Code Chapter 68-1. Without objection, Ms. Faulk was accepted at hearing as an expert in the area of Florida procurement processes. Ms. Agerton authored the programmatic portions of the ITN and served as an evaluator. She has a bachelor's and master's degree in criminology. She is also a Florida-certified addiction professional and certified criminal justice addictions professional. She currently serves as contract manager for the Everglades Recovery Center ("Everglades") contract, of which GEO is the incumbent vendor.3/ During negotiations, GEO, which had only provided services to the Department for a short time, touted its experience and devotion of resources at Everglades. However, GEO was under a corrective action plan at Everglades as of May 12, 2017, because of missing information in clinical files and lack of staff supervision. Complete clinical files are very important to substance abuse treatment. Proper clinical documentation is necessary for licensure purposes and allows the Department to ensure that services are being provided in accordance with the contract. By the end of October 2017, Ms. Agerton had conducted a site visit to Everglades, and although GEO had made significant progress in the area of leadership and staff, the clinical files were still a significant problem. Ms. Agerton and Ms. Faulk had concerns about GEO's current contract performance at Everglades. During the negotiation phase, GEO was aware of the Department's concerns regarding its performance at Everglades. During negotiations, GEO was told by the Department that it is trying to spend its money more efficiently and in a cost-effective manner. GEO was told by the Department that its price was outside the range of competitive replies, and GEO was encouraged to provide alternative pricing models and "sharpen its pencils." During negotiations, the Department asked every vendor to identify its cost drivers. GEO did not identify the performance bond as a cost driver. However, UPI identified the performance bond as a cost driver. UPI informed the Department that a performance bond would cost it $200,000 per year regardless of whether the amount of the bond was reduced, because the cost of the bond is based on the complete value of the contract. UPI requested that it be allowed to submit a cashier's check to the Department in the amount of $1,000,000 for three regions in lieu of paying $200,000 per year for five years to a bonding company for a performance bond. At hearing, Ms. Faulk explained the process of negotiating with individual vendors, the importance of having a strategy, and the value of making individual concessions with individual vendors during negotiations. UPI had performed services for the Department for over ten years, through budget cuts, and had not walked away from their contracts. Accordingly, the negotiation team considered UPI's suggestion to be a low risk. That is, the Department did not believe there was a significant risk that UPI would abandon the contract. In any event, the cashier's check proposed by UPI would benefit the Department because the Department could easily take the money and use it to recoup losses in the event of nonperformance, as opposed to a bond, which may require the Department to engage in protracted litigation with a surety company to obtain the value of the bond. The Department also saw the cashier's check as an opportunity to obtain lower pricing from UPI. The negotiation team told UPI it would accept, in lieu of the performance bond, a $1,000,000 cashier's check if UPI was awarded three regions; a $750,000 cashier's check if UPI was awarded two regions; and a $500,000 cashier's check if UPI was awarded one region. Allowing UPI to post a cashier's check in the amount of $750,000 for the two regions it was awarded did not provide UPI with a competitive advantage over GEO. At hearing, GEO's representative, John Thurston, who oversaw the development of GEO's reply and BAFO, and participated in the negotiations, acknowledged that GEO's cost to obtain a performance bond in the amount of $1,500,000 would only have been $67,500 per year. During negotiations, the Department revised the scope of work. Following the negotiations, on October 25, 2017, the Department emailed an RBAFO to those vendors who participated in the negotiations. The RBAFO informed vendors that the term "Best and Final Offers" is used to provide the vendor the opportunity to clarify its response and adjust its price based on the negotiations, and that this does not preclude the Department from seeking clarification or additional information upon receipt of the BAFOs. The RBAFO further stated that the BAFO "must contain a written narrative of services to be provided inclusive of clarifications and any alternative or modifications discussed during the negotiation process." The BAFO required an executive summary, description of service delivery, a staffing matrix, and a price sheet. GPR-037 (General Program Requirements) in the RBAFO addressed staffing and provided, in pertinent part: The vendor shall ensure that all required Vendor staff positions are filled for the entire scheduled 40 hour weekly working period, and that those individuals are physically present at the work site. All positions are full-time, unless otherwise specified, inclusive of interim positions. As to the price sheet, the per diem pricing "should represent the best price the Vendor is willing to offer to the Department." The RBAFO specifically addressed and allowed for vendors to provide alternative pricing models and methods. Providing alternative price offerings gives the Department more options to solve its problem and demonstrates a vendor's understanding of the Department's needs. All vendors were provided with an equal opportunity to submit BAFOs reflecting revisions to the ITN made by the Department during negotiations. The RBAFO reminded vendors to include in their BAFOs alternatives or any modification discussed during the negotiation process. GEO was aware during negotiations that it could have inquired about or proposed to negotiate different components of all aspects of its proposal. GEO was also aware that any global changes for all vendors would be included in the RBAFO, but that negotiation concessions, innovative solutions, and negotiated points with individual vendors, would not be included. In fact, GEO negotiated items that were not shared with other vendors. The BAFOs and Negotiation Team Recommendation The deadline for vendors to submit their BAFOs was November 14, 2017. The Department received BAFOs from the four vendors invited to negotiate. The ITN provided that BAFOs would not be scored and the negotiation team would make a recommendation of award based on which vendor's solution presented the best value to the state, utilizing the selection criteria in the ITN. Prior to submitting its BAFO, the Department responded to Gateway's inquiries about differences between what was to be included in the BAFO and what was discussed during negotiations, specifically in the context of the ratio of Prevention Services counselors (indicated as one counselor to fifty participants in the RBAFO, but discussed during negotiations as one counselor to eighty participants). The Department instructed Gateway to use the ratios included in the RBAFO, and "provide an alternative price with the ratio your Company is proposing." As allowed by the RBAFO and further clarified by the Department, Gateway's BAFO included both a base price offering and an alternative price offering, with detailed explanations of the assumptions included within each offering. Gateway's BAFO included a ratio for Prevention Services counselors from one counselor for every fifty participants (1:50), and an alternative ratio of one counselor for every eighty participants (1:80). Gateway's staffing models in its BAFO also included part-time positions. The members of the negotiation team reviewed the BAFOs and then made a formal recommendation of award at a public meeting held on November 17, 2017, with recorded minutes. The negotiation team recommended regional awards rather than a statewide award. It recommended an award of Regions 1 and 2 to UPI and Regions 3 and 4 to Gateway. The team recommended these vendors because it believed their solutions represented the best value to the state based on the selection criteria identified in the ITN. Ms. Faulk recommended UPI for Regions 1 and 2 because UPI was an incumbent vendor with a long history of providing satisfactory services to the Department. Additionally, she felt UPI had tremendous ideas on how to maximize treatment, their cost was affordable, and they proposed innovative solutions. Ms. Faulk ultimately recommended Gateway's alternate price offering for Regions 3 and 4 because she found them very innovative and treatment-focused. She felt they had extensive experience in a correctional setting providing substance abuse treatment, and their cost was very affordable. She recommended the alternate price offering because it was an innovative solution to increase services. Gateway's alternate price offering increased the number of available treatment slots and provided staffing which the Department found acceptable and appropriate, while at the same time offering a better price. Ms. Agerton recommended UPI for Regions 1 and 2 because she felt UPI brought an innovative solution in negotiations, as well as many different ideas. She felt that based on their incumbent status, they had knowledge of the Department's systems and were able to suggest improvements while remaining affordable. Ms. Agerton recommended Gateway for Regions 3 and 4 because they also brought innovative solutions, particularly an evaluator that would help with monitoring their implementation. She also felt Gateway was likewise affordable and energetic. Neither Ms. Faulk nor Ms. Agerton recommended GEO for any of the regions. Ms. Faulk felt GEO's cost was significantly higher than the other vendors. She also had concerns about some of GEO's responses during the negotiation sessions, particularly with regard to the problems at Everglades. Ms. Faulk felt GEO lacked innovation, it did not understand the problems at Everglades, and it lacked an effective strategy for how not to have the problems reoccur in the future. Ms. Agerton did not recommend GEO for any of the regions because she felt they were very expensive compared to the other vendors; so expensive, in fact, that their price exceeded the Department's budget. Ms. Agerton also had concerns about GEO's current contract performance at Everglades. A formal recommendation memorandum was prepared by the procurement officer and routed through various levels of the Department. The memorandum included a cost analysis, which reflected the total awarded price for all four regions for the initial five-year term to be $57,683,377.25. GEO's proposed price for all four regions for the same period was $80,558,693.75, approximately $22,000,000 higher than the Department's intended awards for all four regions. Notably, the formal recommendation memorandum mistakenly reflected 225 prevention slots in Region 3, instead of the 320 prevention slots included in Gateway's alternative proposal; and 200 prevention slots in Region 4, instead of the 320 prevention slots included in Gateway's alternative proposal. For Region 3, multiplying 320 slots times Gateway's per diem rate of $3.89 (and by 365 days a year), results in an annual total cost of $454,352; compared to the annual cost figure of $319,466.25 for 225 slots reflected in the memorandum. For Region 4, multiplying 320 slots times Gateway's per diem rate of $3.89 (and by 365 days a year), results in an annual total cost of $454,352; compared to the annual cost figure of $283,970 based on 200 slots. Thus, accounting for the increased prevention slots for Regions 3 and 4 results in an annual increase in cost of $305,267.75 above the $11,536,675.45, for a total annual cost for all four regions of $11,841.943.20, and a five-year cost of $59,209,716. On the other hand, GEO's proposed price for all four regions for the same period was $80,558,693.75, which divided by five results in an annual cost to the Department of $16,111,738.70. GEO eliminated the cost of Aftercare services because the Department intends to use an Alumni Program for zero cost in lieu of Aftercare services. GEO calculated that removing the cost to the Department of Aftercare services would result in $1,885.790.75 less, or a total annual cost of $14,225,948.70. Thus, removing the cost of Aftercare services from GEO's proposed price for all four regions would still result in a five-year cost to the Department of $71,129,743.50, which may exceed the amount appropriated, budgeted, and available to the Department for substance abuse treatment for Fiscal Year 2017- 2018, and which far exceeds the cost of $59,209,716 (the amount of the proposed award to Gateway and UPI for the same time period).4/ The recommendation memorandum was approved by the Department's secretary on January 9, 2018. GEO's Protest GEO's protest raises numerous issues, none of which warrant rescission of the Department's intended award to Gateway and UPI. Gateway's Reply to the ITN GEO contends Gateway submitted only a single "statewide" reply to the ITN, and no reply for any regions, and therefore, Gateway is ineligible for a regional award. The persuasive and credible evidence adduced at hearing demonstrates that Gateway's reply was properly considered as a reply for multiple regions because Gateway clearly indicated its intent to be considered for multiple regions. Moreover, Gateway gained no competitive advantage over other vendors as a result of combining its statewide reply with a regional reply. In fact, the Department would have been inundated with replies if it required a vendor to reply for every conceivable combination of regions. UPI's Performance Guarantee GEO contends the Department materially deviated from the ITN and gave UPI a competitive advantage over it by allowing UPI to provide, in lieu of a performance bond, a cashier's check in the amount of $500,000 if awarded one region; $750,000 if awarded two regions; or $1,000,000 if awarded three regions. The persuasive and credible evidence adduced at hearing demonstrates that the Department did not materially deviate from the ITN and give UPI a competitive advantage over GEO by allowing UPI to provide, in lieu of a performance bond, a cashier's check in the amount of $500,000 if awarded one region; $750,000 if awarded two regions; or $1,000,000 if awarded three regions. Notably, the ITN did not require proposers to submit a performance bond or letter of credit with its reply to the ITN, and none of the vendors submitted a performance bond or letter of credit with their replies. Instead, in replying to the ITN, a vendor was only required to "demonstrate its ability to meet the Performance Bond requirements." UPI satisfied the requirements of the ITN by demonstrating its ability to meet the performance bond requirements. In any event, the reduction in the amount of the bond agreed to by the Department ($750,000 in connection with the award of contracts for two regions) did not provide UPI with a competitive advantage over GEO. At hearing, Mr. Thurston estimated GEO's annual cost of providing a performance bond in connection with contracts to be awarded pursuant to the ITN would be approximately $67,500, well below the $200,000 per year that UPI was quoted for its bond. Moreover, the amount of $67,500 is insignificant compared to the significant disparity in the annual, total prices proposed by GEO and UPI in their BAFOs for Regions 1 and 2 (GEO: $9,299,141.50; UPI: $6,342,203, for a difference of $2,956,938.50 per year). At hearing, Mr. Thurston acknowledged he could have raised the issue of the performance bond during negotiations. As Mr. Thurston also acknowledged at hearing, even if GEO had been able to negotiate an elimination of the performance bond amount requirement in its entirety, GEO would not have been able to offer a price that would have remedied the disparity. Gateway's BAFO (Prevention Services Ratio) GEO contends Gateway's ratio for Prevention Services counselors of 1:80, as provided in Gateway's BAFO alternative price offering, is a material deviation from the RBAFO requirements. As detailed above, this alternative offering was expressly permitted by the RBAFO and was further clarified by the Department to Gateway before its BAFO was submitted. Moreover, increasing the prevention capacity to 80 per institution adds an additional 605 inmates served at any one time, resulting in the Department being able to serve more inmates for the same appropriation amount. This is precisely the type of innovative thinking the Department sought to reach its goals. GEO did not submit an alternative pricing model, and it never asked the Department if the ratios for Prevention Counselors were negotiable. At hearing, GEO could not say how much it could have lowered staff levels, if at all, if it attempted to negotiate ratios. Gateway was not given a substantial advantage over GEO by increasing the prevention capacity. In addition, although chapter 65D-30 does include required ratios for certain types of services, there is no maximum caseload requirement applicable to Prevention Services. Gateway's BAFO (Part-Time Positions) GEO also contends Gateway violated GPR-037 in the RBAFO because Gateway's staffing models included part-time positions. However, the Department interprets the phrase "unless otherwise specified" to mean that unless the vendor specifies a position in its reply as part time, the Department will assume that any positions referenced in the reply are full time (40 hours). GEO never asked the Department for clarification on the meaning of the phrase "unless otherwise specified." At hearing, Mr. Thurston could not say whether its BAFO would have been adjusted had GEO asked about negotiating the positions, in terms of being full time. In any event, the Department currently utilizes part- time staff under the contracts being replaced by the ITN. Part- time staff may provide a more cost-effective solution than full- time staff. Gateway's BAFO (Clerical Positions) GEO also contends Gateway's alternate price offering provided for a reduction in clerical staff positions contrary to GPR-035 as set forth in Addendum 6 and the RBAFO. GPR-035 required that each vendor provide a minimum of one clerical position for up to 136 treatment slots, and one-half position for each additional 68 treatment slots. In support of its position, GEO presented Exhibit 1. However, GEO's Exhibit 1 is based on incorrect assumptions, and it is unreliable and unpersuasive. First, the ratios calculated by GEO are impermissibly "rounded-up." Secondly, contrary to GEO's position, the Department only calculates an additional one-half position once the full 68 treatment slots have been achieved. GPR-035 does not require one-half positions for "up to each additional 68 slots." A plain reading of GPR-035, consistent with the Department's reasonable interpretation, is that an additional one-half position is required only after the full 68 slots have been achieved. Gateway's base price offering fully complied with the staffing ratios when the ratios are calculated according to a plain reading of GPR-035, which is bolstered by the Department's practice in calculating ratios. Gateway's alternative price offering providing for a reduction in clerical positions to one full-time employee per facility was a cost-saving measure discussed with the Department and a product of negotiations. Even if Gateway's alternative price offering deviated with regard to the clerical positions, given the discrepancy between GEO's and Gateway's price offerings, the deviation is so small that it is a minor irregularity and not a material deviation. Gateway's BAFO (Pricing) GEO also contends Gateway failed to provide region- specific pricing or a final, firm pricing offer of any kind for the initial term or the renewal term. During negotiations and in its BAFO, Gateway reiterated that it would accept a regional or multi-regional award. Under Section 4.12 of the ITN, the Department reserved the right to seek clarification from vendors regarding their BAFOs and to reopen negotiations after receiving BAFOs. The negotiation team recommended awarding Gateway's alternate price offering for Regions 3 and 4 contingent upon clarification from Gateway that its pricing would be applicable to Regions 3 and 4. Although vendors were invited and could have attended the public meeting and heard this for themselves, none of them chose to attend. Four days later, on November 21, 2017, the Department's procurement officer reached out to Gateway's representative asking it to confirm that the pricing listed in the alternate price offering would remain the same if awarded individual regions as opposed to the entire state. Gateway's representative responded that the alternate prices included in Gateway's BAFO could remain in effect with a modified administrative personnel staffing plan if Gateway was awarded more than one region. At the time of this exchange, the Department's negotiation team had already recommended Gateway for Regions 3 and 4; so, the Department knew there would be no need to renegotiate pricing because Gateway was recommended to receive more than Region 4. According to Ms. Faulk, the Department understood Gateway's response to mean that the per diem pricing provided in Gateway's BAFO would apply to Regions 3 and 4. Gateway would reduce the oversight positions to two or three positions, consistent with the smaller level of responsibilities required for two regions instead of four. This exchange occurred prior to the drafting of the award recommendation memorandum, which was dated November 28, 2017. It was not signed by Ms. Faulk until January 3, 2018, or the Secretary until January 9, 2018. Gateway's per diem statewide pricing applied equally to Regions 3 and 4. Although Gateway did not provide a grand total price on its BAFO price sheet, the Department calculated the grand total price using the correct per diem unit prices provided. The ITN stated that unit prices would control in the event of a mathematical error. As it pertains to the price sheet instructions, the RBAFO stated that the vendor's pricing should represent the best price the vendor is willing to offer the Department. Gateway provided both a base price offering and an alternate price offering. The base price offering's price sheet contained the required per diem prices for both the original contract term and the renewal contract term. Under the section titled "TOTAL PRICE," Gateway appeared to sum the individual per diem prices rather than provide an actual grand total contract amount. Gateway did the same for its alternate price offering price sheet. Although Gateway did not provide a grand total price on the price sheet, it included a detailed budget breakdown for both its base price offering and alternate price offering. The Department felt these breakdowns offered additional transparency into Gateway's pricing. Section 4.10, Tab F, of the ITN provided that all calculations would be verified for accuracy by the Department's Bureau of Support Services staff, and that unit prices submitted by a vendor would prevail in the event a mathematical error is identified. Ms. Faulk testified the Department could calculate a grand total price by using the per diem pricing provided on the price page. She explained the Department could multiply the per diem price for each service type by the number of slots for that service, and then multiply that number by 365 days to arrive at the yearly price for a particular service. The Department could then add those prices together to obtain an annual total. She also explained these same calculations could be done for the renewal pricing. UPI's BAFO (Clerical Positions) GEO contends UPI deviated from the staffing requirements by providing fewer clerical support positions than required by the RBAFO. Specifically, GEO contends UPI had a deficit of six clerical support positions, and that if GEO knew it could reduce the staffing complement by six, it would have been worth approximately $270,000. UPI's clerical staffing ratios deviated from GPR-035, because its ratios were calculated based on the belief that prevention slots were not "treatment" slots. The ITN and RBAFO refer to prevention slots as treatment slots. Nevertheless, given the discrepancy between the prices submitted by GEO and UPI, UPI's deviations from the clerical staffing requirements are so small that they are minor irregularities and not material deviations. UPI's BAFO (Pricing) GEO also contends UPI's BAFO failed to include the Revised Price Sheet. Specifically, in paragraph 24 of its amended petition, GEO alleged: "UPI appears to have created its own form that emulated the format of the required form but provides many more spaces for additional information. Other Vendors that used the ITN required form did not have the opportunity to include this additional information." Although UPI did not use the specific Revised Price Sheet form, it provided per diem prices for each level of treatment as required by the form and additional information for the Department's consideration. GEO failed to include per diem pricing for Residential Therapeutic slots in Regions 2 and 4. GEO also modified its price sheets and submitted additional information in the form of annotations denoted by asterisk. In sum, the persuasive and credible evidence adduced at hearing demonstrates that the Department appropriately determined that the proposed awards to Gateway and UPI will provide the best value to the Department based on the selection criteria. Any irregularities in Gateway's and UPI's replies and BAFOs as alleged by GEO were minor and not material deviations. The Department's intended awards to Gateway and UPI are not contrary to the Department's statutes, rules, the ITN specifications, clearly erroneous, contrary to competition, arbitrary, or capricious.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Corrections enter a final order dismissing the protest of GEO Reentry Services, LLC. DONE AND ENTERED this 20th day of April, 2018, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of April, 2018.
The Issue Whether the Department of General Services should disqualify Savin Corporation's bid for failure to submit a separate supply price list.
Findings Of Fact On April 26, 1984, DGS issued ITB 402-600-38-B entitled "Walk-up Convenience Copiers, Plain Bond Paper" to establish a state contract for the purchase of walk-up convenience copiers. The ITB contains general and special conditions and specifications. The specifications provide for four types and twelve classes of copiers with four acquisition plans -- one-year lease, two- year lease, three-year lease, and outright purchase. Vendors may submit a bid for each type, class, and acquisition plan. Savin submitted a bid for all acquisition plans in Type I, Classes 1-10; Type II, Classes 1-3; Type III, Classes 1-10; and Type IV, Classes 1-10. /4 The special conditions of the ITB require that a price sheet (page 14 of the ITB) be submitted for each machine bid. The price sheets are used to evaluate the bids, and contracts are awarded in each category to the bidder submitting the lowest cost per copy. The cost per copy is determined by a cost formula set for in the special conditions which consist of three factors: machine cost, labor cost, and supply cost. The following special conditions of the Invitation To Bid relates to supply costs: C) SUPPLY COST- The bidder shall compute supply costs on the Manufacturer's Brand. If there is an existing state contract for supplies for the manufacturer's brand equipment; the state contract price may be substituted. Supply costs will be rounded to six (6) decimal points. All other costs will also be rounded off to six (6) decimal points. The volume price used by the vendor to compute supply cost shall be based on the monthly median volume of the type and class being bid. Supply cost submitted shall be firm for the contract period, except for paper, and all supply costs shall be current market price, verifiable. The price list shall also include the manufacturer's standard test pattern as the original document. Vendor must complete the supply price list (See page 13) and include it with his bid and must submit a separate supply price list reflecting volume discount prices to substantiate that correct price volumes were used unless state contract prices were used. A contract award may include supplies during the term of this contract if deemed in the best interest of the State. By electing to substitute state contract supplies, the vendor is certifying that his equipment, using said supplies, will meet all performance requirements of this bid and of the equipment manufacturer. Failure to include the supply price lists and manufacturer's guaranteed yields with your bid shall automatically disqualify the bid. NOTE: In the event of a variance between supply prices listed on the bid sheet and the supply price list submitted with the bid, the supply price list prices shall prevail, and the bidder's cost per copy will be adjusted accordingly. NOTE: All cost formulas will be verified by the Division of Purchasing and errors in extension will be corrected. In the event incorrect supply costs volumes are used by a bidder, the Division of Purchasing will adjust these costs to the median volume range. The above quoted portion of the ITB makes it absolutely clear that each vendor had to submit two supply price lists: the supply price list set forth on page 13 and a separate supply price list, reflecting quantity discounts which was to be used to "substantiate that correct price volumes were used." Further, it was specifically stated that the failure to include both supply price lists with the bid would result in the bid being automatically disqualified. The page 13 supply price list consists of a list of various supplies and two columns for the bidder to complete entitled "Net Delivered Price (per carton)" and "Manufacturer's Guaranteed Yield". Page 13 was included in the ITB to cure a problem the Department had in the 1983-84 contract year with the manufacturer's guaranteed yield. A note at the bottom of page 13 reminds the bidder that a separate supply price list must be submitted with the bid. It states: NOTE: Bidders must submit their quantity discount prices for supplies on a separate sheet for verification and inclusion in the contract should the State elect to award supplies. The separate supply price list reflecting quantity discounts was required to verify the prices submitted by the bidder on pages 13 and 14 and to prevent the practice of low-balling". "Low-balling" occurs when a bidder uses a large quantity supply cost to determine the cost per copy on a low volume machine. This results in an artificially low cost per copy and gives the "low- balling" bidder an advantage over other bidders who use the correct supply price based on the median volume of the machine being bid. To verify that the proper cost per copy is submitted the prices on the separate supply price list are compared to the prices on the bid sheet. If there is a conflict, the prices on the separate supply price list prevail, and the prices on the bid sheet and on page 13 are adjusted to conform to the prices on the separate supply sheet. Prior to the 1984 Invitation to Bid Savin historically offered the state volume discount pricing for supplies. However, for the 1984-85 Invitation to Bid Savin decided to offer set pricing for supplies rather than volume discount pricing. Under set pricing the price of the supply item remains the same regardless of the quantity purchased. By offering a set price for supplies, at the lowest published discount pricing level offered to the Federal government, Savin felt it would gain a competitive advantage in Florida and other states that had competitive bidding. In states where competitive bidding was not used Savin did not offer set pricing but used published quantity discount pricing. In response to the 1984 Invitation to Bid, Savin completed the Supply Price List on page 13 and the bid sheet on page 14 for each machine bid. However, Savin did not submit the separate supply price list for each bid as required by the note at the bottom of page 13 and the underlined portion of the special conditions relating to supply cost. Because the separate supply price lists were not submitted with the bids, the Department determined that Savin's bids were unresponsive. The Department also disqualified three or four other vendors, including Royal, Panasonic, and Southern Copy Products, because they did not submit the separate supply price lists. Savin did not submit the separate supply price list because it interpreted the terms and conditions of the ITB as requiring a separate supply price list only when quantity discount pricing was being offered. Because Savin was offering set pricing, it did not consider that the separate supply price list was necessary. However, the only way the Department could determine whether a vendor was offering set pricing or quantity discount pricing was by referring to the separate supply price list. Several other vendors that offered set pricing including Canon, Mita Copy Star America, Pitney Bowes, Monroe and A. B. Dick, submitted separate supply price lists with their bids which indicated that set pricing was being offered. The separate supply price list not only indicated whether quantity discount pricing or set pricing was being offered, as stated above, it was used by the Department to verify the prices submitted on the bid sheets and on page 13. In one case where the bidder offered set pricing, the supply prices for toner and developer listed on the bid sheets and on page 13 differed from the prices on the separate supply price list, and the prices on the bid sheets and page 13 were adjusted to conform with the prices on the separate supply price list. Therefore, the inclusion of the separate supply price list was not necessary only when discount pricing was offered, it was necessary when set pricing was offered. The separate supply price list established that set pricing was being offered; it established the price at which the bidder must sell the supplies; and it was used to verify the prices on the bid sheet and page 13. /5 Therefore, the omission of the separate supply price list from the response to the ITB cannot be considered a minor irregularity which may be waived. Although a separate supply price list is required by the ITB, the list does not have to follow any particular format. The separate list sufficiently indicates that set pricing is being offered if only one price is quoted for a given supply. If varying prices are offered for a given supply, based on the amount ordered, then quantity discount pricing is being offered. Many of the proposed findings of fact submitted by the Petitioner have been rejected in whole or in part. The majority have been rejected by way of making contrary findings of fact as set forth above. Others have not been addressed in the findings of fact because they are conclusions of law or argument on the issue. However, other proposed findings are rejected for the reasons stated in the subparagraphs below: Paragraphs 17 and 18 are rejected as irrelevant, immaterial and not supported by competent substantial evidence. When Mr. Hittinger was asked whether he assumed that Savin was offering quantity discount pricing, he answered "I didn't assume. I didn't make any assumptions." (T-266). Mrs. Hayes stated: "I am afraid on a bid situation, we can't assume what their pricing would have been if they had submitted it." (T-245) Mr. Nee did indicate that the disqualification of Savin did not make any sense, but explained that statement by stating: "The phrase that didn't make any sense was talking about Savin's failure to submit a quantity discount price list... Because Savin had always done it in the past, and they -- they never left -- if we asked them to cross every T, they crossed every T and it didn't make any sense that something apparently looked to be omitted". Paragraph 15 is rejected as not supported by competent substantial evidence. The evidence indicates that the primary purpose of page 13 was not to establish the price at which vendors would be obligated to sell their supplies, but was included in the ITB for the submission of manufacturer's guaranteed yields (T-144, T-146; T-158-16O, T-166-167, T-242). Further, the witnesses who testified that the vendor would be bound by the prices on page 13 all qualified their answers. In response to the question of whether the bidder would be bound by the prices on page 13, Mrs. Hayes responded, "...if he did submit a substantiating document that he is offering a set price, and that set price agrees with the price that is on page 13, yes." (T-242); Mr. Hittinger responded: "If he receives an award, yes"; "If he had a responsive bid" (T- 264); and "No, in itself it does not. It would have to have a supporting verification sheet to complete that offer." (T-268); Mr. Barker responded, "If they are correct," (T-163). Virtually all the witnesses testified that it was the separate supply price list that established the prices by which the vendors would be bound. Paragraph B is rejected as irrelevant, however, the evidence supports a finding that some state agencies utilize volume discounts on copier supplies and some state agencies do not purchase in sufficient quantities to utilize volume discounts.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that Savin's bids be disqualified. DONE AND ENTERED this of 7th June 1985, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway The Oakland Building Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of June, 1985.
The Issue The issue is whether Respondent committed unlawful employment practices contrary to Section 760.10, Florida Statutes (2007),1 by discriminating against Petitioner based on her race or color in its failure to promote her or in its decision to terminate her employment.
Findings Of Fact Wal-Mart is an employer as that term is defined in Subsection 760.02(7), Florida Statutes. Petitioner, an African-American female, was hired by Wal-Mart on or about August 26, 2004. At the time of her dismissal, she worked as a Customer Service Manager ("CSM") on the overnight shift, from 10 p.m. to 7 a.m. As a CSM, Petitioner performed various cashiering and supervisory duties at the front end of the store. These duties included conducting cash transactions and making refunds to customers. Petitioner's employment with Wal-Mart was terminated on November 13, 2007, for a category of offense styled "Gross Misconduct--Integrity Issue" related to fraudulent returns. In plain language, Petitioner was alleged to have stolen money from Wal-Mart by issuing "refunds" to nonexistent customers and pocketing the money from the cash register. Wal-Mart has a "Coaching for Improvement" policy setting forth guidelines for progressive discipline. See endnote 4, supra, for a brief description of the disciplinary progression. While the progressive discipline process is used for minor and/or correctable infractions such as tardiness, "gross misconduct" constitutes a ground for immediate termination. The coaching policy explicitly sets forth "theft," "dishonesty," and "misappropriation of company assets" as examples of gross misconduct. Prior to her termination, Petitioner's most recent three progressive "coachings" related to her habitual poor attendance and punctuality. A verbal coaching for misconduct related to attendance/punctuality was issued on January 5, 2007. A written coaching for misconduct related to attendance/punctuality was issued on February 23, 2007. A "decision day" for misconduct related to attendance/punctuality was issued on August 24, 2007, because Petitioner had accumulated six unauthorized absences since the written coaching in February. All of these coachings pre-dated Petitioner's Complaint by more than 365 days. Petitioner conceded that these coachings were unrelated to the reasons for her dismissal from employment. Apart from her unconvincing testimony about an allegedly malfunctioning store time-clock, Petitioner essentially conceded that she had persistent problems arriving on time for work. Petitioner also conceded that, aside from hearsay and rumor on the floor of the store, she had no personal knowledge of anyone else's coachings and thus had no basis for comparing her disciplinary history to that of any other Wal-Mart employee. Wal-Mart's "Promotion & Demotion Criteria" expressly provide that an employee is not eligible for a promotion to management trainee if he or she has an active written coaching. A written coaching is "active" for a period of one year after its issuance, meaning that Petitioner would not have been eligible for promotion to management trainee until February 24, 2008, had she not been discharged on November 13, 2007. Wal-Mart's "Career Preference" system is a computer program that allows employees to express their interest in promotion to other positions. An employee may log onto the Career Preference system and indicate her interest in a particular job. If an employee has not indicated her interest, she is not considered to have applied for the position and will not be considered for that job opening. A printout of Petitioner's Career Preference history was entered into evidence. It indicates that she never applied for a promotion to department manager. On April 13, 2006, Petitioner attempted to indicate her interest in the management trainee program. However, the Career Preference system will allow only qualified employees to indicate an "interest" and thereby be considered for a job; less-than-qualified employees are shown to have an aspirational "goal" of attaining the position. As of April 13, 2006, Petitioner had at least one active written coaching in her employment file,6 had not completed the prerequisites for the management trainee program, and was therefore ineligible for the position. Thus, the Career Preference system did not list her as having an "interest" in the management trainee position and she was not considered for the job. The evidence indicates that Petitioner was not qualified or eligible for a promotion at any time during the 365-day period preceding the filing of her Complaint. Wal-Mart's asset protection coordinators ("APCs") and Market Asset Protection Managers ("MAPMs") work under an entirely different chain of command than those employees involved in store operations. APCs and MAPMs are not involved in day-to-day decisions regarding employee discipline or promotions. Sandra Raines is the APC for Wal-Mart Store 5326, where Petitioner worked. Her job is to supervise and investigate integrity and facility safety issues, including instances of suspected theft by Wal-Mart employees. Ms. Raines reports directly to Melanie Clemons, the MAPM for 12 stores in Market 481, including Store 5326. Ms. Clemons supervises 12 APCs as to their asset protection duties, which includes allegations of internal theft by Wal-Mart employees. As part of her job, Ms. Raines reviews a weekly refund review report. This report provides information regarding suspicious transactions, such as refunds in excess of $50 for which the customer did not provide a receipt. The report provides information necessary to trace the transaction: the operator number of the cashier, the number of the register on which the transaction occurred, and whether the transaction was hand-keyed. It is usual Wal-Mart refund practice to scan the Universal Product Code ("UPC") bar code from the receipt into the register. A "hand-keyed" transaction is one in which the register operator manually overrides the register's protocol and types the information into the register, rather than scanning in the UPC bar code. Ms. Raines testified that, though there are legitimate reasons for using this procedure, a hand-keyed transaction is one of the "red flags" that cause her to look more deeply into a transaction. In the course of reviewing the November 3, 2007, weekly refund review report, Ms. Raines noticed a sale of $963.92 in merchandise at 3:47 a.m. on October 24, 2007, conducted by Petitioner. She also noticed a refund of $212.92 related to that receipt at 3:29 a.m. on November 2, 2007. The refund was hand-keyed. The large amount of the refund, the odd hour at which it occurred, and the fact that it was hand-keyed, combined to rouse Ms. Raines' curiosity. Ms. Raines reviewed the electronic journal, a record of every transaction that takes place in the store. She was able to obtain the original receipt from the October 24, 2007 purchase and the receipt for the November 2, 2007 refund. The refund receipt indicated that the returned item was a recliner chair. Ms. Raines' suspicions became greater as she wondered who would return a recliner at 3:29 a.m., then further intensified when she noted the original receipt showed that no recliner was purchased. Ms. Raines' preliminary review of the refund report and the receipts led her to believe that Catherine Durso, a white female CSM working the overnight shift, conducted the refund transaction. Ms. Durso's operator number was on the refund receipt. Ms. Raines began reviewing store surveillance footage to find visual evidence that Ms. Durso had committed a fraudulent return. Ms. Raines reviewed the video of the original October 24, 2007, sale and saw no recliner. However, she did observe Petitioner printing an additional copy of the sales receipt approximately 11 minutes after the sale. Ms. Raines next reviewed the video of the November 2, 2007 refund transaction. She saw no recliner chair7 and no customers present at the register at the time of the refund. Instead, Ms. Raines saw Petitioner conducting the refund transaction on Ms. Durso's register at 3:47 a.m. Ms. Durso was not to be seen in the surveillance footage of this transaction. Based on all the evidence before her, Ms. Raines concluded that Petitioner hand-keyed a fraudulent cash refund for $212.92, using the UPC code for a recliner chair and the transaction number from the reprinted receipt she had kept from the October 24, 2007 sale. At this point, Petitioner had recorded a cash refund of $212.92 but had not taken any money from the register. Ms. Raines therefore continued to watch the video to "kind of see what's going to happen next." At 6:03 a.m., Petitioner recorded a "no sale" transaction on the same register she had used for the refund. A "no sale" can only be performed by a CSM or a member of management because it involves opening the register drawer without actually recording a sale. A "no sale" is typically used when the cashier needs to change out larger bills for smaller ones. On this "no sale," Petitioner appeared to be merely sorting money. However, Petitioner recorded a second "no sale" three minutes later, at 6:06 a.m. This time, Petitioner removed money from the large-bill slot of the register and concealed the money in a black jacket draped over her left arm. Petitioner admitted removing the money from the register and placing it under her jacket. She claimed that she did so in order to safely move the money from the front of the store to the accounting office in the back. This claim was not credible. Ms. Raines testified that there is never a situation in which a CSM should hide money under a jacket. Wal-Mart provides blue register bags for transporting money and requires their use, for reasons of safety and employee integrity. Based on her observation of the fraudulent return transaction, and the removal and concealment of money from the register drawer, Ms. Raines concluded that Petitioner was stealing money from Wal-Mart. Ms. Raines continued her investigation, and discovered two additional fraudulent returns performed by Petitioner. Both of these returns were hand-keyed, and both used the receipt from the October 24, 2007 purchase. One refund transaction occurred on October 24, 2007, the same date as the purchase. Petitioner hand-keyed a refund for a recliner chair in the amount of $212.92, the same amount as the November 2, 2007 refund. The second refund occurred on October 26, 2007. Petitioner hand- keyed a $249.09 fraudulent refund for a Barbie Jeep, a battery- operated toy car large enough to hold two young children. No Barbie Jeep was purchased on October 23, 2007. For both of these refunds, Petitioner used the same $963.92 receipt from October 24, 2007, that Ms. Raines observed Petitioner reprinting 11 minutes after the actual purchase. Ms. Raines viewed the store video to confirm that no customers were present when these refunds were conducted. She also confirmed that no recliner or Barbie Jeep entered the store on the dates in question. Finally, Ms. Raines observed that on October 13, 2007, Petitioner's register was $300 short at the end of her shift. The surveillance video for that date showed Petitioner performing nine "no sale" transactions. Under the guise of performing an audit of the cash register, Petitioner was removing money from the drawer. Ms. Raines notified her supervisor, Ms. Clemons, of her observations and her conclusion that Petitioner conducted several fraudulent refunds in order to steal money from Wal- Mart. Ms. Clemons reviewed the evidence gathered by Ms. Raines. She reviewed the store videos to verify that Petitioner conducted three fraudulent refund transactions. At the conclusion of her independent review of the evidence, Ms. Clemons was convinced that Petitioner had stolen money from Wal-Mart. Ms. Raines and Ms. Clemons scheduled an interview with Petitioner on November 13, 2007. At this interview, Ms. Clemons terminated Petitioner's employment with Wal-Mart because of gross misconduct. During the interview, Petitioner admitted that she conducted fraudulent returns. She wrote out a statement in her own words: I had a couple of returns that were not actually returns. They were used for emergency personal purposes due to severe hardship and past-due medical bills. To my recollection, it has only started just recently around October 2007 and only 3x's that I remember. I do apologize for the integrity issue and am willing to pay back the 3 that I know and remember. I felt I was pushed over the edge by personnel and corporate or none of this would have happened. Everyone goes through hardships and I guess it was just my turn and that's how I chose to deal with [sic]. Again, I apologize and am willing to repay Wal-Mart, given the opportunity. At the hearing, Petitioner unconvincingly claimed that she was "coerced" into writing the above statement by a promise that Wal-Mart would not pursue criminal charges for the theft if she made a written confession. She claimed that the statement was not true, but was the result of putting herself "in a theatrical acting mode," imagining what would make someone do the things of which she stood accused. This testimony was not credible. Ms. Raines and Ms. Clemons credibly testified that Petitioner was not coerced into admitting her guilt. Ms. Clemons stated that she offered Petitioner the opportunity to write a statement out of adherence to Wal-Mart procedures. Ms. Clemons did not need the statement. She already had all the evidence she needed and would have fired Petitioner whether or not she wrote the statement. Petitioner admitted that she was discharged solely as a result of the investigation performed by Ms. Raines and Ms. Clemons. Petitioner was criminally prosecuted for the theft. She pled guilty and was convicted of grand theft, was sentenced, and paid restitution to Wal-Mart. Petitioner testified that she does not believe and does not contend in this forum that either Ms. Raines or Ms. Clemons discriminated against her because of her race or color. She testified that the discrimination did not involve Ms. Raines and Ms. Clemons: "I was fired by them, but the case of discrimination goes way before that." Even if the time-barred elements of the Complaints were considered, Petitioner provided no evidence beyond her bare assertions that she suffered from discrimination on account of her race or color. She believed that Ms. Durso received favored treatment, not because she was white and Petitioner was black, but because Ms. Durso had relatives in management and friends in the store. Also, Ms. Durso had computer skills that Petitioner lacked, which at times enabled Ms. Durso to sit at a desk in the back of the store while Petitioner did the heavy lifting in the front. Given Petitioner's obvious lack of candor as to the central issue of her termination, the undersigned is reluctant to base tangential findings on Petitioner's word alone. Even if Petitioner's testimony were credited as to the preferential treatment accorded Ms. Durso, Petitioner alleged no motive related to race or color in any of this treatment. Petitioner offered no record evidence that she was qualified for, applied for, and was denied a promotion. To the contrary, the evidence showed that Petitioner kept herself ineligible for promotion under Wal-Mart rules by having written "coachings" on her record for persistent lateness and unapproved absences from work. Petitioner offered no evidence that a similarly situated employee of another race or color committed a similar theft and was not discharged from employment with Wal-Mart. The greater weight of the evidence establishes that Petitioner was terminated from her position with Wal-Mart due to gross misconduct on the job in form of fraudulent refunds that attempted to cover her theft of money from her employer. The greater weight of the evidence establishes that Wal-Mart has not discriminated against Petitioner based on her race or color.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations issue a final order finding that Wal-Mart Stores East, L.P. did not commit any unlawful employment practices and dismissing the Petition for Relief. DONE AND ENTERED this 6th day of April, 2010, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of April, 2010.
The Issue Is Worldwide Investment Group, Inc. (Worldwide) entitled to apply to the State of Florida, Department of Environmental Protection (the Department) for funds to reimburse Worldwide for costs associated with petroleum clean-up at 500 Wells Road, Orange Park, Florida, Facility ID#108736319? See Section 376.3071(12), Florida Statutes.
Findings Of Fact The Property Howard A. Steinberg is a Certified Public Accountant, (CPA) licensed to practice in Florida. In addition to his work as a CPA, Mr. Steinberg has other business interests. Among those interests is Worldwide, a corporation which Mr. Steinberg formed for the purpose of acquiring certain assets, or properties, from Home Savings Bank and American Homes Service Corporation (Home Savings Bank). Worldwide became a corporation in July 1996. Mr. Steinberg is the sole shareholder of that corporation and has been since the inception of the corporation. In addition to controlling all of the assets within Worldwide, Mr. Steinberg is the sole officer of the corporation. The corporation has no other employees. Worldwide has its office in Hollywood, Florida, in the same physical location as Mr. Steinberg's accounting firm of Keystone, Steinberg and Company, C.P.A. Under its arrangement with Home Savings Bank, Worldwide acquired property known as Save-A-Stop at 500 Wells Road, Orange Park, Florida. Mr. Steinberg engaged the law firm of Burnstein and Knee, to assist Worldwide in the purchase of the Save-A-Stop property. The Save-A-Stop property is a commercial parcel that has experienced environmental contamination from petroleum products. To address that problem the firm of M. P. Brown & Associates, Inc., (Brown) was paid for services in rendering environmental clean-up of that site. Substantial work had been done by Brown to remediate the contamination before Worldwide purchased the property from Home Savings Bank. Home Savings had paid Brown for part of the costs of clean-up before Worldwide acquired the Save- A-Stop property. After the purchase, Mr. Steinberg paid Brown to finish the clean-up. Application for Reimbursement Mr. Steinberg, as owner of Worldwide, understood that the possibility existed that Worldwide could be reimbursed for some of the clean-up costs by resorting to funds available from the Department. On July 29, 1997, Bonnie J. Novak, P.G., Senior Environmental Geologist for Brown, wrote to Mr. Steinberg to provide a cost estimate for preparing a reimbursement application in relation to the Save-A-Stop property. The cost to prepare the application was $1,870.00. On August 27, 1996, Mr. Steinberg accepted the offer that had been executed by Brown by Mr. Steinberg signing a contract, and by calling for Brown to prepare an application, to be presented to the Department for reimbursement of costs expended in the clean-up. In furtherance of the agreement between Worldwide and Brown, $935.00 was paid as part of the costs of preparation of the application. This payment was by a check mailed on August 27, 1996. The balance of the fee was to be paid upon the completion of the preparation of the application. In 1996, outside the experience of his businesses, Mr. Steinberg was having difficulties in his marriage. To address the situation, Mr. Steinberg filed a Petition for Dissolution of Marriage. That Petition was filed in April 1996, at which time Mr. Steinberg assumed custody of the children of that marriage, with no right for their mother to unaccompanied visits. After filing for dissolution, Mr. Steinberg relied on others to assist him in dealing with his personal and business life. From December 1996 through January 6, 1997, Mr. Steinberg was particularly influenced by the upheaval in his personal life. It caused him to request extension of deadlines from the Internal Revenue Service for the benefit of his clients whom he served as a CPA. During December, Mr. Steinberg was only in his office for approximately 10 percent of the normal time he would have spent had conditions in his personal life been more serene. On January 6, 1997, the conditions in Mr. Steinberg's personal life took a turn for the worse when his wife committed suicide. In December 1996, attorney Jerrold Knee, who had assisted Mr. Steinberg as counsel in purchasing the Save-A-Stop property, spoke to someone at Brown concerning the status of the preparation of the application for reimbursement of funds expended in the clean-up. He was told that the application was being worked on. Mr. Knee was aware that the deadline for filing the application was December 31, 1996. Mr. Steinberg was also aware of the December 31, 1996, deadline for submitting the application. In that connection, Mr. Knee was familiar with the difficulties that Mr. Steinberg was having in Mr. Steinberg's marriage in 1996. Mr. Knee knew that Mr. Steinberg was infrequently in the office attending to business. Mr. Knee surmised that Mr. Steinberg was relying upon Mr. Knee to make certain that the application was timely submitted, and Mr. Knee felt personally obligated to assist Mr. Steinberg in filing the application, given the knowledge that Mr. Steinberg was not in the office routinely during December 1996. His sense of responsibility did not rise to the level of a legal obligation between lawyer and client. Although Mr. Knee was aware of the pending deadline for submitting the application for reimbursement, and had inquired about its preparation by Brown, and had discussed it with Mr. Steinberg, Mr. Knee never specifically committed to making certain that the reimbursement application was filed on time. As it had committed to do, Brown prepared the reimbursement application for the Save-A-Stop site. The application was for the total amount of $58,632.85, not including preparation charges and CPA Fees. Written notification of the preparation of the application was provided to Mr. Steinberg on December 12, 1996. The correspondence reminded Mr. Steinberg that the application needed CPA approval, an invoice and registration, and a signed certification affidavit. Most importantly, the notification reminded Mr. Steinberg that an original and two copies of the application must be sent to a person within the Department prior to December 31, 1996. The notification specifically indicated the name of that individual within the Department and set forth that person's address. The notification arrived in Mr. Steinberg's office during the week of December 12, 1996. That notification was not opened until late January or early February 1997. Mr. Steinberg opened the letter at that time. During December 1996 Mr. Steinberg was responsible for opening the mail received in his office. No other person was expected to open that mail for the benefit of Worldwide. Untimely Application On February 6, 1997, Worldwide submitted its application for reimbursement for clean-up at the Save-A-Stop location. That application was received by the Department on February 7, 1997. The Department has consistently interpreted the statutory deadline for submitting reimbursement applications in accordance with Section 376.3071(12), Florida Statutes, (Supp. 1996) to be absolute. Consequently, on February 11, 1997, the Department denied the Worldwide application because it had been filed beyond the December 31, 1996, deadline recognized by the statute. Worldwide contested that proposed agency action by requesting a hearing to examine the issue of the timing of the application submission. Consequences of Untimely Application In Florida, petroleum taxes are deposited for the benefit of the Inland Protection Trust Fund. The Florida Legislature allows monies to be appropriated from those deposited funds. In that budgetary process, the Governor's office serves as liaison in requesting the Legislature to appropriate monies from the Inland Protection Trust Fund in relation to the costs of cleanup of sites contaminated by petroleum products. To assist the Governor's office, the Department identifies the need for covering the costs of the clean-up and makes a recommendation to the Governor to provide to the Legislature concerning the amount to be appropriated for the clean-up. In the history of the clean-up program, in 1995, problems were experienced with fraudulent and inflated claims calling for reimbursement for the cost of clean-up. This led to a debt of approximately $550,000,000.00. There was a concern that that debt could not be repaid in a reasonable time frame. In response, the Department, as authorized by the Legislature in action taken in 1996, negotiated a bond transaction through the Inland Protection Financing Corporation. With the advent of the bond issue, $343,000,000.00, not to include the cost of funding the bond, was made available to pay for petroleum clean-up. That bond issue was designed to fund the payment of reimbursement applications that had been received before the end of the life of the petroleum clean-up reimbursement program in place. During the 1996 session, in which the Legislature approved the bond issue, the Legislature also made changes to the petroleum clean-up program. The changes were fundamental in that applicants were no longer reimbursed for clean-up work that had been performed. With the advent of the legislative changes, petroleum clean-up, under a system calling for payment from the fund, could only be conducted if an applicant was pre-approved to conduct the clean- up. As part of that process of gaining funds pursuant to the bond issue, the Department performed an analysis, as authorized by the Legislature, to determine that amount necessary to pay existing obligations that had accrued under the petroleum clean-up reimbursement program that predated the Legislative change in 1996. To ascertain the existing obligation, the Department totaled the known dollar amount associated with the existing reimbursement applications and a portion of unreviewed reimbursement applications that had been received. The Department adjusted the sum to be paid in association with applications that had not been reviewed to that point, having in mind prior experience in which only 82 percent of claims had been allowed. The overriding concern by the Department was that it needed to determine whether the bond issue would be sufficient to defease the backlog of applications for reimbursement previously filed. Information concerning the reimbursement obligations was made known to the Florida Supreme Court in bond validation proceedings held before that court. The Inland Protection Finance Corporation was also made aware of the reimbursement obligations. In 1997, the Department gave further information to the Inland Protection Financing Corporation, indicating that the amount of bond was sufficient for reimbursement obligations. The Department in association with the terms of the bond transaction agreed that the bond proceeds would not be used to fund claims that were received after January 3, 1997. The deadline for submitting applications had been extended until January 3, 1997, by virtue of a statutory amendment found at Section 376.3071(12), Florida Statutes, (1997). Therefore, consistent with the statutory change, the Department had allowed applications submitted after December 31, 1996, but before January 4, 1997, to be considered on their merits. The December 31, 1996, deadline had existed under Section 376.3071(12), Florida Statutes (Supp. 1996). The statutory change occurred because a number of applications that were filed pursuant to the December 31, 1996, deadline set forth in Section 376.3071(12), Florida Statutes (Supp. 1996) did not meet that deadline. The reason for this failure was due to weather conditions that caused overnight couriers, Federal Express and United Parcel Service, to be unable to deliver parcels to the Tallahassee, Florida, airport. These applications, as other applications, were sent to the Department at a Tallahassee, Florida, address. Based on the inability of the two couriers to deliver applications under the timeline anticipated, the Department did not receive that group of applications until January 2, 1997. Subsequently, the applications were accepted as timely based upon the amendment found in Section 376.371(12), Florida Statutes (1997) which extended the filing deadline until January 3, 1997. As a policy consideration, the Department believes it must strictly enforce the deadline for submission of reimbursement applications, as extended by the Legislature, to avoid the future accrual of debt for applications submitted after January 3, 1997, which the Department cannot reasonably anticipate. Apropos of the present case, the Department does not believe that it is well-advised to allow even a single claim for reimbursement, if that claim was received after January 3, 1997. To date, 64 applications have been received by the Department subsequent to December 31, 1996. All but six of those applications were received no later than January 3, 1997. Two of that six applications for reimbursement are still pending before the Department. Historically 22,000 applications for petroleum clean-up have been received by the Department since 1986. At the time of the hearing, 9,000 applications were pending before the Department. In December 1996, 3,000 applications were received calling for reimbursement of costs. At the time of hearing, approximately $340,000,000 in reimbursement claims had not been satisfied. Petitioner makes its claim to be excepted from the deadline for submitting its application based upon the doctrine of equitable tolling.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED that a Final Order be entered denying the application of Worldwide to participate in the reimbursement program for clean-up expenses as untimely. DONE AND ENTERED this 7th day of May, 1998, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS 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 Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1998. COPIES FURNISHED: P. Tim Howard, Esquire P. Tim Howard and Associates, P.A. 1424 East Piedmont Drive, Suite 202 Tallahassee, Florida 32312 Jeffrey Brown, Esquire Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Kathy Carter, Agency Clerk Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 F. Perry Odom, General Counsel Department of Environmental Protection 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Virginia B. Wetherell, Secretary Department of Environmental Protection 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
The Issue The issue in this case is whether Respondents have violated provisions of Section 627.837, Florida Statutes, through payment of alleged monetary inducements to insurance agents for the purpose of securing contracts which finance insurance premiums.
Findings Of Fact Petitioner is the Department of Insurance and Treasurer (Department). Respondents are Puritan Budget Plan, Inc., and Gibraltar Budget Plan, Inc., (Respondents). Findings contained in paragraphs 3- 23, were stipulated to by the parties. Stipulated Facts Common shares in Respondents' corporations were sold to insurance agent/shareholders for between $500.00 and $2,500.00 per share, depending on date purchased. Presently, and for the purposes of this litigation, marketing and/or administrative fees paid by Respondents to agent/shareholders range from $1.00 to $13.00 per contract produced, depending on the number of payments made, and the amount of the down payment. Each per contract marketing and/or administrative fee paid by Respondents to agent/shareholders is completely unrelated to the number of contracts produced by that agent/shareholder, and is based upon the characteristics of each contract, pursuant to the terms of the shareholder purchase agreement. Perry & Co., pursuant to a written agreement, manages the day to day activities of Respondents, including solicitation of new shareholder/agents. Alex Campos is currently President of Perry & Co. Perry & Co., Dick Perry or Alex Campos have no equity ownership, either direct or indirect, in Respondents corporations. No shareholder of Perry & Co. is also a shareholder in either Respondent, and no shareholder of the Respondents is a shareholder in Perry & Co. No officer or director of Perry & Co. is an officer or director of either Respondent, and no officer or director of either Respondent is an officer or director of Perry & Co. The individual management agreements between Perry & Co. and Respondents are terminable with proper notice by either party. Respondent Puritan Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Puritans' principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Respondent Gibraltar Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Gibraltar's principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Customers of Respondents are typically financing automobile insurance premiums. There is little if any variation among licensed premium finance companies in the State of Florida as to the interest rate charged to customers. In 1988, the Department inquired of Respondents' activities in relation to agent/shareholder compensation arrangements. After several meetings with representatives from Respondents, the Department closed the matter without taking any action. Also in 1988, the Department proposed the adoption of Rule 4-18.009, which in part would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes, but later withdrew the proposed rule. Again in 1994, the Department proposed a rule which would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes. After a hearing and adverse ruling by the hearing officer, the Department withdrew proposed Rule 4-196.030(8). Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in the unnecessary financing of contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in insurance agents adding or sliding unnecessary products to make the total cost of insurance more expensive and induce the financing of additional contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. An "inducement" is presently defined as "an incentive which motivates an insurance purchaser to finance the premium payment or which motivates any person to lead or influence an insured into financing the insurance coverage being purchased; or any compensation or consideration presented to a person based upon specific business performance whether under written agreement or otherwise." Rule 4-196.030(4), Florida Administrative Code (July 27, 1995). This rule is currently effective but presently on appeal. There is no evidence that Respondents unnecessarily financed any premium finance contracts or engaged in any "sliding" of unnecessary products to induce the unnecessary financing of contracts. Section 627.837, Florida Statutes, does not prohibit the payment of corporate dividends based on stock ownership to shareholders who are also insurance agents. According to the Final Bill Analysis for H.B. 2471, in 1995 the Legislature amended Section 627.837, Florida Statutes, relating to rebates and inducements. This section was amended to clarify that this statute does not prohibit an insurance agent or agents from owning a premium finance company. The statute, as amended, is silent on the issue of how owner-agents may be compensated. Other Facts Approximately 80 percent of Respondents' insureds will turn to the shareholder/agent to handle premium mailing and collection. When a shareholder/agent provides these valuable services and labor to Respondents through the servicing of the premium finance contract with an insured, payment for those services and/or recoupment of the expenses involved with their provision is made, at least in part, in the form of the marketing and administrative fees paid by Respondents to the shareholder/agent. The marketing and administrative fee payment by Respondents to shareholder/agents is made from the net profit of the corporation and represents payment of ownership interest (dividends) to shareholder/agents in addition to payment for shareholder/agent services or expenses. Respondents generally finance "non-standard" private passenger automobile insurance. Such insurance generally covers younger drivers and drivers with infraction points against their license. The average non-standard premium is $500 per year. Thirty percent of non-standard insureds will cancel their insurance prior to the renewal date. Cancellation of policies and financing arrangements by non-standard insurers require the agent to return unearned commissions, about $30 generally. In contrast, payment of an insurance premium in cash guarantees an agent his/her entire commission, an average of $90 per non-standard policy. Consequently, the financial interest of most agents is best served by cash sale of auto insurance as opposed to financing the insurance. The average amount generated by 95 percent of all premium finance contracts executed in Florida would yield an agent/shareholder approximately six dollars per contract.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered dismissing the Administrative Complaints. DONE and ENTERED in Tallahassee, Florida, this 28th day of November, 1995. DON W. DAVIS, 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 28th day of November, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings 1.-11. Accepted to extent included within stipulated facts, otherwise rejected for lack of citation to the record. 12. First sentence is rejected as not substantially dispositive of the issues presented. Remainder rejected for lack of record citation if not included within stipulated facts. 13.-15. Rejected to extent not included within stipulation, no citation to record. Incorporated by reference. Rejected, no record citation, legal conclusion. 18.-19. Rejected, not materially dispositive. 20. Rejected, no record citation. 21.-23. Rejected, not materially dispositive. Rejected, record citation and relevancy. Rejected, weight of the evidence. Incorporated by reference. Respondent's Proposed Findings 1. Rejected, unnecessary to result. 2.-3. Accepted, not verbatim. 4. Rejected, unnecessary. 5.-7. Accepted, not verbatim. 8.-9. Rejected, unnecessary. 10. Accepted per stipulation. 11.-12. Rejected, unnecessary. 13. Accepted per stipulation. 14.-16. Accepted, not verbatim. Rejected, hearsay. Rejected, relevance. Rejected, unnecessary. 20.-22. Accepted per stipulation. 23. Rejected, unnecessary. 24.-57. Incorporated by reference. 58.-60. Rejected, unnecessary. 61.-62. Rejected, subordinate and not materially dispositive. 63.-67. Rejected as unnecessary to extent not included in stipulated facts. Accepted per stipulation. Rejected, unnecessary. Accepted per stipulation. 72.-76. Rejected, unnecessary. 77. Accepted per stipulation. 78.-79. Incorporated by reference. 80.-87. Accepted per stipulation. 88. Incorporated by reference. 89.-90. Accepted per stipulation. 91.-95. Rejected, subordinate. 96. Accepted. 97.-101. Rejected, unnecessary. 102. Incorporated by reference. COPIES FURNISHED: Alan Liefer, Esquire Division of Legal Services 612 Larson Building Tallahassee, FL 32399-0333 Steven M. Malono, Esquire Cobb, Cole & Bell 131 N. Gadsden St. Tallahassee, FL 32301 Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Dan Sumner Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300
The Issue The issue in this case is whether the Petitioner should revoke or suspend the Respondent's pari-mutuel occupational license for allegedly gambling out of his teller box in violation of F.A.C. Rules 61D-1.031(6) and 61D-1.002(18).
Findings Of Fact On or about July 6, 1994, the Respondent, Edward J. Tomczak, applied for a pari-mutuel occupational license as a teller at Tampa Jai Alai. According to the evidence, a one-year Unrestricted "M2" General license, number 0208239-1084, was issued to the Respondent, and the license is scheduled to expire on June 30, 1995. In the course of working as a teller at Tampa Jai Alai on the evening of August 29, 1994, the Respondent issued himself at least $1,427 of tickets for which he made no payment. In effect, he "borrowed" and used the fronton's money, against fronton policy, to gamble on his own account. As a result of his gambling, the Respondent was $1,427 "short" at the end of the evening. After closing out for the evening, the Respondent reported the $1,427 "short" to his supervisor. The Respondent explained that he was trying to win enough money to pay the claim of a woman whose winning December, 1992, Twin Trifecta ticket was cashed by the Respondent on August 11, 1993, after allegedly being found in the ladies room at Tampa Jai Alai by the Respondent's girlfriend. Notwithstanding the Respondent's attempt to explain his conduct of the previous evening, it was clearly understood between him and his supervisor that the Respondent's conduct on August 29, 1994, was a firing offense and that the Respondent no longer would be permitted to work as a teller at Tampa Jai Alai. (It was not the first time the Respondent reported a substantial "short" that summer. A previous "short" was in the neighborhood of $600-$700.) The next day, the Respondent cashed out his retirement account, repaid Tampa Jai Alai the $1,427 owed, and left. Whether he quit or was fired is unimportant to the issues in this case. A small "short" by a teller is not a firing offense at Tampa Jai Alai. There are many ways in which honest errors in the course of an evening can result in minor (less than $100) "shorts." Tampa Jai Alai's policy is that tellers must repay "shorts" and that "shorts" over $100 must be repaid before the teller can work again at the fronton. But "shorts" of the magnitude of $600-$700, much less $1,427, are considered highly unusual and are cause for concern that they are not the result of honest mistakes but rather of prohibited gambling "out of the box," as the Respondent was doing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, enter a final order: (1) imposing a $500 fine on the Respondent, Edward J. Tomczak; (2) revoking his license; and (3) declaring him ineligible for relicensure for a period of one year, with relicensure conditioned upon certification by a Florida licensed mental health practitioner that he has been evaluated for possible gambling addiction and either has been found not to be addicted or is being treated for such an addiction. RECOMMENDED this 22nd day of June, 1995, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 22nd day of June, 1995. COPIES FURNISHED: Joseph M. Helton, Jr. Esquire Department of Business and Professional Regulation 1940 N. Monroe Street Tallahassee, Florida 32399-1007 Edward J. Tomczak 6401 S. Westshore Blvd., Apt. 716 Tampa, Florida 33616 Royal H. Logan Acting Director Department of Business and Professional Regulation Division of Pari-Mutuel Wagering 1940 North Monroe Street Tallahassee, Florida 32399-0792 Lynda Goodgame General Counsel Department of Business and Professional Regulation Division of Pari-Mutuel Wagering 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, and the entire record compiled herein, the following relevant facts are found. Respondent, Homer L. (Glenn) Wade, is the holder of certificate No. CA 453 B, which has been issued pursuant to Chapter 559, Florida Statutes. Respondent, Wade, has used that certificate to qualify American Collection Systems, Inc., doing business as American Collection Systems, with its principal offices located at 3011 Northeast 44th Street in Fort Lauderdale. (Petitioner's Composite Exhibit No. 1.) By two, five count Notices to Show Cause filed herein on November 19, 1980, Petitioner seeks to suspend or revoke Respondent, Wade's certificate of qualification for reasons which will be set forth hereinafter in detail. 2/ Count II of the Notices allege, in pertinent art, that on or about May 22, 1980, Respondent and/or its agent materially misrepresented a consumer claim from a debtor, Ms. Joyce Kilgore, by misrepresenting the amount owed, in violation of Chapter 559.73(3), Florida Statutes. The deposition of Joyce Kilgore, 3/ taken on April 20, 1981, reveals that Ms. Kilgore, a resident of Atlanta, Georgia, ordered one set of three (3) mint mark covers of the Susan Anthony Dollar from Fleetwood, a coin collection agency in Cheyenne, Wyoming. Ms. Kilgore was billed $28.50 plus a $2.00 interest charge. Ms. Kilgore cancelled the order prior to receiving the coin collection and subsequently received a credit for the receipt of the cancellation notice. The remaining three (3) allegations set forth in the Notices to Show Cause allege, in pertinent part, that Respondent, Homer L. Glenn Wade, and/or its accent, communicated to debtor Richard Pruss, which gave the appearance of being authorized, issued or approved by a government, governmental agency or attorney at law, when it was not, in violation of Chapter 559.72(10), Florida Statutes: that Respondent and/or its agent engaged in a material misrepresentation by misrepresenting the amount owed in its attempt to collect a consumer claim from debtor Richard Pruss, in violation of Chapter 559.73(3), Florida Statutes, and finally, that Respondent and/or its agent, on September 22, 1980, communicated or threatened to communicate with debtor Richard Pruss' employer, prior to obtaining final judgement against debtor Pruss, and without securing Pruss' permission to do so in writing, in violation of Chapter 559.72(4), Florida Statutes. The facts surrounding these allegations are that on June 26, 1980, Richard truss took his dog to the Boca West Animal Clinic. The treating veterinarian, Art Malernee, Doctor of Veterinary Medicine (D.V.D.) performed a series of laboratory and symptomatic screenings to determine from what Messr. Pruss' dog was suffering. Within the next day, the treating veterinarian, advised Messr. Pruss that his dog was apparently poisoned and that it was best to "put the dog to sleep." Messr. Pruss agreed to euthanasia and cremation and was presented a bill for $306.50 the following day. Messr. Pruss considered the bill excessive, so advised Dr. Malernee's receptionist and told her that he could only make a partial payment. Pruss also presented the receptionist with a check which along with she was told (by Pruss) to delay presenting for payment until he obtained sufficient funds to cover that check. The following day, Messr. Pruss attempted, without success, to negotiate and pay a lesser amount than the balance due to Dr. Malernee. Messr. Pruss then stopped payment on the check, which was drawn in the amount of $231.40 and he (Pruss) has not paid the remaining balance. The bill was referred to Respondent for collection. On approximately July 24, 1980, Respondent's agent, a Mr. Bob Stoudt, telephoned Respondent's wife to inquire about the bill. Mrs. Pruss, according to Messr. Pruss, was advised that she should be at Respondent's office by 7:00 P.M., inasmuch as he would "hate to see Messr. Pruss arrested or to know that his employer had learned of this unpaid obligation." Debtor Pruss subsequently received the demands from Respondent requesting payment of $242.50 which represented a fee of an approximate $10.00 service or interest charge to satisfy the alleged unpaid claim. (See Petitioner's Exhibit No. 4.) Messr. Pruss also received a collection notice and a separate notice which basically quoted Florida's fraudulent check law showing American Collection Systems as the sender of that notice. (Petitioner's Composite Exhibit No. 3.) On September 22, 1980, debtor Pruss received a letter bearing the same date from Respondent, which appeared to show that a copy of that letter was sent to Pruss' employer (Publix Super Market in Sunrise, Florida), marked to the attention of the store manager. See Petitioner's Exhibit No. 4. Thereafter, debtor Pruss advised his employer of the outstanding obligation. Debtor Pruss admitted that he initially agreed to pay a portion of the outstanding bill but on September 2, 1980, refused to pay based on the telephone call(s) that he had received at work (allegedly three or four times including the phone calls to his wife at his residence.) Respondent's Defense Respondent generally denied the allegations set forth herein in the Notices to Show Cause. Respondent countered on the basis that he signed no document or authorized any document to be signed to the effect that he was an attorney, nor did the form letter which, in pertinent part, recited the fraudulent check law, purport to be, in any manner a judicial document. Respondent contends that there was no misrepresentation as to the amount owed and that the law authorized a service charge of five percent (5 percent) which is sanctioned per Chapter 559, Florida Statutes. Finally, Respondent denies that any threat was made or that any attempt was made to communicate with debtor Pruss' employer. Respondent points out that there was no future action which is contemplated in a threat inasmuch as the letter here complained of had already been sent and further that it was not written or otherwise approved by Respondent. Additionally, Respondent points out that in any event, the letter was simply a request for assistance from Pruss' employer to adjust a debt and that no disciplinary action was taken against Pruss by his employer. In support of his position as to the fact that the amount claimed to be due by the debtor (Pruss) was in fact owed, Respondent pointed out that Pruss tendered a check in the amount claimed to Dr. Malernee for satisfaction of the obligation.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent's certificate of qualification and license be suspended for a period of thirty (30) days; said suspension commencing 30 days from the Division's final order. RECOMMENDED this 22nd day of September, 1981, in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of September, 1981.
