Findings Of Fact The Petitioner is University General Hospital, Inc. (hereinafter "UGHI"), the present license holder of University General Hospital (hereinafter "University Hospital"), a 140-bed general acute-care hospital located in Seminole, Florida. During calendar years 1989 and 1990 and until July 30, 1991, University Hospital operated as a division of Community Health Investment Corporation f/k/a/ CHS Management Corporation (hereinafter "CHIC"). On July 30, 1991, UGHI was incorporated as a wholly-owned subsidiary of CHIC and became the license holder of University Hospital. University Hospital's change in licensure on that date did not change its ownership, control, management, reporting, or operation. On or about December 2, 1991, UGHI timely filed Certificate of Need (hereinafter "CON") Application No. 6851 to convert 12 general acute-care beds to hospital-based skilled nursing beds. In a letter dated December 19, 1991, the Department (hereinafter "HRS") identified certain items of information omitted from UGHI's initial application (commonly referred to as an "Omissions Letter"), including, among other items, audited financial statements of the applicant. On or about January 15, 1992, UGHI timely filed its response to the Omissions Letter and included a document entitled "UNIVERSITY GENERAL HOSPITAL, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMMUNITY HEALTH INVESTMENT CORPORATION) FINANCIAL STATEMENTS AS OF DECEMBER 31, 1990 AND 1989 TOGETHER WITH REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS." In a letter dated January 28, 1992, HRS notified UGHI that its CON application was being administratively withdrawn from consideration for the sole reason that it did not contain audited financial statements of the applicant, University General Hospital, Inc. The purpose of audited financial statements from the standpoint of HRS' review of CON applications is that they provide HRS with a basis to determine the overall financial strength and financial position of the applicant and the applicant's ability to carry out the project being proposed. HRS requires that the financial statements be "of the applicant" because it looks to the source of funding and financial strength of the entity responsible for funding the project--the party submitting the CON application. The audited financial statements submitted by UGHI reflect the resources available to it for the CON project proposed in CON Application No. 6851 and are appropriate to demonstrate the financial strength of UGHI. The audited financial statements filed by UGHI contain financial documentation for years ending December 31, 1990 and 1989, as well as information through November 13, 1991. The issuance of audited financial statements for an entity incorporating a period of time before that entity's corporate existence (known as "reissuance") is a common practice in the accounting profession and, subject to the entity's ability to satisfy the specified prerequisites, is consistent with pronouncements and standards under generally accepted auditing standards (hereinafter "GAAS") and generally accepted accounting principles (hereinafter "GAAP"). The prerequisites for reissuance of an audited financial statement are adequate disclosure made in the notes of the financial statement and continuance of common ownership, control, management, reporting, and operation of the entity's activities. Prior to issuance of the audited financial statements for UGHI, Arthur Andersen & Co. conducted an extensive post-audit review of UGHI and concluded that the financial statements previously issued to University Hospital could be reissued as audited financial statements of UGHI. Had Arthur Andersen & Co. found that the previously-issued audited financial statements were misleading or that the requirements set forth in GAAS and GAAP were not satisfied, it would not have reissued the audited financial statements on behalf of UGHI. The audited financial statements submitted by UGHI to HRS constitute a valid document prepared in accordance with the pronouncements and standards under GAAS and GAAP. It is the policy of HRS that, if an entity has been in existence for less than one year, HRS will accept only a balance sheet audit as of the date of incorporation, or a short period audit from the date of incorporation through an undefined period of time. HRS' policy is not reflected in any of the statutes, rules, or HRS Manual provisions regarding audited financial statements, and HRS is not in the process of promulgating a rule regarding this policy. HRS' policy applies to all entities submitting CON applications that have been in existence for less than one year. Balance sheet and short period audits are not appropriate documents to assess an entity's financial condition. In many cases, HRS would prefer a reissued audited financial statement to a balance sheet audit in analyzing a CON application. In determining whether an applicant complies with Section 381.707(3), Florida Statutes, HRS will, with certain exceptions, look at whether the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code, is met. HRS does not apply the definition of "Audited Financial Statement" set forth in Section 10-5.002(5), Florida Administrative Code, to applicants in existence for less than one year. The definition it applies to these entities is not set forth in any rule, statute, or HRS Manual provision. A balance sheet audit does not comply with the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code. The audited financial statements filed by UGHI comply with the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code. Rule 10-5.008(5)(g), Florida Administrative Code, identifies those audited financial statements satisfying the rule definition of "Audited Financial Statement" that HRS will not accept. HRS explains the exceptions set forth within Rule 10-5.008(5)(g), Florida Administrative Code, on the basis that these audited financial statements reflect financial documentation of an affiliate entity. The audited financial statements submitted by UGHI are not a combined audit, a consolidated audit, or an audit of a division, as prohibited under Rule 10-5.008(5)(g). From an accounting standpoint, the audited financial statements submitted by UGHI are those of UGHI. An accounting firm typically identifies the entity being audited on the title page of the audited financial statements and in the audit report and financial statements contained therein. The title page of, and audit report and financial statements in, the audited financial statements prepared by Arthur Andersen & Co. for UGHI all reflect that the entity being audited is UGHI. An accounting firm faces significant liability if the audited financial statements it prepares are found to be inaccurate or misleading. HRS does not dispute, and in fact agrees, that the audited financial statements prepared by Arthur Andersen & Co. for UGHI were correctly issued and are consistent with GAAS and GAAP.
The Issue Whether Respondent violated statutory and rule provisions relating to record-keeping requirements for licensed check cashers, and if so, what penalty should be imposed.
Findings Of Fact Petitioner, Office of Financial Regulation (the Office or Petitioner), is the state agency charged with administering and enforcing chapter 560, Florida Statutes, related to licensing of Money Services Businesses, a term that includes check-cashing businesses. Respondent, Capital City Check Cashing (Capital City or Respondent), has been a licensed check casher, pursuant to chapter 560, Part III, Florida Statutes, since March 2007. Capital City is located at 458 West Tennessee Street in Tallahassee, Florida. John O. Williams is the owner of Capital City and appeared as counsel for Capital City throughout these proceedings. Kane Fuhrman is the manager and sole employee of Capital City and directly provides check-cashing services to Capital City’s customers. Capital City Examination William Morin is employed by the Office as a Financial Examiner/Analyst Supervisor. On October 23 and 24, 2012, Mr. Morin conducted an examination of Capital City’s records for the period of January 1, 2010 through October 23, 2012. The examination was conducted on the premises of Capital City. Mr. Morin was accompanied by Matt Manderfield, a field analyst in training. Mr. Morin conducted the examination using an examination module designed by the Office as both a checklist of required records and an electronic notebook for recording the examiners notes. Mr. Fuhrman was present for the examination. Mr. Fuhrman provided voluminous records to Mr. Morin, which Mr. Morin scanned into his computer while on site at Capital City. Prior to leaving the premises on October 24, 2012, Mr. Morin explained to Mr. Fuhrman that some statutorily- required documents were missing and presented Mr. Fuhrman with a written records request. The written request indicates that the missing documents were needed by October 29, 2012. Through the records request, the Office sought the following documents for the examination period: (1) complete customer files for Capital City clients JNJ Service, LLC; Swift Delivery; Johnson Maintenance Service; and Charlie’s Electric Service; (2) copies of payment instruments cashed, including the back of the payment instruments showing endorsement; (3) daily electronic check-cashing logs; and (4) customer thumbprints on checks cashed. Customer Files Florida Administrative Code Rule 69V-560.704(4)(d) (2009),1/ reads as follows: (4) In addition to the records required in subsections (1) and (2), for payment instruments exceeding $1,000.00, the check casher shall: * * * (d) Create and maintain a customer file for each entity listed as the payee on corporate payment instruments and third party payment instruments accepted by the licensee. Each customer file must include, at a minimum, the following information: Documentation from the Secretary of State verifying registration as a corporation or fictitious entity showing the listed officers and FEID registration number. If a sole proprietor uses a fictitious name or is a natural person, then the customer file shall include the social security number of the business owner and documentation of the fictitious name filing with the Secretary of State. Articles of incorporation or other such documentation which establishes a legal entity in whatever form authorized by law. For purposes of this rule a sole proprietor operating under a fictitious name registered with the Secretary of State shall not have to present such documentation. Documentation of the occupational license from the county where the entity is located. A copy of the search results screen page from Compliance Proof of Coverage Query Page webpage from the Florida Department of Financial Services – Division of Workers’ Compensation website (http://www.fldfs.com/WCAPPS/Compliance_POC/ wPages/query.asp) Documentation of individuals authorized to negotiate payment instruments on the corporation or fictitious entity’s behalf including corporate resolutions or powers of attorney. Payment instruments for insurance claims where there are multiple payees shall be exempt from this provision provided that the maker of the check is an insurance company and the licensee has obtained and retained documentation as to the identity of the natural person listed as payee on such payment instrument. Capital City requires its customers to complete and sign a “Check Cashing Agreement” (Agreement). The second page of the Agreement is a form soliciting customer information, including the name, address, phone numbers, address, social security number, and driver’s license number of the conductor (the person cashing the check on a corporate check), as well as the name of the person’s employer, their business address and phone number. The form includes fields for information about the check being cashed, such as the check number and amount, as well as the payor and payee names. Customers are required to sign and date the Agreement, as well as place their thumbprint in a designated box on the face of the Agreement. By signing the Agreement, the customer agrees to release their personal and business information to a third-party verifier, to pay a fee for said verification, and to pay Capital City three times the face value of any instrument cashed which is returned for insufficient funds. During the on-site examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, JNJ Service, LLC: a copy of an executed Agreement, copies of the photographic identification and social security card of the conductor, a copy of the face of a check for $4,471.68 cashed, a copy of the receipt for the check, and a printout from the Secretary of State’s Sunbiz website for corporate status of JNJ Service, LLC. The printout shows the FEIN number for JNJ Service, LLC, and reports corporate status as “Inactive” with last event shown “Administrative Dissolution for Annual Report” on September 23, 2011. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Swift Delivery, LLC: copies of the face of three checks cashed in amounts exceeding $1,000.00 and three accompanying executed Agreements. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Johnson’s Maintenance Service: copies of two checks cashed in amounts exceeding $1,000.00, accompanying executed Agreements, and copies of the photo ID and social security card of the conductor. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Charlie’s Electric: a copy of the face of a check cashed for $28,000.00, an executed Agreement, and a receipt for the check cashed. Prior to the examination, Capital City did not routinely keep copies of the corporate information from the Secretary of State’s website as part of the customer files. Prior to the examination, Capital City did not request, or otherwise obtain, the Articles of Incorporation for its corporate clients. Prior to the examination, Capital City did not request copies of its corporate clients’ occupational license. If a corporate client presented its occupational license, Capital City kept a copy. Prior to the examination, Capital City did not request, or otherwise obtain, information regarding its corporate clients’ compliance with workers’ compensation insurance requirements. On October 29, 2012, in response to Mr. Morin’s written records request, Mr. Fuhrman printed from the Secretary of State’s website, the corporate detail page for JNJ Service, LLC, Swift Delivery, LLC, Johnson Maintenance, Inc., and Charlie’s Electric Company, Inc. The information showed that JNJ Service, LLC, was an active corporation having been reinstated on September 10, 2012; Swift Delivery, LLC, had been administratively dissolved on September 23, 2011; Johnson Maintenance, Inc., had been administratively dissolved on September 26, 2008; and Charlie’s Electric Company, LLC, had been administratively dissolved on September 15, 2006. Following the examination, and in response to Mr. Morin’s records request, Mr. Fuhrman obtained articles of incorporation for JNJ Service, LLC, and Johnson Maintenance, Inc.; articles of organization for Swift Delivery, LLC; and a corporate reinstatement application for Charlie’s Electric Company, Inc., filed February 29, 2008. Following the examination, and in response to Mr. Morin’s request for information, Mr. Fuhrman checked the Office of Financial Regulation – Division of Workers’ Compensation website, and queried the name of each of its four corporate customers. Mr. Fuhrman’s queries returned “O records found” for each client. Mr. Fuhrman printed a screen shot of each query return. On November 5, 2012, Mr. Morin returned to Capital City and picked up a package of documents from Mr. Fuhrman, as well as the records request form whereon Mr. Fuhrman had written the types of records which were being provided. There was conflicting testimony regarding whether the documents Mr. Fuhrman obtained in response to the records request were included in the package Mr. Morin obtained from Mr. Furhman on November 5, 2012. The Office maintains that the documents were not furnished. Mr. Fuhrman was unable to testify with certainty that the documents obtained were in the package of documents he gave to Mr. Morin. Whether or not the documents were sent to the Office is a red herring, and the extent of testimony on this issue was largely irrelevant. The issue is whether the documents were maintained by Capital City in its customer files during the examination period, not whether Capital City was able to produce the documents following the examination. Capital City admitted that it did not maintain those documents during the examination period. As such, Capital City did not maintain customer files for JNJ Service, LLC; Swift Delivery, LLC; Johnson Maintenance Service; and Charlie’s Electric Company, Inc., in compliance with rule 69V-560.704(4) during the examination period. Subsequent to the examination, Capital City developed a checklist for compiling customer files on corporate customers who cash checks of $1,000.00 or more. The checklist includes all of the information required by rule 69V-560.704. Check Copies Florida Administrative Code Rule 69V-560.704(2) reads, in pertinent part, as follows: Every check casher shall maintain legible records of all payment instruments cashed. The records shall include the following information with respect to each payment instrument accepted by the registrant: A copy of all payment instruments accepted and endorsed by the licensee to include the face and reverse (front and back) of the payment instrument. Copies shall be made after each payment instrument has been endorsed with the legal name of the licensee. Endorsements on all payment instruments accepted by the check casher shall be made at the time of acceptance. Prior to the examination, Capital City did not keep copies of the backs of checks cashed. Rather, Capital City relied upon its bank to maintain copies of the checks cashed with endorsement. Capital City introduced at final hearing, a binder containing the copies of the backs of all checks cashed, with endorsements, by Capital City during the months of July, September, and October 2012. These records were provided to Respondent from its banking institution after the examination and after the Office filed its original Administrative Complaint. It is unclear whether Capital City, subsequent to the examination, has changed its practice of relying upon its bank to maintain copies of the backs of checks cashed. Mr. Williams testified both that “we decided, after the audit that, to be safe, we’d go ahead and keep the backs of the checks”2/ and “[w]e pay $75 a month so that the bank will produce these for us each month, and we pay extra if we have to produce them on demand during the middle of the month if we have any issues that involves law enforcement. But they are producible.”3/ Capital City’s decision, prior to the examination, not to maintain copies of the backs of checks cashed, was due in part to Mr. Williams’ belief that the governing statute allows a check casher to designate its bank as a third-party maintainer of records. Section 560.310(3), Florida Statutes (2012),4/ reads as follows: A licensee under this part may engage the services of a third party that is not a depository institution for the maintenance and storage of records required by this section if all the requirements of this section are met. Capital City’s bank is a depository institution. Capital City’s decision not to maintain copies of the backs of the checks, prior to the examination, was also due in part to Mr. Williams’ belief that “there is certain information that’s added to the back of checks after they go through the bank”5/ that was more helpful to law enforcement authorities interested in the checks. Capital City offered no testimony to identify what information on the backs of the checks existed at the time the checks were deposited, and what, if any, information was added during bank processing. Mr. Morin prepared a Report of Examination (Report) dated January 22, 2013, summarizing the findings of the October 2012 Capital City records examination. The Report was delivered to Kane Fuhrman, on behalf of Capital City, by certified mail. The Report contains the following with regard to maintenance of copies of the backs of checks cashed: 5. Section 560.1105 F.S./ Section 560.310(1)F.S./Rule 69V-560.704(2)(a), F.A.C. – The licensee failed to maintain copies of the backs of payment instruments cashed: (Exhibit I-XV, XIX) The licensee claims that the bank keeps copies of the backs of payment instruments cashed for them. This is also confirmed on the records request form where the licensee notes that their bank keeps these records. After receipt of the Report, Mr. Williams prepared a letter to the Office with responses to the findings.6/ The Office did not respond in any way to his letter. Mr. Williams testified that he understood the lack of response to mean that the Office accepted his explanation that Capital City’s bank was the designated record-keeper of copies of the backs of checks cashed. Electronic Log Florida Administrative Code Rule 69V-560.704(5) reads as follows: (5)(a) In addition to the records required in subsections (1) and (2) for payment instruments $1,000.00 or more, the check casher shall create and maintain an electronic log of payment instruments accepted which includes, at a minimum, the following information: Transaction date; Payor name; Payee name; Conductor name, if other than the payee; Amount of payment instrument; Amount of currency provided; Type of payment instrument; Personal check; Payroll check; Government check; Corporate check; Third party check; or Other payment instrument; Fee charged for the cashing of the payment instrument; Branch/Location where instrument was accepted; Identification type presented by conductor; and Identification number presented by conductor. Electronic logs shall be maintained in an electronic format that is readily retrievable and capable of being exported to most widely available software applications including Microsoft EXCEL. During the examination, Mr. Fuhrman provided Mr. Morin with copies of Capital City’s daily payment instrument log from August 1, 2012 through August 31, 2012. Each log displays the face value of each check cashed, the net amount of cash provided to the customer, and the fee charged to the customer. The Capital City daily logs provided to Mr. Fuhrman do not include the payee and payor name; the conductor name, if different from the payee; the type of payment instrument; or the identification type or number presented by the conductor. Capital City argues that all the information required to be on the payment instrument log was in the possession of Capital City, thus, it is in substantial compliance with the rule. In fact, Capital City introduced at final hearing a payment instrument log for checks over $1,000.00 accepted in August 2012. The log includes all the information required by the rule. The information used to complete the fields was pulled from Capital City’s customer files, which include the copies of the face of the checks, as well as copies of conductor’s photo identification and social security card. The fact remains that Capital City did not maintain an electronic payment instrument log which complied with rule 69V- 560.704(5), during the examination period. Customer Thumbprint Florida Administrative Code Rule 69V-560.704(4) reads, in pertinent part, as follows: In addition to the records required in subsection (1) and (2), for payment instruments exceeding $1,000.00, the check casher shall: Affix an original thumbprint of the conductor to the original of each payment instrument accepted which is taken at the time of acceptance[.] During the examination period, Capital City obtained customer thumbprints on the customer Agreement, rather than on the surface of the check cashed. Subsequent to the examination, Capital City has begun obtaining customer thumbprints on the surface of the checks cashed. Capital City failed to maintain customer thumbprints as required by rule 69V-560.704(4) during the examination period. Due Process Issues Capital City maintains that the Office conducted the records examination in a manner that violated Capital City’s right to due process of law. First, Capital City complains that the Office was required to conduct an examination of its records within the first six months after licensure, and that the Office’s failure to do so prevented Capital City from a thorough understanding of the applicable record-keeping requirements. Between 2008 and 2012, section 560.109(1) required the Office to examine all licensees within the first six months after licensure. See § 560.109, Florida Statutes (2011). The 2012 Legislature amended section 560.109 to delete the requirement for examination within six months of licensure. See ch. 12-85, § 2, Laws of Fla. The Office conducted the instant examination in October 2012, after the effective date of chapter 12-85, Laws of Florida. Next, Capital City argues that the Office failed to comply with its own examination procedures. Capital City introduced into evidence Petitioner’s publication titled, “Chapter 560 Money Services Businesses, Examiner Manual” (Manual). The Manual is dated “Revised September 2012.”7/ The Manual requires the examiner to conduct an Exit Interview with the licensee’s manager, and lists issues which must be covered, at minimum, with the licensee. Section XIV of the Manual provides, in pertinent part, as follows: XIV. Exit Conference When the Examiner has completed the examination, an exit interview will be held with the manager or his or her designated representative. The exit interview should consist of at least the following: Identification and discussion of any findings noted and corrective action that will be requested. The manager should be allowed the opportunity to refute any finding identified. The Examiner should not engage in a debate over the law. Reiterate that the Examiner is only a fact finder. Advise the licensee that an examination report will be prepared and sent to them or their main office. Notify the licensee that a written response to the examination is not required; however, the licensee should be encouraged to notify the Office of any and all corrective action taken. If they decide to make one, it will be part of the file. Respondent claims Mr. Morin did not provide a meaningful exit interview with Mr. Furhman in which he explained the requirements with which Capital City was not in compliance. The record establishes that Mr. Fuhrman was confused about the record-keeping requirements and what the Office considered to be “customer files.” During the examination on October 23, 2012, Mr. Morin gave a copy of rule 69V-560.704 to Mr. Fuhrman to assist with his understanding. Mr. Morin testified that he spoke with Mr. Fuhrman “in general” about the rule and explained they were the minimum requirements for customer files. Mr. Morin spoke “minimally” with Mr. Fuhrman about the purpose of the Capital City Check-Cashing Agreement relative to the customer file rule. Mr. Morin told Mr. Fuhrman that designating the bank as the record-keeper of copies of the backs of checks cashed did not satisfy the rule requirement. Finally, Mr. Morin “generally” discussed the requirements with Mr. Fuhrman on October 24, 2012, when Mr. Morin left the written records request with Mr. Fuhrman. The Examiner’s Manual further provides, in pertinent part, as follows: XVI. REVIEW OF EXAMINATION TARGET’S RESPONSE Although there is no direct requirement to respond to the Office concerning corrective actions taken or to refute any finding, the licensee may do so. If a licensee does respond, the following should be accomplished: The Examiner who performed the examination should review the response, complete the response evaluation, and make comments as appropriate if directed to do so by the AFM or his or her designee. It is not the Examiner’s responsibility to determine whether the action taken by the licensee was appropriate to correct the situation. If the action is deemed to be inappropriate or insufficient by the AFM or Examiner Supervisor to correct the situation, comments should be made as to what additional action may be needed. * * * d. The completed response evaluation should be attached to the response and delivered to the AFM. * * * f. The Regional Office may either file the response or may, if required, issue a risk based examination follow-up on the information in the response. Respondent maintains the Manual requires the Office to respond in writing to Capital City’s response to the Office’s Report of Examination. Respondent argues that if the Office had responded to his explanation that the bank maintains copies of the checks cashed, he would have provided the copies to the Office. Nothing in Section XVI of the Manual requires the Office to respond to a licensee’s response to the Report of Examination. Finally, Respondent argues that the Office applies a strict compliance, rather than substantial compliance, standard to review of licensee’s records, and fails to collect information relative to mitigating circumstances, which can be applied in determining appropriate penalties for violations. The first argument is strictly a legal argument which is dealt with in the Conclusions of Law. Findings relative to the second argument are contained herein. Andrew Grosmaire, Chief of the Office’s Bureau of Enforcement, calculated the administrative sanctions to be imposed on Respondent for each respective rule and statutory violation. A violation of the customer file rule is a level B offense according to Florida Administrative Code Rule 69V- 560.1000. Level B corresponds with a fine ranging from $3,500.00 to $7,500.00 per violation. Mr. Grosmaire recommended a fine of $7,500.00 because all four customer files, or 100%, were deficient. A violation of the requirement to maintain copies of the backs of checks cashed could have been penalized pursuant to section 560.114(1)(a), failure to comply with any order of the Office, which is a B-level offense. However, Mr. Grosmaire chose instead to charge Respondent under 560.1105, failure to maintain all records for five years, which is an A-level offense with a fine amount ranging from $1,000.00 to $3,500.00. See Fla. Admin. Code R. 69V-560.1000(150). Mr. Grosmaire recommended a fine of $3,500.00 because all of the records reviewed, or 100% of the sample, failed to meet the requirement for copies of backs of checks cashed. A violation of section 560.1105 can subject a licensee to revocation, even for a first offense, pursuant to rule 69V- 560.1000(4), but Mr. Grosmaire did not recommend revocation of Respondent’s license. A violation of the electronic log requirement is also a B-level offense. In this case, Mr. Grosmaire considered that the electronic log produced by Capital City contained four of the 11 fields required, and translated that to 64% compliance. Applying that percentage to the range of fines, Mr. Grosmaire recommended a fine of $6,000. A violation of the requirement to obtain thumbprints on the face of checks cashed is a B-level offense. Mr. Grosmaire recommended a fine amount of $7,500.00 because 100% of the check records reviewed failed to meet the thumbprint requirement. Mr. Grosmaire considered the aggravating and mitigating factors listed in rule 69V-560.1000(148). He determined that two aggravating factors applied: “(f) [w]hether, at the time of the violation, the licensee had developed and implemented reasonable supervisory, operational or technical procedures, or controls to avoid the violation;” and “(i) the length of time over which the licensee engaged in the violations[.]” Mr. Grosmaire determined that (f) applied because three out of four violations were found in 100% of the samples examined. He determined that (i) applied because the violations existed for the entire examination period. Mr. Grosmaire recommended a total fine of $24,500.00. Mr. Grosmaire determined that one mitigating factor applied – “no disciplinary history for licensee.” Mr. Grosmaire applied that factor in determining what term of suspension to impose on Respondent. Mr. Grosmaire recommended the minimum suspension of 33 days for all violations because Respondent had no disciplinary history. Mr. Grosmaire testified that he relied upon the aggravating and mitigating factors “that the examiner has identified, that I’ve seen in the report, or the mitigating circumstances I’ve seen in the report.”8/ Mr. Morin testified that, during his examination, he does not make a determination of whether there are aggravating or mitigating factors.9/
Recommendation Based upon the aforementioned Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Office of Financial Regulation, enter a final order: Finding that Respondent, Capital City Check Cashing, violated subsections 560.310(1), 560.310(2)(a), 560.310(2)(c), and 560.310(2)(d), Florida Statutes; and Florida Administrative Code Rules 69V-560.704(2)(a), 69V-560.704(4)(a), 69V- 560.704(4)(d), and 69V-560.704(5)(a). Imposing an administrative penalty against Respondent in the amount of $24,500.00, payable to Petitioner within 30 calendar days of the effective date of the final order entered in this case. Suspending Respondent’s license for 33 days. The undersigned retains jurisdiction in this matter to rule on Respondent’s Motion for Sanctions pursuant to section 57.105, Florida Statutes (2014), should Respondent be the prevailing party in the final order entered in this case. DONE AND ENTERED this 27th day of August, 2014, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 2014.
Findings Of Fact Petitioner in this proceeding is Lykes Memorial Hospital, Inc., (Lykes) a separate, albeit subsidiary, corporation from its parent, Lykes Health Systems, Inc. Lykes is a 166 bed, not-for-profit general acute care community hospital located in Brooksville, Florida. On or about May 30, 1990, Lykes timely filed CON Application No. 6266 to add 30 hospital-based, extended care beds through renovation of existing space. On or about June 14, 1990, Respondent requested Lykes to provide certain items of information omitted from the original application. One of the items requested in Respondent's written omissions request was an audited financial statement of the applicant for Lykes' most current fiscal years, 1988 and 1989. Lykes responded by providing two audits: an audit of Lykes Memorial Hospital, Inc., for the year ending September 30, 1988, and an audit of Lykes Health Systems, Inc., for the years ending September 30, 1989 and 1988 (the consolidated audit). By letter dated July 25, 1990, Respondent notified Lykes that its CON application was being withdrawn from consideration due to the failure of Lykes to submit audited financial statements of Lykes for the most recent fiscal year of operation which ended September 30, 1989. The submission of an audit containing the most current audited financial information is necessary for Respondent to determine an applicant's current financial condition and assess the proposed project's financial feasibility. Such analysis is crucial to a determination of whether the applicant will continue to be an ongoing corporation providing its best services to patients over a long-term period. Respondent's analysis is limited to the audited financial statement of the applicant. To permit an applicant to meet the requirement for an audited financial statement by providing an audited financial statement from an entity different than the applicant opens the door to submission of varying and discretionary types of financial information. Such a practice could result in unfair comparisons of financial information in the process of comparative review with regard to financial information analysis. There are three essential parts to an audited financial statement. Those parts are an independent auditor's opinion; financial statements; and notes to the financial statements. Although Lykes' submission of an audited financial statement for the year ending September 30, 1988, meets requirements contained in Section 381.707(3), Florida Statutes, mandating submission of such a statement by an applicant, the submitted audit was not for the most current fiscal year of operation. Rather, the audit submitted is for the year before. For existing health care facilities such as Lykes, Section 381.707(3), Florida Statutes, also requires the submission of a balance sheet and a profit- and-loss statement for the previous two fiscal years' operation. Respondent has interpreted Section 381.707(3), Florida Statutes, to require an applicant's submission of the most current year's audit. When the application is submitted by an existing health care facility, Respondent requires submission of an audited financial statement for the two most current fiscal years. This requirement is contained in Chapter 11-3, part 6, of Respondent's Certificate of Need Policy Manual. Personnel involved in the preparation of Lykes' application were aware of this requirement. While the audited financial statement of Lykes for the year ending September 30, 1988, provides an auditor's opinion on the financial condition of Lykes, the applicant, at that time; no such opinion is contained in the audit of Lykes Health Systems, Inc., for the years ending September 30, 1988, and 1989, which is specific to Lykes apart from the parent corporation. Respondent does not have access to an applicant's financial records and is therefore dependent upon disclosures or notes to an audited financial statement to provide fair disclosure of the financial statements and identify specific areas of concern. Without such note disclosures, a proper financial analysis cannot be performed. Notes in the consolidated audit of Lykes Health Systems, Inc., are not complete note disclosures for Lykes, the applicant. Further, notes in the consolidated audit were prepared for the consolidated group of businesses operating under the umbrella of Lykes Health Systems, Inc., and not for any individual entity within the group. It is not possible to isolate information applicable to Lykes from the auditor's notes to the consolidated audit. The consolidated audit included statements of revenues and expenses, fund balances, and a balance sheet for Lykes for the fiscal years ending September 30, 1989, and September 30, 1988. However, no decision should be made with regard to those financial statements in the absence of note disclosures specific to Lykes, assuring that an auditor has specifically analyzed that entity and reached an opinion with regard to it. While a note to the consolidated audit contains a breakdown of capital assets for the consolidated group, this is not a specific breakdown of capital assets for Lykes, the applicant. Hence, Respondent cannot determine the applicant's capital assets breakdown. Further examples of the lack of specificity afflicting the consolidated audit include notes which fail to provide a specific breakdown of bonds payable for Lykes; a specific breakdown of or disclosure of contributions by Lykes to the pension plan; and no specific breakdown for Lykes with regard to patient service revenues. Instead, everything is grouped together. The consolidated audit does not contain all of the notes which would appear in an audit of Lykes, the applicant. Additional financial statements included with the consolidated audit contain no notes. The report must be interpreted in relation to Lykes Health Systems, Inc., taken as a whole. The audit of Lykes Health Systems, Inc., cannot be considered a specific audit of Lykes, the applicant. 1/ Rather, the consolidated audit expresses an opinion with regard to the parent corporation.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered withdrawing Petitioner's application for CON No. 6266 from further consideration. DONE AND ENTERED this 14th of January, 1991, in Tallahassee, Leon County, Florida. 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 14th day of January, 1991. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings 1-6. Adopted in substance, though not verbatim. 7-9. Rejected, unnecessary. Adopted in substance. Rejected, unnecessary. Adopted by reference. Rejected, cumulative. Rejected, argumentative. 1st sentence addressed, remainder rejected as unnecessary. 16-17. Rejected, argument. 18-19. Rejected, not supported by weight of the evidence. 20-22. Rejected, argument. 23. Rejected, relevance. 24-25. Rejected, unnecessary and argumentative. Respondent's Proposed Findings 1-3. Adopted in substance, not verbatim. 4. Adopted by reference. 5-15. Adopted in substance, though not verbatim. 16-17. Adopted by reference. COPIES FURNISHED: Stephen A. Ecenia, Esq. Suite 400 First Florida Bank Building Tallahassee, FL 32301 Edward G. Labrador, Esq. Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Dr., Suite 103 Tallahassee, FL 32308 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue Whether the Department of Revenue's tax assessment against Petitioner, Christopher McQuade, d/b/a Stage One Computer Systems, issued on September 26, 2000, should be sustained.
Findings Of Fact Petitioner, Christopher McQuade, was owner of a business named Stage One. That company was registered with the Department of Revenue (Department) on November 5, 1993, and was issued tax certificate number 61-09-037987-32/9. Stage One was engaged in the business of selling computers. At all times relevant to the proceeding, Christopher McQuade, d/b/a Stage One Computer Systems, operated an internet service and sold computers and related products. This company was registered with the Department on August 1, 1996, and was issued tax certificate number 61-00-044138-32/3. The Department is the executive agency of the State of Florida charged with the administration and enforcement of Florida’s sales and use tax laws, pursuant to Section 20.21, Florida Statutes. On or about June 8, 1999, the Department notified Petitioner it would conduct an audit of Stage One Computer Systems for the period May 1, 1994 through April 30, 1999. The audit period was later extended to August 31, 1999 (audit period). The Notice of the Intent to Audit Books and Records indicated that the audit would take place at a mutually agreed date, but not before August 6, 1999, and further instructed Petitioner to make specified records available for the Department’s review. The specific records that the Department requested Petitioner to produce for review under the audit were identified in the Notice, Form DR890. Those records included the following records pertinent to Stage One Computer Systems: federal income tax returns; Florida sales and use tax returns; depreciation schedules; general ledgers, cash receipt journals; sales journal; sales invoices; shipping documents; purchase invoices; tax exempt certificates; lease agreements; and documents relating to commissions and/or secondary sellers. As of December 23, 1999, more than six months after Petitioner was notified of the Department’s intent to conduct an audit of Stage One Computer Systems, he had not completely or substantially complied with the Department's request for records. The only documents Petitioner provided to the Department were three Stage One Computer Systems bank statements from January, February, and March 1999, a list of internet subscribers, their e-mail addresses, and prices. The spreadsheet containing this information did not include the services that the customers received or the length of time the named individuals had been Petitioner’s internet customers. The bank statements provided by Petitioner were for the Stage One Computer Systems account. However, Petitioner told Ms. Hoch that in addition to funds for the business, he also deposited his paycheck from his full-time but unrelated job into the Stage One Computer Systems bank account. Despite this assertion, Petitioner provided no documentation that established or distinguished what portion of the funds in the Stage One Computer Systems account were attributable to the business versus Petitioner’s salary from his full-time job. Petitioner's failure to provide the relevant and requested records made it impossible for the Department’s auditor to verify, identify, or segregate that portion of the business revenue derived from the internet access fees and that portion derived from the sale of tangible personal property. Accordingly, the auditor determined that the deposits into the Stage One Computer Systems' bank account represented sales of tangible personal property by the company. The auditor, Marie Hoch, made several attempts to meet with Petitioner but was unsuccessful in doing so. One such meeting was scheduled for January 24, 2000, but was canceled after Petitioner advised Ms. Hoch that he was ill and could not meet with her that day. Petitioner never met with Ms. Hoch and advised the Department that it could not conduct the audit at his home, the business location, in New Port Richey because he was employed full-time in Tampa and was not there during regular business hours. Petitioner acknowledged that through Stage One Computer Systems, he ran an internet service and sold computers on a part-time basis. Nonetheless, Petitioner failed to provide invoices or other documentation to establish the company's sales transactions during the audit period. In telephone conversations with Ms. Hoch, during the audit process, Petitioner stated that at the end of each month he destroyed the invoices, and that any information related to sales that was on his computer could not be retrieved because his computer had crashed. On Petitioner’s monthly state sales tax returns, Form DR15, he declared that all the sales of Stage One Computer Systems were tax exempt. The basis of this declaration was Petitioner’s assertion that providing individuals with internet access is a tax exempt service. However, Petitioner did not provide back-up documents to support the declared exemptions. To receive credit for exempt sales, Petitioner would have had to provide the Department with documentation such as sales invoices showing the name of the customer and the item sold, shipping documents which would have shown where the goods were sent, or resale or exemption certificates. For example, if a shipping document showed that certain tangible personal property sold by Petitioner was shipped out of state, that property would be exempt from sales tax. Likewise, a re- sale certificate or exemption certificate from Petitioner’s customers would establish that the tangible personal property was exempt from sales tax. In absence of any documentation to support Petitioner’s assertion that his sales were tax exempt, the Department treated the sales reported on the Form DR15 for Stage One Computer Systems as taxable. To determine Petitioner’s tax liability for the audit period, Ms. Hoch looked at funds deposited into the Stage One Computer Systems' bank account in January, February, and March 1999 and the gross sales reported in Petitioner’s tax returns filed by Petitioner for those same months. To calculate the underreported sales, Ms. Hoch subtracted the sales amount reported on the tax return from the total amount deposited into the company’s bank account for the corresponding months. Based on this calculation, Ms. Hoch determined the difference between the reported sales and what appeared to be the unreported sales of the company. In the months of January, February, and March 1999, Petitioner filed the state sales tax return or DR15 with the Department. On those forms, Petitioner claimed that Stage One Computer Systems had gross sales of $1,350.00 in January 1999, $0 in February 1999, and $1,243.15 in March 1999. Petitioner declared that the reported gross sales were tax exempt, but provided no documentation to support that declaration. The three bank statements of Stage one Computer Systems reflected one deposit of $4,542.58 in January 1999; four deposits/credits totaling $16,472.05 in February 1999; and six deposits totaling $7,112.11 in March 1999. There were significant discrepancies between the deposits into Stage One Computer Systems' bank account and the gross sales of the company, as reported on the Form DR15. Since Petitioner provided no documentation to the Department to verify or explain the source of these deposits, Ms. Hoch determined that the deposits into Stage One Computer Systems’ bank account were for sales of tangible personal property. To determine the underreported sales, Ms. Hoch calculated the difference between the reported gross sales for January, February, and March 1999 and the funds deposited into the Stage One Computer Systems' bank account for those months. This amount was considered the “taxable difference.” Utilizing the Department's records and limited information provided by Petitioner, the Department determined that for the audit period, Petitioner should be assessed $12,655.95 in taxes, $6,152.05 in penalties, and $2,428.68 in interest, through October 7, 1999. The Department notified Petitioner of this proposed assessment in a Notice of Intent to Make Audit Changes, dated October 7, 1999. After October 7, 1999, based on additional information obtained by the Department and its communications with Petitioner, the Department revised its audit of Petitioner. Rene Seda, an auditor assigned to Petitioner’s case after Ms. Hoch left the Department, revealed that Petitioner, Christopher McQuade, also had an inactive sales account registered in the name of Stage One. In a telephone conversation, Christopher McQuade told Mr. Seda that he had sold tangible personal property under the sales tax account number 61-09-037987-32/9. That number was assigned to Stage One, a company which was owned by Christopher McQuade and registered with the Department in November 1993. According to Petitioner, the Stage One account was closed and replaced by the current account number, 61-00- 044138-32/3, registered to Stage One Computer Systems. The assessment reflected on the October 7, 1999, Notice of Intent to Make Audit Changes covered the taxes owed for the period from November 1996, at or near the time Stage One Computer Systems registered with the Department, to August 1999, the end of the audit period. After Mr. Seda learned that Christopher McQuade had a previously active account under the name Stage One, the Department calculated the estimated taxes for the company’s unreported gross sales of tangible personal property for the period May 1994, at or near the time the company was registered with the Department, through October 1996, when that company was no longer active and its activities were assumed by Stage One Computer Systems. Again, Petitioner failed to provide any documentation to indicate the amount of gross sales that were made by Stage One during the audit period or any other time that it was an active company. In absence of such documentation, Mr. Seda averaged the monthly sales taxes owed by Stage One Computer Systems for the period November 1996 through August 1999, the end of the audit period. Based on this calculation, the estimated average tax owed by Petitioner for each month between May 1994 through October 1996, except for August 1996, was $372.23. The Department records indicate that Petitioner made a tax payment in August 1996, which off- set his tax assessment for that month, reducing his taxes assessment for August 1996 to $20.00. During the audit process, Petitioner told Mr. Seda that Stage One Computer Systems had three servers which were used for the company's business operations, a file server, a web server, and an e-mail server. Based on this information, Mr. Seda determined that the three servers were fixed assets of the business. Subsequently, Petitioner indicated that he did not own the servers. However, Petitioner failed to provide the Department with any documentation to support his claim that someone other than Stage One Computer Systems or Christopher McQuade owned the servers. Using the best information available to him, Mr. Seda estimated the total cost of the three servers to be $15,000.00, or $5,000.00 each. Mr. Seda assumed the servers were purchased at the beginning of the audit period and scheduled the three servers in the first month of the audit period. Based on these estimates and assumptions regarding the three servers used by Stage One Computer Systems in its business operations, the Department assessed Petitioner $900.00 in taxes for those fixed assets. Based on the Department’s review of Petitioner's company, Stage One, on May 30, 2000, the Department issued a second Notice of Intent to Make Audit Changes, which revised totals for tax, penalty, and interest. On September 26, 2000, after the audit process had concluded, the Department issued a Notice of Proposed Assessment and Addendum of Proposed Assessment to Petitioner. The notice and addendum thereto properly assessed Petitioner tax of $24,370.62, penalty of $12,185.43, and interest, through September 26, 2000, of $11,194.81.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered upholding the Department of Revenue’s assessment against Petitioner in full, including all taxes, penalties, and interest for the audit period May 1, 1994 through August 31, 2000. DONE AND ENTERED this 2nd day of August, 2001, in Tallahassee, Leon County, Florida. ___________________________________ CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 230 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 2nd day of August 2001. COPIES FURNISHED: Christopher McQuade Stage One Computer Systems Post Office Box 1712 Elfers, Florida 34680-1712 John Mika, Esquire Department of Legal Affairs The Capitol, PL-01 Tallahassee, Florida 32399-1050 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100
The Issue Whether Respondent, Northrop Grumman Corporation, discriminated against Petitioner, James L. Heidel, on the basis of his age and disability, as stated in the Petition for Relief, in violation of Subsection 760.10(1), Florida Statutes (2002).
Findings Of Fact Northrop Grumman Information Technology (Northrop Grumman IT) is the information technology sector of Northrop Grumman Corporation. Northrop Grumman IT is divided into several business units, one of which is Internal Information Services (IIS), which is headquartered in Dallas, Texas, and has over 2,000 employees at Northrop Grumman Corporation locations across the country and the world. IIS provides internal information services support to the Northrop Grumman Information Systems (IS) sector facility (AGS&BMS) in Melbourne, Florida. The IIS support of the Melbourne site mirrors its IS customer's functions and organizations. Petitioner began working for Northrop Grumman Corporation in 1996, as a database administrator (job title: DB Arch Tech NG Internal Sys. 4). Petitioner was a database administrator for the CoastPoint finance system at the Melbourne site. After Petitioner was moved off of the CoastPoint effort, Petitioner provided database administration support for the MetaPhase system for a number of months concurrently with his database administration work in the ILS (logistical support directorate of Northrop Grumman Corporation). Petitioner was added to the ILS area as a database administrator. Petitioner also performed limited software engineering tasks to the extent that he had time in addition to his primary role of ILS database administration duties. Petitioner never disputed that Joe Boniface had superior familiarity and experience with all aspects of the ILS area. Indeed, if Petitioner compared himself to Mr. Boniface for purposes of layoff, Petitioner agrees that Respondent should have kept Mr. Boniface because of his seniority, greater experience, and managerial leadership. In 2002, the IS customer's budget for the ILS area was reduced as a result of the ramping down of "JSTARS" work, which is the primary focus of the Melbourne facility. This budget cut affected the level of budget that was available for IIS support work and resulted in Petitioner's layoff. At the time of Petitioner's layoff, there were two employees, Petitioner and Mr. Boniface (job title: S/W Eng NG Internal Sys. 4), providing database administration support for the ILS area of the IS customer. Mr. Boniface was the IIS lead for the ILS area and, in addition to his database system administration efforts, he worked in a software engineer capacity, developing and/or maintaining Oracle applications for ILS, and was the primary interface with the IS customer regarding IIS support of the ILS area. Simply stated, Mr. Boniface was a critical and irreplaceable person for IIS support in Melbourne. Upon Petitioner's layoff, Mr. Boniface continued the Oracle database administration duties that Petitioner had performed. At the time of Petitioner's layoff, there were two Database Services employees, Petitioner and Jim Ardito (job title: DB Arch Tech NG Internal Sys. 4), for Oracle database support needs at the Melbourne site. Mr. Ardito was a 20-year veteran of database administration, was the administrator of nine databases supported by IIS in Melbourne, and was a 32-year employee of Northrop Grumman Corporation. Petitioner was a back-up Oracle database administrator for Mr. Ardito to the extent he took vacation or was out of the office. As part of the layoff decision process affecting Petitioner, management and human resources prepared a rank order analysis, comparing the charging party to the other person in his job group, Mr. Ardito. Mr. Ardito was 59 years old at the time of Petitioner's layoff. Upon Petitioner's layoff, Mr. Boniface resumed the database administration duties that Petitioner had been performing, in addition to his other duties. Mr. Boniface was 46 years old at the time of Petitioner's layoff. Andrew Caldwell worked for IIS as a "job shopper" at the Melbourne site, as a computer consultant to Northrop Grumman Corporation from July 1997 to August 1998. Mr. Caldwell was formally hired as a Northrop Grumman Corporation employee on or about August 1998. He was hired as a software engineer (job title: S/W Eng NG Internal Sys. 3). Mr. Caldwell supported the CoastPoint project as a software engineer prior to his role supporting the ILS area as a software engineer. At the time he was terminated from employment with Respondent, Petitioner was 50 years old. Petitioner's job responsibilities were assumed by Mr. Boniface, Petitioner's technical lead who had done Petitioner's job before Petitioner was hired. Petitioner offered no evidence of any physical disability or any suggestion that he had been discriminated against because of a physical disability. Petitioner suggests that he was replaced by a "younger" co-employee, Mr. Caldwell; however, no evidence was presented regarding Mr. Caldwell's age (Petitioner testified "I don't know his exact age. He is about 30, I would guess"). In addition, Mr. Caldwell's job description was software engineer (job title: S/W Eng NG Internal Sys. 3), a job in which he continued after Petitioner's termination. Mr. Caldwell was not a database administrator which was Petitioner's job description. Faced with a significant budget cut, Respondent conducted an orderly analysis of its customer requirements and decided it had to eliminate a database administrator. Faced with a management direction to reduce employees, Bob Gildersleeve and John Tartaro, Petitioner's supervisors, made a decision between Petitioner and Mr. Ardito, as set forth herein above (paragraphs 11, 12 and 13). The decision was based on sound reasoning and was not based on the ages of the individuals.
Recommendation Based of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing Petitioner's Petition for Relief and finding that Petitioner failed to present a prima facie case and, additionally, that Respondent demonstrated, by a preponderance of the evidence, that Petitioner's termination was not based on unlawful discriminatory reasons. DONE AND ENTERED this 8th day of July, 2004, in Tallahassee, Leon County, Florida. S JEFF B. CLARK 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 8th day of July, 2004.
The Issue Whether Petitioner was retaliated against due to testifying by deposition in another employee’s employment discrimination lawsuit.
Findings Of Fact Amie Remington, Esquire, an attorney in private practice, was hired as a contract attorney by the State of Florida to represent the Department in an employment discrimination lawsuit brought by Linwood Scott involving computer security violations and lax enforcement of the Department’s computer security policy that resulted in loss of State funds due to employee fraud. As part of the discovery in the Scott case, Ms. Remington deposed Petitioner on January 11, 2005. Prior to the deposition, Ms. Remington spoke with Katie George, Chief Legal Counsel for the Department, and obtained information as to all proposed witnesses, including Petitioner. At this time, Ms. Remington received information that Petitioner was identified for layoff. Mamum Rashied, the Department’s former District Operations Administrator, who retired on February 2, 2006, managed the Department’s operations for the four counties in District One; Escambia, Santa Rosa, Okaloosa, and Walton. As District Operations Administrator, Mr. Rashied was the second person in charge of the district with purview over the Economic Self Sufficiency (ESS) Program. The ESS program was the program in which Petitioner was employed at a salary of $1215.00 bi- weekly. During calendar year 2005, the ESS program underwent a statewide reorganization resulting in the elimination of approximately 42 percent to 43 percent of ESS positions through layoffs in District One. Petitioner, then an Economic Self-Sufficiency Specialist II (ESSSII), was on the list for layoff. Placement on the layoff list was made based on a top-to-bottom ranking of employees. Each employee was to be rated by the unit supervisors and placed on the list in terms of their retainability. The rating list was forwarded to the Operations Manager for the Service Center. Each Service Center compiled a ratings list which was then forwarded to the District Program Office to be combined into one district list. Mr. Rashied received a copy of the district list which contained the Petitioner’s name sometime in December 2004. The layoff listing process took approximately two months and was in existence prior to the Petitioner giving her deposition in the Linwood Scott case on January 11, 2005. Prior to the layoffs, Department personnel conducted general sessions at the Service Center for all interested employees to gain information as to the potential layoff situation. However, Petitioner was unaware of these meetings and apparently did not participate in them. During her deposition in the Scott case, Petitioner testified that she had logged into her computer using her password and P number and then allowed another employee to use her computer to help her with a problem case. Petitioner had permitted the use of her computer in an effort to help the employee process the information her center was required to handle. Such aid and supervision was part of her duties as an ESSSII. Petitioner did not believe that her actions violated the security policy of the Department. However, such action was a violation of the Department’s computer security policy. Petitioner’s testimony related to the fact that such activity occurred often in her Department. After her testimony, Petitioner was terminated on January 27, 2005, effective February 7, 2005, prior to her being laid off. The termination was the result of the Petitioner’s violation of the Department’s computer security policy. Petitioner was subsequently reinstated on April 5, 2005, following a ruling by the Public Employee Relations Commission (PERC) in favor of Petitioner, including payment of back pay and benefits. The ruling did not find that Petitioner had been retaliated against. Immediately following reinstatement, Petitioner was laid off effective April 5, 2005, pursuant to the prior layoff list which was still on-going. Importantly, if Petitioner had not been terminated she would have been laid off. Petitioner was subsequently rehired by the Department as an Economic Self-Sufficiency Specialist I (ESS-I) on September 2, 2005. The Petitioner’s personnel file indicated that she had been laid off and was subject to rehire. Based on a position opening and Petitioner’s qualifications, Petitioner was rehired and continues in the ESS-I position to date. Petitioner testified in her own behalf at the hearing. She asserted that she thought she was retaliated against because of her testimony in the Linwood Scott case. However, she offered no other evidence to show such retaliation and such supposition is insufficient to support a claim of retaliation. Likewise, Petitioner did not offer any evidence that Petitioner’s reasons for her initial termination and later layoff were pretexts to cover unlawful retaliation. Since there was insufficient evidence to support Petitioner’s claim of retaliation, her Petition for Relief should be dismissed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Florida Commission on Human Relations enter a final order dismissing the Petition for Relief. DONE AND ENTERED this 16th day of May, 2006, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 16th day of May, 2006. COPIES FURNISHED: Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Brittie Powers 106 Lakewood Road Pensacola, Florida 32507 Eric D. Schurger, Esquire Department of Children and Family Services 160 Governmental Center, Suite 601 Pensacola, Florida 32501-5734
The Issue The issue is whether respondent acted fraudulently, arbitrarily, illegally, or dishonestly in proposing to award a contract for DASD drives and controllers to EMC Corporation.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Respondent, Department of Health and Rehabilitative Services (HRS), operates a computer system known as the Florida System (system). That system is used to store and process large quantities of client benefit information. Because of various deficiencies in the system, the 1993 legislature authorized HRS to make an expenditure from other appropriated moneys to enhance the performance of the system and to meet federal certification requirements. HRS was required, however, to execute a contract and encumber the moneys for the new services no later than June 30, 1994, or forfeit the appropriation. This controversy involves a dispute between HRS, intervenor, EMC Corporation (EMC), the vendor ranked first by HRS and selected as the winner of the contract, and petitioner, International Business Machines Corporation (IBM), the second ranked vendor. Because of the above time constraints and threatened loss of moneys, HRS has requested that this matter be resolved on an expedited basis so that a final order can be entered and a contract signed by June 30, 1994, the end of the current fiscal year. By way of background, on January 14, 1994, HRS issued a request for proposal (RFP) inviting various vendors to submit proposals for providing direct access storage devices (DASD) and controllers for the system. The RFP is more specifically identified as RFP 94-10BB-DSD. HRS structured its request for services as an RFP rather than an invitation to bid because it knew there was more than one product on the market that could meet its requirements, the RFP process gives it more flexibility and would result in a better price, and the RFP process allows vendors more options in providing a solution to a problem. As amended, the RFP called for a bidder's conference to be held on February 2, 1994, written proposals to be filed with HRS by 2:00 p.m. on March 14, 1994, and all proposals to be opened the same day. Thereafter, the offers were to be evaluated by a team of HRS employees whose role was to evaluate the various proposals and assign each proposal a score. A selection committee then had the responsibility of preparing a final report and recommendation for the HRS deputy secretary for administration. The authority to make a final decision rested with that individual. HRS originally anticipated a contract start date of April 1, 1994, but later changed this to May 1, 1994. That date is now in suspense pending the outcome of this case. Three vendors submitted a total of five proposals in response to the RFP. They included IBM and EMC, both of whom submitted two offers, identified as the IBM-1, IBM-2, EMC-1 and EMC-2 proposals, respectively, and Hitachi Data Systems, who is not a party in this case. After an evaluation of all proposals was conducted by the evaluation team, it recommended that the EMC-2 proposal be selected. This recommendation was accepted by the selection committee, which then submitted a final report and recommendation to the HRS deputy secretary for administration, Lowell Clary. After reviewing the report and recommendation, Clary issued a notice of intent to award the contract to EMC on April 19, 1994. Upon receipt of this advice, IBM timely filed its protest, as amended, alleging that EMC's proposal was deficient in four respects and that its IBM-2 proposal should have been ranked first. Subsequent efforts to informally conciliate the dispute have obviously been unsuccessful. The Specifications HRS currently uses 3390 DASD disc drives on its IBM 9021-900 mainframe computer. By its RFP, HRS seeks to purchase additional disc drives and associated controllers to enhance the system's storage capacity and ability to process the data from storage to the processor. Once installed, these enhancements should significantly improve the response time of the system and complete the financial management section of the child support system. The DASD is a device that stores data or information. The DASD is controlled by a controller, a box containing electrical circuitry that manages the movement of data stored in the DASD between that device and the mainframe computer (CPU) which processes the data. The controllers are attached to the CPU by channels, which are the paths between the storage system and the CPU. Data can be moved through copper or fiberoptic cables (channels), with fiberoptic providing much faster transfer than copper. Finally, the word "cache" is used in computer jargon to describe the storage of data in the controller as opposed to the storage of data in the DASD unit. Data is moved to and from cache through sophisticated algorhythms. Because data in cache is stored on computer memory chips, the retrieval of data from cache is substantially faster than the retrieval of data from DASD. The specifications for the equipment to be supplied by the vendor are found in paragraphs 1.1 and 1.2 on page 9 of the RFP, as amended. Those paragraphs read in pertinent part as follows: Statement of Need The Department currently uses 3390 DASD drives on its IBM 9021-900 mainframe computer. The department wishes to purchase two to four 3390-A28 DASD or equivalent and four (4) to eight (8) 3390-B2C DASD or equivalent. In order to support these devices two (2) to three (3) additional 3990-006 controllers or equivalent will also be purchased. This bid is for new DASD and Controller devices or equivalent hardware. If equivalent hardware is proposed the DASD and Controllers must be capable of being managed by IBM's software, and the SMS software support capabilities must be at the latest release level. Also, the maintenance vendor and the cost of maintenance for a period not less than three years after the warranty must be identified. The DASD Controllers must be capable of containing at least one gigabyte of CACHE memory (a minimum of 256 MB of CACHE is required in this proposal). Any Controller/DASD Configuration proposed for these bid requirements must be capable of functioning in ESCON mode. Statement of purpose The department will purchase the proposed equipment in increments as funds become available. The initial purchase will consist of at least two (2) 3390-A28 DASD or equivalent, at least four (4) 3390-B2C DASD or equivalent and at least two 3390-006 controllers or equivalent. The remaining devices will be purchased as funds become available. * * * Equivalent is defined in paragraph JJ. of the definitions section of the RFP as "(c)apable of providing equal or superior performance and having equal or greater capacity." In wording the definition in this manner, HRS intended to give a very broad interpretation to the word "equivalent," and to allow vendors maximum flexibility in providing a solution to HRS's equipment needs. Importantly, HRS did not intend to make IBM the sole source for supplying the equipment. Thus, if a vendor could provide equivalency with a single controller and all other specified functionality, that was permissible under the RFP. Also, paragraph 4.1 of the RFP provides in part that a material deviation may not be waived by the department. A deviation is material if, in the department's sole discretion, the deficient response is not in substantial accord with this Request for Proposal's requirements, provides an advantage to one proposer over other proposers, has a potentially significant effect on the quantity or quality of items proposed, or on the cost to the department. Material deviations cannot be waived. (Emphasis in original) This provision is consistent with the requirements of HRS Rule 10-13.012, Florida Administrative Code, which provides that the "Department shall reserve the right to waive minor irregularities in an otherwise valid bid or proposal." The statement of need in paragraph 1.1 used IBM nomenclature because that is a common language that HRS personnel use, and it is one that is commonly understood in the computer industry. As noted earlier, however, HRS was simply looking for a solution to its need for more data storage and data transfer capacity, and it was not dictating that the equipment proposed be identical to that described using IBM nomenclature. Several other RFP requirements are pertinent to this dispute. First, the RFP required that "(e)ach controller shall support eight (8) channels," or a total of sixteen. This meant that each control unit should have eight-channel capability, or a total of sixteen channel connections. The controller technology also had to be ESCON (enterprise systems connection) capable, that is, capable of using fiberoptic technology (rather than copper cables) in the event HRS later decided to upgrade its equipment. Contrary to IBM's assertion, there was no requirement in the RFP concerning "concurrent I/O's," an acronym for input/output operations. Thus, in order to satisfy the RFP, the unit did not have to have a specified number of channel directors with the ability to make simultaneous data transfers between the storage device and the CPU. In terms of cache capacity, HRS required a storage subsystem having at least 120 gigabytes, with the ability to later upgrade to a maximum capacity of 240 gigabytes. Finally, the successful vendor was required to post a performance bond, and it would not receive any payments under the contract until the equipment was functioning at 99 percent availability for thirty consecutive days within a ninety day period. Otherwise, the equipment would be removed at the firm's expense and the contract terminated. The EMC-2 and IBM-2 Proposals In its EMC-2 proposal, EMC proposed to furnish one Symmetrix 9100-9016 unit at a unit price of $561,000 for a total price of $561,000. This unit combines the DASD and the controller in a single box. It can be configured to function as up to four controllers. The unit proposed by EMC provides 136 gigabytes of capacity and can be expanded to provide 272 gigabytes. The unit uses a different architecture than that used by IBM and takes approximately one-sixth of the floor space of the proposed IBM units. Thus, it requires less electrical power and produces less heat, thereby reducing the cost of electricity and air-conditioning by 80 percent to 87 percent. IBM took a very literal approach to the RFP's Statement of Need and concluded that any equipment proposed as equivalent must be identical to the IBM equipment described in the Statement of Need. Under IBM's construction of the RFP, since the Statement of Need described two IBM 3390-006 controllers, two controllers must be supplied in order to be equivalent. Similarly, since one IBM 3390-006 has capacity for eight concurrent I/Os, IBM erroneously concluded that the RFP required eight concurrent I/Os. While one IBM 3390-006 controller configured with Model 3 DASD as proposed in the IBM-2 proposal can handle 180 gigabytes of capacity and can satisfy the minimum capacity requirements, two IBM 3390-006 controllers were necessary in order to handle the RFP's maximum capacity requirements of 240 gigabytes. Thus, IBM offered equipment with the following characteristics: 8 concurrent I/Os, 16 ESCON channels, and the capacity to handle up to 360 gigabytes. The Evaluation Process In conjunction with this project, HRS established an HRS DASD and Controller Project Team which consisted of an evaluation team and a selection committee. The evaluation team was divided into two segments, a technical evaluation team with five members and a business evaluation team with two members. The selection committee consisted of two members. All team and committee members were HRS employees. Prior to the opening of the proposals, all members of the evaluation team were given an evaluation manual to be used in evaluating the responses to the RFP. In addition, on February 21, 1994, all team members were required to attend an "in-depth" training session. Ten days after the RFP was released, a bidder's conference was held in Tallahassee. The purpose of the conference was to discuss the contents of the RFP and firms' inquiries and recommended changes. Among other vendors, representatives of IBM and EMC were in attendance. It should be noted that no vendor had previously challenged any part of the specifications within the statutory three day time period for doing so. Firms were also afforded the opportunity to submit written inquiries to HRS to which HRS replied in writing. Three questions were submitted by IBM, all designed to elict an admission from HRS that IBM was the sole source of the equipment. HRS declined to agree with this premise. On March 14, 1994, the technical proposals were opened. A determination was first made as to each vendor's compliance with mandatory requirements. In this case, all proposals were found to comply with the mandatory requirements. The proposals were then evaluated on both a technical and business basis. Under the technical evaluation, which consisted of two sections, corporate capabilities and technical approach, each team member scored the proposal using pre-established criteria on eighteen technical criteria and eight corporate criteria. Points ranging from 0 to 4 were assigned for each criterion in descending value based on whether the proposal received a superior, good, acceptable, poor, or no value rating. A maximum of 400 points could be achieved on this part of the evaluation, with 300 available for the technical approach and 100 points available for the corporate capabilities. Each proposal was then assigned final weighted points according to the formulas presented in the RFP. As it turned out, the IBM-1, IBM-2, EMC-1, EMC-2 and Hitachi proposals received 395, 396, 356, 338 and 283 points, respectively. It should be noted that during the technical scoring process, each proposal was scored on its own merits and not by comparing one proposal with another, and all technical scoring was completed before the cost proposals were opened. Under the business evaluation, the proposals were evaluated on the basis of equipment and maintenance costs. Because cost was a very important factor to HRS, it was allocated 60 percent of the total points. According to the RFP, the vendor submitting the lowest priced proposal would receive 540 points while 60 points would be awarded the vendor proposing the lowest maintenance costs for the first three years of the contract. The higher costing proposals were awarded points pro rata based on an RFP formula. In this case, the EMC-2 proposal carried a price of $561,000, with no maintenance costs for the first three years, as compared to the cost on the IBM-2 proposal of $1,148,216, the second ranked offer. Therefore, the EMC-2 proposal received the full 600 points while the IBM-2 offer received only 293 points. Based on the above evaluation, which was done in a fair and consistent manner in accordance with the HRS evaluation manual, the final scores were allocated as follows: Proposer Technical Points Cost Points Total Points IBM-1 395 242 637 IBM-2 396 293 689 EMC-1 356 246 602 EMC-2 338 600 938 Hitachi 283 368 651 Given these rankings, the selection team issued its final report and recommendation on April 13, 1994, recommending that the EMC-2 proposal be ranked first and that EMC be awarded the contract. Was EMC's proposal nonresponsive? Initially, because no proof was submitted at hearing as to IBM's claim that EMC did not submit three corporate references who used EMC equipment similar in magnitude and scope to that requested in the RFP, that allegation has been deemed to have been abandoned. Remaining at issue are contentions that EMC-2's proposal was nonresponsive in two respects and deficient in one other respect. As to the alleged nonresponsive features of the proposal, IBM claims that (a) EMC-2's proposal contains technology which is not yet available on the market in the time required under the terms of the RFP, and (b) the 9100 model proposed by EMC is not of equal or superior performance or of equal or greater capacity to two IBM 3990-006 controllers. As to the other alleged deficiency, IBM contends that the specifications of the 9100 model vary from the specifications described in the EMC-2 proposal and thus EMC will have an advantage over other proposers if it is allowed to substitute equipment or not meet specifications. IBM first contends that the EMC-2 proposal contains technology which is not yet available on the market in the time required under the terms of the RFP. In this regard, the evidence shows that EMC introduced a 5500 model in November 1992. That unit uses a large amount of cache and a five and one- quarter inch disk technology. Sometime later, EMC began to develop a new unit with "somewhat less" capacity than the 5500 unit but using a much newer and higher density disc drive in the five and one-quarter inch format with the capability of storing nine gigabytes of capacity. During the preliminary stages of the development of the model, EMC referred to it as the "Jaguar," because of its high performance technology. Before publicly marketing the unit, EMC briefly identified the model as the 9100 unit because it had nine gigabyte capacity. Later on, however, EMC elected to place the device within its 5000 series in part to reflect to the industry that the device uses the same technology as EMC's existing 5500 series and in part to avoid confusion with a competitor's recent introduction of a 9000 series machine. Accordingly, the model number was changed to 5200-9 because it had smaller capacity than the existing 5500 model, but used nine gigabyte disc drives. The first 9100/5200 technology was delivered to Delta Airlines on January 10, 1994, and the second and third units were delivered to The Home Depot, Inc. and General Accident Insurance Company of America within the next few months. In April 1994, or after the model was already in use, EMC published a marketing brochure and on May 12, 1994, it offically announced the introduction of the new unit. When the RFP package was prepared, EMC had not yet made a decision to rename the 9100 unit a 5200-9 model, and thus it used the 9100 nomenclature throughout its proposal. Even so, Karin Morris, the HRS systems programmer administrator, established that this type of error (i. e., changes in model numbers) occurs "regularly" on RFP submissions by data processing vendors, and it is of no concern to the agency. Because model 5200 (previously known as 9100) was current technology at the time the EMC-2 proposal was submitted, IBM's contention to the contrary is rejected. It is further found that, for all practical purposes, models 5200 and 9100 are one and the same in that they have the same cache and amount of disc drives, and when EMC referred in its proposal to model 9100, it was referring to what is now known as the model 5200-9. Thus, EMC did not substitute technology after its proposal was opened, nor did it obtain an unfair advantage over the other vendors by making this change. The change in model number was a minor irregularity, and one that could be waived by HRS. IBM next contends that the EMC-2 proposal contains a material error and that the unit described therein does not meet the RFP specifications. More specifically, in paragraph 4 of Tab 3 of the proposal, EMC gave the following description of the proposed hardware: Within the Symmetrix unit, up to eight (8) control units may be defined to the operations system. In addition, the unit allows up to eight concurrent I/O's. The maximum number of parallel channels is sixteen, or will allow up to thirty two ESCON channels for the unit. In drafting the RFP, an EMC account executive inadvertently described the characteristics of the EMC 5500 model rather than the new 5200 model. At the outset of hearing EMC conceded that the above descriptive language was in error, and that it did not discover the error until it was pointed out by IBM during a deposition taken on May 25, 1994, or just two days prior to hearing. The language should have read as follows: Within the Symmetrix unit, up to four (4) control units may be defined to the operations system. In addition, the unit allows up to four (4) concurrent I/O's. The maximum number of parallel channels is sixteen, or will allow up to sixteen ESCON channels for the unit. Like EMC, HRS became aware of the error at the deposition taken on May 25, 1994. It views the error as immaterial because none of the eighteen technical criteria in the manual considered by the evaluation committee addressed the number of concurrent I/Os the equipment must be able to accomplish. This is confirmed by the fact that none of the evaluator's scoresheets gave material consideration to that matter. Indeed, with the possible exception of subpart C on question 8, no evaluation criterion specifically related to the above language. Even if the EMC-2 proposal was reevaluated and a zero given for question 8, it would not result in a change in the rankings. At the same time, by amending its proposal in this respect, EMC did not obtain an advantage over other vendors since factors not relevant to the technical scoring criteria can not afford a competitive advantage. Given these considerations, it is found that the error in paragraph 4 of Tab 3 is immaterial, and HRS could properly waive this minor irregularity. Finally, IBM contends that the single EMC model 9100 (5200) was not of equal or superior performance or of equal or greater capacity to two IBM 3990- 006 controllers. The more credible and persuasive evidence supports a finding, however, that the 5200-9 model has eight actual channel capability, it has ESCON channel capability, it has a total potential cache of 272 gigabytes, it is the equivalent of two 3390-A28 DASDs, four 3390-B2C DASDs and two 3390-006 Mod 6s in that it provides the same capabilities and functionalities and the same result to customers as IBM equipment, and thus it satisfies the equivalency requirements of the RFP. Therefore, it is found that the EMC-2 proposal is responsive in all respects to the RFP and that HRS properly ranked that proposal first.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by respondent awarding the contract for RFP 94-10BB-DSD to EMC Corporation and dismissing with prejudice the protest of International Business Machines Corporation, Inc. DONE AND ENTERED this 16th day of June, 1994, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-2588BID Petitioner: Partially accepted in findings of fact 2 and 4. Partially accepted in finding of fact 2. Partially accepted in finding of fact 6. Rejected as being contrary to the more credible and persuasive evidence. Partially accepted in finding of fact 13. Partially accepted in finding of fact 16. Partially accepted in finding of fact 18. Partially accepted in finding of fact 17. Partially accepted in finding of fact 4. Partially accepted in finding of fact 10. Partially accepted in findings of fact 5, 9 and 21. 12-13. Partially accepted in finding of fact 21. Partially accepted in finding of fact 6. Partially accepted in finding of fact 13. Rejected. See findings 22 and 23. Rejected. See findings 9 and 22. Rejected. See findings 22 and 23. Rejected. See findings 6, 8 and 9. Rejected as being irrelevant. See finding 9. Rejected as being contrary to the more credible and persuasive evidence. Partially accepted in finding of fact 13. Rejected as being contrary to the more credible and persuasive evidence. Respondent: 1. Partially accepted in finding of fact 2. 2. Partially accepted in finding of fact 3. 3. Partially accepted in finding of fact 5. 4. Partially accepted in finding of fact 14. 5-6. Partially accepted in finding of fact 18. 7. Partially accepted in finding of fact 19. 8-9. Covered in preliminary statement. 10. Partially accepted in finding of fact 6. 11. Partially accepted in finding of fact 8. 12-13. Partially accepted in finding of fact 6. 14. Partially accepted in finding of fact 15. 15. Partially accepted in finding of fact 10. 16. Rejected as being unnecessary. 17. Partially accepted in finding of fact 8. 18. Partially accepted in finding of fact 23. 19. Rejected as being unnecessary. 20-24. Partially accepted in finding of fact 20. 25. Rejected as being unnecessary. 26. Partially accepted in finding of fact 20. 27. Partially accepted in finding of fact 19. 28. Rejected as being unnecessary. 29. Partially accepted in finding of fact 20. 30. Partially accepted in finding of fact 16. 31. Partially accepted in finding of fact 23. 32-33. Partially accepted in finding of fact 21. 34-36. Partially accepted in finding of fact 22. Intervenor: Partially accepted in finding of fact 2. Partially accepted in finding of fact 5. Partially accepted in finding of fact 2. 4-5. Partially accepted in finding of fact 15. Rejected as being unnecessary. Partially accepted in finding of fact 14. Partially accepted in finding of fact 3. 9-13. Partially accepted in finding of fact 16. 14-15. Partially accepted in finding of fact 17. 16. Partially accepted in finding of fact 4. 17-19. Partially accepted in finding of fact 18. Partially accepted in finding of fact 4. Partially accepted in findings of fact 6 and 15. 22-24. Partially accepted in finding of fact 6. 25. Partially accepted in finding of fact 5. 26-27. Partially accepted in finding of fact 8. 28. Partially accepted in finding of fact 15. 29-33. Partially accepted in finding of fact 9. 34. Partially accepted in finding of fact 10. 35-39. Partially accepted in finding of fact 20. 40. Partially accepted in finding of fact 12. 41. Rejected as being unnecessary. 42. Partially accepted in finding of fact 6. 43-44. Partially accepted in finding of fact 10. 45. Partially accepted in finding of fact 11. 46. Partially accepted in finding of fact 12. 47-48. Partially accepted in finding of fact 21. 49. Partially accepted in finding of fact 23. 50. Partially accepted in finding of fact 22. 51. Partially accepted in finding of fact 20. 52. Partially accepted in finding of fact 11. 53. Partially accepted in finding of fact 23. Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, not supported by the evidence, subordinate, or a conclusion of law. COPIES FURNISHED: Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services Building One, Room 407 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Kimberly J. Tucker, Esquire Building One, Room 407 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Hume F. Coleman, Esquire Post Office Drawer 810 Tallahassee, Florida 32302-0800 Daniel W. Schenck, Esquire 4111 Northside Parkway HO7K2 Atlanta, Georgia 30327 William A. Freider, Esquire Building E, Suite 200 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Terrence J. Russell, Esquire P. O. Box 1900 Fort Lauderdale, Florida 33302-1900 Margaret-Ray T. Kemper, Esquire 215 South Monroe Street Suite 815 Tallahassee, Florida 32301
The Issue Whether part of Florida Administrative Code Rule 69V- 560.704, particularly subsections (4)(d) and (5)(a), exceed Respondent’s rulemaking authority; enlarge, modify or contravene the specific provisions of law implemented; or are arbitrary or capricious, and thus, constitute an invalid exercise of delegated legislative authority pursuant to section 120.52(8), Florida Statutes.
Findings Of Fact Respondent is the state agency charged with the regulation and enforcement of chapter 560, Florida Statutes,2/ relating to money services businesses and their authorized vendors. Chapter 560, Part I, governs money services business generally, which includes check cashers. Chapter 560, Part III, governs check cashers. Petitioner is a licensed check casher pursuant to section 560.303. As a licensee, Petitioner is required to comply with Respondent’s duly-adopted administrative rules governing check cashers. Petitioner challenges parts of Florida Administrative Code Rule 69V-560.704, “Records to Be Maintained by Check Cashers,” as an invalid exercise of delegated legislative authority. Respondent cites section 560.105 as the specific authority to adopt the rule. Section 560.105 provides as follows: 560.105 Supervisory powers; rulemaking.— The office shall: Supervise all money services businesses and their authorized vendors. Have access to the books and records of persons the office supervises as necessary to carry out the duties and functions of the office under this chapter. Issue orders and declaratory statements, disseminate information, and otherwise administer and enforce this chapter and all related rules in order to effectuate the purposes, policies, and provisions of this chapter. The commission may adopt rules pursuant to ss. 120.536(1) and 120.54 to administer this chapter. The commission may adopt rules requiring electronic submission of any forms, documents, or fees required by this chapter, which must reasonably accommodate technological or financial hardship and provide procedures for obtaining an exemption due to a technological or financial hardship. Rules adopted to regulate money services businesses, including deferred presentment providers, must be responsive to changes in economic conditions, technology, and industry practices. Respondent cites section 560.310, as the law implemented by the challenged rule. Section 560.310 provides as follows: 560.310 Records of check cashers and foreign currency exchangers.— A licensee engaged in check cashing must maintain for the period specified in s. 560.1105 a copy of each payment instrument cashed. If the payment instrument exceeds $1,000, the following additional information must be maintained or submitted: Customer files, as prescribed by rule, on all customers who cash corporate payment instruments that exceed $1,000. A copy of the personal identification that bears a photograph of the customer used as identification and presented by the customer. Acceptable personal identification is limited to a valid driver license; a state identification card issued by any state of the United States or its territories or the District of Columbia, and showing a photograph and signature; a United States Government Resident Alien Identification Card; a passport; or a United States Military identification card. A thumbprint of the customer taken by the licensee when the payment instrument is presented for negotiation or payment. The office shall, at a minimum, require licensees to submit the following information to the check cashing database or electronic log, before entering into each check cashing transaction for each payment instrument being cashed, in such format as required by rule: Transaction date. Payor name as displayed on the payment instrument. Payee name as displayed on the payment instrument. Conductor name, if different from the payee name. Amount of the payment instrument. Amount of currency provided. Type of payment instrument, which may include personal, payroll, government, corporate, third-party, or another type of instrument. Amount of the fee charged for cashing of the payment instrument. Branch or location where the payment instrument was accepted. The type of identification and identification number presented by the payee or conductor. Payee’s workers’ compensation insurance policy number or exemption certificate number, if the payee is a business. Such additional information as required by rule. For purposes of this subsection, multiple payment instruments accepted from any one person on any given day which total $1,000 or more must be aggregated and reported in the check cashing database or on the log. A licensee under this part may engage the services of a third party that is not a depository institution for the maintenance and storage of records required by this section if all the requirements of this section are met. The office shall issue a competitive solicitation as provided in s. 287.057 for a statewide, real time, online check cashing database to combat fraudulent check cashing activity. After completing the competitive solicitation process, but before executing a contract, the office may request funds in its 2014-2015 fiscal year legislative budget request and submit necessary draft conforming legislation, if needed, to implement this act. The office shall ensure that the check cashing database: Provides an interface with the Secretary of State’s database for purposes of verifying corporate registration and articles of incorporation pursuant to this section. Provides an interface with the Department of Financial Services’ database for purposes of determining proof of coverage for workers’ compensation. The commission may adopt rules to administer this section, require that additional information be submitted to the check cashing database, and ensure that the database is used by the licensee in accordance with this section. (emphasis added). Florida Control of Money Laundering in Money Transmitters Act Section 560.310 was created by the 1994 Legislature as part of the omnibus “Money Transmitters Code” (the Code), providing for initial regulation of payment instrument sellers, foreign currency exchangers, check-cashers, and funds transmitters. The Code was enacted following publication of a report of Florida’s Eleventh Statewide Grand Jury titled “Check Cashing Stores: A Call for Regulation.” See Interim Report Number One of the Eleventh Statewide Grand Jury, “Check Cashing Stores: A Call For Regulation,” (Feb. 9, 1994)(“1994 Grand Jury Report” or “1994 Report”). The 1994 Report recognized the important role of check-cashing services for a significant number of people who are economically disadvantaged and cannot, or do not, maintain traditional bank accounts. However, the 1994 Report also documented abuse of unregulated check-cashing services by con artists, money launderers, and other criminals. The report found that the unregulated industry attracted criminals because the industry was under no obligation to keep records of the identity of those for whom they move money. Specifically, the report found that check-cashers did not have to: (1) verify that their business customers were legally registered; (2) verify that the person presenting the payment instrument is authorized to cash the instrument; or (3) keep records of the identity of the person who cashed the payment instrument. Id. The 1994 Report found check-cashing services were “not legally obligated to maintain transaction records of any kind that would be useful to law enforcement in the exercise of their investigatory duties.” Id. The 1994 Report recommended statewide regulation of check-cashing services to include the following relevant requirements: Id. Maintain for a period of five years all records of transmittals, currency exchanges, checks cashed, payment instruments issued, and other related financial records. Obtain identification from customers when cashing checks or money orders. Obtain, and maintain for five years, documentation regarding the identity of the payees of checks and money orders. Part I of the Code applied generally to all money transmitters, which was specifically defined to include check cashers. See ch. 94-354, § 1, Laws of Fla. (1994). The Code created section 560.123 “Florida Control of Money Laundering in Money Transmitters Act” requiring money transmitters to comply with the money laundering, enforcement, and reporting provisions of section 655.50, Florida Statutes. Id. Section 655.50, Florida Statutes (1993),3/ provided in pertinent part, “[e]ach financial institution shall maintain for a minimum of 5 calendar years full and complete records of all financial transactions, including all records required by 31 C.F.R. parts 103.33 and 103.34.” § 655.50(8)(b), Fla. Stat. (1993). Part III of the Code created sections 560.301, et seq., titled the “Check Cashing and Foreign Currency Exchange Act” (the Act). See ch. 94-354, § 3, Laws of Fla. (1994). Section 560.310, titled “Records of check cashers and foreign currency exchangers,” contained no requirements for particular types of records to be kept, but provided for the length of time check cashers must maintain “books, accounts, records and documents,” and provided for the location and destruction of said records. See § 560.310, Fla. Stat. (Supp. 1994). The Act did not directly require personal identification of persons presenting payment instruments for cash, but rather incentivized the presentation of personal identification by correlating the amount of fees charged with presentation of personal identification. Check cashers could charge a higher transaction fee when the customer did not present identification.4/ In 2008, the Attorney General’s Office published a Report of the Eighteenth Statewide Grand Jury titled, “Check Cashers: A Call for Enforcement” (2008 Report). See Second Interim Report of the Eighteenth Statewide Grand Jury, “Check Cashers: A Call for Enforcement” (March 2008). The 2008 Report was highly critical of the Money Transmitter Regulatory Unit (MTRU), the arm of Respondent with regulatory authority over check cashers and other money transmitters. The 2008 Report documented systematic fraud involving the check-cashing industry perpetrated particularly by construction contractors, in the arena of workers’ compensation, and the health care sector, in the arena of Medicaid and Medicaid prescription drug fraud. Id. at 7. According to the 2008 Report, both issues involved the establishment of shell corporations to launder money obtained by fraudulent means. Id. at 9, 11. The 2008 Report described the following elaborate scheme of workers’ compensation fraud: A contractor, who is required to purchase workers’ compensation insurance based on the amount of his or her payroll, hides the payroll by establishing a shell corporation in the name of a nominee owner, often a temporary resident of the United States. The shell company buys a bare minimum workers’ compensation policy, and the contractor makes payments to this shell “subcontractor,” who cashes the checks and returns the money to the contractor to pay his or her employees under the table. Id. at 10-12. Further, according to the 2008 Report, some check cashers actively participated in this scheme by setting up shell companies themselves, securing the certificate of insurance, and seeking out contractors with which to do business. Id. at 13. The 2008 Report documented an investigation by the Division of Insurance Fraud which revealed ten construction companies had funneled one billion dollars through check- cashing businesses in the prior three years. Id. at 13. The 2008 Report documented lack of enforcement by the MTRU, understaffing, and underutilized resources. Id. at 19-24. Further, the Report placed blame on the MTRU for failing to exercise rulemaking authority granted by the 1994 Legislature, especially with respect to collecting information related to corporate customers. Id. at 38. The 2008 Report also found the MTRU needed legislative authority to require check cashers to gather and report information in electronic format, which would make the investigation process more efficient and allow check-cashing businesses to detect structuring of transactions by customers to defraud workers’ compensation and other statutory requirements. Id. at 19. The 2008 Legislature incorporated many of the recommendations from the 2008 Report and significantly overhauled regulation of all money services businesses (formerly, “money transmitters”) including check cashers. The 2008 Legislation made the following changes-of- note to Part I of chapter 560: Prohibited licensees from accepting anything of value from a customer with intent to deceive or defraud. See ch. 08- 177, § 8, Laws of Fla. (2008) Prohibited the delivery to MTRU of any file known by it to be fraudulent or false. See Id. Increased the enforcement authority of MTRU. See ch. 08-177, § 9, Laws of Fla. Authorized immediate suspension of a license for failure to provide required records. See ch. 08-177, § 10, Laws of Fla. Required licensees to retain all required records for a minimum of five years. See ch. 08-177, § 1, Laws of Fla. The 2008 Legislature made the following changes to chapter 560, Part III: Prohibited a check casher from transacting business in any name other than the legal name under which it is licensed; Required disclosure of any fictitious name as part of initial licensing; Required a check casher to endorse all payment instruments received in the check- casher’s legal name under which it is licensed; and Prohibited check cashers from accepting multiple payment instruments from a person who is not the original payee, unless the person is a licensed check casher and the payment instruments are endorsed with the check casher’s legal name. Further, the 2008 Legislation required check cashers to maintain a customer file on all customers who cash “corporate or third-party payment instruments exceeding $1,000.” Ch. 08-177, § 42, Laws of Fla. The 2008 Legislature also added the requirement that, for any payment instrument accepted having a face value of $1,000 or more, the check casher must maintain personal identification from customers, a thumbprint of the customer, and a payment instrument log in an electronic format. See Id. Subsections 560.310(4), (5), and (6), relating to creation and maintenance of a statewide, real-time, online check-cashing database, were created by the 2013 Florida Legislature. See ch. 13-139, § 1, Laws of Fla. Prior to the 2013 amendments, section 560.310 required check cashers to maintain an electronic payment instrument log “as prescribed by rule.” § 560.310(1)(d), Fla. Stat. (2012). The 2013 amendment required check cashers to “submit the following information to the check-cashing database or electronic log, before entering into each check cashing transaction for each payment instrument being cashed, in such format as required by rule . . . .” Id. The Rule Florida Administrative Code Rule 69V-560.704(5)(a), reads as follows: (5)(a) In addition to the records required in subsections (1) and (2) for payment instruments $1,000.00 or more, the check casher shall create and maintain an electronic log of payment instruments accepted which includes, at a minimum, the following information: Transaction date; Payor name; Payee name; Conductor name, if other than the payee; Amount of payment instrument; Amount of currency provided; Type of payment instrument; Personal check; Payroll check; Government check; Corporate check; Third party check; or Other payment instrument; Fee charged for the cashing of the payment instrument; Branch/Location where instrument was accepted; Identification type presented by conductor; and Identification number presented by conductor. (b) Electronic logs shall be maintained in an electronic format that is readily retrievable and capable of being exported to most widely available software applications including Microsoft EXCEL. The 2013 Legislature incorporated into section 560.310, almost verbatim, the information required by the rule to be collected and maintained by check cashers in an electronic log.5/ The only significant difference between the statute and the rule is that the statute additionally requires check cashers to maintain, as part of the electronic log, the “payee’s workers’ compensation insurance policy number or exemption certificate number, if the payee is a business.” § 560.310(2)(d)11., Fla. Stat.6/ Respondent has not amended the rule subsequent to the 2013 amendments to section 560.310 requiring development and maintenance of a statewide, real-time, online check- cashing database. Respondent has not activated a statewide, real-time, online check-cashing database, but anticipates doing so in Fiscal Year 2015-2016. Referrals to Law Enforcement Pursuant to section 560.109(9), Respondent is required to annually report to the legislature the total number of examinations and investigations of its licensees that resulted in a referral to law enforcement, and the disposition of those referrals by agency. Respondent refers to the Florida Department of Law Enforcement (FDLE) results of its licensee investigations which may reveal criminal activity within the purview of the FDLE. For Fiscal Year 2012-2013, Respondent’s Bureau of Enforcement referred 78 examinations to FDLE. Respondent refers to the Division of Insurance Fraud (DIF) results of its licensee examinations which may reveal criminal activity related to workers’ compensation insurance. For Fiscal Year 2012-2013, Respondent referred 33 examinations to DIF. At the time of Respondent’s 2012-2013 annual report to the Legislature, FDLE had not opened any cases based on the 78 examinations referred. During that same time frame, DIF had opened 4 cases based on 33 referrals from Respondent. Threshold Amount for Recordkeeping Petitioner first challenges the rule as exceeding the scope of Respondent’s delegated legislative authority because it requires a log be kept “for payment instruments $1,000.00 or more” while the statute requires a log be kept on payment instruments “that exceed $1,000.” § 560.310(2)(a), Fla. Stat. Section 560.310(2) further reads, as follows: For purposes of this subsection, multiple payment instruments accepted from any one person on any given day which total $1,000 or more must be aggregated and reported in the check cashing database or on the log. (emphasis added). On the one hand, the statute requires a log be created and maintained on each payment instrument that exceeds $1,000, while on the other hand, acknowledges that payment instruments of lesser amounts, when presented by the same person, are “log worthy” when, together, they reach a threshold of $1,000. Petitioner argues that the 2012 Legislature repealed Respondent’s authority to require a log be kept on payment instrument amounts of $1,000. Section 560.310, Florida Statutes (2011), reads, in pertinent part, as follows: 560.310 Records of check cashers and foreign currency exchangers.— In addition to the record retention requirements specified in s. 560.1105, a licensee engaged in check cashing must maintain the following: Customer files, as prescribed by rule, on all customers who cash corporate or third- party payment instruments exceeding $1,000. For any payment instrument accepted having a face value of $1,000 or more: A copy of the personal identification that bears a photograph of the customer used as identification and presented by the customer. Acceptable personal identification is limited to a valid driver’s license; a state identification card issued by any state of the United States or its territories or the District of Columbia, and showing a photograph and signature; a United States Government Resident Alien Identification Card; a passport; or a United States Military identification card. A thumbprint of the customer taken by the licensee. A payment instrument log that must be maintained electronically as prescribed by rule. For purposes of this paragraph, multiple payment instruments accepted from any one person on any given day which total $1,000 or more must be aggregated and reported on the log. (emphasis added). The statute contained distinct recordkeeping requirements for payment instruments exceeding two different threshold amounts: (1) A customer file on all customers who cash corporate or third-party payment instruments exceeding $1,000, and (2) personal identification information of customers presenting payment instruments of $1,000 or more. The payment instrument log requirement was not associated with any minimum threshold amount. However, the language of subparagraph (c) did require aggregation of multiple payment instruments accepted from any one person on any given day which total $1,000 or more. As such, the log appeared to be required for all payment instruments of $1,000 or more. The 2012 Legislation struck the separate threshold of $1,000 or more which triggered the requirement to keep customer’s personal identification information. See ch. 12- 85, § 7, Laws of Fla. (2012). Further, the 2012 changes collapsed the separate requirements of customer identification information, customer thumbprint, and a payment instrument log into one list of records required to be kept on customers who cash payment instruments exceeding $1,000. See Id. However, the law retained the requirement that multiple payment instruments totaling $1,000 or more accepted from any one person on any given day be aggregated and reported on the log. Electronic Log Requirement Next, Petitioner challenges the rule as an invalid exercise of Respondent’s delegated legislative authority because the governing statute was amended in 2013 to eliminate the requirement for check cashers to keep an electronic log of payment instruments. In 2013, the Legislature created the following new subsections of section 560.310: The office shall issue a competitive solicitation as provided in s. 287.057 for a statewide, real time, online check cashing database to combat fraudulent check cashing activity. After completing the competitive solicitation process, but before executing a contract, the office may request funds in its 2014-2015 fiscal year legislative budget request and submit necessary draft conforming legislation, if needed, to implement this act. The office shall ensure that the check cashing database: Provides an interface with the Secretary of State’s database for purposes of verifying corporate registration and articles of incorporation pursuant to this section. Provides an interface with the Department of Financial Services’ database for purposes of determining proof of coverage for workers’ compensation. The commission may adopt rules to administer this section, require that additional information be submitted to the check cashing database, and ensure that the database is used by the licensee in accordance with this section. Ch. 13-139, § 1, Laws of Fla. With regard to the payment instrument log, the statute was amended as follows:7/ Id. The office shall, at a minimum require licensees to submit the following information to the check cashing database or electronic log, before entering into each check cashing transaction for each A payment instrument being cashed, in such format as required log that must be maintained electronically as prescribed by rule: The law also made the following conforming changes to existing text of section 560.310: (2) If the payment instrument exceeds $1,000, the following additional information must be maintained or submitted: * * * For purposes of this subsection paragraph, multiple payment instruments accepted from any one person on any given day which total $1,000 or more must be aggregated and reported in on the check cashing database or on the log. Id. The statute authorizes Respondent to make a 2014- 2015 legislative budget request prior to executing the contract for a vendor to run the database. See § 560.310(4), Fla. Stat. Thus, the statute specifically anticipates lag time between enactment of the legislation requiring the statewide database and the rollout of the database. Contrary to Petitioner’s assertion, the statute does not eliminate licensed check cashers’ responsibility to maintain records in an electronic log. The statute recognizes the licensee’s duty to both maintain information on an electronic log and submit that information to the statewide real time database. Corporate Customer Next, Petitioner challenges Respondent’s authority to require check cashers to maintain records of corporate customers in addition to natural persons. The section of the rule at issue is 69V-560.704(4), which reads, in pertinent part, as follows: (4) In addition to the records required in subsections (1) and (2), for payment instruments exceeding $1,000.00, the check casher shall: * * * (d) Create and maintain a customer file for each entity listed as the payee on corporate payment instruments and third party payment instruments accepted by the licensee. Each customer file must include, at a minimum, the following information[.] (emphasis added). Florida Administrative Code Rule 69V-560.704 further defines the following relevant terms: For purposes of this rule the term: ‘Corporate payment instrument’, as referenced in Section 560.310(1), F.S., means a payment instrument on which the payee named on the face of the payment instrument is not a natural person. ‘Conductor’ means a natural person who presents a payment instrument to a check casher for the purpose of receiving currency. ‘Customer file’ in regard to a ‘corporate payment instrument’ means the corporate entity shown as payee. In regard to ‘third-party payment instruments’, the term ‘customer file’ means the individual negotiating the payment instrument. Petitioner complains that Respondent is without authority to construe the term “customer” as the payee on a corporate payment instrument rather than a natural person appearing before the licensee presenting a check to be cashed. Petitioner argues that section 560.310 defines customer as the person presenting a check for payment, while the rule impermissibly requires the licensee to maintain customer files of corporate entities. Section 560.310 does not define the term “customer.” The sections of the statute which predate the 2013 Legislation used the term customer as if it applied only to a natural person. For example, the statute required the check casher to maintain “[a] copy of the personal identification that bears the photograph of the customer used as identification and presented by the customer.” § 560.310(2)(b), Fla. Stat. (2012). Further, the statute required the licensee to maintain “[a] thumbprint of the customer taken by the licensee when the payment instrument is presented for negotiation or payment.” § 560.301(2)(c), Fla. Stat. (2012). However, the 2013 amendments to chapter 560, specifying the items to be documented in the check casher’s electronic log of payment instruments, employ the terms “payor name” and “payee name” as displayed on the payment instrument, and “conductor” if different from the name on the payment instrument. The list of items required by statute to be logged include “[t]he type of identification and identification number presented by the payee or conductor,” and “[p]ayee’s workers’ compensation insurance policy number or exemption certification number, if the payee is a business.” § 560.310(2)(d)10. and 11., Fla. Stat. (2013). Additionally, the legislation requires Respondent to ensure that the anticipated statewide check-cashing database will interface with the Secretary of State’s database for verifying corporate registration and articles of incorporation, as well as with the Department of Financial Services’ database for determining proof of coverage for workers’ compensation. If the payee’s corporate information is not maintained by check cashers, it cannot be reported to the statewide check-cashing database for verification. Furthermore, the statute prohibits a licensee from accepting or cashing a corporate payment instrument from a person who is not an authorized officer of the corporate payee named on the instrument. See s. 560.309(4), Fla. Stat. Without obtaining records of the corporate payee, the check casher would be unable to comply with this requirement. Corporate Documents Next, Petitioner complains that some of the information required by rule to be kept on corporate customers is beyond the Respondent’s statutory authority. Specifically, Petitioner objects to the obligation to maintain the following information on corporate customers, as required by rule 69V- 560.704(4)(d): Documentation from the Secretary of State verifying registration as a corporation or fictitious entity showing the listed officers and FEID registration number. If a sole proprietor uses a fictitious name or is a natural person, then the customer file shall include the social security number of the business owner and documentation of the fictitious name filing with the Secretary of State. Articles of Incorporation or other such documentation which establishes a legal entity in whatever form authorized by law. For purposes of this rule a sole proprietor operating under a fictitious name registered with the Secretary of State shall not have to present such documentation. Documentation of the occupational license from the county where the entity is located. A copy of the search results screen page from Compliance Proof of Coverage Query Page webpage from the Florida Department of Financial Services – Division of Workers’ Compensation website (http://www.fldfs.com/WCAPPS/Compliance _POC/wPages/query.asp). Documentation of individuals authorized to negotiate payment instruments on the corporation or fictitious entity’s behalf including corporate resolutions or powers of attorney. Payment instruments for insurance claims where there are multiple payees shall be exempt from this provision provided that the maker of the check is an insurance company and the licensee has obtained and retained documentation as to the identity of the natural person listed as the payee on such payment instrument. Section 560.310(2) provides for the following customer information to be kept on file: Customer files, as prescribed by rule, on all customers who cash corporate payment instruments that exceed $1,000. (emphasis added). Respondent clearly has statutory direction in determining which types of documentation should be kept in corporate customer files. As noted previously, licensed check cashers are required by statute to enter into their electronic log each corporate payees’ workers’ compensation insurance policy number or exemption certificate number before entering into each check-cashing transaction. See § 560.310(2)(d)11, Fla. Stat. Likewise, licensees are required to verify that the conductor presenting a corporate check is an authorized officer of the corporate payee. See § 560.309(4), Fla. Stat. Petitioner seems to suggest that Respondent cannot require any document to be kept on corporate payees unless that document is specifically mentioned in the authorizing statute. That suggestion is contrary to controlling law, as discussed more fully below.
