The Issue Whether Petitioner is required to pay sales tax on the commission its pays to property owners for the right to place and operate air and vacuum machines at various locations in central Florida.
Findings Of Fact Petitioner owns coin-operated air and vacuum machines, which it places at numerous convenience store and gas station locations throughout central Florida. The State of Florida, Department of Revenue, is an executive agency of the State of Florida, which is statutorily charged with the administration and enforcement of Florida's sales tax laws. The Department conducted an audit of Petitioner following the discovery of information developed during an audit of another company. It was determined that Petitioner had never registered with the Department of Revenue for sales tax collection or payment. During the audit, the Department determined that Petitioner had not paid sales tax on its out-of- state purchases of air and vacuum machines and equipment valued at approximately $303,429.00. These machines were purchased for use in Florida. The Department assessed sales tax on these purchases. The Petitioner conceded that it owed sales tax on these purchases and did not contest that portion of the assessment. It has paid said taxes. The Department assessed sales tax on payments made by the Petitioner to other companies for the right to place its machines at their business. Petitioner places coin-operated air and vacuum machines on premises of the convenience stores and gas stations under a verbal contract at will in which the land owner receives a portion of the gross receipts from the operation of the machines. Petitioner is solely responsible for the installation of the air and vacuum machines, including providing the electrical tie-in at the site of the machine. The air and vacuum machines are mounted on a six hundred pound concrete pad and transported and placed on the convenience store property. The air and vacuum machines are portable, even after placement at a convenience store, and are removed if Petitioner determines that the location is not sufficiently profitable. The air and vacuum machines are purchased by Petitioner and the air and vacuum machines are owned solely by Petitioner during the period that they are located on a convenience store's premises. Petitioner is solely responsible for regular inspection of the air and vacuum machine and is solely responsible for maintenance of the machines. Petitioner is solely responsible for cleaning the air and vacuum machines at all locations. Also, Petitioner is responsible for all repair work to the machines which are provided at no cost to the owner of the convenience store. Petitioner is entitled to ingress and egress from the property at any time to accomplish these repairs. Petitioner is ultimately responsible for refunding any money to the store operator when an air and vacuum machine fails to work properly. Petitioner is solely responsible for all licensing fees and taxes on the air and vacuum machines. Petitioner carries liability insurance coverage on the air and vacuum machines. On or about June 10, 1988, Petitioner entered into a written contact with Carse Oil Company, Inc., which owned convenience stores in the central Florida area, doing business as Ideal Food Stores. This agreement was in effect for a period of three or four years, including some years during the audit period, beginning September 1, 1988. The agreement, entitled "Air/Water Vacuum Commission Agreement" (hereinafter Agreement) is a contract between Petitioner and Carse Oil Company, Inc., by which Petitioner agreed to place an air and vacuum machine on Carse Oil's property. The written Agreement with Carse Oil Company, Inc. provides for the monthly payment to be made on a date certain each month. The Carse Oil Agreement is complete and contains all of the terms of the contract between the parties as to the duties and obligations of each party under the contract. This written Agreement is representative of the course of dealing with other businesses with which Petitioner entered oral agreements during the period of the audit. Like the Agreement, the oral agreements allowed Petitioner to place its machines at its own cost on the property of a convenience store. The Petitioner does not currently have, and has not ever had any agreements in writing with its customers other than the written Agreement with Carse Oil. Under the written and oral agreements, Petitioner was responsible for coming onto the property to repair its machines. Petitioner is also entitled to come onto the property to remove monies from the cash box located in the machine. Only Petitioner's employees held the key to the money box and were entitled to come onto the property any time to access the money box in the machine. None of Petitioner's customers has a key or other access to the money box located in each air and vacuum machine. Petitioner is solely responsible for calculating the commission payment to a convenience store after collecting the money in the machine. Petitioner is solely responsible for deciding whether to remove an air and vacuum machine from a convenience store's premises if it is unprofitable. With the exception of one customer, Petitioner does not pay a separate amount to the convenience store for the electricity that is used in the operation of the air and vacuum machine. Petitioner's agreements with its customers, including the Agreement with Carse Oil Company, provide for the convenience store to receive each month a percentage of the money collected in the previous month for the operation of the air and vacuum machine(s) located on the store's premises. The air and vacuum machines are equipped with a coin counter. Petitioner is solely responsible for periodically collecting the coins that have accumulated in each air and vacuum machine. The percentage that Petitioner pays to the convenience stores under its agreements with them ranges from 25 percent to 50 percent and are negotiated on an individual basis. Petitioner pays a higher percentage to a convenience store where the revenues generated are relatively higher than the revenues generated by machines at other locations. The payment to the location owner is thus based upon the business derived at a particular location. Thus, as part of the business decision of payment for allowing placement of the machine, Petitioner evaluates the value of the location of the machine and payment is guided by the performance at the location. Payment made by Petitioner is directly connected to the acquisition of the right of placement of the machine, and the location owner is not entitled to receive any compensation once a machine is removed from the premises. The location owner has no responsibility for the cost of placing the machine, the costs of maintenance and cleaning the machine during its placement, the cost of repair of the machine during placement or responsibility for payment of insurance coverage of machines during placement. The location owner involvement is limited to authorization of the use of the property for placement of the machine. The compensation or "commissions" are directly tied to payment for the right to place the machine on the premises of a convenience store. The payment which Petitioner characterized as a revenue sharing arrangement, regardless of the title placed on the agreement between the parties, is based upon the right of placement of the machines on the property of another distinct business entity. Petitioner paid out $613,125.00 during the years under audit based upon its written and oral agreements allowing for the placement of its equipment. The Department assessed sales tax on the payments made as "commissions" to the parties where the machines were placed. The Department assessed sales tax due in the amount of $54,994.40, plus penalty in the amount of $16,539.12 and interest in the amount of $15,643.48, for a total due of $87,177.00. On April 15, 1994, Petitioner paid $18,206.61 on this amount leaving a balance due of $68,970.39. Petitioner does not dispute the Department's mathematical calculations of the total sales dollars upon which the tax assessment is based. Petitioner has not paid sales taxes on the monies it remitted to the convenience stores during the audit period. Petitioner did not seek advice from the Department prior to the assessment as to whether sales tax should have been collected on the business transactions assessed by the Department.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Executive Director enter a Final Order denying the Petition contesting the assessment of tax and impose a sales and use tax audit assessment in the amount of $68,970.39, plus interest. DONE and ENTERED this 28th day of June, 1996, in Tallahassee, Florida. DANIEL M. KILBRIDE, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-2131 To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Petitioner did not submit proposed findings of fact as of the date of this Order. Respondent's Proposed Findings of Fact. Accepted in substance: paragraphs 1-31. COPIES FURNISHED: Gary Shader, Esquire Shader and Wilson 1750 North Maitland Avenue Maitland, Florida 32751 James F. McAuley, Esquire Elizabeth T. Bradshaw, Esquire Office of the Attorney General The Capitol, Tax Section Tallahassee, Florida 32399-1050 Linda Lettera, General Counsel Deparment of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue for consideration in this case is whether the Respondent's Rule 21E-17.001(20) is a valid exercise of delegated legislative authority.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, William R. Muldrow, was a licensed contractor and the Respondent, Construction Industry Licensing Board, was the state agency responsible for the licensing and regulation of contractors in Florida. Such regulation includes the promulgation of rules governing the practice of the contracting profession in this state. Section 489.129(1), Florida Statutes, authorizes the Board to, inter alia, "... require financial restitution to a consumer ..." by a licensee when it determines the licensee has committed any of the violations stipulated in that section. The word, "consumer" is not further defined anywhere in the statute. Thereafter, the Board promulgated Rule 21E-17.001(20) which, for any violation occurring after October 1, 1988, permitted the Board to order the contractor involved to make restitution in the amount of financial loss suffered by the "customer, subcontractor, or materialman", in addition to any other penalties provided by the guidelines set out within the rule. Petitioner, a contractor, is convinced that the statutory use of the term "consumer" is not so broad as to include the Board's application of it not only to customers but also to subcontractors and materialmen. He testified to that effect in support of his position, and presented the Final Order of the Board in DOAH Case No. 92-3951, Department of Professional Regulation v. William R. Muldrow, April 1, 1993. In that Order, the Board imposed discipline against the Petitioner herein to include suspension of his license, which suspension was stayed upon the condition that he satisfy a civil judgement entered against him within 30 days. On the other hand, Terry Manrique and Robert E. Watts, both contractors and both members of the Board, indicated it was the intention of the pro-active Board when it proposed the enabling legislation that reimbursement be required to any member of the public facing loss from the acts of a contractor. Its position was predicated upon the recognition by Board members, whose membership includes two consumers, that many contractors were failing to pay materialmen and upon its understanding that the law, as it existed, did not protect materialmen whose claims were for a sum less than $2,500.00. They claim it was the Board's intention that legislation be enacted to cover claims by a contractor's customers, materialmen, and subcontractors and assert the language of the legislation proposed by the Board made reference to all three classes. The proposed legislation was not provided, however. When the legislation was enacted it made reference only to consumers. Mr. Watts, the residential contractor member of the Board, has extensive experience in the legislative process having worked for the legislature for several years. He is directly familiar with the legislative revision section which "cleans up" proposed legislative language. In his experience, he found that drafters of legislation would often select a single word which was intended to include other, unstated matters. In that regard, Mr. Watts is of the opinion the use of "consumer" in the act was an umbrella word intended to include consumers, customers and the public. Mr. Watts concedes that throughout the Board's rules, the term, "consumer" is defined separately and other persons are defined elsewhere. These other rules were not introduced. Review of the instant rule, however, fails to indicate any other use of the term "consumer" though the word "customer" is used frequently. The Construction Industry Licensing Board serves not only the purchaser of a building but the public in general. One of the biggest problems within the construction industry is the contractor who fails to pay his bills and this failure constitutes a substantial danger to the public. If the contractor does not pay his suppliers of either material or labor, he injures the public. With this in mind, Mr. Watts urged that the intent of the enabling legislation here is to insure the contractors operate safely, competently and in good faith, and pay their bills. According to Mr. Watts, in the most recent legislative session, in furtherance of that aim, the Board secured the passage of legislation to establish a recovery fund, as opposed to a restitution fund. Repeatedly using the term "public", as opposed to "customer", "consumer", or "materialman", Mr. Watts is of the opinion the new fund "should" protect anyone who is injured by a contractor, including suppliers and materialmen.
The Issue Whether or not the corporate names Dupont Realty Investment Corporation and Dupont Realty, Incorporated, are deceptively similar to each other and, if so, whether or not pertinent rules and regulations of the Department of State require the latter chartered corporation to amend its Articles of Incorporation and registration to reflect a new name.
Findings Of Fact Based upon the testimony adduced at the hearing, the documentary evidence received and the entire record compiled herein, the following relevant facts are found. Petitioner, Dupont Realty Investment Corporation, was issued charter No. 535008 on April 27, 1977. Petitioner is a for-profit corporation which has remained active since April of 1977. Respondent, Dupont Realty, Inc., was issued charter No. 680928 on August 4, 1980, and has been permitted the use of that corporate name by Respondent, Secretary of State, Division of Corporations (Secretary) based on the Secretary's reliance on Chapter 607, Florida Statutes, and Rule Chapter 10- 1, Florida Administrative Code. The Secretary takes the position that the Petitioner and Respondent, Dupont Realty, Inc., were properly granted name clearances inasmuch as there exists a major word difference within the style of their name. That is, the compound "Realty Investment" denotes something entirely different from "Realty." (Letter dated April 27, 1981, from D. W. McKinnon, Director, Division of Corporations, to Anthony R. LaRossa, Petitioner's registered agent.) Petitioner, in urging that there is no difference in the subject corporate names, also points out that it has spent substantial monies in advertising; that the subject corporations are engaged in the same business (sale of real estate); are serving the same locality and are operating in the same postal areas. Using that criteria, and the guides set forth in Chapter 607.024, Florida Statutes, and Rule Chapter 10-1.04, Florida Administrative Code, Petitioner argues that Respondent, Dupont Realty, Inc.`s name is deceptively similar to its (Petitioner's) name. Both corporations operate within Dade County and are engaged in the real estate business. Petitioner's salesmen answer their telephone in the abbreviated form "Dupont Realty." According to Charles Yaritz, a salesman, Petitioner's customers refer to it as "Dupont Realty." Petitioner claims that it has received telephonic inquiries of properties about which it has no knowledge. Salesman Yaritz admitted that its business activities are primarily that of the sale of commercial properties due to "high interest rates" which are now prevalent in the area. (Testimony of salesman Yaritz and Anthony R. LaRossa, salesman and registered agent/broker for Petitioner, respectively.) Petitioner uses advertising signs which contain the caption "For Sale Dupont Realty Investment Corporation" and a telephone number. Petitioner also uses a silk screen which is different from any advertising legend used by Respondent, Dupont Realty, Inc. (See Petitioner's Exhibits 2 and 3.) Robert Silverang, an employee of Respondent, Secretary of State, examines name requests pursuant to the authority contained in Chapter 607, Florida Statutes, and Rule Chapter 10-1, Florida Administrative Code. Messr. Silverang reiterated the Secretary's position that the word Investment is regarded as a major name change/difference, the existence of which permitted the Secretary to grant the subject corporate name clearance to Respondent, Dupont Realty, Inc. Messr. Silverang also offered the opinion that when there is a major name difference, locality is not considered as a factor in either granting or denying a name clearance. Respondent, Dupont Realty, Inc., chose the name Dupont Realty because "Dupont" is her 1/ "legal" name. Respondent is engaged almost exclusively in the sale of residential property and caters to clientele consisting of approximately 95 percent French-Canadian. In further support of its claimed "confusion," Petitioner referred to the fact that it received an order of checks intended for Respondent, Dupont Realty, Inc., and retained custody of same for approximately one (1) month prior to the hearing herein. (Petitioner's Exhibit 6.) Respondent's property listings are in areas different from the areas in which Petitioner lists and sells property. Respondent advertises on signs approximately twice the size of the signs utilized by Petitioner. Respondent, Dupont, has no phone listing in the Dade County telephone directory and has not been advised by her customers of any "confused" calls. Both firms have spent approximately the same amount of funds for advertising purposes. However, the two corporations use different medians to carry out their advertising. Thus, Petitioner caters to publications which attempt to reach the commercial client, whereas Respondent, Dupont Realty, Inc., aims at reaching French-Canadians who are primarily interested in the purchase and sale of residential properties.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the grant of the name Dupont Realty, Inc., to Respondent be UPHELD in that said name is not deceptively similar to that of Petitioner. DONE and RECOMMENDED this 20th day of October, 1981, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of October, 1981.
The Issue The issue is whether Rule 5J-10.001, Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority, pursuant to Section 120.52(8), Florida Statutes.
Findings Of Fact Pursuant to Sections 559.801(2) and 559.813(2), Florida Statutes, Respondent has exclusive administrative jurisdiction over the Sale of Business Opportunities Act, Chapter 559, Part VIII, Florida Statutes, and shares judicial enforcement over the Act with the Florida Department of Legal Affairs and the applicable office of the state attorney. (Unless stated otherwise, all references to "Sections" shall be to Florida Statutes, all references to the "Act" shall be to the Sale of Business Opportunities Act, and all references to "Rules" shall be to the Florida Administrative Code.) The Act governs the sale or lease of certain business opportunities in Florida. Sections 559.803 and 559.804 respectively require sellers of covered business opportunities to provide timely disclosures to prospective purchasers and to file annual disclosure statements with Respondent prior to advertising or offering covered business opportunities for sale. More relevant to this case, Section 559.801 sets forth the definitions that establish the coverage of the Act: 559.801 Definitions.--For the purpose of ss. 559.80-559.815, the term: (1)(a) "Business opportunity" means the sale or lease of any products, equipment, supplies, or services which are sold or leased to a purchaser to enable the purchaser to start a business for which the purchaser is required to pay an initial fee or sum of money which exceeds $500 to the seller, and in which the seller represents: That the seller or person or entity affiliated with or referred by the seller will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, currency or card operated equipment, or other similar devices or currency-operated amusement machines or devices on premises neither owned nor leased by the purchaser or seller; That the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using in whole or in part the supplies, services, or chattels sold to the purchaser; That the seller guarantees that the purchaser will derive income from the business opportunity which exceeds the price paid or rent charged for the business opportunity or that the seller will refund all or part of the price paid or rent charged for the business opportunity, or will repurchase any of the products, equipment, supplies, or chattels supplied by the seller, if the purchaser is unsatisfied with the business opportunity; or That the seller will provide a sales program or marketing program that will enable the purchaser to derive income from the business opportunity, except that this paragraph does not apply to the sale of a sales program or marketing program made in conjunction with the licensing of a trademark or service mark that is registered under the laws of any state or of the United States if the seller requires use of the trademark or service mark in the sales agreement. For the purpose of subparagraph 1., the term "assist the purchaser in finding locations" means, but is not limited to, supplying the purchaser with names of locator companies, contracting with the purchaser to provide assistance or supply names, or collecting a fee on behalf of or for a locator company. "Business opportunity" does not include: The sale of ongoing businesses when the owner of those businesses sells and intends to sell only those business opportunities so long as those business opportunities to be sold are no more than five in number; The not-for-profit sale of sales demonstration equipment, materials, or samples for a price that does not exceed $500 or any sales training course offered by the seller the cost of which does not exceed $500; or The sale or lease of laundry and drycleaning equipment. "Department" means the Department of Agriculture and Consumer Services. "Purchaser" includes a lessee. "Seller" includes a lessor. An important question in this case is the extent to which the Act addresses affiliates of a seller. In fact, the Act does so only once. In describing the various disclosure requirements imposed upon a "seller," Section 559.803 mentions an affiliate in Section 559.803(1), which requires the disclosure of "the name of any parent or affiliated company that will engage in business transactions with the purchasers or who takes responsibility for statements made by the seller." In describing the annual filings, Section 559.805 does not mention "affiliates." Nor do the main enforcement provisions of the Act mention "affiliates." Section 559.809 prohibits 14 specified acts by "sellers". Section 559.813(2)(a) specifies five violations by "a seller or any of the seller's principal officers or agents" that may result in the penalties set forth in Section 559.813(2)(b). In connection with the sale or lease of business opportunities, Respondent has adopted three rules at Chapter 5J-10, Florida Administrative Code. Petitioners have challenged, in its entirety, Rule 5J-10.001, which supplies several definitions. Rule 5J-10.001 states: 5J-10.001 Definitions. The definitions contained in Section 559.801, Florida Statutes, and the following apply: “Initial Fee or sum of money,” as used in Section 559.801(1)(a), F.S., shall include the total funds paid by the purchaser to the seller, including all monies paid for deposits, down payments, prepaid rents, equipment costs, materials, samples, products, training, services or inventory purchases. “Material change” shall include any fact, circumstance, or set of conditions which has a substantial likelihood of influencing a purchaser or a reasonable prospective purchaser in the making of a significant decision relating to a named business opportunity or which has any significant financial impact on a purchaser or prospective purchaser. “Sales program or marketing program” means: A written or oral procedure or plan provided by the seller to a purchaser of a business opportunity concerning products, equipment, supplies, services or training that the seller represents will be provided on how to sell or market the product or service; or Where the seller provides to the purchaser the following devices, techniques, training or materials which will assist the purchaser in deriving income from the business opportunity: Sales or display equipment or merchandising devices; Specific sales or marketing techniques; or Sales, marketing or advertising materials which are intended for use by the purchaser to influence a consumer to purchase a product or service. “Seller” includes any person who has an ownership interest of 10% or greater in an entity which sells or leases business opportunities. Specific Authority 570.07(23) FS. Law Implemented 559.801, 559.803, 559.805 FS. History–New 11-15-94, Amended 6-4-95. Respondent adopted Rule 5J-10.001 effective November 15, 1994, and amended it effective June 4, 1995. The specific authority cited for the rule, Section 570.07(23), provides only that Respondent "shall have and exercise the following functions, powers, and duties: To adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of law conferring duties upon it." However, in 1997, the Legislature adopted Section 559.813(8), which broadens Respondent's rulemaking authority under the Act by providing: "The department has the authority to adopt rules pursuant to chapter 120 to implement this part." In defining "seller" in Rule 5J-10.001(4), Respondent relied on the Federal Trade Commission (FTC) regulations at 16 Code of Federal Regulation (CFR) Part 436 (collectively, the "Franchise Rule"). In particular, Respondent relied on 16 CFR 436.2, explaining in a response to an interrogatory that Rule 5J-10.001(4) "was intended to clarify the identity of persons sufficiently affiliated with the sale of a business opportunity by virtue of their share ownership (16 C.F.R. 436.2) upon whom a duty should be imposed to make the required statutory disclosures in the sale of a business opportunity." In 16 CFR Sections 436.2(a)(1)(i) and (ii), the FTC identifies two types of franchises covered under the FTC Act: the package and product franchise and the business opportunity. As the name implies, the business opportunity described in 16 CFR Section 436.2(a)(1)(ii) bears the closer resemblance to the Act. Under 16 CFR Section 436.2(a), both types of franchises require an arrangement and, more importantly, "any continuing commercial relationship." For the business opportunity, 16 CFR Section 436.2(a)(1)(ii)(A) requires that a franchisee offer, sell, or distribute to a person other than the franchisor goods or services that are supplied by the franchisor, supplied by a third person with whom the franchisor requires the franchisee to do business, or supplied by an affiliate of the franchisor with whom the franchisee is advised by the franchisor to do business. In addition, for the business opportunity, 16 CFR Section 436.2(a)(1)(ii)(B) requires that the franchisor secure for the franchisee retail outlets or accounts, locations or sites for product sales displays (such as vending machines or rack displays), or the services of a person to secure these retail outlets, accounts, locations or sites. Also, 16 CFR Section 436.2(i) defines an "affiliated person" as a person that "directly or indirectly controls, or is controlled by, or is under common control with, a franchisor"; that "directly or indirectly owns, controls, or holds with power to vote, 10 percent or more of the outstanding voting securities of a franchisor"; or that "has, in common with a franchisor, one or more partners, officers, directors, trustees, branch managers, or other persons occupying similar status or performing similar functions." However, the definitions in 16 CFR Section 436.2 apply only to terms "used in this part," and 16 CFR Part 436 does not cover enforcement and liability issues--only disclosures and definitions, including coverage definitions. In fact, the sole purpose of the affiliate definition in 16 CFR Section 436.2 is to explain the disclosure requirements set forth in 16 CFR Sections 436.1(a)(7) (total funds required to be paid to franchisor or its affiliates), 436.1(a)(8) (recurring funds required to be paid to franchisor or its affiliates), 436.1(a)(9) (names of affiliates with which franchisee is required or advised to do business), 436.1(a)(11) (basis for calculating actual revenue to be received by franchisor or its affiliates), 436.1(a)(12) (financing conditions offered by franchisor or its affiliates), and 436.1(a)(14) (extent to which franchisee--or, if a corporate, franchisee's affiliates--to participate directly in the franchised operation). Nowhere in the Franchise Rule does the affiliate definition broaden the scope of the persons liable for violations of the federal law. On July 26, 2002, Respondent filed an Administrative Complaint against Petitioners and three allegedly related corporations and transmitted the matter to the Division of Administrative Hearings (DOAH) for a formal hearing. This proceeding was designated DOAH Case No. 02-3374. At the same time, Respondent imposed an Immediate Final Cease and Desist Order ordering that Petitioners and three allegedly related corporations discontinue the sale of business opportunities in Florida. (The First District Court of Appeal later stayed the enforcement of this order.) On October 11, 2002, Respondent served an Amended Administrative Complaint. The undersigned Administrative Law Judge completed the hearing in DOAH Case No. 02-3374 on November 25, 2002. As of the date of this final order, the parties have not yet filed their proposed recommended orders. In the Administrative Complaint, Amended Administrative Complaint, and Immediate Final Cease and Desist Order, Respondent relies on Rules 5J-10.001(3) and (4), but not Rules 5J-10.001(1) and (2). With respect to Rule 5J-10.001(3) ("Sales or Marketing Program Rule"), Respondent alleges that the business opportunities are covered by the Act because of the presence of a "sales program or marketing program." With respect to Rule 5J-10.001(4) ("Seller Rule"), Respondent alleges that Petitioners are liable as owners of one or more named corporations that are "sellers" who have violated the Act. With respect to Rules 5J-10.001(1) and (2), respectively, the regulatory definitions of an "initial fee or sum of money" or "material change" play no significant role in DOAH Case No. 02-3374. For this reason, Petitioners are not substantially affected by these rules, and the Conclusions of Law below determine that Petitioners lack standing to challenge Rules 5J-10.001(1) and (2), which are not further discussed in this final order.
The Issue Are the February 13, 2014, letters of Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (Division), requiring totalisator reports to "identify the Florida [permitholder] in reports as both host and guest when applicable," statements that amount to a rule, as defined in section 120.52(16), Florida Statutes (2013).1/
Findings Of Fact Florida permits and regulates betting on greyhound racing,2/ jai alai games,3/ quarter horse racing,4/ and harness racing.5/ The Division is responsible for administration of Florida's statutes and rules governing this betting. JKC and OPKC are separate, individually permitted facilities. Jacksonville Greyhound Racing owns and operates both the JKC and the OPKC. It is not, however, a party to this proceeding. The betting system is a pari-mutuel system. This "means a system of betting on races or games in which the winners divide the total amount bet, after deducting management expenses and taxes, in proportion to the sums they have wagered individually and with regard to the odds assigned to particular outcomes."6/ Each race, contest, or game is an "event."7/ The aggregate wagers called "contributions" to pari-mutuel pools are labeled "handle." § 550.002(13), Fla. Stat. An "intertrack wager" is "a particular form of pari-mutuel wagering in which wagers are accepted at a permitted, in-state track, fronton, or pari-mutuel facility on a race or game transmitted from and performed live at, or simulcast signal rebroadcast from another in-state pari-mutuel facility."8/ The JKC offers intertrack wagering at its permitted facility located in Jacksonville, Florida. It does not offer live events. The OPKC offers intertrack wagering and wagering on live events conducted at its permitted facility in Orange Park. The Racetracks are host tracks when they transmit live greyhound racing to other in-state and out-of-state facilities for off-track wagers.9/ They are guest tracks when wagers are made at their separate permitted locations on pari-mutuel races or games conducted at third-party facilities.10/ Florida statutes and the Division's rules require detailed reports from permitholders to the Division and other permitholders, including tables of wagers, pool data, and winnings.11/ These reports are generated by "totalisators." A totalisator is "the computer system used to accumulate wagers, record sales, calculate payoffs, and display wagering data on a display device that is located at a pari-mutuel facility."12/ The Division's Form DBPR-PMW-3570 requires host permitholders to report intertrack wagering "handle" by guest on a monthly basis. The host permitholders must sign and attest to the accuracy of the information submitted in the form. Also, Florida Administrative Code Rule 61D-7.023(2) requires generation of reports for each pool within each contest to be printed immediately after the official order of finish is declared. On March 9, 2012, the Division issued a letter to AmTote International ("AmTote"), a licensed totalisator company, and copied Jacksonville Greyhound Racing, notifying AmTote that Florida permitholders and the Division would need a breakdown of the handle of the Racetracks in order to pay appropriate purses, taxes, or other liabilities. It sent a similar letter to other totalisator companies. This was an effort to be accommodating and flexible. The letter concluded: "Please continue to provide handle information broken down by source, which is required by rule to all those in the state of Florida who have been users of that information in the past." The Racetracks rely upon AmTote to provide their totalisator services. Between March 2012 and March 2014, AmTote commingled the Racetracks' wagering data into a single "community," reporting all wagering as coming from the OPKC in order to reduce interface fees paid for the totalisator service. The guest track wagering data and reports exchanged with the other totalisator companies from the Racetracks show up on the AmTote settlement files as OPKC. The reports do not differentiate between wagers made at each of the Racetracks. Before March 1, 2012, AmTote segregated wagering data as coming from either JKC or OPKC. During the two years reported by the Racetracks as a single community, the Racetracks separately provided Florida host tracks a supplemental report breaking down the sources within the common community. The Racetracks provided these supplemental reports--via email or other means--to assist Florida host tracks with reporting requirements. They did not provide them simultaneously with the other reports and data. There were frequently errors that had to be identified and corrected. In an effort to be flexible and work with the Racetracks, the Division tolerated this method of reporting for two years. But it created problems for both the Division and for the other permitholders in the state. On February 13, 2014, the Division prepared and issued correspondence to AmTote, as well as the two other Florida totalisator companies, announcing that it intended to require proper reporting of the data required by rule, including reports of each permitholder. The letter states: This letter is to address the issue of proper and complete identification of each individual permitholder in totalisator reports. Rule 61D-7.024(1), Florida Administrative Code, requires all Florida pari-mutuel permitholders to use an electronically operated totalisator. Rule 61D-7.023(9), F.A.C. states in part, ". . . Each report shall include the permitholder's name . . .," and Rule 61D-7.024(4), F.A.C. states in part, ". . . reports shall be kept logically separate . . . ." Further, Rule 61D-7.023(1), F.A.C. states, "The totalisator licensee shall be responsible for the correctness of all tote produced mutual accounting reports. " In accordance with Florida Administrative Code, the division requires each permitholder to be properly and uniquely identified by totalisator reports provided to the division and to the permitholders. In addition, the totalisators are responsible for the correctness of all tote produced mutual accounting reports. Reports provided after February 28, 2014 must properly identify the Florida Permitholder in reports as both host and guest when applicable. Improper identification of permitholders will be considered a violation of the Florida Administrative Code. On March 11, 2014, AmTote began segregating wagering data from the Racetracks in compliance with the February 13, 2014, letter. The Racetracks will incur additional financial costs if AmTote ends the reporting of all wagering data as coming from OPKC for purposes of reports provided to other totalisator companies licensed in Florida and begins segregating their wagering data by individual permitholders. These costs stem from additional interface fees incurred outside the regulatory jurisdiction of Florida. The only evidence of these costs is the testimony of Matthew Kroetz, vice-president of Operations for Jacksonville Greyhound Racing. The testimony of Mr. Kroetz about the cost of the required change is confusing because he mingles assumed costs for a third closed track as if it were reactivated and operational. Bayard Raceways is that track. The Racetracks' parent company owns it. But the likelihood and timing of that reactivation is speculative. In addition, Bayard is not a party to this proceeding. Neither is the parent company. Mr. Kroetz' testimony establishes that the current cost for the two petitioners is a total of $1,500 per month. He projects that costs for reporting, as the letter requires, would be $4,500 per month for the two Petitioners and the track that may reopen in the future. That testimony is unrebutted and consistent with his testimony that the recurring fees for all three tracks would total over $50,000 annually. It is accepted as accurate. But the $3,000 increase from $1,500 to $4,500 per month is not due solely to the reporting requirement. It is also due to lumping in the non-active track. The evidence does not support including that track, the opening of which is speculative. The monthly fee for the two operating tracks is $1,500 divided by two or $750. Subtracting that, as the current cost for an existing track, from the $3,000 increase, lowers the estimated increase to $2,250. Dividing that by three gives the increased monthly cost per track, or $750 per track. This results in the projected annual cost increase for each of the Racetracks of $9,000. Although Mr. Kroetz testified in summary that the changes would result in an increased cost of "about a thousand dollars per month per facility," that testimony is not persuasive. It is inconsistent with the more detailed testimony relied upon above and would require the improbable and unsupported conclusion that the monthly increase would be more than the existing fees.
The Issue This is a license discipline case, in which the Petitioner seeks to take disciplinary action against a pharmacy licensee on the basis of alleged violations of Sections 465.014, 465.023(1)(c), and 465.025(3)(b), Florida Statutes.
Findings Of Fact The Respondent in this case, Nan-Dan, Inc., is, and has been at all times material to the Second Amended Administrative Complaint, a licensed community pharmacy, holding license number PH 0002807. The Respondent does business as "Buy-Rite Drugs." The Respondent's address is 103 South 3rd Street, Lantana, Florida 33462-2853. The Respondent Nan-Dan, Inc., does not do business as "Professional Rx Systems." There is another business entity known as "Professional Rx Systems," which was licensed in November of 1987, and which does business as "Nan-Dan Corp., Inc." Professional Rx Systems is a licensed community pharmacy, having been issued license number PH 0010094. Professional Rx Systems is a separate and distinct licensee and is a separate and distinct business entity from Nan- Dan, Inc., the Respondent in this case. On or about May 30, 1991, a pharmacy (probably Professional Rx Systems) prepared a billing statement regarding prescriptions for patient O.I. The entries on the billing statement include an entry for prescription number 6171144, described as "60 ROBAXIN-750 TABS," with a corresponding charge of $33.42. The second page of the May 30, 1991, billing statement includes an entry for prescription number 4173954, described as "30 DARVOCET N 100," with a corresponding charge of $20.02. Robaxin 750 and Darvocet N-100 are both brand name drugs. Dr. Faustino Gonzalez was and is the Medical Director of Gold Star Medical Management, a company which subcontracts with Humana Medical Plans to provide medical services to a group of patients. The facilities at which Gold Star Medical Management provides medical services probably includes Eason Nursing Home. In any event, in approximately May of 1991, Gold Star Medical Management did a quality review for Eason Nursing Home, in which it looked at the prescriptions for numerous patients. Of the cases that were reviewed, Dr. Gonzalez did not recall seeing anything but generic drugs which had been actually dispensed to the patients. However, Dr. Gonzalez does not recall whether the Robaxin 750 listed on the billing statement described above was one of the drugs he reviewed. Similarly, there is no evidence that the Darvocet N- 100 listed on the billing statement described above was one of the drugs reviewed by Gold Star Medical Management. Dr. Gonzalez did not recall whether he had ever actually seen patient O.I. and he did not know whether the drugs actually furnished to patient O.I. were brand name drugs or generic drugs. There is no evidence in the record of this case of the identity of the pharmacist or pharmacists who may have dispensed any drugs to patient O.I. There is no evidence in the record of this case as to the amount of the cost savings, if any, that accrued or might have accrued to the pharmacy if generic drugs had been dispensed in lieu of brand name drugs. There is no evidence in the record of this case as to how much was paid by or on behalf of the patient O.I. for the drugs itemized on the billing statement described above. For a brief period during July of 1987, the Respondent employed Harold B. Steinberg as a pharmacist. Mr. Steinberg presently has a hostile attitude towards the owner of the Respondent corporation. From approximately February of 1991 through May of 1991, Joyce Trapp was employed by the Respondent as a pharmacy technician.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Board of Pharmacy enter a Final Order in this case dismissing all of the violations alleged in the Second Amended Administrative Complaint. DONE AND ENTERED this 25th day of August, 1993, at Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of August, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO.92-4270 The following are my specific rulings on all proposed findings of fact submitted by all parties. Findings submitted by Petitioner: Paragraph 1: Rejected as contrary to the greater weight of the evidence. (See Petitioner's Exhibit 2.) Paragraph 2: Rejected as not supported by clear and convincing evidence. The only witness to testify on this matter only referred to Eason as one of the nuring homes "being taken care of by Mr. Erb's operation." Mr. Erb has two operations, only one of which is a respondent here. Further, the witness' lack of reliable information on the matter is revealed by his testimony that he ". . . never got to see the papers." As a final matter, the Hearing Officer has given very little credit to Mr. Steinberg's testimony. Mr. Steinberg's testimony was vague and imprecise and Mr. Steinberg appeared to have very hostile feelings towards the owner of the Respondent entity. Paragraph 3: Accepted. Paragraph 4: Rejected as not supported by persuasive clear and convincing evidence. Mr. Steinberg's testimony on this subject was vague and imprecise. It also has some unexplained conflicting details, among them the assertion at one point that Steinberg was the only pharmacist on the premises and the later assertion that Mr. Erb was present and that Mr. Erb was also a pharmacist. Further, the only evidence of the absence of supervision consists of hearsay evidence that would not be admissible over objection in a civil action, largely because the hearsay speakers are unidentified. And as a final matter, the activities vaguely described by Mr. Steinberg do not constitute "dispensing" within the statutory definition of the word "dispense" at Section 465.003(5), Florida Statutes (1986 Supp.). Paragraph 5: Rejected as irrelevant or as subordinate and unnecessary details. Paragraph 6: Accepted. Paragraph 7: Rejected as irrelevant because not charged in the Second Amended Administrative Complaint. Also rejected as not supported by persuasive clear and convincing evidence. Ms. Trapp appeared to have a very poor memory and her testimony tended to be vague and incomplete. Paragraph 8: Rejected for several reasons, including the fact that without a reference to the time and place of these proposed facts, there is no way to determine whether these proposed facts are relevant to the allegations of the Second Amended Administrative Complaint. Also rejected because there is no persuasive clear and convincing evidence of these proposed facts. Paragraphs 9, 10, 11 and 12: Accepted in substance. Paragraph 13: Rejected as either not supported by persuasive clear and convincing evidence or as being contrary to the greater weight of the evidence. In this regard it is noted that, although Petitioner's Ex. 3 is incomplete at the top, the visible portion of the business name at the top of the statement is "X SYSTEMS" and printed across the bottom of the statement is the business name "PROFESSIONAL RX SYSTEMS." Accordingly, it is more likely that the drugs billed to patient O.I. were billed by Professional Rx Systems (which is not a Respondent in this case) than that they were billed by the Respondent, Nan-Dan, Inc., d/b/a Buy Rite Drugs. Further, Dr. Gonzalez' testimony was to the effect that he was not sure whether his review included the drugs allegedly furnished to patient O.I. Paragraphs 14 and 15: Rejected as not supported by persuasive competent substantial evidence. As noted above, any dispensing involving the patient O.I. was probably done by someone other than the Respondent and, in any event, there is no persuasive competent substantial evidence as to what was actually dispensed. Paragraph 16: Accepted. Paragraph 17: Rejected as not supported by persuasive competent substantial evidence or as contrary to the greater weight of the evidence. (See discussion of Paragraphs 13, 14, and 15, above.) Paragraph 18: Accepted that the mentioned drug is a brand name "medicinal drug." The remainder of this paragraph is rejected as irrelevant, as well as not supported by persuasive competent substantial evidence. Paragraph 19: Rejected as not supported by persuasive competent substantial evidence. Findings submitted by Respondent: Paragraphs 1 and 2: Accepted. Paragraphs 3, 4, 5, and 6: Accepted in substance. Paragraph 7: Accepted. Paragraphs 8, 9, 10, 11, 12, and 13: Accepted in substance. Paragraphs 14 and 14: The last two paragraphs (both of which are numbered as 14) of the Respondent's proposed findings are, for the most part, rejected as constituting arguments as to why findings should not be made, rather than proposed findings of fact. (It is noted that the arguments are, essentially, correct and have been considered in deciding what findings should be made.) COPIES FURNISHED: Wayne H. Mitchell, Esquire Department of Business and Professional Regulation Northwood Centre, Suite 60 1940 North Monroe Street Tallahassee, Florida 32399-0792 William M. Furlow, Esquire Katz, Kutter, Haigler, Alderman, Davis & Marks, P.A. Post Office Box 1877 Tallahassee, Florida 32302-1877 Jack McRay, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 John Taylor, Executive Director Board of Pharmacy 1940 North Monroe Street Tallahassee, Florida 32399-0775
