Recommendation Based on the evidence presented at the hearing on September 22, 1989, the hearing officer recommends that the attorney fees awarded to Ganson be in the following amounts: Attorney fees for the Administrative Phase: $16,550.00 Attorney fees for the Appeal Phase: 23,550.00 Attorney fees for the Attorney Fee Phase: 8,150.00 TOTAL ATTORNEY FEE RECOMMENDATION $48,250.00 Based on the evidence presented at the hearing on September 22, 1989, the Hearing Officer recommends that the costs awarded to Ganson be in the following amounts: Administrative Phase $401.94 Appeal Phase 100.00 Attorney Fee Phase 0.00 TOTAL COSTS RECOMMENDATION $501.94 Respectfully submitted and entered this 12th day of October 1989, at Tallahassee, Leon County, Florida. MICHAEL M. PARRISH, 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 12th day of October, 1989. APPENDIX TO REPORT AND RECOMMENDATION IN GANSON v. STATE OF FLORIDA, DEPARTMENT OF ADMINISTRATION, DOAH CASE NO. 89-4818F, 1st DCA CASE NO. 88-01568 The following is a summary of the rulings at hearing on all of the exhibits offered by all parties at the evidentiary hearing on September 22, 1989. Exhibits offered by Petitioner Ganson: Petitioner Ex. 1: Received without objection. Petitioner Ex. 2: Received without objection. Petitioner Ex. 3: Received without objection. Petitioner Ex. 3A: Received without objection. Petitioner Ex. 4A: Received without objection. Petitioner Ex. 4B: Received without objection. Petitioner Ex. 5. Objection on grounds of relevancy. Objection overruled and exhibit received. [Objection on the grounds of hearsay might have resulted in a different ruling, but there was no hearsay objection.] Petitioner Ex. 6: Objection on grounds of relevancy. Objection overruled and exhibit received. [Objection on the grounds of hearsay might have resulted in a different ruling, but there was no hearsay objection.] Petitioner Ex. 7: Received without objection. Petitioner Ex. 8: Received without objection. Petitioner Ex. 9: Officially recognized without objection. Petitioner Ex. 10: Officially recognized without objection. Petitioner Ex. 11: Objection sustained. [Included in record as rejected exhibit.] Petitioner Ex. 12. Officially recognized without objection. Petitioner Ex. 13: Officially recognized without objection. Exhibits offered by Respondent Department: Department Ex. 1: Received without objection. Department Ex. 2: Received without objection. Department Ex. 3: Objection on grounds exhibit constitutes statement made in negotiations concerning a compromise. Objection sustained. [Included in record as rejected exhibit.] Department Ex. 4: Objection on grounds exhibit constitutes statement made in negotiations concerning a compromise. Objection sustained. [Included in record as rejected exhibit.] COPIES FURNISHED: Augustus D. Aikens, Esquire Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Kenneth D. Franz, Esquire 204-B South Monroe Street Tallahassee, Florida 32301 Raymond D. Rhodes, Clerk District Court of Appeal First District State of Florida 300 Martin Luther King Boulevard Tallahassee, Florida 32399-1850 ================================================================= DISTRICT COURT OPINION ================================================================= IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA TERRI J. GANSON, NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND Appellant, DISPOSITION THEREOF IF FILED. vs. CASE NO. 88-1568 DOAH CASE NO. 89-4818F STATE OF FLORIDA, DEPARTMENT OF ADMINISTRATION, OFFICE OF STATE EMPLOYEES' INSURANCE, Appellee. / Opinion filed December 22, 1989. Appeal from an order of the Department of Administration. Kenneth D. Kranz, of Eric B. Tilton, P.A., Tallahassee, for appellant. Augustus D. Aikens, Jr., General Counsel, Department of Administration, Tallahassee, for appellee. OPINION AND ORDER ON ATTORNEY FEE BARFIELD, J. By direction of this court the matter of attorney fees payable to appellant was submitted to Michael M. Parrish, Hearing Officer, for a recommendation on the amount of fee to be awarded. His Report and Recommendation follows. REPORT AND RECOMMENDATION By opinion filed July 7, 1989, reported at 14 FLW 1594, the District Court of Appeal, First District, reversed and remanded a final order of the Department of Administration. The opinion included the following disposition of Ganson's motion for costs and attorney fees: Appellant's motion for attorney fees under section 120.57(1)(b)10, Florida Statutes (1987), based upon her assertion that the agency action which precipitated the appeal was a gross abuse of the agency's discretion, is granted. The parties may, within twenty days of the date this decision becomes final, file with this court a stipulation regarding the amount of reasonable attorney fees to be awarded. In the event the amount of the attorney fees cannot be agreed upon by the parties within the time allotted, the Department shall promptly refer the matter to Michael Parrish, the Division of Administrative Hearings hearing officer, for an immediate evidentiary hearing to determine the amount of reasonable attorney fees. The hearing officer's recommendations thereon shall be filed with this court within sixty days after this opinion shall have become final, at which time this court will enter an appropriate order awarding attorney's fees. Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984); Johnston v. Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984). The parties were unable to reach a stipulation regarding the amount of reasonable attorney fees to be awarded. On August 28, 1989, the Department of Administration referred the matter to Michael Parrish, a hearing officer of the Division of Administrative Hearings, to conduct an evidentiary hearing to determine the amount of reasonable attorney fees. In order to accommodate scheduling difficulties of counsel, at the request of the parties the court extended the sixty-day period for the filing of the hearing officer's recommendations until October 13, 1989. (See Motion For Extension of Time filed September 7, 1989, and order granting same issued September -14, 1989.) An evidentiary hearing was originally scheduled for September 15, 1989. At the request of counsel for the Department of Administration, the evidentiary hearing was continued until September 22, 1989. At the hearing on September 22, 1989, Ganson presented the testimony of Kenneth D. Kranz, Esquire, the attorney who performed all of the services for which fees are claimed. Ganson also offered numerous exhibits including the affidavits of two local attorneys (Vernon T. Grizzard, Esquire, and Fishel Philip Blank, Esquire), both of which included expert opinions regarding the reasonableness of the attorney fees sought by Ganson. The Department also called Mr. Kranz as a witness and offered four exhibits. [Rulings on all exhibits offered by all parties are contained in the appendix to this report and recommendation.] The Department did not call any expert witnesses to oppose the opinions expressed by Messrs. Kranz, Grizzard, and Blank. At the conclusion of the hearing, the parties were allowed until September 29, 1989, within which to file memorandums of law, which have been carefully considered during the preparation of this report and recommendation. The statutory provision pursuant to which the court has granted an award of attorney fees, Section 120.57(1)(b)(10), Florida Statutes (1987), reads as follows, in pertinent part: When there is an appeal, the court in its discretion may award reasonable attorney's fees and costs to the prevailing party if the court finds that the appeal was frivolous, meritless, or an abuse of the appellate process or that the agency action which precipitated, the appeal was a gross abuse of the agency's discretion. Attorney Fees Ganson's Proposal For Amount Of Attorney's Fees And Costs Of Litigation suggests that there may be some disagreement between the parties as to whether the court's award of attorney fees encompasses all phases of this litigation, or is only an award of attorney fees for legal services on appeal. It would appear from the court's specific mention of Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984), and Johnston v. Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984), that the court envisioned an award of attorney fees "at the hearing level," as well as on appeal. And it also appears to be well settled that attorney fees may also be recoverable for the time spent litigating entitlement to attorney fees. See Bill Rivers Trailers, Inc. v. Miller, 489 So.2d 1139 (Fla. 1st DCA 1986); B & L Motors, Inc. v. Big Inotti, 427 So.2d 1070 (Fla. 2d DCA 1983). See also Albert Heisler v. Department of Professional Regulation, Construction Industry Licensing Board, 11 FALR 3309 (DOAH Final Order issued May 19, 1989). For purposes of this report and recommendation, I have assumed that the court's award of attorney fees encompassed all three phases of activity in this litigation; the "administrative phase" (from the commencement of the administrative claim until the Department's final order), the "appeal phase" (from the Department's final order until the appellate court opinion), and the "attorney fee phase" (from the appellate court opinion to the present). Accordingly, I have included in this report and recommendation discussion and recommendations as to the appropriate attorney fee award for all three phases of the litigation. Where it appears helpful to do so, issues regarding the three phases are discussed separately. The methodology to be followed in determining the amount of reasonable attorney fees to be awarded to a prevailing party is set forth in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985). There, the Florida Supreme Court decided to "adopt the federal lodestar approach for computing reasonable attorney fees" and, at pages 1150-51, set forth the following methodology: The first step in the lodestar process requires the court to determine the number of hours reasonably expended on the litigation. Florida courts have emphasized the importance of keeping accurate and current records of work done and time spent on a case, particularly when someone other than the client may pay the fee. To accurately assess the labor involved, the attorney fee applicant should present records detailing the amount of work performed. Counsel is expected, of course, to claim only those hours that he could properly bill to his client. Inadequate documentation may result in a reduction in the number of hours claimed, as will a claim for hours that the court finds to be excessive or unnecessary. The "novelty and difficulty of the question involved" should normally be reflected by the number of hours reasonably expended on the litigation. The second half of the equation, which encompasses many aspects of the representation, requires the court to determine a reasonable hourly rate, for the services of the prevailing party's attorney. In establishing this hourly rate, the court should assume the fee will be paid irrespective of the result, and take into account all of the Disciplinary Rule 2-106 factors except the "time and labor required," the "novelty and difficulty of the question involved," the "results obtained," and "[w]hether the fee is fixed or contingent." The party who seeks the fees carries the burden of establishing the prevailing "market rate," i.e., the rate charged in that community by lawyers of reasonably comparable skill, experience and reputation, for similar services. The number of hours reasonably expended, determined in the first step, multiplied by a reasonable hourly rate, determined in the second step, produces the lodestar, which is an objective basis for the award of attorney fees. Once the court arrives at the lodestar figure, it may add or subtract from the fee based upon a "contingency risk" factor and the "results obtained." The number of hours reasonably expended on the litigation. Ganson's attorney has submitted contemporaneously prepared, detailed time records evincing his labors at all three phases of this litigation. These records reflect that Ganson's counsel recorded 66.2 hours at the administrative phase, 94.2 hours at the appeal phase, and 32.6 hours at the attorney fee phase, for a grand total of 193 hours. To support the application for fees, Ganson introduced the affidavits of two members of the Florida Bar, both of whom practice administrative law in the Tallahassee area, and both of whom opined that the total number of hours claimed was reasonable and that the number of hours claimed for each of the three phases of the litigation was also reasonable. Although the Department argues that many of the hours claimed by Ganson's attorney are excessive, the Department did not offer any expert witness testimony to support its arguments. Part of the Department's argument in this regard is that the hours claimed by Ganson's attorney should be reduced because the attorney prepares his own legal documents, including pleadings, notices, motions, and briefs, by typing on a computer. Mr. Kranz explained in his testimony that such preparation is no different and no more time-consuming than preparation of documents by such means as oral dictation or handwriting, and the Department has not offered any evidence that Mr. Kranz, document preparation methods are more time-consuming than the methods of other attorneys. Also, without benefit of expert opinion or other evidence, the Department argues that the amount of time spent by Ganson's attorney on writing the brief in the appellate court should be reduced from the claimed 51 hours to an arbitrary figure of 26 hours. There is simply no basis in the record for such a reduction. Nor is there any record basis for the Department's contention that the hours spent by Ganson's attorney in preparation for oral argument should be arbitrarily reduced from the claimed 13 to a mere 4. The Department has raised challenges to several other details of the hours claimed by Ganson's attorney, but all of the challenges fail for want of expert opinion or other evidence to support them. Based on the evidence presented, all of the hours claimed by Ganson's attorney are reasonable. Accordingly, the first step in the lodestar calculation consists of a total of 193 hours broken down as follows: 66.2 hours at the administrative phases, 94.2 hours at the appeal phase, and 32.6 hours at the attorney fee phase. The reasonable hourly rate for the services of Ganson's attorney. The parties disagree on what constitutes a reasonable hourly rate for Ganson's attorney. Ganson contends that the rate should be $125 per hour, basing the contention largely on the opinions in the Blank and Grizzard affidavits to the effect that $125 is the "market rate" in the Tallahassee legal community for services of the nature provided in this case. The Department contends, based primarily on its notions about the experience level of Mr. Kranz and on what Mr. Kranz has charged other clients for legal work, that a reasonable hourly rate would be $75 for legal work at the administrative phase and $100 per hour for legal work at the appeal phase and thereafter. Ganson's contentions are supported by evidence; the Department's are not. Further, Ganson's contentions are consistent with the second step methodology of Rowe, supra, while the Department's are not. Rowe places on the party seeking attorney fees the burden of establishing "the rate charged in that community by lawyers of reasonably comparable skill, experience and reputation, for similar services." The evidence shows that rate to be $125 per hour. The calculation of the lodestar amount. The calculation of the lodestar amount under the Rowe methodology is normally a simple arithmetic task; the multiplication of the reasonable number of hours times the reasonable hourly rate. Here, the calculation is as follows: For the administrative phase, 66.2 hours x $125.00 $8,275.00; for the appeal phase, 94.2 hours x $125.00 $11,775.00; and for the attorney fee phase, 32.6 hours x $125.00 $4,075.00. Adding the three components together produces a lodestar of $24,125.00. But the Department argues, on the basis of cases such as Miami Children's Hospital v. Tamayo, 529 So.2d 667 (Fla. 1988), that the fee to be awarded in this case must be limited to the maximum fee that Ganson was obligated to pay to her attorney; an amount which the Department contends is only $500.00. Disposition of this issue requires a closer look at the nature of Ganson's fee arrangement and at a couple of other more analogous cases. The fee arrangement between Ganson and her attorney is described as follows in one of the Kranz affidavits (Petitioner's Exhibit 2, at pp. 8 and 9): Our agreement was that: 1) no fee would be owed if we were not successful in her claim; and 2) we would attempt to secure an award of fees against the Department, and in the event that we, were successful in that claim, attorney's fees would be whatever were awarded. Upon being advised at the outset that an eventual award of fees appeared very unlikely, the client initially insisted that she wanted to pay me something if we ultimately won on the merits, but did not prevail on the issue of fees. I perceived that it was very important to her not to consider herself to be taking advantage of me. I agreed and said that we would decide on a fee later if that situation arose. We never discussed an amount certain, but it was my intention that, if we ended up in this situation, I would charge her, if anything, a token amount only large enough to make her comfortable. Realistically, no significant fee (if any) would have been paid by the client; any fees bearing any rational relationship to the work required in this case could only have come from an award against the Department. In his testimony at the hearing, Mr. Kranz testified that if Ganson had won on the merits, but had not been awarded attorney fees against the Department, and if Ganson had insisted on paying a fee for legal services, he would probably have charged her about $500.00. But Mr. Kranz clarified that under those circumstances, the fee would have been more in the nature of what Ganson wanted to pay, rather than anything she would have been required to pay. In brief summary; although under certain speculative circumstances which might have, but never did, come about, Ganson might have wanted to pay a nominal fee to her attorney, her attorney had no intention of collecting a fee from any source other than an award of attorney fees against the Department. Specifically, Ganson's attorney did not have an agreement to share in any percentage of any recovery he might obtain for Ganson. Ganson's fee agreement with her attorney is unlike the agreement in Miami Children's Hospital, supra, and is quite similar to the fee agreements addressed in Quanstrom v. Standard Guaranty Insurance Company. 519 So.2d 1135 (Fla. 5th DCA 1988), and State Farm Fire and Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988). The fee agreement in Quanstrom, supra, "was to the effect that if the attorney ultimately prevailed..., the attorney would be entitled to a fee which would be the amount the court allowed as an attorney's fee under Section 627.428, Florida Statutes, rather than a percentage of the recovery." And in Palma, supra, the contingency fee agreement provided that "the amount of the fee agreed to under the contract was a fee to be awarded by the court." In both Quanstrom and Palma, the courts held that the usual Rowe factors should be used to calculate reasonable attorney fees, and in neither case was the fact that no fee was due from the client found to be a basis for limiting the fee. In view of the nature of the fee agreement in this case, and on the basis of Quanstrom and Palma, the usual Rowe factors should be applied here. Effect of "results obtained" on the lodestar amount. In the Rowe decision the court observed, at page 1151: The "results obtained" may provide an independent basis for reducing the fee when the party prevails on a claim or claims for relief, but is unsuccessful on other unrelated claims. When a party prevails on only a portion of the claims made in the litigation, the trial judge must evaluate the relationship between the successful and unsuccessful claims and determine whether the investigation and prosecution of the successful claims can be separated from the unsuccessful claims. In this case, Ganson was successful on her entire claim against the Department. Therefore, the "results obtained" component of the Rowe methodology does not provide a basis for reducing the fee. Application of the "contingency risk" factor to the lodestar amount. Ganson argues that a "contingency risk" factor of 2.5 should be applied to the lodestar amount. The Department argues, for a number of different reasons set out below, that no contingency risk factor should be applied in this case. At page 1151 of the Rowe decision, the court tells us the following about contingency risk factors: Based on our review of the decisions of other jurisdictions and commentaries on the subject, we conclude that in contingent fee cases, the lodestar figure calculated by the court is entitled to enhancement by an appropriate contingency risk multiplier in the range from 1.5 to 3. When the trial court determines that success was more likely than not at the outset, the multiplier should be 1.5; when the likelihood of success was approximately even at the outset, the multiplier should be 2; and, when success was unlikely at the time the case was initiated, the multiplier should be in the range of 2.5 and 3. (emphasis added) The use of the phrase "entitled to enhancement" supports a conclusion that the application of a multiplier is mandatory in contingent fee cases, and Florida appellate courts in two districts have so held. See State Farm Fire & Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988); Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988). But several decisions in the Third District Court of Appeal have concluded that the contingency risk multiplier is not mandatory. See Bankers Insurance Company v. Valmore Gonzalez, 14 FLW 906 (Fla. 3d DCA 1989); National Foundation Life Insurance Company v. Wellington, 526 So.2d 766 (Fla. 3d DCA 1988); Travelers Indemnity Company v. Sotolongo, 513 So.2d 1384 (Fla. 3d DCA (1987). Although the matter is not entirely free from doubt, unless and until the matter is further clarified by the Florida Supreme Court, it would appear that the better reasoned view, and the most widely accepted view, is that the contingency risk multiplier should be treated as mandatory in cases where the party seeking fees has entered into a contingent fee agreement. The Department argues that, even if mandatory, a contingency risk multiplier is inappropriate here because the fee agreement between Ganson and her attorney was never reduced to writing. In this regard, the Department relies on FIGA v. R.V.M.P. Corp., 681 F.Supp 806 (S.D. Fla. 1988), in which a federal court applying Florida law held: Because this contingency fee arrangement was never reduced to a writing, it is an unconscionable contract. The Rules Regulating the Florida Bar, in particular Rule 4-1.5(D)(1), (2)(1987), provide that every lawyer who accepts a contingency fee arrangement must reduce the arrangement to a writing signed by the client and a lawyer for the law firm representing the client. This obviously is not the case here. Because the proposed arrangement violates this rule of professional responsibility, the contingency fee agreement here is unconscionable and, therefore, void. See Citizens Bank & Trust Co. v. Mabry, 102 Fla. 1084, 136 So. 714 (1931). Because the contingency fee arrangement here is unconscionable, the court will not apply a contingency risk factor. See Aperm of Fla., Inc. v. Trans-Coastal Management Co., 505 So.2d 459 (Fla. 4th DCA 1987). Because of the views quoted above, the court in FIGA declined to apply a contingency risk factor, but did, on a quantum merit theory, award a substantial attorney fee. For several reasons, FIGA does not appear to be controlling here. First, the conclusion in FIGA is not based on Florida case law, nor does there appear to be any Florida appellate court decision which has followed FIGA. Second, the facts in FIGA are different from the facts in this case. FIGA involved a contingency fee agreement in which the attorney was to receive one- third of the amount recovered and, if no amount was recovered, the client would pay the costs, but not the fees, of the litigation. As discussed above, the contingency fee agreement in this case does not contemplate the attorney taking a share of the client's recovery or otherwise receiving a fee from the client. Rather, as in Quanstrom and Palma, supra, the only source from which the attorney seeks a fee is the opposing party. Because of these differences, FIGA is inapplicable to the instant matter. The Department also argues that on the basis of Pennsylvania v. Delaware Valley Citizens, Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987), the use of the contingent fee multiplier should be limited or omitted. In response to an identical argument, the court in Aetna Life Insurance Company v. Casalotti, 544 So.2d 242 (Fla. 3d DCA 1989), held: We are unable to entertain that suggestion, for the Florida Supreme Court in Rowe expressly authorized multipliers and prescribed the permissible range. The same result should obtain here. See also, State Farm Fire & Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988), and Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988). (Contingent fee multipliers are mandatory.) The Department argues that no multiplier should be used because it would result in an attorney fee many times larger than Ganson's recovery and would be a fee with no reasonable relationship to the size of the recovery. In answer to a similar argument, the court in Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988) , held: As to the argument that the contingency risk multiplier may, in the trial court's opinion, result in an unreasonably large fee in a given case (such as when, as here, it is compared only to the amount in controversy), the answer is that the factors other than the contingency risk factor, such as the hours expended and the routinely charged fee rate, are equally implicated. If any formula considers only relevant factors, and all of them, and correctly weighs those factors, the result necessarily will be correct. If the result is unsatisfactory to those having the responsibility and authority in the matter, then they should change the formula by reassessing the factors to be considered and the weight to be given each. We who are bound to follow the authority of others should not omit factors or juggle the weight given a factor, beyond the perimeters given the exercise of discretion, in order to reach a preferred result. And it should also be noted that in State Farm Fire & Casualty Co. v. Palmer, 524 So.2d 1035 (Fla. 4th DCA 1988), an attorney fee in the amount of $253,500.00, calculated pursuant to the Rowe factors, was approved on appeal even though the amount recovered by the plaintiff was only $600.00. (The Palma court noted that the litigation in that case had become protracted due to "stalwart defense" and "militant resistance;" characteristics which are to some extent shared by the litigation in this case.) On the basis of the foregoing, the mere size of the fee, if properly calculated pursuant to the Rowe methodology, is not a basis for reduction of the fee. For all of the reasons set forth above, it is concluded that a contingency risk multiplier should be applied in this case. What remains to be done is to select the appropriate multiplier. Although Ganson argues otherwise, upon consideration of the evidence, it appears that at the outset the likelihood of success in this case was approximately even. To borrow from Appalachian, Inc. Ackmann, 507 So.2d 150 (Fla. 2d DCA 1987), in which a multiplier of 2 was approved, at the outset the outcome of this case "was tentative and incapable of a comforting prediction of success. Under such circumstances, Rowe requires a multiplier of 2. Application of that multiplier yields the following results: For the administrative phase, $8,275.00 x 2 $16,550.00; for the appeal phase, $11,775.00 x 2 $23,550.00; and for the attorney fee phase, $4,075.00 x 2 $8,105.00. The total for all three phases of the litigation is calculated as $16,550.00 + $23,550.00 + $8,150.00 - $48,250.00. On the basis of all of the foregoing, a reasonable attorney fee pursuant to the Rowe methodology totals $48,250.00 Costs Ganson's motion before the appellate court was titled "Motion For Attorney's Fees," but the opening sentence of the motion requests an award of "attorney's fees and costs." (emphasis added) The motion also concludes with a request for an award of "reasonable attorney's fees and costs." (emphasis supplied) The court's opinion in this case grants Ganson's "motion for attorney fees," but never specifically awards costs. Similarly, the court's opinion does not specifically direct the hearing officer to make any recommendation regarding costs. Nevertheless, the court's specific mention of Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984), and Johnston v. Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984), leaves open the possibility that it was the court's intention to award costs as well as fees to Ganson. Because of that possibility, I include the following discussion of Ganson's costs. The costs which Ganson seeks to recover are itemized in the three Kranz affidavits designated as Petitioner's Exhibits 2, 3, and 3A. Broken out into the three phases of this litigation, the costs claimed are summarized as follows: Administrative Phase Expert witness fee (Dr. Whitley) 100.00 Expert Witness fee (Dr. Munasifi) 125.00 Deposition transcript (Dr. Munasifi) 151.94 Copying charge for medical records 25.00 Miscellaneous copying charges 89.00 Miscellaneous postage charges 3.41 Sales tax on certain expenses 13.16 Total claimed for this phase 507.51 Appeal Phase District Court of Appeal filing fee 100.00 Copying charges--Initial Brief 57.46 Copy/Binding Charge -Reply Brief 19.44 Miscellaneous copying charges 39.15 Miscellaneous postage charges 5.85 Total claimed for this phase 221.90 Attorney Fee Phase Photocopying charge--Proposal For Fees Exhibits--Tallahassee Copy & Printing & 84.80 Total claimed for this phase 84.80 The necessity or reasonableness of the costs are not addressed in the affidavits of Blank and Grizzard. The Kranz affidavits itemize the costs, but contain no opinion concerning the reasonableness of the expert witness fees claimed nor any opinion that the other costs claimed were reasonably and necessarily incurred in the prosecution of Ganson's case. The evidence does show that the client has voluntarily paid all but the last few dollars of the costs claimed, which is some evidence of the reasonableness of the costs. Further, facial examination of the costs claimed reveals nothing out of the ordinary. With regard to the expert witness fees paid to Dr. Whitley and Dr. Munasifi, the necessity of such testimony can hardly be doubted in a case in which the central issue concerned the nature of Ganson's medical condition before and after her employment with the state. Finally, the Department of Administration has not argued that any of the costs claimed are unnecessary or unreasonable. The Department's failure to object notwithstanding, the copying charges (with the exception of the charges for copies of medical records) and the postage charges are not the types of costs that are normally assessed against an opposing party. See Statewide Uniform Guideline For Taxation Of Costs In Civil Actions. Accordingly, the miscellaneous copying charges ($89.00) and miscellaneous postage charges ($3.14) should be deducted from the costs for the Administrative Phase; the initial brief ($57.46), the reply brief ($19.44), and miscellaneous ($39.15) copying charges and the miscellaneous postage charges ($5.85) should be deducted from the costs for the Appeal Phase; and the photocopying charge ($84.80) should be deducted from the costs for the Attorney Fee Phase. With these reductions, the costs Ganson should recover, if it is the intention of the court to award costs, are as follows: Administrative Phase $401.94 Appeal Phase 100.00 Attorney Fee Phase 0.00 Total allowable costs $501.94
Findings Of Fact Petitioner is a small business party within the meaning of Subsection 57.111(3)(d), Florida Statutes (1987). Petitioner was required to relocate its business in 1986 as the result of a public taking of the property where the business was situated. Petitioner sought relocation benefits from Respondent's relocation assistance program. The program is operated by Respondent in accordance with authority contained in Sections 339.09(4) and 421.55(3), Florida Statutes. Various requests by Petitioner for payment of relocation benefits in accordance with the Uniform Relocation Act were denied by Respondent. In DOAH Case No. 88-0778T, Petitioner sought a formal administrative hearing pursuant to Section 120.57, Florida Statutes concerning Respondent's denial of the requested reimbursements. At the final hearing in DOAH Case No. 88-0778T, evidence was presented regarding Respondent's denial of benefit payments of $1,324 for advertisement expense in a telephone directory; $1,370 for installation of an exhaust fan at the new facility; $2,405 for fees for consultative services from an attorney; $1,200 for the alleged loss of employee time spent in conferences with Respondent personnel regarding relocation; $1,500 for expense of a second search for a suitable relocation site; and $1,035 for consultation fees associated with design of a product display area in the new facility. With the exception of Respondent's denial of the claim for $1,035 for consultant fees, Respondent's denials were found to be appropriate in DOAH Case No. 88-0778T. Such a finding of appropriateness also equates to a finding of substantial justification for denial for purposes of this proceeding. A recommended order was issued in DOAH Case No. 88-0778T, finding denials of all requested reimbursements to be appropriate with the exception of Respondent's denial of the request for $1,035 for consultation fees associated with design of a product display area. Payment of this latter amount was recommended as constituting an authorized reimbursement under legal provisions governing the relocation program. On December 26, 1988, Respondent entered a final order awarding Petitioner $1,035 for this consultation fee expense. Other claims for reimbursement by Petitioner in the amount of $10,414.17 were paid by Respondent, prior to the final hearing in DOAH Case No. 88-0778T, in the course of proceedings in the Circuit Court for Broward County, Florida. That court adopted a settlement stipulation of the parties regarding those claims which expressly reserved attorney fees in regard to those issues for later determination by that court. Petitioner presented no evidence with regard to those claims at the final hearing in DOAH Case No. 88-0778T. At the final hearing in the present proceeding, Respondent offered testimony that confusion concerning payment of those claims resulted from the death of the attorney handling the case for Respondent. Respondent initially denied the claims in the absence of the deceased attorney's records in the mistaken belief that the matter had been resolved earlier in the circuit court condemnation proceeding. Upon learning such was not the case, payment of the claim and effectuation of settlement of the issue was made in the circuit court case and occurred shortly after Petitioner's request for hearing in DOAH Case No. 88- 0778T. The circumstances surrounding the initial denial of payment of this benefit by Respondent substantially justify Respondent's denial and constitute a sufficient basis to deny Petitioner's recovery of fees or costs related to this payment recovery in this administrative proceeding. The proof submitted at the final hearing in this cause establishes that Petitioner's counsel expended between 55 and 70 hours of time in his representation of Petitioner's attempts to recover all denied benefits in DOAH Case No. 88-0778T. Counsel's average hourly rate was $125. However, the fee arrangement between client and counsel was a "modified or combined contingency fee" permitting any recoverable attorney fees to serve as the primary source of payment of counsel's fees. Petitioner was not bound by the agreement to pay counsel's fees beyond amounts determined to be appropriate by the hearing officer in the administrative case or the judge in the circuit court matter. To that extent, attorney fees in this cause that have been incurred by Petitioner may be considered "contingent." Documentation submitted by Petitioner includes an affidavit from its president which simply recites the status of Petitioner as a small business party, but sets forth no specifics of a fee arrangement with counsel. The affidavit of Petitioner's counsel establishes a minimum number of hours (55) and dates of work performed by counsel, and states that his hourly rate is $125. Calculating the number of hours by the hourly rate, one reaches a total fee amount of $6,875. Counsel's affidavit does not address which of the various benefits sought to be recovered was the subject of any particular expenditure of time. Although the relocation benefits sought to be recovered were separable subjects, allocation of time expended with regard to a particular benefit recovery effort is not established by the evidence. Testimony of William Robert Leonard was also offered by Petitioner to support the reasonableness of a legal fee amount of $10,000 for Petitioner's counsel. While Mr. Leonard opined that he normally would not support a $10,000 attorney fee as reasonable for a $1,000 recovery, the circumstances of this case were different because "[y]ou are arguing with the state." Petitioner attempted to establish through further testimony of Leonard that the enormity of the resources of the government of the State of Florida justify such a fee because cost considerations prevent private litigants from engaging in costly and protracted proceedings in matters of limited recovery. Leonard did not address allocation of the requested attorney fee among the various benefits for which recovery was sought, choosing instead to premise his opinion regarding reasonableness of a $10,000 attorney fee upon "the amount of time counsel was required to respond to a state agency." Leonard's testimony is not credited with regard to reasonableness of a $10,000 fee for recovery of the $1,035 relocation benefit due to his professed lack of knowledge of certain administrative law procedures; the failure of his testimony to address the nature or difficulty of tasks performed by counsel for Petitioner; and his concurrence with the assertion that his opinion of such a fee was based in part upon a "gut reaction." No evidence was submitted to support the reasonableness of the cost amount of $250 requested as a witness fee for Mr. Leonard's participation in the proceeding. Petitioner seeks recovery of $448.50 in costs associated with the transcript of final hearing had in DOAH Case No. 88-0778T and a $480 expert witness fee in conjunction with testimony of E. Scott Golden, an attorney, at that final hearing. The testimony of Mr. Golden in that proceeding related to his provision of relocation site advice to Petitioner and drafting of legal documents for Petitioner. Petitioner did not prevail with regard to recovery of relocation benefits related to the expense of Mr. Golden's services.
The Issue The amount of attorneys fees and costs, if any, that should be awarded Petitioners pursuant to the Final Order issued on March 4, 1997, in Division of Administrative Hearings Case No. 96-1418RU, et al., finding Petitioners entitled to attorneys fees and costs pursuant to the provisions of Section 120.595, Florida Statutes (Supp. 1996) and retaining jurisdiction to determine the "reasonable amounts" of such fees and costs
Findings Of Fact By Joint Prehearing Stipulation and without waiving objections to applicability of Section 120.595, Florida Statutes, the Agency For Health Care Administration (AHCA), has stipulated with all parties as to the "reasonable amounts" of requested fees and costs to be awarded Petitioners in the event that such an award is determined to be applicable. All parties have also stipulated to the lack of liability of Intervenor Citizens of the State of Florida for payment of any award of fees and costs in this proceeding. That stipulation in its entirety is incorporated by this reference within these findings of fact and attached to this Final Order as Exhibit "A." The amendments to Chapter 120, Florida Statutes, were adopted as part of a major rewrite of the APA. See, Chapter 96-159, Laws of Florida. The amendments were effective October 1, 1996, and were effective prior to the hearing related to the rule challenge cases. All parties requesting attorneys’ fees and costs rely upon Section 120.595(4), Florida Statutes (Supp. 1996) as authority for an award of fees. Provisions of Section 120.595(4), Florida Statutes (Supp. 1996), are applicable to the facts of this case. See, Final Order issued on March 4, 1997, in Division of Administrative Hearings Case No. 96-1418RU, et al.
The Issue The issue for determination is whether Intervenors are entitled to reasonable attorney fees and costs pursuant to Section 120.595, Florida Statutes (2003).1
Findings Of Fact Petitioner is an insurer and carrier within the meaning of Subsections 440.02(4) and 440.02(38), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(w).2 Petitioner is licensed in the state as a workers' compensation insurance carrier (carrier).3 Respondent is a state agency within the meaning of Subsection 440.02(3), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(b). In relevant part, Respondent is responsible for resolving reimbursement disputes between a carrier and a health care provider. Intervenors are health care providers within the meaning of Subsection 440.13(1)(h), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(u). Each Intervenor is a health care facility within the meaning of Subsection 440.13(1)(g), Florida Statutes (2005). Intervenors seek an award of attorney fees and costs against Petitioner pursuant to Sections 57.105 and 120.595, Florida Statutes (2003). The proceeding involving Section 57.105, Florida Statutes (2003), is the subject of a separate Final Order entered on the same date as this Recommended Order. The scope of this Recommended Order is limited to Section 120.595, Florida Statutes (2003). Intervenors allege that Petitioner is the "non- prevailing adverse party" in an underlying proceeding and participated in the underlying proceeding for an "improper purpose" as the quoted terms are defined, respectively, in Subsections 120.595(1)(e)3. and 120.595(1)(e)1., Florida Statutes (2003). The underlying proceeding involves eight consolidated Petitions for Administrative Hearing. Petitioner filed each Petition for Administrative Hearing after Respondent determined Petitioner had improperly discounted the amount of reimbursement Petitioner paid for hospital services that Intervenors provided to eight patients from March 13, 2004, through February 11, 2005. From April 13 through May 23, 2005, Respondent issued separate orders directing Petitioner to pay the disputed amounts pursuant to Subsection 440.13(7), Florida Statutes (2005). From June 1 through June 21, 2005, Petitioner filed eight separate Petitions for Administrative Hearing. The eight petitions were subsequently consolidated into one underlying proceeding. Petitioner is the non-prevailing adverse party in the underlying proceeding. On December 8, 2005, Petitioner filed a Notice of Voluntary Dismissal in the underlying proceeding. On December 9, 2005, Intervenors filed their motion for attorney fees based on Section 120.595, Florida Statutes (2003). The formal hearing in the underlying proceeding was set for January 18, 2006. The ALJ amended the issue for the formal hearing to exclude the original reimbursement dispute and to limit the scope of the formal hearing to the fee dispute. The ALJ did so to avoid delay in the resolution of the proceeding. The fee dispute at issue in this proceeding includes only six of the original eight reimbursement disputes because Intervenors were not the medical providers in two of the original eight disputes.4 In the six reimbursement disputes involving Intervenors, Respondent ordered Petitioner to pay additional reimbursements in the aggregate amount of $54,178.52. Approximately $51,489.27 of the $54,178.52 in additional reimbursement involved inpatient hospital services provided to one patient.5 The remaining $2,689.25 in additional reimbursement involved outpatient hospital services in the emergency room.6 Subsection 440.13(12), Florida Statutes (2005), mandates that a three-member panel must determine statewide schedules for reimbursement allowances for inpatient hospital care. The statute requires hospital outpatient care to be reimbursed at 75 percent of "usual and customary" charges with certain exceptions not relevant to this proceeding. Notwithstanding the statutory mandate to schedule reimbursement rates for hospital inpatient services, the inpatient services at issue in the underlying proceeding were apparently unscheduled inpatient services. By letter dated April 13, 2005, Respondent ordered Petitioner to pay Intervenor, Holmes Regional Medical Center, Inc. (Holmes), an additional reimbursement in the amount of $51,489.27. The total reimbursement to Holmes was 75 percent of the charges that Holmes submitted to Petitioner for reimbursement.7 Respondent interprets Subsection 440.13(12), Florida Statutes (2005), to authorize reimbursement of both unscheduled inpatient hospital services and outpatient hospital services at the same rate. There is no dispute that Respondent reimburses unscheduled inpatient hospital services and outpatient hospital services at 75 percent of the "usual and customary" charges. The dispute in the underlying proceeding was over the meaning of the phrase "usual and customary" charges. Petitioner challenged the interpretation asserted by Respondent and Intervenors. Respondent and Intervenors contended that the quoted statutory phrase means Intervenors' usual and customary charges evidenced in a proprietary document identified in the record as the "charge master." Each Intervenor maintains its own charge master, and the information in each charge master is proprietary and confidential to each Intervenor. Petitioner asserted that the statutory phrase "usual and customary" charges means the usual and customary charges imposed by other hospitals in the community in which Intervenors are located. Petitioner maintains a data base that contains information sufficient to determine the usual and customary charges in each community. Petitioner did not participate in the underlying proceeding for an improper purpose within the meaning of Subsection 120.595(1)(e)1., Florida Statutes (2003). Rather, Petitioner presented a good faith claim or defense to modify or reverse the then-existing interpretation of Subsection 440.13(12), Florida Statutes (2005). Petitioner had a reasonable expectation of success. The statutory phrase "usual and customary" charges is not defined by statute. Nor has the phrase been judicially defined. Respondent bases its interpretation of the disputed phrase on two agency final orders and relevant language in the Florida Workers' Compensation Reimbursement Manual for Hospitals (2004 Second Edition) (the Manual). The Manual is developed by the Florida Department of Financial Services (DFS).8 The Manual interprets the quoted statutory phrase to mean the "hospital's charges." However, after the effective date of the Manual in 2004, DFS developed a proposed change to the Manual that, in relevant part, interprets "usual and customary" charges to mean the lesser of the charges billed by the hospital or the median charge of hospitals located within the same Medicare geographic locality.9 The trier of fact does not consider the new interpretation of the disputed statutory phrase as evidence relevant to a disputed issue of fact. As Respondent determined in an Order to Show Cause issued on February 16, 2006, and attached to Intervenors' PRO, "what constitutes 'usual and customary' charges is a question of law, not fact." The ALJ considers the new interpretation proposed by DFS for the purpose of determining the reasonableness of the interpretation asserted by Petitioner in the underlying proceeding. The ALJ also considers the new DFS interpretation to determine whether the interpretation asserted by Petitioner presented a justiciable issue of law. Intervenors assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to initially explain its reduced reimbursement to Intervenors with one of the codes authorized in Florida Administrative Code Rule 69L-7.602(5)(n) as an explanation of bill review (EOBR). None of the EOBR codes, however, contemplates a new interpretation of the statutory phrase "usual and customary" charges. Intervenors further assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to respond to discovery. However, responses to discovery would not have further elucidated Petitioner's rule-challenge. Petitioner stated eight times in each Petition for Administrative Hearing that Florida Administrative Code Rule 69L-7.501, the DFS rule incorporating the Manual by reference: [S]hould be read to allow recovery of 75% of the usual and customary fee prevailing in the community, and not 75% of whatever fee an individual provider elects to charge. Respondent and Intervenors were fully aware of the absence of statutory and judicial authority to resolve the issue. Petitioner did raise at least one factual issue in each Petition for Administrative Hearing. Petitioner alleged that Respondent's decision letters ordering Petitioner to pay additional reimbursement amounts had no legal effect because Respondent acted before each provider requested and received the carrier's reconsidered reimbursement decision. The absence of a formal hearing in the underlying proceeding foreclosed an evidential basis for a determination of whether each provider in fact requested and received a reconsidered reimbursement decision before the date Respondent ordered Petitioner to pay additional reimbursements. In this fee dispute, Petitioner presented some evidence to support the factual allegation and thereby established the presence of a justiciable issue of fact. It is not necessary for Petitioner to present enough evidence to show that Petitioner would have prevailed on that factual issue in the underlying proceeding. If the letters of determination issued by Respondent were without legal effect, Petitioner would not have waived its objections to further reimbursement within the meaning of Subsection 440.13(7)(b), Florida Statutes (2005). A determination that Petitioner did, or did not, submit the required information is unnecessary in this proceeding. During the formal hearing in this proceeding, Petitioner called an expert employed by a company identified in the record as Qmedtrix. The testimony showed a factual basis for the initial reimbursement paid by Petitioner. It is not necessary for Petitioner to show that this evidence was sufficient to prevail on the merits in the underlying case. The evidence is sufficient to establish justiciable issues of fact in the underlying case. In this proceeding, Petitioner submitted some evidence of justiciable issues of fact in the underlying proceeding. Petitioner need not submit enough evidence in this fee dispute to show Petitioner would have prevailed on these factual issues in the underlying proceeding. Intervenors are not entitled to a presumption that Petitioner participated in this proceeding for an improper purpose in accordance with Subsection 120.595(1)(c), Florida Statutes (2003). Although Petitioner was the non-prevailing party in two previous administrative hearings involving the same legal issue, the two proceedings were not against the same prevailing hospital provider and did not involve the same "project" as required in the relevant statute. Intervenors seek attorney fees in the amount of $36,960 and costs in the amount of $2,335.37 through the date that Petitioner voluntarily dismissed the underlying proceeding. Absent a finding that Petitioner participated in the underlying proceeding for an improper purpose, it is unnecessary to address the amount and reasonableness of the attorney fees and costs sought by Intervenors. If it were determined that Petitioner participated in the underlying proceeding for an improper purpose, the trier of fact cannot make a finding that the proposed attorney fees and costs are reasonable. Such a finding is not supported by competent and substantial evidence. The total attorney fees and costs billed in the underlying proceeding were charged by six or seven attorneys or paralegals employed by the billing law firm. However, the fees and costs at issue in this proceeding exclude any time and costs charged by paralegals and include only a portion of the total fees and costs charged by the attorneys. The total amount of time billed and costs incurred in the underlying proceeding is evidenced in business records identified in the record as Intervenors' Exhibits 20-23. However, those exhibits do not evidence the reasonableness of the fees and costs billed by the attorneys.10 Either the testimony of the billing attorneys or the actual time slips may have been sufficient to support a finding that the attorney fees and costs are reasonable. However, Intervenors pretermitted both means of proof. Intervenors asserted that the time slips contain information protected by the attorney-client privilege. However, Intervenors neither submitted redacted time slips nor offered the actual time slips for in-camera review. Nor did Intervenors allow the attorneys to testify concerning unprivileged matters. The absence of both the testimony of the attorneys and the time slips is fatal. The fact-finder has insufficient evidence to assess the reasonableness of the fees and costs, based on the novelty and difficulty of the questions involved. Intervenors' expert opined that the attorney fees and costs are reasonable. The expert based her opinion, in relevant part, on her review of the actual time slips maintained by each attorney. However, Petitioner was unable to review the time slips before cross-examining the expert. In lieu of the actual time slips, Intervenors submitted a summary of the nature of the time spent by each attorney. The summary is identified in the record as Intervenors' Exhibit 2. Petitioner objected to Intervenors' Exhibit 2, in relevant part, on the ground that it is hearsay. The ALJ reserved ruling on the objection and invited each side to brief the issue in its respective PRO. The paucity of relevant citations in the PROs demonstrates that neither side vigorously embraced the ALJ's invitation. Intervenors' Exhibit 2 is hearsay within the meaning of Subsection 90.801(1)(c), Florida Statutes (2005).11 The author of Intervenors' Exhibit 2 summarized the unsworn statements of attorneys from their time slips and submitted those statements to prove the truth of the assertion that the time billed was reasonable. Intervenors made neither the attorneys nor their time slips available for cross examination.12 Even if the summary were admissible, the summary and the testimony of its author are insufficient to show the attorney fees and costs were reasonable. The insufficiency of the summary emerged during cross-examination of its author. The author is the lone attorney from the billing law firm who testified at the hearing. Q. What other information did you look at to decide what time to actually bill . . .? A. The information I used was the information from the actual bill. Q. If we look at the first entry . . . were you the person that conducted that telephone conference? A. No, I wasn't. Transcript (TR) at 510-511. Q. In other words, [the entries] go with the date as opposed to the event [such as a motion to relinquish]? A. That's correct. Q. So if I wanted to know how much time it took you to actually work on the motion to relinquish, I would have to look at each entry and add up all the hours to find out how long it took you to do one motion. Is that how I would do that? A. It would be difficult to isolate that information from this record, we bill and explain in the narrative what work is performed each day, and unless that was the single thing worked on for several days, there would be no way to isolate the time, because we don't bill sort of by motion or topic. . . . Q. Well, if I'm trying to decide whether the time billed is reasonable, wouldn't I need to know how much time was spent on each task? A. I'm not sure how you would want to approach that. . . . Looking at this document, it does not give you that detail. It doesn't provide that breakout of information. Q. Is there a way for us to know who you spoke with on those entries? A. The entry . . . doesn't specify who participated in the conference. I don't recall what the conference entailed . . . . And many of these entries are from months ago, and I can't specifically recall on that date if I was involved in a conference and who else might have been there. . . . And so my guess is where the conference is listed on a day when lots of activity was performed on behalf of the client, most of it in this case was research. TR at 516-521.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order denying the motion for attorney fees and costs. DONE AND ENTERED this 27th day of April, 2006, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 2006.
The Issue The issue presented is whether Petitioners are entitled to an award of attorney's fees and costs pursuant to the Florida Equal Access to Justice Act.
Findings Of Fact The underlying proceeding, DOAH Case No. 94-3605, involved Petitioners' challenge to notices of final assessments for fuel taxes. The assessments had been issued by the Department against Nana's Petroleum, Inc.; Emilio Perez d/b/a Nana's Stations; Emilio Perez as Vice President of Nana's Petroleum, Inc.; Edilia Perez as Secretary of Nana's Petroleum, Inc.; Sun Petroleum, Inc.; and Emilio Perez as President and Manager of Sun Petroleum, Inc. At the commencement of the final hearing, Sun Petroleum, Inc., and Emilio Perez as President and Manager of Sun Petroleum, Inc., withdrew their challenge to the assessments against them, and those assessments became final. Five assessments thereafter remained for determination in the underlying proceeding: one against Edilia Perez as secretary of Nana's; one against Emilio Perez as vice president of Nana's; one against Emilio Perez d/b/a Nana's Stations; and two against Nana's Petroleum, Inc. In the Recommended Order and in the Final Order entered in the underlying proceeding, only a portion of one of the assessments against Nana's Petroleum, Inc., was upheld. The Department was substantially justified in issuing its assessments against Petitioners and in initiating this proceeding. Further, an award of attorney's fees and costs for the underlying proceeding would be unjust.
