Findings Of Fact The RFP Respondent issued a request for proposals in October, 1988, entitled "Turnpike Bridge Replacement Design/Build Project, State Road 91 (Florida's Turnpike)" (the "RFP"). The RFP solicited technical and price proposals for state Project Nos. 97890-3325 and 97930-3324. The State Projects involved the design and construction of temporary detours and permanent replacement bridges over canal crossings at several locations on Florida's Turnpike. The RFP required bridges to be constructed as permanent structures at each of the project sites. Respondent advised interested parties at the scope of services meeting on October 18, 1988, that detour bridges would also be required at all of the project sites. Local permitting was a key factor in the scope of services required for the projects contemplated in the RFP. Respondent advised interested parties, including Petitioner and Intervenor, at the scope of services meeting that Respondent had done no coordinating with local agencies and that local permitting was the responsibility of each party responding to the RFP ("offeror"). The local agency with responsibility for issuing permits for a majority of the canal crossings in the RFP was the Lake Worth Drainage District ("Lake Worth"). Both Petitioner and Intervenor inquired of Lake Worth while preparing their respective technical proposals to confirm Respondent's representation that bridges would be required for both detours and permanent structures at all project sites. Lake Worth advised Petitioner that vertical clearances and hydraulics required bridges for both detours and permanent structures at all canal crossings subject to Lake Worth's jurisdiction. However, Lake Worth advised Intervenor, on or about October 26, 1988, that culverts would be acceptable for detours at three of the project sites. Kenneth Bryant was the President of DSA Group, Inc. ("DSA"). DSA is a consulting engineering firm that was retained by Intervenor to assist in the preparation of its technical and price proposals. Mr. Bryant asked Lake Worth why culverts would not be acceptable for permanent structures if culverts were acceptable for detours. Lake Worth responded that consultants for Lake Worth would look into the hydraulics of the entire system. Petitioner and Intervenor submitted their respective technical proposals on or about January 11, 1989. 2/ Intervenor used culverts in its technical proposal at those canal crossings where Lake Worth had approved the use of culverts for detours. Intervenor also included documentation of the approvals by Lake Worth. Petitioner included bridges in its technical proposal for all detours and permanent structures. The date for submitting price proposals was changed by Respondent several times. The original date was scheduled for 30 days after receipt of the technical proposals. After several delays, price proposals were timely submitted by Petitioner and Intervenor on June 21, 1989. The opening of price proposals was set for July 6, 1989, pursuant to a letter dated June 23, 1989, from Bill Deyo, Design/Build Coordinator for Respondent. The letter stated in relevant part: ... If approved by the Final Selection Committee the selected team will be posted on July 10, 1989, with the final awarding scheduled for July 14, 1989. Award and execution of this contract is contingent upon approval of budget by the Governor's office. Respondent selected Petitioner's proposal as number one and Intervenor's proposal as number two. The Final Selection Committee issued a "memo" on July 6, 1989, authorizing award of the contract. 3/ Award and execution of the contract was approved by the Governor's office. 4/ Rejection of All Proposals On July 10, 1989, Respondent sent a telegram to each offeror cancelling the posting of "bid" tabulations for that day. On August 31, 1989, the Final Selection Committee issued a memorandum rescinding its authorization to award the contract for the RFP, and requested its Contracts Administration Office to notify all "...Design/Build teams of the decision to REJECT all price proposals." On September 12, 1989, Respondent notified all offerors by certified mail of Respondent's decision to reject all "bids". No reason for Respondent's rejection of all price proposals was stated in the certified letter. At that time, offerors were not otherwise advised by Respondent of the reason for the rejection. Respondent rejected all price proposals based upon a substantial reduction in the scope of services required for the RFP. Between October, 1988, and August 31, 1989, Lake Worth determined that culverts would be acceptable instead of bridges at five of the six project sites within the jurisdiction of Lake Worth. Lake Worth's change in position substantially reduced the scope of services required in the RFP. The value of that reduction in the scope of services was approximately $3.6 million. 5/ Respondent knew or should have known from the technical proposal submitted by Intervenor on January 11, 1989, that the scope of services required in the original; RFP had been reduced to the extent Lake Worth had approved the use of culverts instead of bridges for the detours at some of the project sites. Respondent did not investigate the potential reduction in the scope of services until after the opening of price proposals on July 6, 1989. The parties stipulated at the formal hearing that Respondent's rejection of all price proposals was not at issue. Therefore, the question of whether Respondent's rejection of all proposals was arbitrary, capricious, or beyond the scope of Respondent's discretion as a state agency is not at issue in this proceeding. 6/ Respondent's Existing Rule The legislature required Respondent to adopt by rule procedures for administering combined design/build contracts. Section 337.11(5)(b), Florida Statutes. Accordingly, Respondent adopted Florida Administrative Code Rule 14- 91.006 on March 13, 1988 ("Rule 14-91.006"). 17. Rule 14-91.006(5) provided: The Deputy Assistant Secretary for Technical Policy and Engineering Services, jointly with the Deputy Assistant Secretary representing the District in which the project is located, may determine it is in the best interest of the state to provide funds to firms selected for preparation of technical and price proposals in response to the Design Criteria Package. Each firm selected shall receive identical fixed fees for this work. Specific Authority 334.044(2) 337.11(5)(b) F.S. Law implemented 337.11(5) F.S. History-New 3-13-88. (emphasis added) Rule 14-91.006(5) was adopted to facilitate competitive responses to a request for proposals by paying fixed fees to firms selected by Respondent to prepare technical and price proposals. Rule 14-91.006(5) was also adopted so that Respondent could compensate offerors, retain their technical proposals, and use the design concepts on similar projects. Rule 14-91.006 was amended on June 13, 1990, in relevant part, by repealing Rule 14-91.006(5). The repeal of Rule 14-91.006(5) occurred approximately 33 days after the date of the formal hearing but before the entry of a final order in this proceeding. 7/ Request for Payment After Respondent notified offerors of the rejection of all price proposals, Petitioner and Intervenor requested Respondent to make a determination of whether it was in the best interest of the state to provide funds to Petitioner and Intervenor for the preparation of their respective technical and price proposals in accordance with Rule 14-91.006(5). Petitioner and Intervenor requested on several occasions that the Deputy Assistant Secretary for Technical Policy and Engineering Services jointly with the Deputy Assistant Secretary for the Turnpike convene a meeting to make the determination authorized in Rule 14-91.006(5) Informal conferences with Respondent's representatives were requested on at least four occasions to discuss the issue of Petitioner's compensation for its technical and price proposals. Respondent's representatives met with Petitioner a few days before the formal hearing on May 10, 1990. Respondent stated that it had no statutory authority to compensate Petitioner for Petitioner's technical and price proposals in the absence of a contract. Respondent neither contracted with Petitioner and Intervenor to pay for their technical and price proposals nor offered to enter into such a contract. Petitioner offered to enter into such a contract and also offered to provide computer tapes containing plans and specifications required in the RFP if Respondent would agree to compensate Petitioner. Repeal of Respondent's Existing Rule Sometime between March 13, 1988, and October, 1988, Respondent considered the payment of funds pursuant to Rule 14-91.006(5) in a design/build project that preceded the RFP. 8/ Respondent requested funds from the comptroller but was advised by the comptroller that no funds could be provided pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent's general counsel confirmed that there was no statutory authority to provide funds pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent took no public action to repeal Rule 14- 91.006(5) until March 16, 1990, approximately two years after the earliest date Respondent could have received the directives from its comptroller and general counsel advising Respondent that Rule 14-91.006(5) exceeded its statutory authority. Instead of formally repealing Rule 14-91.006(5), Respondent followed the comptroller's recommendation to obtain legislative authority to pay funds pursuant to Rule 14- 91.006(5). Respondent unsuccessfully proposed such legislation to the House Transportation Committee during the 1989 legislative session. In November, 1989, Respondent drafted an amendment to Rule 14-91.006 which, in relevant part, repealed Rule 14-91.006(5). Notice of the proposed formal repeal of Rule 14- 91.006(5) was published in the Florida Administrative Weekly on March 16, 1990. The amendment to Rule 14-91.006 was adopted and Rule 14-91.006(5) was formally repealed through appropriate rulemaking procedures on June 13, 1990. During 12 design/build projects, Respondent never paid funds to any firm for technical and price proposals when the firm had not been awarded a contract pursuant to a request for proposals. Respondent never adopted standards for determining the proper timing for payment of funds pursuant to Rule 14-91.006(5). Respondent never adopted standards for determining when it would be in the best interest of the state to provide funds pursuant to Rule 14- 91.006(5). Respondent refused to apply Rule 14-91.006(5) and refused to determine if it would be in the best interest of the state to provide funds to Petitioner and Intervenor for their respective technical and price proposals. The sole reason given by Respondent for its refusal to apply Rule 14-91.006(5) was the lack of statutory authority to provide funds to firms selected for preparation of technical and price proposals in the absence of a contract. Respondent's representatives never considered applying Rule 14- 91.006(5). When Respondent's representatives met with Petitioner shortly before May 10, 1990, they stated that they would like to provide the requested funds and that such funds should be provided, but that no statutory authority existed for providing such funds in the absence of a contract. The signatories to the memorandum from the Final Selection Committee, dated August 31, 1989, never met until after the meeting that took place shortly before May 10, 1990, to discuss payment for the technical and price proposals submitted by Petitioner and Intervenor. When they did meet, it was determined that no statutory authority existed to provide funds pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent never intended to compensate either Petitioner or Respondent for their respective technical and price proposals in the absence of a contract. Respondent never conducted any review of the technical and price proposals prepared and submitted by Petitioner and Intervenor for the purposes described in Rule 14-91.006(5). Two significant factors to be considered in making such a determination, however, would have been the benefit derived by Respondent from the technical and price proposals submitted and the effect that the provision of such funds would have on competition. Best Interest of the State Payment of funds to Petitioner and Intervenor would have been in the best interest of the state within, the meaning of Rule 14-91.006(5). 9/ Respondent derived substantial benefit from the technical and price proposals submitted by Petitioner and Intervenor including a reduction in the cost of State Project Nos. 97890-3325 and 97930-3324 in the approximate amount of $3.6 million. The fair market value of the proposals submitted by Petitioner and Intervenor was between $500,000.00 and $700,000.00 for each of the two proposals. All of the plan sheets and drawings were completed. The plans were prepared in accordance with Respondent's criteria for plan preparation. Every detail was followed and a complete maintenance of traffic plan was included. Where bridges were designed, the bridge calculations were included. Very little work was left to be done. In order to price out a project of the magnitude and scope required in the RFP, the technical proposals had to be very close to final design. Petitioner's technical proposal for both projects contemplated in the RFP was recorded on magnetic media in Petitioner's computer automated drawing machine. The magnetic media files could be easily transferred to Respondent. Petitioner at all times was ready, willing, and able to make such a transfer if Respondent had agreed to provide funds to Petitioner pursuant to Rule 14- 91.006(5). A great deal of valuable information was contained in the technical proposals prepared and submitted by Petitioner and Intervenor. Eighty to 90 percent of the engineering decisions were made and depicted either on the preliminary drawings or within the calculations included in the technical proposals. Information gathering and coordination with local permitting agencies, including Lake Worth, was a major component of designing and building the projects described in the RFP. Those kinds of activities required a good deal of time from higher level personnel in each organization. Respondent derived benefit from the technical proposals prepared by Petitioner and Intervenor irrespective of whether bridges or culverts are ultimately used at the canal crossings in the RFP. The only change that would be required would be to erase the bridges and insert details for a culvert crossing. Respondent derived benefit from the technical proposals prepared by Petitioner and Intervenor with respect to the projects contemplated in the RFP and similar projects in the future. Respondent can "relet" the project in the future and intends to do so. 10/ Respondent has retained the technical and price proposals submitted by Petitioner and Intervenor pending the outcome of this proceeding. Respondent's unwritten policy is to either return technical and price proposals to their offerors or destroy such proposals upon the concurrence of the, appropriate offeror. After this proceeding is concluded, Respondent intends to either return or dispose of the technical and price proposals submitted by Petitioner and Intervenor in a manner consistent with its unwritten policy. Reliance On Respondent's Existing Rule Petitioner and Intervenor were aware of Rule 14-91.006(5) in preparing and submitting their respective technical and price proposals. Neither Petitioner nor Intervenor, however, presented evidence of the extent to which they may have relied on Rule 14-91.006(5). Petitioner and Intervenor did not demonstrate that they were induced by Rule 14-91.006(5) to respond to the RFP or that Rule 14-91.006(5) was even a material or significant consideration to them. Payment of funds pursuant to Rule 14-91.006 (5) was neither addressed in the RFP nor discussed by the parties prior to Respondent's rejection of all price proposals. The record leaves open to speculation whether Petitioner and Intervenor would not have responded to the RFP in the absence of Rule 14- 91.006(5).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner's written formal protest should be DENIED; Respondent should return the respective technical and price proposals to Petitioner and Intervenor; Respondent should not provide funds to either Petitioner or Intervenor pursuant to former Rule 14-91.006(5). DONE AND ORDERED in Tallahassee, Leon County, Florida, this 10th day of January, 1991. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk, of the Division of Administrative Hearings this 10th day of January, 1991.
The Issue The issues are whether, in violation of sections 120.54(1)(a) and 120.56(4), Florida Statutes, Respondent has made an agency statement that is an unadopted rule in implementing a 2017 statutory amendment broadening the category of first-time test-takers to be counted when calculating the passing rate of the graduates of Petitioner’s prelicensure professional nursing education program (Program) and whether, pursuant to section 57.111, Petitioner may recover attorneys’ fees and costs from Respondent. At Petitioner’s request, the parties presented evidence concerning constitutional challenges that Petitioner intends to present to a district court of appeal.
Findings Of Fact The Program is a prelicensure professional nursing education program that terminates with an associate degree. Respondent approved the Program in 2013, thus authorizing Petitioner to admit degree-seeking students into the Program, as provided in section 464.019. As provided by section 464.019(5)(a)1., the passing rate of the Program’s graduates taking the NCLEX for the first time must meet or exceed the minimum passing rate, which is ten points less than the average passage rate of graduates taking the NCLEX nationally for the first time. Until June 23, 2017, the passing rate of a Florida program was based only on first-time test-takers who had taken the exam within six months of graduating (New Graduates). Chapter 2017-134, sections 4 and 8, Laws of Florida, which took effect when signed into law on June 23, 2017 (Statutory Amendment), removes the six-month restriction, so that the passing rate of a Florida program is now based on all first-time test-takers, regardless of when they graduated (Graduates). The statutory language does not otherwise address the implementation of the Statutory Amendment. For 2015 and 2016, respectively, the minimum passing rates in Florida were 72% and 71.68%, and the Program’s New Graduates passed the NCLEX at the rates of 44% and 15.79%. As required by section 464.019(5), Respondent issued the Probationary Order. The Probationary Order recites the provisions of section 464.019(5)(a) specifying the applicable passing rate, directing Respondent to place a program on probation if its graduates fail to pass at the minimum specified passing rates for two consecutive years, and mandating that the program remain on probation until its passing rate achieves the minimum specified rate. The Probationary Order details the 2015 and 2016 passing rates of Petitioner’s relevant graduates and the minimum passing rates for these years. The Probationary Order makes no attempt to describe the condition of probation, which might have included a reference to New Graduates, other than to refer to section 464.019(5)(a)2., which, unchanged by the Statutory Amendment, specifies only that a program must remain on probation until and unless its graduates achieve a passing rate at least equal to the minimum passing rate for the year in question. For 2017, the minimum passing rate for a Florida program was 74.24%. If, as Respondent contends, the new law applies to all of 2017, six of the fifteen of the Program’s Graduates failed the NCLEX, so the Program’s passing rate was inadequate at 60%. If, as Petitioner contends, the old law applies to all of 2017, twelve of the Program’s test-takers were New Graduates, and only three of them failed, so the Program’s passing rate was adequate at 75%. Respondent clearly applied the Statutory Amendment retroactively to January 1, 2017, in the Order Extending Probation because the order states that that the passing rate of the Program’s Graduates for 2017 was only 60% and therefore extends Petitioner’s probationary status for 2018. The Order Extending Probation provides Petitioner with a clear point of entry to request an administrative hearing. Each party applies the Statutory Amendment without regard to the effective date of June 23, 2017, but Respondent reaches the correct conclusion: the passing rate of the Program’s graduates for 2017 was inadequate. The NCLEX is administered throughout the year, and the dates of graduation are available for Petitioner’s Graduates taking the NCLEX in 2017, so it is possible to calculate a combined passing rate, using only New Graduates under the old law for testing dates through June 22 and all Graduates under the new law for testing dates after June 22. From January 1 through June 22, 2017, five of the Program’s test-takers were New Graduates and they all passed. From June 23 through December 31, 2017, four of the eight Graduates taking the NCLEX passed the test. Combining these results for all of 2017, the Program’s passing rate was nine divided by thirteen, or 69%, which was inadequate for 2017.
The Issue Whether or not all or part of the 40 statements challenged in the petition of Great American Reserve Insurance Company violate Section 120.535 F.S. requiring the agency to immediately discontinue all reliance upon the statements or any substantially similar statement as a basis for agency action.
Findings Of Fact On June 13, 1994, Petitioner filed a petition for administrative determination of agency statement. The petition listed the following agency statements and alleged that each constituted a rule pursuant to Chapter 120.52(16), F.S. which had not been adopted by the rulemaking procedures provided by Section 120.54 F.S. [1993]. The challenged statements are as follows: Respondent issues a form which solicits information as follows: Please provide the following information for each approved and pending annuity contract: Form number. Name of form, if any. Date approved or if pending. What are the surrender charges and for how long? What is the initial interest rate and for how long? What is the guaranteed interest rate? Are there any bonuses? If so, for how long and under what circumstances are they paid? Is this annuity two-tier? If so, how is interest applied? What field compensation is paid for each variation? Are any of these forms field issue that allow the agent to write in the current rate of interest? If so, what controls are in place to guarantee accuracy? Respondent issues a form which solicits information as follows: Please list any other annuities offered by the company and their corresponding contract maintenance fees, administration charges, surrender charges, etc. Respondent issues a form which solicits information as follows: Please provide the agent compensation levels associated with each form and/or set of surrender charges. Respondent issues a form which solicits information as follows: Please describe the specific calculation basis of the various annuity purchase rates/settlement options. Please include sample calculations of all options at a selected age(s). Respondent issues a form which solicits information as follows: What percentage sales are expected to be replacements of an existing contract? Please identify the replacement percentages by source (internal, external, 1035 exchanges, etc.). Respondent issues a form which solicits information as follows: [Provide] a brief description of the market and marketing method. Respondent issues a form which solicits information as follows: Please provide the following: Agency training procedures as they relate to this form, Any brochures provided to agents which refer to this form, Any guidelines to assure that policy comparisons are accurate and fair, Standards to ensure that no marketing methods are used which would have the effect of inducing replacement sales through misleading representations, and All forms, other than those required by Rule 4-151.006 and 4-151.007(3)(b), used to a execute replacement sales. Respondent issues a form which solicits information as follows: Please describe the company's practice concerning credited interest rates for annuity products in renewal years. Does the credited interest rate on a given date vary by the duration of the policy within a policy form block of business? If so, please describe the relationship between the various rates. How is this practice disclosed in sales literature for its products? On an annuity policy, varying the death benefit by issue age and duration is unfair discrimination under Ch. 626.9541(1)(g). It is not appropriate to vary the death benefit by age at death for an annuity policy. Variation of surrender charges in an annuity policy by age results in unfair discrimination under Ch. 626.9541(1)(g). Basing the surrender charge in an annuity policy on the age of the annuitant is unfair discrimination under Ch. 626.9541(1)(a). Where surrender charges, which are guaranteed in an annuity contract, vary between forms and the policy parameters, which vary in support of these different surrender charges (interest, bonuses, etc.), are not guaranteed in the contract, if a company were to have products with different surrender charges this would constitute unfair discrimination under Ch. 626.9541. Unfair discrimination is prohibited under annuity contracts by Florida Statute 626.9541(1)(g). The Department continues to receive filings with many variations of interest rates and surrender charges for which the surrender charges are guaranteed and the interest rates are not. These many combinations, applied to the same type contracts, violate this statute. If a single insurance company offers more than one annuity policy in the same market in Florida, the values to the purchaser pursuant to guaranteed parameters under each policy must be actuarially equivalent to those of each other policy. A withdrawal provision in an annuity contract which waives surrender charges on all or part of a partial surrender but imposes surrender charges on all of a total surrender will produce unfair discrimination. Proposed interest rate differentials must result in compensatory guarantees across whatever number of free withdrawal options are made available in an annuity contract for a block of business. It is the position of the Florida Department of Insurance that where multiple annuity products are presented for approval in the State of Florida that the examination of the guaranteed parameters of the policies must all result in the same actuarially equivalent benefit to the beneficiary of the policy for a block of business. If you looked at a block of business sold under each policy, taking into account the distribution of that business and the persistency patterns of that business over the life of that block of business, there must be a comparable return to the policyholder. Less than half a point would be considered approaching reasonable. In an annuity policy, where the present value at death of the amount of death benefit paid is based on the manner in which it will be paid, this is discriminatory pursuant to Ch. 626.9541. It should be revised so that the death benefit options are actuarially equivalent. Each settlement option which may be exercised under an annuity policy must be the actuarial equivalent of each other settlement option offered under that policy. Settlement options offered in an annuity policy may not vary based on the age of the policyholder. An annuity policy may not contain a one direction market value adjustment. One direction MVA does not provide equitable treatment. such an adjustment should be allowed to move equally in both directions to prevent inequitable and discriminatory treatment under Ch. 626.9541. The Department of Insurance mandates compliance with the provision in the current draft of the standard non-forfeiture law for annuities that guaranteed minimum annuitization rates must be at least that guaranteed during the accumulation phase, for a policy not to violate Ch. 626.9541(1)(a) and Ch. 627.411(2). In an annuity contract, the guaranteed minimum annuitization rate may not be less than the guaranteed minimum accumulation rate, per the current draft of the standard non- forfeiture law for deferred annuities. The Department considers a minimal measure of benefits being reasonable in relation to premiums under Ch. 627.411(2), to be compliance with the standard non-forfeiture law. The guaranteed minimum annuitization rate in an annuity policy may not be less than the guaranteed minimum accumulation rate, per the current draft of the standard non-forfeiture law for deferred annuities. The Department continues to feel that attribution of mortality expense charge to variations in the annuitization phase is inappropriate. The current draft of the standard non-forfeiture law for deferred annuitities allows use of projection scale G to be applied to the 1993 table a to account for possible future mortality improvement. It would also appear inappropriate to deduct a mortality charge in the annuitization phase for a mortality risk from the accumulation phase, as the risk no longer exists. Annuity policy forms may not be approved unless all sales brochures and literature are submitted with the forms. All annuity contracts must contain a table of guaranteed values. A table of guaranteed values in an annuity policy must demonstrate any available partial withdrawals not subject to surrender charges, even if the free partial withdrawal provisions are set out in the policy. An annuity contract must include a table of guaranteed minimum annuitization rates. Current company practice may not be presented in the illustration or brochure as a product characteristic of an annuity policy. Only contractually guaranteed items may be presented as policy parameters. If a contract contains proposed provisions which would allow the company to reserve the right to make future changes in charges, guarantees or contractual provisions in the policy, this would violate Ch. 627.474. A sales illustration in an annuity policy must display surrender values, even if the surrender charges are disclosed in the illustration. An illustration in advertising of an annuity policy must demonstrate any available partial withdrawals not subject to surrender charges, even if the terms of a free partial withdrawal provisions are set out in the advertising. Computer generated sales illustrations for annuity policies must include the following: Name of the person that the illustration is prepared for. Name of the agent preparing the illustration. A current date. A proposed date of maturity. Disclosure of all expense charges including a clear statement of the surrender charges. An illustration in advertising of a one tier annuity policy must specify the maturity date. The agent is not permitted to write in the current interest rate in the sales brochure. Death benefits or settlement options in an annuity policy to be sold to males and females must be based on male mortality tables for men, female mortality tables for women or gender blended mortality tables. Statements 1-8 challenge forms used by the Department of Insurance soliciting the enumerated information. Statements 9-40 challenge statements of policy used by the Department in review of annuity insurance policy and advertising forms. Between the filing of the Petition herein and the date of formal hearing, the Respondent agency filed a notice of rule development workshop. (See Finding of Fact 36) The parties stipulated: That Petitioner has standing herein as a person substantially affected by the agency statements challenged in the petition herein. That each challenged agency statement is an agency statement defined as a rule under Section 120.52(16) F.S.; and That none of the challenged agency statements have been adopted by the rulemaking procedure provided by Section 120.54 F.S. [1993]. By reason of the parties' stipulations, the only matter to be determined is whether or not the agency is currently using the rulemaking procedure expeditiously and in good faith to adopt rules which address the statements challenged by the petition herein. In an effort to establish minimal standards on a wide variety of issues, the Department of Insurance and State Treasurer has recently tried to approach rulemaking in a holistic or coordinated manner among its various bureaus and areas of technical expertise instead of piecemeal, as historically. In 1989-1990, the agency adopted 225 forms as rules, reducing the number of forms in use from 800. Its last wholesale rules review and revision occurred in the fall of 1991, partly in response to the legislative creation of Section 120.535 F.S., was internally code-named "the rules reorganization project," and met the statutory March 1, 1992 deadline to formalize existing non-rule policies. Both projects were conducted under the oversite of agency attorney Ruth L. Gokel, of the agency's legislative and rules section. Since then, the agency has largely deferred to its technical experts to initiate rulemaking, and not to its lawyers. However, anytime a regulatory employee approaches the legislative and rules section, that section immediately initiates rulemaking procedures. While Ms. Gokel does not provide routine oversite to the agency's bureaus or divisions to determine whether they are routinely using non-rule policy, she has the authority to recommend to agency bureaus and divisions that they are in need of rules. Because she is familiar with the complex processes for promulgating rules, she coordinates much of the agency's rule drafting. Ms. Gokel created a departmental manual on rulemaking in June 1991. The manual was published after enactment of Section 120.535 F.S. Portions of that manual, upon which Petitioner strongly relies, provides: any interpretation of a statute or any requirement generally imposed on agents, companies or other regulated entities as a group which has not been adopted as a rule, is a non-rule policy. * * * The first time we interpret a statute and apply it to a particular fact situation, the interpretation is not as yet a statement of general applicability and thus is not a rule. The second time an issue arises . . . we need to begin to formulate a rule. The third or fourth time a statute is interpreted and applied in a given manner, a rule should be published. Petitioner views this manual as binding upon the agency to begin rulemaking in some form immediately upon any agency employee imposing any statutory interpretation for the first time and even if the statutory interpretation is still only part of an individual's mental process. Petitioner also views the manual as requiring the agency to publish a rule upon the third or forth similar interpretation. However, the competent substantial evidence as a whole shows that the manual's pronouncements were, at best, aspirational. The manual was designed as the agency's first best attempt to educate its non-lawyer experts concerning their responsibilities under a new law, to ensure agency compliance with the new law by "picking up any non-rule policy floating around", to head off potential violations of the new law, and to minimize the number of potential petitions challenging agency statements under the new law. The manual also was in line with the agency's new evolving coordinated approach to rulemaking. The manual is designed to alert laymen to rulemaking problems, and was revised in December 1993. It will continue to be revised periodically. Prior to the filing of the Petition herein, the Department adopted checklists to aid insurers in their submission of policy forms and to aid the Department staff in their reviews of such form filings. The checklists are adopted as forms in Part II of Rule Chapter 4-149. Prior to the filing of the Petition herein, the Department adopted rules governing the review of advertising material for annuities. Those rules may be found in Part II of Rule Chapter 4-150. The Department has conducted actuarial reviews of annuity filings only since May of 1992. Although there were no statutory changes on or about that date, the Department was motivated to institute much closer scrutiny of annuities and the sale of annuities in this state as a result of the rule challenges to the Department's "bank rules", Chapter 4-223 F.A.C. Actuarial review by the agency has evolved in order to ensure that the products are clearly presented, that they are not unfairly discriminatory, that the sales presentations and contracts are not misleading, and that the product has not been designed for use with inappropriate marketing practices. These are statutorily permissible goals. See, Chapter 627 F.S. Of necessity, the Department review must combine its regulatory concerns into one cohesive set of policy statements. The actuarial review of annuities was first conducted by actuary Mike Morgan from May 1992 to about February 1993, when that responsibility was assumed by another Department actuary, Tom Foley. In December, 1993, the responsibility shifted to yet another Department actuary, Linda Ziegler. During the course of the reviews performed by each of these agency employees, judgments were made as to particular aspects of the actuarial review. Those judgments regarding the particular forms being reviewed were expressed in letters to the companies involved. Some of these letters were requests for additional information. If the additional information were supplied and, in the opinion of the reviewing actuary, it did not result in a violation of Florida statutes or rules, then the filing was approved. If the reviewing actuary found a violation based on the additional information, the filing was disapproved. Other letters were disapproval letters after a complete review of all the requested information. Actuarial review is an arcane business involving informed consideration of many different aspects of a filing. The decision to approve or disapprove is made on the basis of the totality of the filing. It may be that one aspect of a particular filing might not be entirely within the required parameters in the judgment of the actuary, but that aspect, in that particular filing, might be offset by another aspect, which in turn would render the filing approvable. All pieces of the whole are interrelated and the whole is complex. When Ms. Ziegler became responsible for the filings, she consulted with Mr. Morgan and Mr. Foley. Over the course of the two years of review, the actuaries involved wrote several hundred letters addressing actuarial issues on a situation by situation basis as each situation arose. Between December 1993 and the filing of the Petition herein, Ms. Ziegler was the responsible reviewing actuary. During those approximately six months, Ms. Ziegler consistently and uniformly applied the statements challenged to every application for annuity policy form and advertising form approval filed. Thus, even those statements used relatively few times have been used every time the policy embodied in the statement could have been applied. Additionally, departmental letters to insurance company applicants for approval of annuity policy and advertising forms, some 630 separate applications of challenged statement numbers 2, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23 and 40, related to unfair discrimination pursuant to Section 627.9541(1)(g) F.S. Challenged statement number 29 has been the articulated agency policy for at least 21 months, since the issuance of Department of Insurance Informational Bulletin 92-032 issued October 21, 1992. In January of 1994, Mike Morgan drafted language intended for the agency's legislative package for the 1994 session to address parts of the problem of actuarial review statutorily. Although agency personnel believed the agency had, and has, authority to perform these reviews, Ms. Ziegler testified that it is always better if matters are addressed by specific statutes because they are then much less subject to challenge. The Legislature did not address the issue of annuities in 1994. However, Mr. Morgan's work remained available to Ms. Ziegler when she began drafting what eventually became the Department's proposed rules on the subject. In March 1994, Ms. Ziegler began work on a draft bulletin to send to the companies to inform them in a more comprehensive way of the Department's current interpretations of several parts of the actuarial review problem. At about that time, she met with Department attorney Dennis Silverman who advised that eventually she would need to pursue rulemaking. Ms. Zeigler was unavoidably absent from the workplace at some time during this period due to an accident. When she returned to her office, she prioritized what she considered "more immediate" work. In May 1994, Ms. Ziegler returned to the draft bulletin, made a few minor changes, and then abandoned the project in favor of proposed rules. The Petition in this cause was filed June 13, 1994. Ms. Ziegler was aware that the forty statements had been challenged by the Petition shortly after the Petition herein was filed. In the third week of June 1994, Ms. Ziegler sought out Ms. Gokel. At that time, Ms. Ziegler had draft rules she felt cohesively addressed the actuarial review necessities, including addressing certain misleading sales practices. She also had several of the checklists adopted in Part II of Chapter 4-149 F.A.C. on which she had drafted proposed changes. Her comprehensive package addressed the totality of the necessary review and, as a result, also addressed each of the forty statements challenged in the pending Petition. Ms. Ziegler represented to Ms. Gokel that she was comfortable with the whole package and was ready to go public with it. Ms. Gokel informed Ms. Ziegler that since February, 1994 Ms. Gokel had had an assignment to make changes to the same checklists and had already had two meetings, in February and in March, with two other members of the Department regarding the same matter. Yet another member of the Department, Kim Forrester, had been working on proposed changes to the advertising rules in Part II of Chapter 4-150 F.A.C. Ms. Forrester was working with another departmental attorney, so in line with the agency's comprehensive approach to rules, Ms. Gokel had the foregoing assignment transferred to her. Based upon Ms. Gokel's considerable education, training, and experience in rulemaking, her understanding of agency policy concerning the need for and use of rule development workshops, the great amount of insurance industry interest which can reasonably be anticipated for the draft rules, and her personal knowledge regarding the complexity and breadth of the actuarial matters addressed in the draft rules, Ms. Gokel determined that a rule development workshop was essential. Rule workshops have been more the norm than the exception with this agency since at least 1992. The agency published its Notice of Rule Development Workshop in the Florida Administrative Weekly on July 1, 1994. The notice stated that a preliminary draft of the rules would be available for distribution on July 22, 1994, and that the workshop would be held on August 23, 1994, from 2 to 4 p.m. Respondent's witnesses affirmatively demonstrated significant planning and tangible steps that have been taken in furtherance of the rulemaking process since the filing of the foregoing notice. Ms. Gokel has devised a feasible preparatory checklist or schedule for meeting the deadlines announced in the published notice. Between publication of the Notice of Rule Development Workshop and formal hearing, something has been accomplished almost every day. In accord with this schedule, Ms. Gokel has once again met with Ms. Ziegler to discuss the proposed changes; has worked on the needed changes to the checklists with the secretary in the Bureau of Life and Health Forms and Rates because those checklists are documents in the "Lotus Notes" software program not available to Ms. Gokel in the agency's legislative and rules section; has reviewed the statutory authority supplied by Ms. Ziegler and has added the history notes where they were missing in the draft prepared by Ms. Ziegler; has incorporated Ms. Ziegler's and Ms. Forrester's proposed changes into the draft of the advertising rules; has reworked Ms. Ziegler's and Ms. Forrester's drafts for compliance with the Secretary of State's filing requirements; and has produced preliminary rule drafts. These steps have been expeditious and are themselves tangible evidence of the agency's current good faith efforts in the rulemaking procedure. Other steps listed by Ms. Gokel as necessary remained to be accomplished after formal hearing. Those included a meeting between Ms. Gokel and Ms. Forrester about the advertising rules; preparation of the existing rules which adopt the checklists showing the new revision dates; a meeting with Ms. Ziegler to discuss another proposed new rule in the actuarial review rules; a comprehensive review of the history notes; consolidation of the existing drafts into a single document for distribution as noticed for July 22, 1994; and preparation of the sign-in sheets and agenda for the workshop noticed for August 23, 1994. Provisions for timely accomplishing these tasks has been made on Ms. Gokel's schedule. As of the date of formal hearing, Ms. Gokel had already discovered several other statutory sections which should have been included in the Notice of Rule Development Workshop. She expressed the intent to file an amended notice reciting the additional statutory authority, but not otherwise changing the date or time of the workshop. This discovery represents at least one advantage of a comprehensive approach to agency rule drafting as practiced by this agency. Once the workshop draft has been distributed on July 22, 1994, the agency anticipates holding the workshop on August 23, 1994 and leaving the record open for written comments if appropriate. The agency's current intent is to leave the record open for only two weeks, which the agency's past workshopping experience has proven sufficient. Although this period could be extended further, there is no evidence in this record to suppose it will be. After the record closes, the plan is for agency personnel to conduct an internal review of the comments that were received, if any; Ms. Gokel will prepare a revised draft of the rules, as warranted, and will circulate an internal route slip for approval of the agency "senior management" involved. Only the lattermost effort of the route slip is an internal procedure peculiar to this agency and is not a requirement of Chapter 120 F.S. Historically, this route slip procedure has been ministerial and has only taken a few days. There is no clear evidence to show it will be different or take longer this time. Finally, the agency will have to file for notice, pursuant to Section 120.54 F.S. Petitioner presented only speculation to the effect that the foregoing schedule would not be met. The agency's assessment that in the area of actuarial review, moving from "first-time-ever" review of annuities to a comprehensive rule package in two years is the rulemaking equivalent of the "speed of light," may be more colorful than informative and is not binding upon the finder of fact, but the foregoing agency schedule and the agency's actions thereon are found to be currently expeditious in the circumstances of the number and type of rules necessary for such complex subject matter. If any challenged statement were not being addressed by the rulemaking process, the agency would have been unable to demonstrate that the agency rulemaking process is currently proceeding expeditiously and in good faith. However, here, the agency affirmatively demonstrated through unrefuted testimony that its draft rules have addressed, with at least some degree of particularity, each of the forty statements challenged by the Petition. Statements (1) and (2) of the Petition for Administrative Determination of Agency Statement involve requests for information of a company as to the other annuity products which the company is offering, have approved or are pending approval. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, and DI4-557. Statement (3) of the Petition involves a request for information concerning the agent compensation levels paid on the proposed product. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-548, DI4-555, DI4-556, and DI4-557. Statement (4) of the Petition involves a request for information regarding a specific description of the basis of the guaranteed minimum annuitization rates in the contract. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, and DI4-557. Statement (5) of the Petition involves a request for information regarding sales of the product which are expected to be replacements of existing coverage. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, and DI4-556. Statement (6) of the Petition involves a request for information regarding the market to be targeted and the marketing method to be used with respect to the proposed form. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-548, DI4-549, DI4-551, DI4-555, DI4- 556, and DI4-557. Statement (7) of the Petition involves a request for information regarding the agency training methods to be used with respect to the proposed form. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1 Forms DI4-555, DI4-556, and DI4-557. Statement (8) of the Petition involves a request for information regarding the credited interest rates in renewal years and their disclosure to consumers as practiced by the company. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, and DI4- 557. Statements (9) and (10) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., in the death benefit offered in an annuity product. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.064(2)(a)3. Statements (11) and (12) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., in the variation of surrender charges by age in an annuity product. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.065(4). Statements (13), (14), (15), and (18) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., between essentially identical products which have variations in guaranteed surrender charges, and other guaranteed parameters, and do not provide comparable benefits for premiums paid for the annuity products. This subject is addressed in the proposed draft Rule 4-149.071, Petitioner's Exhibit I. Statement (16) of the Petition addresses the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., between policyholders of the same annuity form in treatment under the withdrawal provisions. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.065(4)(c). Statement (17) of the Petition addresses a special case scenario of the Department's concern as expressed in statements (13), (14), (15), (18). This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.071. Statement (19) of the Petition addresses the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S. regarding the payment of a death benefit. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.066, and 4- 149.064(2)(a)3. Statement (20) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., in the value of the annuitization value available in an annuity product. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.066. Statement (21) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S. in the choice of annuitization options available in an annuity product. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.066. Statements (22) and (23) of the Petition address the Department's concern about misrepresentation and unfair discrimination under Section 626.9541(1)(a) and (g), F.S., in the inclusion of a Market Value Adjustment which affects the policy in only one direction. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.067(2). Statements (24), (25), and (27) of the Petition address the Department's concerns about misrepresentation under Section 626.9541(1)(a), F.S., and ambiguity and reasonableness of benefits to premiums under Section 627.411(1)(b), and (2), F.S. in the interest rate component of the guaranteed minimum annuitization rates in the annuity contract. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.064(2)(a)4. Statement (26) of the Petition addresses the Department's concern about reasonableness of benefits to premiums under Section 627.411(2), F.S. for an annuity contract. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.064(2)(a). Statement (28) of the Petition addresses the Department's concern about reasonableness of benefits to premiums under Section 627.411(2), F.S., in the treatment of charges under an annuity contract. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.064(2)(c). Statement (29) of the Petition addresses the Department's concern about timely review and approval of sales literature as noticed by Bulletin 93- 032's expression of existing Rule 4-150.120 F.A.C.. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-548, DI4-549, DI4-550, DI4-551, and DI4-555. Statements (30) and (31) of the Petition involve a requirement for the contract to contain an accurate table of guaranteed values, to prevent ambiguity under Section 627.411 (1)(b), F.S. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, DI4-557. Statement (32) of the Petition involves a requirement for the contract to contain an accurate table of guaranteed minimum annuitization values, to prevent ambiguity under Section 627.411(1)(b), F.S. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, DI4-557. Statement (33) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft rules in Petitioner's Exhibit J, proposed draft Rule 4-150.105(1)(a). Statement (34) of the Petition addresses the Department's concern that a contract explicitly describe policy provisions over the life of the contract, under Section 627.474, F.S. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-548, DI4-555, DI4-556, and DI4-557. Statement (35) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft rules in Petitioner's Exhibit J, proposed draft Rule 40150.105(1)(b). Statement (36) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105(1)(f) F.A.C.. Statement (37) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft rules in Petitioner's Exhibit J, proposed draft Rule 4-150.105. The requirement expressed by statement (37)(e), is presently found in currently promulgated Rule 4-150.106(1). Statement (38) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft Rule 4-150.105(1)(e). Statement (39) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft rules in Petitioner's Exhibit J, proposed draft Rule 4-150.105(1)(d). Statement (40) of the Petition addresses the Department's concern about reasonableness of benefits to premiums under Section 627.411(2), F.S., and unfair discrimination under Section 626.9541(1)(g), F.S. in the value of the death benefits and guaranteed annuitization rates for an annuity contract. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.064(2)(a)4. The testimony that the forty challenged statements are addressed in the Department's draft rules [Pet.I, J; Resp. 1], as set forth above, is uncontroverted. The Petitioner did not present any evidence nor elicit any testimony refuting or otherwise discrediting this testimony on that issue.
The Issue Whether a proposed amendment to Rule 33-5.006(8), Florida Administrative Code, constitutes an invalid exercise of delegated authority?
Findings Of Fact Standing. The Petitioner, W. Gerry Hargrove, is an inmate in the custody of the Respondent, the Department of Corrections. The Petitioner is housed in Tamoka Correctional Institution. The Petitioner is subject to the rules of the Respondent, including the proposed rule amendment at issue in this proceeding. The Respondent. Section 944.09, Florida Statutes, requires that the Respondent, an agency of the State of Florida, adopt rules governing the administration of the correctional system in Florida. Among other things, Section 944.09, Florida Statutes, requires that rules be adopted by the Respondent governing visiting hours and privileges and all other aspects of the operation of the prison system in Florida. The Proposed Amendment to Rule 33-5.006(8), Florida Administrative Code. Section 944.23, Florida Statutes, provides, in pertinent part: The following persons shall be authorized to visit at their pleasure all state correctional institutions: The Governor, all Cabinet members, members of the Legislature, judges of state courts, state attorneys, public defenders, and authorized representatives of the commission. No other person not otherwise authorized by law shall be permitted to enter a state correctional institution except under such regulations as the department may prescribe. . . . [Emphasis added]. Pursuant to the authority of Sections 944.09 and 944.23, Florida Statutes, the Respondent has adopted Chapter 33-5, Florida Administrative Code. Rule 33-5.006(1), Florida Administrative Code, provides, in pertinent part, the following: Upon being committed to the custody of the Department, each inmate shall be given the opportunity to submit a list of persons from whom he wishes to receive visits. The initial list . . . shall be limited to members of the inmate's immediate family. Once the inmate has been assigned to a permanent institution, additional relatives and friends, business associates and others may be considered, but only after a criminal history background inquiry has been made. Rule 33-5.006(7), Florida Administrative Code, provides: (7) Inmate visits with approved family members or friends should be encouraged for the positive purpose of maintaining home and community ties, which after release should provide a deterrent to recidivism. To the extent that it is safe and practicable to do so, such visiting should be allowed to take place in a relaxed atmosphere. Rule 33-5.006, Florida Administrative Code, also provides certain circumstances when a person may be excluded from an inmate's visitors list. For example, persons convicted of a felony may be excluded. Rule 33-5.006(5), Florida Administrative Code. Rule 33-5.007, Florida Administrative Code, is titled "Visitation Denial." Pursuant to this rule, it is provided that visitation may be denied under certain circumstances, i.e., if a visit would present a clear and present danger to the security and order of an institution. Rule 33-5.007, Florida Administrative Code, also provides: (3) No visit should be denied: . . . . (c) for any reason unrelated to the security, order or rehabilitative objectives of the institution. At issue in this proceeding is a proposed amendment to Rule 33- 5.006(8), Florida Administrative Code: (8)(a) An unmarried i[I]nmate[s] [not married] may be allowed to have one single non-immediate family member of the opposite sex on the visiting list, after approval. A married inmate may be allowed to have one single, non-immediate family member of the opposite sex on the visiting list, after approval, if a pending divorce or separation of long duration can be verified and the spouse is removed from the list. Married or unmarried inmates may have non- immediate family member couples on the visiting list after approval, but the member of the couple who is the opposite sex of the inmate may not visit the inmate without the spouse. New proposed language of the rule is denoted by underlining and words or letters removed are indicated by brackets. In this proceeding the Petitioner has only challenged proposed paragraph (c) of Rule 33-5.006(8), Florida Administrative Code (hereinafter referred to as the "Proposed Rule Amendment"). The Respondent has indicated it proposed the addition of paragraph (c) to Rule 33-5.006(8), Florida Administrative Code, because of security concerns. As explained by a representative of the Respondent the following are those security concerns: One spouses (i.e., the wife) may be visiting an inmate without the knowledge of the other spouse (i.e., the husband). If the husband becomes aware of the fact that his wife is visiting an inmate the husband may become alarmed and complain to the Respondent and his wife about the visitation. When the husband complains to his spouse or the Respondent and the inmate learns of the problem, the inmate may become upset. The Respondent indicated that there have been a few instances where inmates who, upon learning that husband of the inmate's visitor has been making it difficult for the visiting spouse to continue with visitation, have attempted to escape to get to the husband. The evidence failed to prove that there is a significant security problem if inmates are allowed to have visitation from a married visitor without requiring that both spouses visit the inmate at the same time. The evidence concerning escape attempts (at best, 5 to 10 attempts during the past thirty years) was speculative. No specifics concerning such attempts were provided when the Petitioner asked for specifics. Nor did the evidence prove that the Respondent's security is inadequate to handle the relatively low number of such escape attempts or that any such escape attempt has been successful. The Notice of Proposed Rulemaking for the Proposed Rule Amendment included a "Summary of the Estimate of Economic Impact of the Rule". Although the Petitioner challenged the adequacy of the Respondent's determination of the economic impact of the Proposed Rule Amendment, the evidence presented during the final hearing of this case failed to prove that the economic impact statement was inadequate.
Findings Of Fact Rule 23-21.03(9)(b) , Florida Administrative Code, the rule under challenge, contains a list of forms to be used by the Commission in parole grant-and-rescind types of proceedings. The particular form which is challenged is PCG-4.4, entitled "Special Commission Action." The Commission on September 7, 1983, extended petitioner's presumptive parole release date (PPRD) by utilizing form PCG-4.4. Petitioner and the Commission agree that invalidation of the challenged rule will not affect petitioner's PPRD. Petitioner does not challenge the method by which Rule 23-21.03(9)(b) , Florida Administrative Code, was promulgated.
Findings Of Fact The initial Petitions for Administrative Hearing were filed on October 4, 1991. The Petitions were filed by Ervin James Horton. In the Petition filed in case number 91-6345R, Rules 33-3.005, 33- 3.0051, 33-3.0083(5)(i), Florida Administrative Code, I.O.P. P13.91.34, I.O.P. P14.91.25 and Post Order 46 were challenged. In the Petition filed in case number 91-6346R, Rules 33-22.001, 33- 22.002, 33-22.003, 33-22.008, 33-22.012, and 33-3.005, Florida Administrative Code, were challenged. The rules challenged by the Petitioner are titled "Legal Documents and Legal and Privileged Mail" (Rule 33-3.005), and "Copying Services for Inmates" (Rule 33-3.0051). Chapter 33-22, Florida Administrative Code, provides rules governing "Inmate Discipline." Rule 33-3.0083(5)(i), Florida Administrative Code, does not exist. The I.O.P's apparently deal with the same general subjects as the Challenged Rules. The Petitions include the use of legal terms and phrases with little in the way of factual explanation. Although the Petitions contain some "legalize", they do not, read alone or in conjunction with all of the Petitioner's pleadings, adequately put the Respondent on notice as to what the Petitioner is challenging or the basis for his challenge. Apparently, the Petitioner is complaining of the actions of several employees of the Respondent relating to a variety of alleged incidents involving the Petitioner. In case number 91-6345R, the Petitioner complained of alleged incidents involving denial of his copying and mail privileges. The Petitioner argued that his access to the courts and his ability to carry out contracts have been impaired by the actions of employees of the Respondent in enforcing the Challenged Rules. In case number 91-6346R, the Petitioner complained of several alleged incidents involving disciplinary actions taken against him pursuant to Chapter 33-22, Florida Administrative Code. The Petitioner argued that the application of Chapter 33-22, Florida Administrative Code, was improper. The incidents complained of by the Petitioner have allegedly been the subject of unsuccessful grievance proceedings. Having failed to obtain a favorable response to his grievances, the Petitioner is seeking through this process to have the incidents reviewed. The Petitioner's allegations concerning the alleged incidents are not merely allegations intended to prove the Petitioner's standing to institute this proceeding. The Petitioner is complaining about, and seeking review of, alleged actions of the Respondent. The Petitioner has also attempted to raise constitutional arguments to support his challenges. The statements concerning constitutional issues consist of mere statements that constitutional rights are being violated without any facts to support an argument that the Challenged Rules are unconstitutional. Insufficient alleged facts concerning why it is believed that the specific requirements or provisions of the Challenged Rules are an "invalid exercise of delegated legislative authority", as defined in Section 120.52(8), Florida Statutes, were included in the Petitions and the Amended Petition. On November 14, 1991, an Order Granting Motions to Dismiss with Leave to Amend and Cancelling Formal Hearing was entered. On November 21, 1991, the Petitioner filed a Motion for Enlargement of Time to Comply to Order to Amend. The Petitioner, however, also filed an Amended Petition in these cases on the same day. The Amended Petition is very similar to the Petitions and suffers from the same deficiencies. The Amended Petition is devoid of a sufficient statement of the alleged facts pertinent to the issues raised in the Petitions which, if proven, would support a determination that the Challenged Rules are invalid under Section 120.56, Florida Statutes. On December 9, 1991, an Order Concerning Motion for Enlargement of Time and Granting Motion to Dismiss Amended Petition was entered. Pursuant to this Order the parties were informed the Amended Petition was dismissed and were given an opportunity to file proposed final orders. On December 11, 1991, the Petitioner filed Petitioner's Motion to File a [sic] Amended Petition or Second Amendmet [sic]. This motion was denied by Order entered December 18, 1991. On December 13, 1991, the Petitioner filed a Motion to Correct Order and, or Alternative Relief. This motion was denied by Order entered December 16, 1991. The Petitioner has challenged Rules 33-3.005, 33-22.001 and 33-22.003, Florida Administrative Code. See Horton v. Department of Corrections, 9 F.A.L.R. 2270 (DOAH Case No. 86-4515R 1987) and Horton v. Department of Corrections, 10 F.A.L.R. 5254 (DOAH Case No. 87-2908R 1988).
The Issue The issues in these cases are whether the following rules promulgated by the Respondent, the Department of Business Regulation [now the Department of Business and Professional Regulation], Division of Pari-mutuel Wagering, are valid exercises of delegated legislative authority: F.A.C. Rules 61D-1.002(18) [formerly 7E-16.002(18)] and 61D-1.006 [formerly 7E-16.006]; and emergency rules 7ERR92-2(18) and 7EER92-6.
Findings Of Fact On or about September 30, 1991, the Petitioner, John R. Witmer, applied to the Respondent, the Department of Business Regulation (now the the Department of Business and Professional Regulation), Division of Pari-mutuel Wagering (the Division), for a three-year occupational license as a veterinarian. The license was issued with a scheduled expiration in 1994. In October, 1993, the Division filed an Administrative Complaint alleging that the Petitioner violated emergency rule 7EER92-2(18) and F.A.C. Rule 61D-1.002(18) (formerly codified as F.A.C. Rule 7E-16.002(18)) on November 11, 1992, and April 2, 1993. The charges remain pending and have been referred to the Division of Administrative Hearings, where they have been given DOAH Case No. 93-6638. On or about June 18, 1992, the Division released the legal opinion of its General Counsel that, if certain provisions of the statutes governing pari- mutuel wagering were allowed to sunset on July 1, 1992, the Division legally would be unable to regulate pari-mutuel wagering adequately, and pari-mutuel wagering would become illegal in Florida. In response to the legal opinion, several tracks and jai alai frontons filed suit in circuit court seeking declaratory and injunctive relief. On or about June 30, 1992, a temporary injunction was issued in the court case requiring the parties to maintain the status quo in effect on June 30, 1992, until further order. A final hearing in the court case was held on August 10, 1992. The court's Final Order held that the statutes that remained in effect after July 1, 1992, were "legally sufficient and not in violation of Article X, Section 7, of the Florida Constitution (1968) [a prohibition against lotteries not sanctioned by law]." The court dissolved the temporary injunction effective August 25, 1992. After the court decision, notwithstanding the earlier legal opinion issued by its General Counsel, the Division determined that it had the necessary statutory authority to promulgate emergency rules to implement what remained of the pari-mutuel wagering statutes after July 1, 1992. Approximately $1.7 billion in cash was being wagered annually. Taxes collected on the wagers amounted to approximately $105 million a year. The possibilities for cheating and stealing to obtain a piece of the action illegally are endless, requiring effective regulation and constant vigilance. It is not unusual, for example, for cheaters to attempt to drug race animals illegally. As a result, some 85,000 urine and blood samples are taken from race animals annually. It was determined that, under the remnants of the statutes that remained after July 1, 1992, there were three areas vital to the public's welfare for which sanctions or rulemaking, or both, were necessary: (1) regulation of the pari-mutuel wagering pool; (2) regulation relative to the collection of taxes; and (3) regulation of the administration of medicines and drugs to racing animals. Fifty-four emergency rules, designated 7EER92-1 through 7EER92-54, were promulgated on or about August 24, 1992. (These compare to the 340 rules previously promulgated under the authority of, and to implement, the entirety of Chapter 550, Fla. Stat. (1991), in effect before July 1, 1992.) In addition, the Division requested that the tracks and frontons promulgate "in-house" rules in an attempt to maintain, as a practical matter, the status quo as of June 30, 1992, to the extent possible. On or about November 22, 1992, the emergency rules were replaced by permanent rules, designated F.A.C. Rule Chapter 7E-16, and F.A.C. Rule Chapter 7E-4 was repealed. On or about December 16, 1992, the Legislature enacted Chapter 92-348, Laws of Florida (1992), a new comprehensive statute governing dog and horse racing pari-mutuel wagering. It replaced the prior law. The final bill analysis and economic impact statement produced by the House of Representatives Committee on Regulated Industries referred to Chapter 92-348 as a "revision" of the law on the subject. The Division suggested to the Senate Commerce Committee that an earlier Senate version of the bill contain a retroactive "savings clause" to specify that the Division would have jurisdiction to prosecute disciplinary proceedings against occupational licensees that were pending on July 1, 1992, under the Division's emergency rules and under the provisions of what would become Chapter 92-348. No such provision was included in Chapter 92-348. On or about December 17, 1992, the Division transmitted to the Department of State, Bureau of Administrative Code, as "technical changes" under F.A.C. Rule 1S-1.002(9), "corrections" to the statutory authority for, and law implemented by, F.A.C. Rule Chapter 7E-16. The "corrections" substituted appropriate provisions from Chapter 92-348. The Division interprets F.A.C. Rule 1S-1.002(9) to apply to changes in the statutory authority for, and law implemented by, rules. F.A.C. Rule Chapter 7E-16 later was redesignated as F.A.C. Rule Chapter 61D-1. Between July 1 and December 16, 1992, the Division issued some 11,000 occupational licenses and denied some 22 applications. During this time period, the Division collected some $400,000 in occupational license fees. The fees were part of the more than $800,000 collected in the fiscal year ending June 30, 1993. During the period from July 1 to December 16, 1992, the Division dismissed more than 80 pending disciplinary matters out of concern for whether the Division still had authority to impose sanctions for the violations in question. In addition, during that time period, out of the same concerns, the Division declined to prosecute more than 260 other cases in which track judges or stewards had found violations.
Findings Of Fact The initial Petition for Administrative Hearing was filed on September 18, 1991. The Petition was filed by Ervin James Horton. In the Petition Rule 33-3.018, Florida Administrative Code, and Policy and Procedural Directive No. 2.02.15 were challenged. The Challenged Rule is titled "Inmate Bank Trust Fund". The Challenged Rule is lengthy and provides for the "policies of the Department with respect to money received for the personal use or benefit of inmates . . . ." The Directive deals with the same general subject. The Petition is, to say the least, confusing. This confusion is caused by the Petitioners frequent use of legal terms and phrases with little in the way of factual explanation. As an example, paragraph 4, State of the Case and Facts, provides the following: 4. That the (Petitioner) seek to challenge D.O.C. Policy and Procedure Directive $2.02.15 entitled (Administration on Inmate Trust Funds) as being invalid, arbitrary, capricious, that goes beyond the powers, functions, duties, to exceed legislative authority. This paragraph is fairly typical of most of the Petition. Although it contains some "legalize", it does not, read alone or in conjunction with all of the Petitioner's pleadings, adequately put the Respondent on notice as to what the Petitioner is challenging or the basis for his challenge. Apparently, the Petitioner is complaining of the actions of three employees of the Respondent, J. L. Ward (see paragraphs 10 and 11 of the Statement of the Case and Facts of the Petition), R. E. Davis (see paragraphs 14 and 23 of the Statement of the Case and Facts of the Petition), and B. E. Goss (see paragraph 24 of the Statement of the Case and Facts of the Petition). See also paragraphs 13-14 and 18 of the Statement of the Case and Facts of the Petition. The Petitioner has also attempted to raise constitutional arguments to support his challenge to the Challenged Rule and the Directive. See paragraphs 17, 22 and 25 of the Statement of the Case and Facts of the Petition and most of the portion of the Petition labeled "Affect the Petitioner [sic] Interest." The statements concerning constitutional issues consists of mere statements that constitutional rights are being violated without any facts to support an argument that the Challenged Rule or the Directive are unconstitutional. Finally, the following relief was requested in the Petition: The Petitioner demand [sic] relief of: That D.O.C. #2.02.15 et. seq. be declared invalid, arbitrary, capricious, to delegate outside the scope of Florida Statute and Constitution. Any and all other applicable authority that's statutory protected or judicial mandate under Federal mandate as [unreadable] v. Wainwright, TCA-75-3 (11/18/77). Wolfish v. Levi, 573 F. 2d 118 (2nd Cir. 1978) (Cite omitted). That the Respondents, be required to incorporate State Constitution and Federal Constitution protection as statutory mandated at 944.09 120.54 et. seq. (1991). Insufficient alleged facts concerning why it is believed that the Challenged Rule and the Directive are an "invalid exercise of delegated legislative authority", as defined in Section 120.52(8), Florida Statutes, were included in the Petition. On November 1, 1991, an Order Granting Motion to Dismiss with Leave to Amend and Cancelling Formal Hearing was entered. On November 21, 1991, a pleading titled "Amended Petition as Ordered November 1st 1991" was filed by the Petitioner. The First Amended Petition is very similar to the Petition and suffers from the same deficiencies. Additionally, it is more apparent in the First Amended Petition that the Petitioner is challenging alleged actions of certain employees of the Respondent and not the Challenged Rule or the Directive. The First Amended Petition is devoid of a sufficient statement of the alleged facts pertinent to the issues raised in the Petition or the First Amended Petition which, if proven, would support a determination that the Challenged Rule and the Directive are invalid under Section 120.56, Florida Statutes. On December 9, 1991, an Order Granting Motion to Dismiss Amended Petition was entered dismissing the First Amended Petition and giving the parties an opportunity to file proposed final orders. On December 13, 1991, the Petitioner filed a document titled "Amended Petition". This Second Amended Petition does nothing to correct the deficiencies of the Petition or the First Amended Petition.
Findings Of Fact The Respondent, the Florida Department of Revenue (hereinafter referred to as the "Department"), notified Petitioner, Irvin L. Olden, by a Revised Notice of Intent to Make Documentary Stamp Tax and Discretionary Surtax Audit Changes (hereinafter referred to as the "Revised Notice"), that he owed $164.45 in documentary stamp tax, plus penalty of $41.11 and interest thru June 6, 1994 of $70.71. See Petitioner's exhibit 3. The Revised Notice was entered May 31, 1994. Mr. Olden was informed in the Revised Notice that the "legal basis" of the proposed audit changes was "Chapters 201.01, 201.02, 201.08, 201.17, F. S." and "Rules 12B-4.012(1) and (2), F.A.C." Mr. Olden filed a written protest to the Revised Notice by letter dated June 23, 1994. On July 12, 1994, the Department issued a letter in response to the written protest. Petitioner's exhibit 2. In pertinent part, Mr. Olden was informed: Your Quit Claim Deed recorded November 6, 1990, transferred half interest in real estate from Sue H. Olden to Irwin L. Olden. There was a $60,000 mortgage on the property. According to Rules 12B-1.012 (1) and (2), and 12B-1.013 (25) and (32), Florida Administrative Code, this transfer is taxable because of the mortgage on the property. The rules state that any deed is taxable if consideration for the property is given. The rules go on to state that a mortgage on the property is consideration. The rules are attached. The letter incorrectly referred to Rule 12B-1.012(1) and (2), Florida Administrative Code, and Rule 12B-1/013(25) and (32), Florida Administrative Code. The Department intended to refer to Rules 12B-4.012 and 12B-4.013, Florida Administrative Code. Mr. Olden timely challenged the proposed assessment of tax pursuant to Section 120.57(1), Florida Statutes. On November 23, 1994, Mr. Olden also filed a petition with the Division of Administrative Hearings challenging the validity of Rule 12B-4.012(2), Florida Administrative Code, pursuant to Section 120.56, Florida Statutes. Rule 12B-4.012(2), Florida Administrative Code (hereinafter referred to as the "Challenged Rule"), provides, in pertinent part: (2) Definitions: (a) "Consideration" under s. 201.02, F.S., includes but shall not be limited to, money paid or to be paid, the amount of any indebtedness discharged by a transfer of any interest in real property, mortgage indebtedness and other encumbrances which the real property interest being transferred is subject to, notwithstanding the transferee may be liable for such indebtedness. Where property other than money is exchanged for interest in real property, there is the presumption that the consideration is equal to the fair market value of the real property interest being trans- ferred. [Emphasis added]. Mr. Olden specifically challenged the portion of the Challenged Rule emphasized in finding of fact 6. Mr. Olden alleged that the Challenged Rule is an invalid exercise of delegated legislative authority as defined in Section 120.52(8)(b) and (c), Florida Statutes. The language of the Challenged Rule which Mr. Olden has alleged is invalid had an effective date of February 13, 1991. Although not clearly stated in Mr. Olden's petition, Mr. Olden's standing to challenge the Challenged Rule is based upon the fact that the Department relied on the Challenged Rule in the Revised Notice and the letter in response to Mr. Olden's written protest. Pursuant to the Department's Motion to Dismiss for Lack of Standing filed by the Department on February 24, 1995, the Department stipulated to the following: The Department stands by its assessment in the assessment proceeding. The statute which was recited in the Department's assessment provides ample authority for the assessment without reference to a subsequently promulgated rule. . . . The Department does not seek to retroactively apply a rule to a transaction which preceded the effective date of that rule. Any statement in the Notice of Proposed Assessment which indicates an intention to apply a rule on a retroactive basis is hereby withdrawn. . . . However, while the rule is valid, it now appears that Petitioner lacks standing to challenge a rule which is not intended to be applied to Petitioner. Petitioner has standing to challenge the assessment and to challenge the Department's prerule application of the Section 201.02, Fla. Stat. (1990). . . . Now that the Department formally withdraws any reference to the rule in support of its assessment against the Petitioner, there is no reason for this matter to proceed further. Counsel for the Department reiterated the Department's position at hearing.
Findings Of Fact The initial Petition for Administrative Hearing was filed on November 8, 1991. The Petition was filed by Ervin James Horton. 3. In the Petition Rules "33-3.001, 33-3.006, 33-3.0025, 33-22.004(3)(A), 33-22.0012 Code 3, s. 3-12, 33-29 and 33-4.001, 33-4.002" and Internal Operating Procedure Number AG-91.51 were challenged. Most of the Challenged Rules are lengthy and deal with a number of subjects. The common thread of the Challenged Rules and IOP concerns the possession of contraband and punishment therefor. The Petition is, to say the least, confusing. This confusion is caused by the Petitioners frequent use of legal terms and phrases with little in the way of factual explanation. As an example, paragraph 2, State of the Case and Facts, provides the following: 2. That the (Respondents) Rules as 33-29 et. seq. 33- 3.006, 33-3.0025, 33-22.0012 Code 3, s 3-12 is [sic] invalid, arbitrary, capricious, vague, delegation to exceed, modify, contravenes, the specific provisions of laws [sic] implemented, citation required by 120.54(7), Florida Statutes and 944.09(1)(A). This paragraph is fairly typical of most of the Petition. Although it contains some "legalese", it does not, read alone or in conjunction with all of the Petitioner's pleadings, adequately put the Respondent on notice as to what the Petitioner is challenging or the basis for his challenge. Apparently, the Petitioner is complaining of the actions of employees of the Respondent in punishing the Petitioner for having contraband in his possession. The Petitioner has also attempted to raise constitutional arguments to support his challenge to the Challenged Rules and the IOP. The statements concerning constitutional issues consist of mere statements that constitutional rights are being violated without any facts to support an argument that the Challenged Rules or the IOP are unconstitutional. Insufficient alleged facts concerning why it is believed that the Challenged Rules and the IOP are an "invalid exercise of delegated legislative authority", as defined in Section 120.52(8), Florida Statutes, were included in the Petition. On December 4, 1991, an Order Granting Motion to Dismiss with Leave to Amend and Cancelling Formal Hearing was entered. On December 23, 1991, an Amended Petition was filed by the Petitioner. The Amended Petition consolidated the Petitioner's challenges in this case and case number 90-7190R. The Amended Petition is very similar to the Petition and suffers from the same deficiencies. Additionally, the Petitioner includes the Department of Legal Affairs, and the State Attorney of the Eighth Judicial Circuit, the Respondents in case number 91-7190R as Respondents and addresses his challenge to other rules, internal operating procedures and directives of the other named Respondents challenged in case number 91-7190R. The Amended Petition is devoid of a sufficient statement of the alleged facts pertinent to the issues raised in the Petition or the Amended Petition which, if proven, would support a determination that the Challenged Rules, the IOP or the other matters challenged in the Amended Petition are invalid under Section 120.56, Florida Statutes. On January 14, 1992, an Order Concerning Amended Petition was entered dismissing the Amended Petition and giving the parties an opportunity to file proposed final orders.
