The Issue Whether Petitioner, Department of Financial Services, Division of Workers’ Compensation (“Division”), properly issued a Stop-Work Order and 4th Amended Penalty Assessment against Respondent, Best Affordable Contractors, LLC (“Respondent”), for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact On July 31, 2020, the parties filed a Joint Pre-hearing Stipulation, by which the parties stipulated to the facts set forth in the following paragraphs 2 through 17. Stipulated Findings The Division is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees and corporate officers. Respondent was engaged in business operations in Florida during the entire period of January 4, 2017, through January 3, 2019. On January 3, 2019, the Division’s investigator, Deryck Gallegos, commenced a workers’ compensation compliance investigation at Respondent’s work site at 1203 Dancy St., Jacksonville, Florida 32205. On January 3, 2019, Respondent had a paid subcontractor, Terry Wayne Lyons, Sr., performing roofing work at 1203 Dancy St., Jacksonville, Florida 32205. On January 3, 2019, Respondent’s subcontractor, Terry Wayne Lyons, Sr., had five paid employees performing roofing work at 1203 Dancy St., Jacksonville, Florida 32205: Terry Wayne Lyons, Sr.; Jahru Li-Ly Campbell; Kevin Lee Hagan; Terry Wayne Lyons, Jr.; and Jonathan Wayne McCall. On January 3, 2019, Respondent’s subcontractor, Terry Wayne Lyons, Sr., had no workers’ compensation exemptions and no workers’ compensation insurance coverage. On January 3, 2019, Respondent had no workers’ compensation exemptions and no workers’ compensation insurance coverage. On January 3, 2019, the Division issued a Stop-Work Order for Specific Worksite Only and Order of Penalty Assessment to Respondent. The Division served the Stop-Work Order for Specific Worksite Only and Order of Penalty Assessment on Respondent by personal service on January 4, 2019. The Division served a Request for Production of Business Records for Penalty Assessment Calculation on Respondent on January 4, 2019. On February 1, 2019, the Division issued an Amended Order of Penalty Assessment to Respondent. The Division served the Amended Order of Penalty Assessment on Respondent on February 7, 2019. The Amended Order of Penalty Assessment imposed a penalty of $353,349.72. On June 3, 2020, the Division issued a 2nd Amended Order of Penalty Assessment to Respondent. The Division served the 2nd Amended Order of Penalty Assessment on Respondent on June 11, 2020. The 2nd Amended Order of Penalty Assessment imposed a penalty of $68,705.29. On July 30, 2020, the Division served a 3rd Amended Order of Penalty Assessment to Respondent. The 3rd Amended Order of Penalty Assessment imposed a penalty of $46,805.02. Throughout the penalty period, Respondent was an “employer” in the state of Florida, as that term is defined in section 440.02(16). Respondent did not obtain exemptions from workers’ compensation insurance coverage requirements for the entries listed on the penalty worksheet of the 3rd Amended Order of Penalty Assessment as “Employer’s Payroll” during the penalty period. Respondent did not secure the payment of workers’ compensation insurance coverage, nor did others secure the payment of workers’ compensation insurance coverage, for the entries listed on the penalty worksheet of the 3rd Amended Order of Penalty Assessment as “Employer’s Payroll” during the periods of non-compliance listed on the penalty worksheet. The manual rates, class codes, and gross payroll identified on the penalty worksheet of the 3rd Amended Order of Penalty Assessment are correct to the extent a penalty is due. Evidentiary Findings Based on business records received from Respondent, the Division has recalculated the assessed penalty. The proposed penalty has been reduced to $27,553.78. Respondent has paid $1,000.00 for the release of the Stop Work Order, leaving a remaining penalty of $26,553.78. In determining the penalty, the Division reviewed Respondent’s business and financial records for a period of two years, from January 4, 2017, through January 3, 2019. Respondent was cooperative and forthcoming with the Division in providing its business and financial records. Penalties are calculated first by establishing the nature of the work being performed by employees. That is done by comparing the work to descriptions provided in the National Council of Compensation Insurance (NCCI) SCOPES® Manual. As relevant to this proceeding, the work being performed by persons who were employees of Respondent was as described in SCOPES® Manual class codes 5551 (Roofing - All Kinds & Drivers); 8227 (Construction or Erection Permanent Yard); 5213 (Concrete Construction NOC); and 8810 (Clerical Office Employees NOC). Workers’ compensation insurance premium rates are established based on the risk of injury associated with a particular class code. The greater the risk of injury, the greater the premium rate to insure that risk. Work such as roofing entails a significant risk of injury, and the approved manual rate is thus very high. Office and clerical work entails a very low risk of injury, and the approved manual rate is correspondingly very low. When work is performed but it is not specifically identified, e.g., laborer, the highest rated classification code for the business being audited is assigned to the employee. In this case, the highest rated classification code applicable to Respondent is class code 5551, for roofing. The 4th Amended Order of Penalty Assessment reveals payroll for individuals engaged in work described in class codes as follows: Anthony Wright - class code 5551 Donnell Eugene Johnson - class code 5551 Edward Tipton - class code 8227 Eugene Monts - class code 5213 James Dunlap - class code 5551 James Walters - class code 5551 Jorel Golden - class code 5551 Kelvin Morrison - class code 5551 Matthew Robinson - class code 5551 Vincent Marino - class code 8810 Jahru Li-Ly Campbell - class code 5551 Kevin Lee Hagan - class code 5551 Jonathan Wayne McCall - class code 5551 Terry Lyons, Jr. - class code 5551 Terry Lyons, Sr. - class code 5551 Mr. Lyons, Sr., was retained by Respondent as a subcontractor. Mr. Lyons, Sr., previously held an exemption from workers’ compensation as an officer of his company, but it had expired on December 27, 2017. Mr. Lyons, Sr., was working at the 1203 Dancy Street worksite on January 3, 2019. The evidence was sufficient to establish that Mr. Lyons, Sr., was appropriately assigned as class code 5551. His exemption was accepted up to its date of expiration, so the period applicable to the penalty calculation for Mr. Lyons, Sr., was from December 28, 2017, to January 3, 2019. Mr. Lyons, Sr.’s employees who were working at the 1203 Dancy Street worksite on January 3, 2019, were Mr. Campbell, Mr. Hagan, Mr. McCall, and Mr. Lyons, Jr. The evidence was sufficient to establish that they were employees of Respondent’s uninsured subcontractor, and that they were appropriately assigned as class code 5551. Mr. Wright and Mr. Robinson were listed on Respondent’s Profit & Loss Detail Sheet as “subcontract labor -- roofing.” Respondent was not able to demonstrate that they were covered by workers’ compensation. The evidence was sufficient to establish that Mr. Wright and Mr. Robinson were appropriately included in the penalty calculation, and that they were appropriately assigned as class code 5551. Mr. Johnson, Mr. Dunlap, and Mr. Morrison were listed on Respondent’s Profit & Loss Detail Sheet as “subcontract labor -- laborer.” Respondent was not able to demonstrate that they were covered by workers’ compensation. The evidence was sufficient to establish that Mr. Johnson, Mr. Dunlap, and Mr. Morrison were appropriately included in the penalty calculation, and that they were appropriately assigned as the highest rated classification code applicable to Respondent, class code 5551. Mr. Tipton was listed on Respondent’s Profit & Loss Detail Sheet as “subcontract labor -- handyman, yard work/clean up, truck detail.” Mr. Monts was listed on Respondent’s Profit & Loss Detail Sheet as “subcontract labor -- laborer.” Ms. Murcia testified that Mr. Marino provided information that Mr. Monts did concrete work, rather than roofing. Respondent was not able to demonstrate that they were covered by workers’ compensation. Mr. Marino indicated that Mr. Tipton and Mr. Monts should have been identified as his personal expenses, performing work at his home. However, they were identified in Respondent’s records as subcontract labor, and the payments to them were reported on Respondent’s 2017 income tax return as business expenses. They each received multiple payments over an extended period. The evidence was sufficient to establish that Mr. Tipton and Mr. Monts were employees of Respondent. The evidence was sufficient to establish that Mr. Tipton was appropriately assigned as class code 8227, and that Mr. Monts was appropriately assigned as class code 5213. Nonetheless, payments to the two were reduced by 20 percent to account for expenditures for materials, with the remaining 80 percent constituting payroll. Fla. Admin. Code R. 69L-6.035(1)(i). Mr. Marino was not an on-site employee of Respondent, but rather performed administration and clerical functions for Respondent. Mr. Marino previously had workers’ compensation, but it had been cancelled on February 28, 2015. The evidence was sufficient to establish that Mr. Marino was appropriately assigned as class code 8810. Mr. Marino obtained an exemption from workers’ compensation as an officer of Respondent on January 4, 2019. The evidence established that James Walters performed repairs to Respondent’s truck. The evidence was not clear and convincing that Mr. Walters was an employee of Respondent. Jorel Golden was identified solely as the payee on a single check image. He did not appear on Respondent’s Profit & Loss Detail Sheet, and there was no evidence as to why Mr. Golden was being paid. The evidence was not clear and convincing that Mr. Golden was an employee of Respondent. The salaries of the employees were calculated based on Respondent’s business records. The total gross payroll amounted to $170,139.07. Except for the amount of payments to Mr. Walters and Mr. Golden, that figure is supported by clear and convincing evidence. The penalty for Respondent’s failure to maintain workers’ compensation insurance for its employees is calculated as 2.0 times the amount Respondent would have paid in premiums for the preceding two-year period. The NCCI periodically issues a schedule of workers’ compensation rates per $100 in salary, which varies based on the SCOPES® Manual classification of the business. The NCCI submits the rates to the Florida Office of Insurance Regulation, which approves the rates to be applied to the calculation of premiums in Florida. The workers’ compensation insurance premium was calculated by multiplying one percent of the gross payroll ($17,013.91) by the approved manual rate for each quarter (which varied depending on the quarterly rate), which resulted in a calculated premium of $18,369.19. Clear and convincing evidence supports a finding that the Division applied the correct rates in calculating the premium. The penalty was determined by multiplying the calculated premium by 2.0, resulting in a final penalty of $36,738.38. In recognition of Respondent’s cooperation in the investigation and the timely submission of its business records, the Division applied a 25 percent reduction in the penalty ($9,184.60), resulting in a total penalty of $27,553.78. The evidence established that the Division gave every benefit of the doubt to Respondent to reduce the penalty, and its effect on Respondent, to the extent allowed within the confines of the law and the records provided.
Recommendation Based on the Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation enter a final order assessing a penalty of $27,553.78, against Respondent, Best Affordable Contractors, LLC, for its failure to secure and maintain required workers’ compensation insurance for its employees and subcontracted labor, subject to recalculation as provided herein, and subject to Respondent’s previous payment of $1,000.00. DONE AND ENTERED this 15th day of September, 2020, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of September, 2020. COPIES FURNISHED: Vincent Marino Best Affordable Contractors, LLC 1348 Clements Woods Lane Jacksonville, Florida 32211 (eServed) Leon Melnicoff, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
The Issue Whether Respondent failed to remit premiums or submit applications for insurance; misappropriated and converted funds for her own use and benefit or unlawfully withheld monies belonging to insureds as set forth in the Administrative Complaint filed herein signed August 2, 1993.
Findings Of Fact Respondent, Margaret Ann Edwards, is currently eligible for licensure and is licensed in Florida as a health insurance agent, and was so licensed at all times relevant to these proceedings. During times material, Respondent served as a general agent for LHCA. Respondent operated through a corporate entity known as Chartered Financial Advisors, Inc., which served as a clearing house for insurance agents. Insurance agents who operate as general agents are well versed in operating an insurance agency. On or about March 4, 1991, LHCA and Respondent entered into an agency agreement whereby Respondent agreed to solicit insurance products on behalf of LHCA. The agreement provided in relevant part: (2) ACCOUNTING All monies received for the Company by the General Agent for premiums, by reason of this Agreement, shall belong to the Company and shall be received and held by the General Agent in a fiduciary capacity only. The initial premiums shall be forthwith paid and delivered to Chartered Financial Advisors, Inc. All other premiums shall be forthwith paid and delivered to the Company. (5) INDEBTEDNESS If the Company, for any reason, refunds the premium on any Authorized Policy solicited by the General Agent, Representatives or employees, the General Agent shall refund to the Company any monies received by the General Agent, Representatives or employees by reason of the payment of such premiums. To the extent not refunded, said amount shall constitute an indebtedness by the General Agent to the Company. Prior to its agreement with LHCA, Respondent had been involved in the insurance business for an extended period of time and was familiar with the duties and obligations of a general agent. General agents who have good credit histories are granted "netting" authority. Netting authority is a procedure whereby the agent is given the authority to receive gross premiums from applicants for insurance and to withhold their net "commissions" from the gross premiums and remit the balance, or net premiums, to the company (LHCA). Respondent maintained a business bank account with Barnett Bank, and she was the sole signator on that account. The account was used to conduct her insurance business and to implement the netting authority arrangement that she had with LHCA. During August, 1992, LHCA became increasingly concerned about Respondent's failure to timely remit premiums due to LHCA on policies issued by the company, as well as premium refunds not being made by the Respondent to insurance consumers. LHCA made Respondent aware of these concerns by telephonic messages and by written communiques. LHCA's concerns about Respondent were not resolved and during January, 1993, LHCA terminated its agency agreement with Respondent. After termination of the agency agreement, LHCA was contacted by insurance consumers, Austin Jenkins, Bernice Caldwell, Mrs. Robert Bolling, and Robert Stopford about either policies that they had applied for and had never received or about policies which they were desirous of cancelling and/or obtaining a refund. LHCA demanded an explanation from Respondent about the complaints from the referenced consumers. Respondent thereafter sent a check to LHCA in the amount of $9,841.02 which Respondent represented as being owed to LHCA for the premium payments for insurance applications previously solicited and sold to the consumers. Respondent's check, which represented the refund of net premiums which was due and owing to LHCA, did not clear the bank and was returned for insufficient funds. Jonathan Miller of LHCA contacted the Respondent and attempted to amicably resolve the matter. Respondent advised Miller to redeposit the check as the funds were now in her account. Miller followed Respondent's directive and the check failed to clear the bank the second time due to insufficient funds. Miller did not authorize Respondent to cover refunds by using net commissions which were owed to LHCA. During this period, LHCA began receiving numerous inquiries from additional insurance consumers about the status of health insurance policies purchased through Respondent or her subagents, but for which the company had no record and had received no net premiums. The number of policies involved was approximately twelve. LHCA conducted an investigation and instructed the inquiring consumers to provide, among other things, proof of payment and other pertinent evidence to substantiate their claims. As a result, LHCA refunded premium payments to each individual consumer, including consumers Jenkins, Caldwell, Bolling, and Stopford. Austin Jenkins made application for insurance to be issued by LHCA through a subagent of Respondent and tendered a check in the amount of $3,868.00 made payable to LHCA. This check was deposited into Respondent's business account maintained at Barnett Bank. Bernice Caldwell, another consumer, also made application for insurance to be issued by LHCA through a subagent under contract with Respondent, and tendered a check in the amount of $7,072.00 made payable to LHCA. The check was deposited into Respondent's business account with Barnett Bank. Robert Bolling made application for insurance to be issued by LHCA of America, through a subagent under contract with Respondent, and tendered two checks in the amounts of $3,195.68 and $2,525.20, respectively, made payable to LHCA. These two checks were deposited into Respondent's business bank account maintained at Barnett Bank. Robert Stopford made application for insurance to be issued by LHCA through a subagent under contract with Respondent, and tendered a check in the amount of $3,996.20 made payable to LHCA. This check was also deposited into the business bank account maintained by Respondent at Barnett Bank. All of the above mentioned checks were negotiated and cleared their respective banks. The funds were thereafter transferred and credited to Respondent's business bank account maintained at Barnett. Insurance consumers Jenkins, Caldwell, Bolling, and Stopford intended their checks to be the initial premium for insurance policies which they applied for with LHCA. LHCA never received any applications for insurance or premium payments from Respondent on behalf of the above named consumers. The premium refunds made by LHCA to insurance consumers, Jenkins, Caldwell, Bolling, and Stopford were reflected on Respondent's account current statements with LHCA. As of December 31, 1993, Respondent owed LHCA the sum of $53,227.65. This sum represented premiums received by Respondent for insurance policies, but which remained unremitted to LHCA. LHCA has demanded payment from Respondent for the above refunds without success. In an attempt to recover its funds paid on behalf of Respondent, LHCA filed a civil suit in Sarasota County Circuit Court, Case No. 93-003262-CI-018. On March 9, 1994, a Summary Final Judgement was entered in the circuit court case filed against Respondent in the amount of $53,225.43. As of the date of hearing, the judgment remains unsatisfied. Respondent was involved in an automobile accident during April, 1992. The accident was the source of injuries to Respondent and limited her ability to actively engage in the operation of her agency. Under the subagency agreement Respondent utilized to hire subagents, Respondent kept approximately fifty-three percent (53 percent) of the net commission and she paid her agents amounts ranging from forty-seven percent (47 percent) up to, and in some cases, sixty percent (60 percent) of the net commissions that she received. When policies were cancelled and the subagents refused to return the premiums which they had been advanced, Respondent found herself financially unable to remit the payments either to the insureds or to LHCA as demanded. Respondent contends that Miller advised her to pay refunds from other net commissions due LHCA. As noted, Miller denies making any agreement with Respondent to use LHCA's net funds. Respondent's contention that she was told by LHCA's representative, Jonathan Miller, to deduct company net premiums from other policies to pay for refunds that were due to other consumers is not credible. In this regard, the agency agreement between Respondent and LHCA provides the procedure whereby LHCA was entitled to a refund from any premiums advanced on behalf of any authorized policies solicited by any general agent, as Respondent, or Respondent's representatives or employees. This procedure is set forth in subparagraph 5 of the agency agreement in effect between Respondent and LHCA. Additionally, the accounting procedures section of the agreement between Respondent and LHCA clearly states that all monies received for the company, as LHCA, by the general agent (Respondent) for premiums, by reason of their agreement, belong to LHCA and shall be received and held by the general agent in a fiduciary capacity only. Given these clear provisos in the agreement between the parties, Respondent's contention that she had entered into other oral agreements with LHCA for return of the premiums does not withstand scrutiny and is not credible.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Respondent's licenses and eligibility for licenses be suspended for nine (9) months, pursuant to Rule 4-231.080, Florida Administrative Code. It is further RECOMMENDED that: Petitioner enter a Final Order requiring that Respondent make satisfactory restitution to Life and Health Insurance Company of America prior to any request for reinstatement of her insurance licenses as authorized pursuant to s. 626.641, Florida Statutes. RECOMMENDED in Tallahassee, Leon County, Florida, this 18th day of October, 1994. JAMES E. BRADWELL 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 18th day of October, 1994. APPENDIX to RECOMMENDED ORDER IN CASE NO. 93-5080 Rulings on Petitioner's proposed findings of fact: Paragraph 20, adopted as modified, paragraph 18, Recommended Order. Paragraph 23, adopted as relevant, paragraphs 22 and 23, Recommended Order. Paragraph 23, adopted as relevant, paragraphs 18 and 22, Recommended Order. Paragraph 24, rejected, legal argument and/or conclusionary. Rulings on Respondent's proposed findings of fact: Paragraph 1, adopted as relevant, paragraph 10-13, Recommended Order. Paragraph 6, adopted as modified, paragraph 3, Recommended Order. Paragraph 9, rejected, as a restatement of testimony. Paragraph 10, adopted as modified, paragraphs 1 and 3, Recommended Order. Paragraph 14, rejected, irrelevant and not probative. Paragraphs 16 and 18, rejected, contrary to the greater weight of evidence, paragraphs 8 and 23, Recommended Order. Paragraph 19, rejected, irrelevant and unnecessary. Paragraphs 21-26, rejected, contrary to the greater weight of evidence, paragraphs 2,5,7, and 23, Recommended Order. Paragraphs 27 and 28, adopted as relevant, paragraphs 19 and 20, Recommended Order. COPIES FURNISHED: James A. Bossart, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 John L. Maloney, Esquire 5335 66th Street North, Suite 4 St. Petersburg, Florida 33709 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue Whether Petitioner, instead of Intervenor, is entitled to the award of RFP-DOT-98-99-4005.
Findings Of Fact The Department issued and advertised RFP-DOT-98-99-4005 (RFP) for bridge tending, maintenance and repair service contracts for movable bridges in St. Lucie and Martin counties. Theresa Martin has been the Department's District IV Contractual Services Coordinator for the past four years. Ms. Martin is responsible for reviewing all requests for contractual services contracts, and did so in the present case. In preparing RFP’s, including the RFP that is the subject of this proceeding, the Contractual Services Office follows the statutory and rule provisions of Section 287.057, Florida Statutes, and Chapter 60A, Florida Administrative Code, and utilizes the Department's Contractual Services Acquisition Procedures, Procedure Number 357-040-020-D. The RFP specifications were not protested. Three proposers submitted timely responses to the RFP: General Electric Industrial Services(GE), Old Tampa Bay Enterprises (OTBE), and C&S Building Maintenance (C&S). The Department determined that the proposals of all three vendors were responsive. Having determined that the proposals were responsive, the Department reviewed and scored the proposals in accordance with the criteria listed in the RFP. The RFP established five (5) different criteria upon which the Department was to evaluate each proposal. The criteria and the maximum allotted points for each criteria were as follows: Management Plan . . . . . . . . .35 points Technical Plan . . . . . . . . .35 points 3. Price . . . . . . . . . .. . . . 25 points Certified Minority Business .. . .5 points Executive Judgment . . . . . . . .5 points GE received the highest rating among the three proposers for its proposal and OTBE was rated second. Based on these ratings, the Department of Transportation posted its intent to award the project to GE. The RFP required submission of separate price and technical proposals. The price proposal included forms for both the proposer’s price and for certification of the proposer’s intention with respect to the use of Disadvantaged Business Enterprises (DBEs). The price proposal and technical proposal were to be submitted to the Department at the same time but in separate sealed envelopes. The price proposal and the technical proposal were then opened separately and scored separately. The technical proposals were properly reviewed and scored by a technical review committee. After the technical proposals were scored, the members of the technical review committee reviewed the price proposals and provided the Department’s contract administrators with their views as to whether the price proposal was acceptable. The technical review committee concluded that GE’s pricing was acceptable, although it exceeded the Department’s estimated budgetary ceiling. The RFP expressly provides: "This is an Indefinite Quantity Contract for which the Department has established an estimated budgetary ceiling amount of $480,000.00. The Contractor shall not exceed the estimated budgetary ceiling amount without an executed Supplemental Agreement. A Supplemental Agreement to increase the estimated budgetary ceiling amount may be entered into based upon Department need and availability." The Department did not interpret the "estimated budgetary ceiling" as an absolute cap. Rather, the Department considered the "estimated budgetary ceiling" a budgeting tool that gave the proposers an indication of the Department’s estimation of the dollar amounts necessary and available for the contract. The estimated budgetary ceiling amount is typically based upon the Department's recent expenditures in similar contracts. Given that the budgetary ceiling in the RFP is an estimate, the RFP specifically authorizes the Department to amend or supplement the contract with additional dollars during the course of the project. The budgetary modification process provided by the execution of Supplementary Agreements for indefinite quantity contracts occurs on a regular basis in District IV and is provided for in the Department's governing Contractual Services Procedures. Consistent with the Department's interpretation of the "estimated budgetary ceiling," a price proposal that was higher than the budgetary estimate would not be considered irregular and rejected as non-responsive. OTBE apparently believed that the RFP’s statement of an "estimated budgetary ceiling" created an absolute cap on the amount of permissible bids. Based on its mistaken belief, OTBE submitted a price of $479,987.00, three dollars below the Department’s estimated budgetary ceiling amount. Both GE and C&S bid amounts that exceeded the estimated budgetary ceiling with GE’s total price bid being $575,100.00. Although the price proposals of GE and C&S exceeded the estimated budgetary ceiling of $480,000.00, the Department did not consider either of these proposals non-responsive. The Department’s decision in this regard was consistent with its definition and interpretation of estimated budgetary ceiling. To determine the number of points each proposal would be awarded in the price category, the Department applied the mathematical formula that was specified in the RFP. According to the RFP: THE PRICE USED IN AWARDING POINTS WILL BE THE GRAND TOTAL SHOWN ON PRICE PROPOSAL FROM "C." ALL RESPONSIVE PRICE PROPOSALS WILL BE SCORED IN RELATION TO THE LOWEST PRICE PROPOSAL USING THE FOLLOWING FORMULA: (Low proposal/subject proposal x 25 points = awarded price points) The points awarded for the price proposal after applying the aforementioned mathematical formula were applied to the price proposal and then added to the particular proposer’s technical proposal point total. Pursuant to the formula specified in the RFP, the low price proposal received 25 points and the other proposals received a proportionate share of 25 points equal to the ratio of the low price to the proposer’s price. The Department reviewed and scored the prices bid by GE, OTBE, and C&S using the price formula established in the RFP. OTBE, with the low bid a price of $479,100.00, was awarded 25 points in the price category. The RFP formula was also applied to GE’s price bid of $575,100.00; as a result thereof, GE was awarded 20.87 points in the price category. OTBE received the benefit of its low bid by receiving the maximum points in the price category. There was no minority business enterprises or DBE goal set for this RFP. However, pursuant to Section 287.057(6)(c), Florida Statutes, the Department provided a point preference for proposers that certified that they would subcontract at least 3 percent to 10 percent of the contract value to certified DBEs. The RFP provided that: The Department will add up to 5 points to the scores of firms (non-CDBE) utilizing Certified DBE’s as subcontractors for services or commodities as follows: 10% and above of total project dollars - 5 points, 3% - 9.9% of total project dollars - 2 points Complete and attach the DBE Preference Points Certification Form (Form "D") in the Price Proposal if CDBE preference points are to be considered. The DBE Preference Certification Form was included as part of the RFP package and was required to be submitted as part of each proposer's price package. Furthermore, the face of the form also required each proposer to declare if it intended to subcontract part of the work to DBEs and specified the scoring for certification of an intent to use DBEs. The DBE Preference Certification Form also advised vendors that a proposer who certified an intent to subcontract at least 10 percent of the contract was awarded 5 points; that a proposer who certified an intent to subcontract more than 3 percent, but less than 10 percent, was awarded 2 points; and that a proposer who did not commit to an intention to subcontract to DBEs would receive no additional points in this category. The purpose of utilizing the DBE Preference Form Certification is for the Department to provide an incentive for contractors to utilize DBEs on Department projects and to bind the proposer to the commitment that is certified on DBE Preference Certification Form. However, when the Department utilizes the form, it is a discretionary election of the proposer to take advantage of utilizing a DBE and receive the additional points. OTBE’s DBE Preference Certification Form stated that OTBE did not intend to use DBEs. Thus, OTBE did not receive any points in the certified business criteria. GE stated on its DBE Preference Certification Form that it intended to subcontract at least 10 percent of the contract to DBEs. Based on GE's certification of an intention to use DBEs for 10 percent of the contract work, in accordance with the provision of the RFP, the Department awarded GE 5 points. On the DBE Preference Certification Form, there was a place for the proposer to list the DBEs it proposed to use and to indicate the type of work and/or commodities that the DBEs would provide. On its DBE Preference Certification Form, GE listed the two DBE entities that it intended to use on the project: Advanced Marketing Consultants and J.C. Industrial Manufacturing Corp. (JC Machines). With regard to the type of work that could be subcontracted to these DBEs, GE indicated on its DBE Preference Certification Form that Advanced Marketing Consultants could provide payroll services and that JC Machines could perform mechanical repairs. The Department’s District IV Contracting Office reviewed GE’s price proposal, including GE’s DBE Preference Certification Form. As part of that process, the District IV contract administrator checked with the Department’s Central Office in Tallahassee, Florida, and confirmed that the DBE’s listed in GE’s proposal were certified DBEs. There is sufficient work available under the contract specifications for GE to meet its DBE commitment using the DBEs that GE listed in its proposal. Moreover, the DBEs listed by GE are capable of performing much of the work required in the RFP’s Scope of Services. The RFP required that each proposal include the names of qualified personnel that are able to perform the job duties and responsibilities outlined in the RFP specifications and that the proposer intended to use if it were awarded the contract. In this case, all three proposers, GE, OTBE, and C&S, submitted the same three key personnel for the bridge superintendent, bridge electrician, and bridge mechanic positions. At the time the proposals were submitted, the key personnel included in those proposals were all working in the positions for which they were listed. Apparently, these individuals had agreed to continue in their positions regardless of which proposer was awarded the contract. The RFP did not require that the personnel listed in a proposal be current employees of the proposer. Rather, the Department expected that these individuals would be employed by the proposer after the vendor was awarded the contract. The RFP specifies the percentage of work that the successful proposer may sublet under the contract. Section 6.0 of the RFP's Scope of Services (Section 6) provides in relevant part: The Contractor shall not sublet, transfer, assign or otherwise dispose of the contract or any portion thereof, or his right, title or interest therein without written approval of the Maintenance Engineer otherwise and in accordance with this agreement. Contractor shall not sublet more than fifty percent (50%) or [sic] a non set-a-side project. Based on the above-quoted provision, the successful proposer, as the prime contractor, can subcontract no more than 50 percent of the value of the contract. Notwithstanding the RFP’s limitation on the percentage of work that may be subcontracted, the RFP did not require proposers to state what percentage of the contract work they intend to subcontract. Moreover, the RFP did not require the vendors to submit proposed subcontracts nor did the RFP specify required terms for subcontracts. Therefore, at the time the RFP’s were evaluated, the Department did not and could not determine precisely what portion of the contract a proposer intended to subcontract or to whom work would be subcontracted. The Department interprets Section 6 to be a contract performance issue. The reason is that the percentage of the work that is subcontracted by the prime contractor after execution of the agreement is monitored by the Department during the performance of the contract. Such monitoring is accomplished by the Department’s requiring that all requests to subcontract portions of the contract be approved by the Department's project engineer. GE or any other successful proposer is obligated to comply with all the requirements and specifications of the RFP and contract. Failure of a successful proposer to comply with these requirements is a contract performance issue and not an issue that the Department is required or able to address at the proposal review and selection phase. In the instant case, the Department intended to award the contract to the responsive and responsible offerer whose proposal it determined to be the most advantageous to the State taking into consideration price and other criteria. GE was the apparent highest ranked, responsive, and responsible proposer or offerer with a total score of 87.20, including 20 points in the price category and 5 points for certifying its intent to use DBEs. OTBE was the second ranked proposer with 82.67, including 25 points for the price category; OTBE properly received no points for the DBE Preference Certification.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter a final order awarding the contract to GE Industrial Systems and dismissing Petitioner’s challenge to the award of RFP-DOT-98-99- 4005. DONE AND ENTERED this 22nd day of June, 1999, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD 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 22nd day of June, 1999. COPIES FURNISHED: Thomas F. Barry, Secretary ATTN: James C. Myers, Clerk of the Agency Proceedings Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Pamela Leslie, General Counsel Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Brian F. McGrail Assistant General Counsel Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Brant Hargrove, Esquire 1545 Raymond Diehl Road, Suite 150 Tallahassee, Florida 32301 Jonathan Sjostrom, Esquire Steel, Hector & Davis, L.L.P. 215 South Monroe Street, Suite 601 Tallahassee, Florida 32301-1804
The Issue The issues in this case are as follows: Whether a refund request submitted by Petitioner, FICURMA, Inc. (Petitioner or FICURMA), to Respondent, Department of Financial Services, Division of Workers' Compensation (Respondent or Department), on January 21, 2010, requesting a refund of assessments paid during 2005 and 2006, is barred pursuant to section 215.26(2), Florida Statutes (2009),1/ because the refund request was not submitted within three years after the assessment payments were made. Whether the doctrine of equitable estoppel can be raised to allow a refund that would otherwise be time-barred by section 215.26(2), and, if so, whether the facts show the sort of rare circumstances that would justify application of that doctrine against a state agency.
Findings Of Fact The Department is the agency that has been statutorily designated as the administrator of the SDTF (§ 440.49, Fla. Stat.) and as the administrator of the WCATF (§ 440.51). The Department's administration of these two funds includes making the requisite assessments to the entities required to pay the assessments and ensuring payment by the assessable entities for deposit into the state Treasury. §§ 440.49, 440.51. As the state agency with the responsibility for the collection of these assessments, the Department is charged with the authority to accept applications for refunds pursuant to section 215.26, for overpayments of assessments, for payment of assessments when none are due, or for payments of assessments made in error. The Department is responsible for making determinations on applications for refunds of SDTF and WCATF assessments. "FICURMA" stands for Florida Independent Colleges and Universities Risk Management Association. FICURMA, Inc., is an independent educational institution self-insurance fund that was established in December 2003, pursuant to the authority of section 624.4623, Florida Statutes (2003). FICURMA was approved as a Florida workers' compensation self-insurer meeting the requirements of section 624.4623, effective December 10, 2003. FICURMA's members self-insure their workers' compensation claims under chapter 440. On November 16, 2004, Evelyn Vlasak, the assessments coordinator for the SDTF and WCATF assessments, wrote to Ben Donatelli, FICURMA's executive director, to advise that the assessments unit of the Department's Division of Workers' Compensation (Division) received notice that FICURMA had been approved to write workers' compensation insurance in Florida, effective December 10, 2003. Therefore, Ms. Vlasak informed FICURMA that it was required to register with the Division; it was required to pay assessments to the WCATF and SDTF, calculated on the basis of premiums paid to FICURMA by its members; and it was required to submit quarterly premium reports to the Division. Ms. Vlasak enclosed quarterly report forms for FICURMA to catch up on its premium reports for the last quarter of 2003 and the first three quarters of 2004. Ms. Vlasak also enclosed Bulletin DFS-03-002, dated June 26, 2003, which attached two Orders Setting Assessment Rates, one for the WCATF for calendar year 2004, and the other for the SDTF for fiscal year 2003-2004. The two orders, issued by E. Tanner Holloman, then-director of the Division, included a Notice of Rights. This notice advised of the right to administrative review of the agency action pursuant to sections 120.569 and 120.57, Florida Statutes, by filing a petition for hearing within 21 days of receipt of the orders. In bold, the Notice of Rights concluded with the following warning: "FAILURE TO FILE A PETITION WITHIN THE TWENTY-ONE (21) DAYS CONSTITUTES A WAIVER OF YOUR RIGHT TO ADMINISTRATIVE REVIEW OF THIS ACTION." Mr. Donatelli testified that Ms. Vlasak's letter came as a surprise, because he and the others involved in lobbying for the passage of section 624.4623 and setting up FICURMA, pursuant to the new law, believed that FICURMA was not subject to SDTF and WCATF assessments. Mr. Donatelli said that he called Ms. Vlasak to ask why FICURMA had to pay when according to their interpretation of the statute authorizing FICURMA to be created, FICURMA was not subject to the assessment requirements. Mr. Donatelli said that in response to his question, Ms. Vlasak stated that it was her interpretation of the statute that FICURMA was required to pay assessments. She stated that she would have that confirmed by "Legal," but that FICURMA should be prepared to start paying in order to avoid penalties for late payment. Mr. Donatelli testified that "obviously with her response, then we started to think hard about reading [section 624.4623] again, and we did, and didn't see any reason that we needed to pay this." But he also testified that when Ms. Vlasak said she would confirm her interpretation with the legal department, he began calculating what the assessments might cost, because they had not been collecting funds to cover the assessments from its members, since they did not know they had to pay the assessments. The next communication received by FICURMA from Ms. Vlasak came by way of a December 20, 2004, memorandum to all carriers and self-insurance funds, providing information to assist with computation of premiums to be reported for the fourth quarter 2004 SDTF and WCATF assessments. At around the same time, FICURMA received Bulletin DFS 04-044B. This bulletin attached copies of the two Orders Setting Assessment Rates signed by Tom Gallagher, then-Chief Financial Officer. One order was for the WCATF for calendar year 2005 and the other order was for the SDTF for fiscal year 2004-2005. As with the previous bulletin attaching two orders for the prior year, this mailing included a Notice of Rights, which provided a clear point of entry to contest the action by filing a petition for administrative hearing within 21 days of receipt. Mr. Donatelli acknowledged that the two Holloman orders and the two Gallagher orders all ordered FICURMA to pay the SDTF and WCATF assessments. Mr. Donatelli testified that after reviewing the second set of orders received, FICURMA did not believe it had any alternative but to pay the assessments. However, because there was a reference to some "legal stuff," he "asked the legals" to take a second look, because this was not an insignificant payment. In fact, the calculation of assessments to catch up for the prior quarters of missed payments was more than $104,000. When asked why, if he believed FICURMA was not assessable, Mr. Donatelli did not direct "the legals" to file a petition for an administrative hearing on FICURMA's behalf to contest the assessment rate orders, Mr. Donatelli's response was: "Basically, it was our respect of the opinion of the Office Of Insurance Regulations [sic: Division of Workers' Compensation] that said that we had to pay that. I mean--we were basically trying to--being good citizens." Accordingly, FICURMA chose to not challenge the assessments, or otherwise object to paying the assessments. Instead, FICURMA transmitted payment on December 26, 2004, for SDTF and WCATF assessments calculated to be due for the fourth quarter of 2003 and the first three quarters of 2004, totaling $104,282.11. Neither this payment, nor subsequent FICURMA assessment payments were made "under protest." Mr. Donatelli's question to Ms. Vlasak sometime in late 2004--whether FICURMA was assessable under either section 440.49 (for the SDTF) or section 440.51 (for the WCATF)--was never put in writing. However, FICURMA's general counsel wrote to Ms. Vlasak on January 7, 2005, to raise a different assessment question: "whether [FICURMA] is assessed and therefore required to pay into the [SDTF] as it was established within the past year and as such none of the group's claims would be eligible for reimbursement from the Fund." This question, limited to the SDTF assessments, was not based on the status of FICURMA as an entity authorized by section 624.4623 but, rather, was based on the fact that the SDTF had been closed for certain new claims before FICURMA was established. After no response was received, FICURMA's general counsel wrote a second time on February 14, 2005, attaching another copy of the January 7, 2005, letter. Neither of these letters asked about Mr. Donatelli's prior telephonic inquiry regarding whether FICURMA was assessable at all because of its status as an entity formed under section 624.4623. Ms. Vlasak responded in writing after the second written inquiry by FICURMA's general counsel that addressed the propriety of the SDTF assessments. Ms. Vlasak stated the Department's position that assessments were to continue to all assessable entities, even though the SDTF was being prospectively abolished. Ms. Vlasak concluded, therefore, that FICURMA "is not exempt" from the SDTF assessments. Ms. Vlasak's letter dated February 16, 200[5],4/ responded only to the written inquiry in the January 7, 2005, letter and February 14, 2005, reminder letter and, thus, addressed only the limited question about SDTF assessments. Thereafter, until 2009, FICURMA had no further telephonic or written communications with the Division about FICURMA's assessability. Instead, FICURMA fell into the pattern of making quarterly premium reports and assessment payments, pursuant to notice by the Department. In total, FICURMA's payments received by the Department in 2005 and 2006 add up to $288,607.32 in SDTF assessments and $63,164.70 in WCATF assessments. The breakdown of assessment payments credited by quarter is as follows: 2003, Q 4 (received 1-11-05) SDTF: $7,652.36 WCATF: $2,962.75 2004, Q 1 (received 1-11-05) SDTF: $22,957.34 WCATF: $ 7,618.49 2004, Q 2 (received 1-11-05) SDTF: $23,685.39 WCATF: $ 7,860.20 2004, Q 3 (received 1-11-05) SDTF: $23,685.39 WCATF: $ 7,860.19 2004, Q 4 (received 2-10-05) SDTF: $25,543.10 WCATF: $ 8,476.00 2005, Q 1 (received 5-2-05) SDTF: $29,258.54 WCATF: $ 4,854.45 2005, Q 2 (received 7-29-05) SDTF: $29,258.54 WCATF: $ 4,854.45 2005, Q 3 (received 11-1-05) SDTF: $29,350.54 WCATF: $ 4,854.85 2005, Q 4 (received 2-2-06) SDTF: $27,193.93 WCATF: $ 4,527.53 2006, Q 1 (received 5-1-06) SDTF: $23,340.73 WCATF: $ 3,098.33 2006, Q 2 (received 7-26-06) SDTF: $23,340.73 WCATF: $ 3,098.33 2006, Q 3 (received 10-27-06) SDTF: $23,340.73 WCATF: $ 3,098.33 In 2007, 2008, and part of 2009, FICURMA continued these quarterly payments pursuant to notice by the Department, paying quarterly assessments to the SDTF totaling $363,441.86 and to the WCATF totaling $31,132.88. In the 2009 legislative session, the adoption of a new law authorizing another type of self-insurance fund contained language that caused Ms. Vlasak to question whether certain other self-insurance funds authorized under different statutes were assessable under sections 440.49 and 440.51. The 2009 law, codified in section 624.4626, Florida Statutes (2009), specifically provided that a "self-insurance fund that meets the requirements of this section is subject to the assessments set forth in ss. 440.49(9), 440.51(1), and 624.4621(7), but is not subject to any other provision of s. 624.4621 and is not required to file any report with the department under s. 440.38(2)(b) which is uniquely required of group self-insurer funds qualified under s. 624.4621." (Emphasis added). In contrast, section 624.4623, the statute under which FICURMA was formed, contained the following language: "An independent education institution self-insurance fund that meets the requirements of this section is not subject to s. 624.4621 and is not required to file any report with the department under s. 440.38(2)(b) which is uniquely required of group self-insurer funds qualified under s. 624.4621." (Emphasis added). Ms. Vlasak asked the Division's legal office to analyze the legal question and give advice. Meanwhile, Ms. Vlasak and her supervisor, Mr. Lloyd, agreed that the standard quarterly assessment notices would not be sent to FICURMA, so that the Department could consider the question of its assessability after receiving advice from its legal office. By not sending the notices, the clock would not start on the deadlines for FICURMA to pay the assessments without imposition of a statutory penalty for late payment. FICURMA, however, had been well-conditioned to expect those quarterly notices and became concerned when the expected notices did not arrive. Mr. Donatelli and his assistant, Joanne Hansen, called Ms. Vlasak several times to ask why nothing had been received yet. They ultimately spoke with Ms. Vlasak, who advised that the Department was reviewing whether FICURMA was assessable, and it did not have to worry about not receiving the notices because payments would not be due until after the notices were received. On October 1, 2009, the Department's legal staff issued a Memorandum of Opinion regarding independent education institution self-insurance funds (like FICURMA), authorized by section 624.4623. This opinion analyzed section 624.4623, as well as the statutory terms used to identify which entities are subject to assessments in section 440.49 (for the SDTF) and section 440.51 (for the WCATF). Based on that analysis, the opinion concluded that self-insurance funds qualifying under section 624.4623 (like FICURMA), are not subject to SDTF or WCATF assessments. Although the analysis was prompted by a different self-insurance fund statute adopted in 2009, the conclusion reached as to section 624.4623 entities would apply to the entire time period since the adoption of section 624.4623 in 2003. The Department witnesses testified unequivocally that the legal opinion was advisory only, and it was up to the administration to make the policy decision to follow the advice given. However, it is difficult to discern any "policy" choice to be made, since the plain import of the opinion was that the statutes were not susceptible to any different interpretation other than that section 624.4623 entities were not subject to SDTF or WCATF assessments. Nonetheless, the legal opinion was reviewed, and, ultimately, the Department agreed with the advice. On November 14, 2009, Ms. Vlasak and Mr. Lloyd called Mr. Donatelli to advise that FICURMA was not required to pay SDTF or WCATF assessments anymore. In addition, they discussed how FICURMA could go about requesting refunds of assessments previously paid. However, they alerted FICURMA to the fact that section could present a problem with respect to requests for refunds of payments made more than three years ago. At the time of this conversation, all of the assessments paid in 2005 and 2006 had been made more than three years ago, while the payments made in 2007-2009 were within the three-year window. On January 12, 2010, Ms. Vlasak wrote to FICURMA, sending the forms for applying for refunds. In the letter, she reiterated the potential problem for refund requests of payments made more than three years ago. Accordingly, she recommended that FICURMA submit separate requests for payments made within the last three years versus those made more than three years ago, as the former would be able to go through more easily. FICURMA completed four separate refund application forms: one for SDTF payments made in 2005 and 2006; one for WCATF payments made in 2005 and 2006; one for SDTF payments made in 2007-2009; and one for WCATF payments made in 2007-2009. The refund forms state that the refund requests are submitted pursuant to section 215.26; FICURMA did not fill in the blank that is required to be filled in if the refund requests were being submitted under any other statute besides section 215.26. The applications were dated January 20, 2010, and were received by the Department on January 21, 2010. The Department approved the refund applications for payments made in 2007-2009 and caused warrants to be issued to FICURMA to refund $363,441.86 for SDTF assessments and $31,132.88 for WCATF assessments. By authorizing refunds of assessments paid in 2007, 2008, and 2009, the Department has acknowledged that FICURMA should never have been assessed under sections 440.49 and 440.51 and should never have been served annually with the Orders Setting Assessment Rates or quarterly with assessment notices. The Department acknowledged FICURMA's entitlement to refunds despite FICURMA's failure to challenge the assessments in 2007, 2008, and 2009 pursuant to the Notice of Rights provided annually. However, as warned, on May 12, 2010, the Department issued a Notice of Intent to Deny Applications for refund of the 2005 and 2006 payments to the SDTF and the WCATF. The sole reason for the denial was that section 215.26(2) required that refund applications be filed within three years after the right to the refund accrued "or else the right is barred." The Department noted--as stated on the refund application form--that the three-year period normally commences when the payments are made. No evidence was presented regarding what are considered "normal" circumstances or what sort of not-normal circumstances would have to be shown to establish that the three-year period in section 215.26(2) would commence at some other point in time, rather than when payments are made.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Respondent, Department of Financial Services, Division of Workers' Compensation, enter a final order denying the requests for refunds of SDTF and WCATF assessments paid by Petitioner, FICURMA, Inc., in 2005 and 2006, because Petitioner's requests are time-barred by section 215.26(2) and because Petitioner has not met its burden of proving that equitable estoppel should be applied against Respondent. DONE AND ENTERED this 8th day of July, 2011, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of July, 2011.
The Issue The issue is whether Petitioner is entitled to be registered as a risk retention group that has the right to do business in Florida.
Findings Of Fact In February 1998, Petitioner was incorporated in the State of Hawaii. On April 6, 1998, the State of Hawaii licensed Petitioner as a risk retention captive insurance company, authorized to provide its members contractual liability insurance in the manner provided by Chapter 431, Article 19, Hawaii Revised Statutes. Petitioner submitted an "Application for Registration as a Risk Retention Group" dated February 3, 1999, to Respondent. Along with the application, Petitioner furnished Respondent a copy of the plan of operation that it had previously submitted to Hawaii, an Appointment of the Insurance Commissioner of the State of Florida to accept service of process, and a resolution by Petitioner's Board of Directors authorizing the appointment. Petitioner furnished Respondent other information, including, but not limited to, the "Statement of Actuarial Opinion of PrimeGuard" for the year ended December 31, 1998, its annual statement for the year ended December 31, 1998, and its quarterly statement as of March 31, 1999, in the form prescribed by the National Association of Insurance Commissioners. Petitioner had previously furnished Hawaii and the other states in which it was doing business with this information. Respondent requested additional information for each of Petitioner's directors and officers, including the following: biographical affidavits, releases of information forms, waiving any right of confidentiality; fingerprint cards; and background investigative reports. Respondent also requested Petitioner to furnish an economic feasibility study for Florida, an organizational chart, copies of relevant Hawaii law, documents relating to the relationship between Petitioner and First Assured Warranty Corporation (FAWC), financial statements for FAWC, information regarding an entity described as "Transportation American Group," and copies of agreement relating to Petitioner's initial funding. Petitioner did not furnish Respondent with the requested information. By letter dated February 21, 2000, Respondent advised Petitioner that its application was incomplete and therefore denied. On or about June 22, 2000, Respondent issued the Amended Letter of Disapproval referenced above in the Preliminary Statement. At the time of the hearing, Petitioner was registered as a non-domiciliary risk retention group in over 30 states. In 1997, Respondent approved the registration of two non-domiciliary risk retention groups, both of which were chartered in Vermont. The business plans of these risk retention groups provide that they will spread and assume the liabilities of their members' failure to perform under home warranties that their members issue, and will directly perform those obligations should the member not do so. These groups are: (a) United Home Insurance Company, owned by Beezer Homes, USA, Inc. and its wholly-owned subsidiaries; and (b) Columbia National Risk Retention Group, owned by the Ryland Group and its wholly-owned operating subsidiaries. As of December 31, 1999, Petitioner had only three members. Two members were "third party obligors" or automobile warranty companies that market, issue and administer automotive service warranties. The third member was a "dealer-obligor." As of March 1, 2000, Petitioner had seven members. Five members were auto dealers in Oklahoma, and two were warranty companies in Colorado. FAWC was one of the two warranty companies. Petitioner had no members in Hawaii, its state of incorporation and charter. In the "insurance policy" between Petitioner and the dealers, the phrase "the Company" refers to Petitioner. The term "insured" is defined as "[t]he person, corporation, partnership or other entity, who is a member of PrimeGuard and participates in PrimeGuard's Administrator's program. In addition, the Insured issued an accepted and validated ESA [extended service agreement] to the Purchaser and is named on the ESA as the Obligor." Petitioner's Articles of Incorporation limit its board of directors to three members. Petitioner has two types of stock, series A redeemable preferred (preferred) and common. Holders of both types of stock have voting rights. The holders of preferred stock as a class are entitled to elect at least 40 percent, or two of the three directors. FAWC owns all of Petitioner's preferred stock; therefore, FAWC has the right to elect the majority of the board. Petitioner issues its members one share of common stock at a cost of $1 per share. FAWC owns 100,000 shares of common stock; it has the right to one vote per share of common stock. The six other members have one share of common stock each for a total of six votes. The holders of the common stock are entitled to vote on the third director. Because FAWC has the majority of the common stock, it also controls the election of the third director. Only the class of shareholders that elects a director may fill a vacancy in the position of that director. Therefore, FAWC will always control the election of Petitioner's board, which may take any action regarding Petitioner's management with or without a formal meeting. FAWC owns 650,000 shares of preferred stock. With one vote per share of stock, FAWC has 750,000 votes, 650,000 votes from its preferred stock and 100,000 votes from its common stock. Petitioner can take no significant action (merger, payment of dividends, or entry into reinsurance agreements) without the consent of the preferred stockholders. Therefore, Petitioner cannot take any such action without the approval of FAWC. The Articles of Incorporation state that the preferred stock is redeemable. Petitioner asserts that its goal is redemption of that stock. However, as of the date of the hearing, no preferred stock has been redeemed. The common stock issued to the five auto dealers has no investment potential. Petitioner has no authority to demand that its members make up a deficiency. On its face, Petitioner's plan of operation provides that only persons or entities who are obligated to perform under motor vehicle service warranties, and who are members and equity owners of Petitioner, are to be insured by Petitioner; the plan reflects that Petitioner has as its owners only persons or companies who comprise the membership of Petitioner and who are provided insurance by Petitioner. Additionally, the plan provides that Petitioner will not, itself, sell or provide motor vehicle service warranties or extended service warranties to consumers or owners of automobiles, but will instead accept and spread, and issue insurance policies for the liability exposure of its members' failure or inability to perform their obligations under motor vehicle service warranties, which the members have provided to consumers. Petitioner has designated FAWC as the administrator of its extended service agreement (ESA) program. FAWC is required to establish a "Dealer/Administrator Agreement" which must be signed by FAWC and dealers, who enroll in the ESA program and "sell" the ESAs. Petitioner obtains its business through FAWC and these dealer members. Petitioner's actuaries determine the prices that it will charge for the ESAs. FAWC then provides the dealers with pricing information regarding each of Petitioner's ESA programs. Petitioner issues the ESAs, not the dealers. The dealers merely sell the ESAs to their customers, the general public. When auto dealers sell a warranty to car buyers, they enter certain information into FAWC's computer system, which automatically displays the "best coverage" for the particular vehicle, based on mileage, age, and other guidelines. The dealers enter their "markup percentage or fixed dollar amount markup," which is automatically added to the "dealer cost" to produce the suggested list price. In other words, dealers are paid a commission for each warranty sold. The dealers keep the commission and remit the "net dealer cost" to FAWC. The net dealer cost first goes to FAWC, then to Petitioner as its premium for the issuance of the warranty. The dealers pay no part of the premium. FAWC decides whether to accept or reject the applications for ESAs submitted by dealers. Dealers may not sell an ESA on a vehicle that does not meet Petitioner's underwriting guidelines. FAWC's computer system generates the ESA acceptance or rejection postcards for mailing directly to the ESA holders. This is exactly the way an insurance agent sells insurance for an authorized insurer. In this case, the dealer sells a warranty issued by Petitioner. FAWC's computer system provides instant access to each dealer's complete history "in regards to monthly production." In the insurance industry, a producer is an insurance salesman. Every ESA contains "convenience benefits," including towing coverage, substitute car rental coverage, tire/road hazard protection, lost key/lockout assistance, and trip interruption protection. A customer, dealer, or transient repair facility may file a claim for service directly to FAWC. FAWC processes the claim, reports it to Petitioner, and requests claim payment from Petitioner. Petitioner sends funds for claim payment to FAWC, which issues the check for the repair directly to the customer (reimbursement), dealer, or transient repair facility. Pursuant to the ESA application, FAWC has sole discretion to determine whether a particular repair or replacement of a part is covered by the ESA. FAWC must pre- authorize all services provided under an ESA, except for certain emergency repairs. FAWC requires a dealer to "highlight the parts and labor charges for which you expect payment." A dealer must obtain an authorization number from FAWC before the dealer can begin making repairs. The only time that the dealer is involved in the claims process is when dealer makes the actual repairs. The dealer has no obligation to make the repairs. Petitioner will either repair or replace, or pay for the repair or replacement of any warranted failures to a covered vehicle. When ESA owners wish to cancel their warranties, they send FAWC a written request. FAWC processes the cancellation and requests the unearned premium from Petitioner. Petitioner refunds the unearned premium for the warranty directly to the purchaser, not the dealer. FAWC audits each dealer's earned loss ratios. FAWC will take corrective action against a dealer if necessary. Corrective action may include, but is not limited to, imposing a surcharge on all ESAs a dealer writes or negotiating a discounted repair pricing structure. If a dealer has too many claims, the dealer may be required to give up its share of common stock. In that case, Petitioner will reimburse the dealer for the price of its stock. Petitioner has purchased "New and Used Automobile Warranty Aggregate Stop Reinsurance" from Swiss Re America. In Petitioner's application to become a captive insurance company in the State of Hawaii, Petitioner could not provide financial information about its owners/insureds because it could not begin operations until it was licensed in Hawaii and registered in the jurisdictions in which it intended to market and insure risks. Petitioner provided the State of Hawaii with additional information in a supplemental application. This information indicates that Petitioner's line of business would be automotive service contracts. Petitioner projected that it would insure approximately 3,500 vehicles in the first year. Petitioner set forth the following marketing strategies: First Assured will use its own marketing force to initially solicit automobile dealers within the states of Colorado, Arizona, New Mexico and Utah. By developing a service contact [sic] that offers a variety of comprehensive coverage options, many customer-friendly features, and a competitive price, First Assured believes that it can and will capture a respectable share of the marker. Most importantly, the level of service that First Assured will provide its dealers will be unmatched in the industry. There is no evidence that Hawaii ever made a determination that Petitioner was structured properly as a risk retention group. Moreover, Hawaii did not license Petitioner as an insurer. Instead, Hawaii licensed Petitioner as a captive insurance company to provide contractual liability insurance to its members under Article 19, Hawaii Revised Statutes. Neither Petitioner nor FAWC is licensed in Florida as a motor vehicle service agreement company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent enter a final order denying Petitioner's application to register as a risk retention group. DONE AND ENTERED this 3rd day of October, 2000, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 3rd day of October, 2000. COPIES FURNISHED: John Keller, Esquire Margaret-Ray Kemper, Esquire Ruden, McClosky, Smith, Schuster, & Russell, P.A. 215 South Monroe Street, Suite 815 Tallahassee, Florida 32301 Robert Prentiss, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307 Honorable Bill Nelson Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300
The Issue The issues in these consolidated cases are: (1) whether the Respondent should award Project/Job No. 15030-2531, RFP No. DOT-90/917002-RA to the Petitioner or to John C. Putnam; (2) whether the Respondent should award Project/Job No. 15010-2540, RFP No. DOT-90/91-7003-RA to the Petitioner or to George A. Cuddeback; and (3) whether the Respondent should award Project/Job No. 26090-2522, RFP No. RFP-DOT-2-90-003, to the Petitioner or to Richard S. Hale.
Findings Of Fact On or about October 19, 1990, the Respondent, the Department of Transportation (DOT or Department), requested proposals for appraisal services in connection with the condemnation of road right of way. Three of the requests for proposals are identified as follows: (1) in District VII, Project/Job No. 15030-2531 (State Road 686, East Bay Drive, Missouri Avenue to East of Highlands, Pinellas County), RFP No. DOT-90/917002-RA, hereafter referred to as RFP 7002 ; (2) also in District VII, Project/Job No. 15010-2540 (State Road 686, West Bay Drive, Missouri to Second Avenue, Pinellas County), RFP No. DOT-90/91- 7003-RA, hereafter referred to as RFP 7003; and (3), in District II, Project/Job No. 26090-2522 (State Road 24, Archer Road, Alachua County), RFP No. RFP-DOT-2- 90-003. The DOT has been decentralized to the extent that each district handles requests for proposals for work within its geographical boundaries. The central office in Tallahassee, establishes general procedures for the districts to follow, provides support services and makes suggestions but does not always require that its suggestions be followed, leaving that for the districts to decide, along with the description of the scope of the work and other aspects of the process. In the requests for proposals (RFPs) in issue in this case, both District VII and District II followed the general procedures of selecting an appraisal service from among the respondents to the RFPs by scoring the respondents on price and other criteria designed to rank the quality of the appraisal service offered. With one exception, the point system and criteria are the same for all three RFPs in issue in this case. In all three cases, evaluation of the responses to the RFPs was done by a three-member committee that included the district appraisal contracts administrator. District VII provided that proposals had to be submitted by November 16, 1990, for evaluation and posting of evaluation results on November 26, 1990. District II provided that proposals had to be submitted by November 19, 1990, for opening on November 20, 1990. The Petitioner, D. J. Leggate Appraisal Service, Inc. (Leggate), submitted responses to all three of the RFPs. All of the contracts were awarded to an RFP respondent other than Leggate. On RFP 7002, Leggate received a score of 37.44 out of a possible maximum score of 60, the third highest score; the successful bidder, John C. Putnam, received a score of 45.33. On RFP 7003, Leggate's score was 39.52 out of 60, again the third highest score; George Cuddeback was awarded this contract with a score of 47.14. On the Alachua County RFP, Leggate's score was 33.01 out of a possible maximum score of 55, only the sixth highest scorer out of eight respondents; Richard S. Hale was the successful bidder with a score of 42.66. The Petitioner made some general claims, and presented some evidence in an attempt to prove, that the criteria and scoring system were too subjective. But the evidence did not prove that the criteria and scoring system were so subjective as to be facially arbitrary. The DOT witnesses adequately explained the criteria and scoring system. Although some of the criteria were not susceptible to completely objective evaluation, even those criteria established specific enough standards to ascertain that the evaluations were not done in a generally arbitrary fashion. Except as referenced in Finding 6, the Petitioner did not attack the scores given to Putnam, Cuddeback or Hale. Instead, the Petitioner attempted to prove that the Petitioner should have received higher scores. One ground argued in support of the Petitioner's case that it should have received higher scores was that higher scores should have been given under some of the criteria pursuant to F.A.C. Rule 14-95.003. But F.A.C. Chapter 14- 95 sets out criteria for the evaluation of appraisers to determine whether they are minimally qualified to do work for the DOT. Appraisers not qualified under Chapter 14-95 to do work for the DOT would be precluded from responding to the RFP. But Chapter 14-95 does not to purport to undertake to rank the relative qualifications of appraisers to determine which appraiser's RFP response should be selected. None of the RFPs state that Chapter 14-95 applies to the evaluation under the RFP criteria. The RFP criteria stand alone and apart from Chapter 14-95. Under the heading "Selection Process," each RFP contains a criterion entitled "Education." The criterion states in part that respondents would be given three points for having a college or university degree with a major related to real estate appraisal and one point for having a degree with any other major. Putnam got one point under this criterion for a B.A. degree in science and engineering; Cuddeback got one point for a B.A. degree in arts; Hale got two points. 1/ Leggate, in the person of its principal, Donald J. Leggate, does not have a college degree. But, in part, unjustifiably relying on Chapter 14-95, Leggate contends that his years of experience in the field should be considered to be the equivalent of a college degree. But Leggate is not entitled to points under this part of the criterion. He clearly does not have a college or university degree. The RFP does not provide for the substitution of work experience for a college or university degree; to the contrary, the RFPs contain a separate criterion under which scores are given for work experience. Whether or not any particular appraiser with a degree is better than any particular appraiser without one, awarding points separately for a college or university degree is legitimate as part of a rational attempt to differentiate the qualifications of the respondents. Under the heading "Education," respondents also were given points for hours of appraisal training in the past three years--three points for 45 or more hours, two points for 30-44 hours, and one point for 10 to 29 hours. Putnam, Cuddeback and Hale got three points each. Leggate had 35 hours and received two points. He did not and could not prove that he was entitled to more. Whether or not any particular appraiser with 45 or more hours of recent appraisal training is better than any particular appraiser with less recent training, awarding points for recent training is legitimate as part of a rational attempt to differentiate the qualifications of the respondents. Although it would seem to make sense for teachers of appraisal training courses to be able to claim or be awarded "bonus" hours for teaching courses, as the Petitioner seems to argue, the Petitioner's evidence that he has taught appraisal training courses at some unspecified point in the past does not entitle him to more points. It was not clear how much of his teaching, if any, was within three years. Under the criterion entitled "Appraisal Experience (maximum points possible, 15)," RFP respondents were given between 10 and 15 points if they had more than five years experience in either eminent domain or single-family experience. The evaluators in District VII gave Leggate a maximum score of ten, while Cuddeback got only eight, and Putnam got only six; in District II, Leggate got 9.67 (the average of the two tens and one nine given by the three evaluators), and Hale got a ten. The Petitioner did not prove why a score of 9.67 was an inaccurate assessment of his appraisal experience in comparison with Hale and the other respondents to the Alachua County RFP. (Their responses to the RFP are not in evidence.) The Petitioner's argument that its score of ten in the District VII evaluations demanded the same score in the District II evaluation does account for possible differences among the competing respondents and is rejected. Under the "Appraisal Experience" criterion, up to five points also were available for "demonstrated expertise in complex/unusual appraisal problems." Putnam, Cuddeback and Leggate all got three as their score in District VII; in District II, Leggate got 3.67, and Hale got 3.33. Again, Leggate contended that it should have been given the highest possible score based on its principal's experience, but the responses to the RFPs were not in evidence, and the Petitioner did not prove why the scores it got were inaccurate assessments of its appraisal experience in comparison with the other respondents. The next criterion to which the Petitioner objects is entitled "Performance (maximum points possible, 9) . . . Past performance for DOT as indicated by Appraiser Performance Evaluations . . . (An appraiser with no prior DOT evaluation shall be rated 'Acceptable.')" Following the suggestion of a memorandum from DOT's central office in Tallahassee, both District VII and District II scored this criterion on the following scale: Outstanding, 9; Good, 5; Acceptable, 0; Poor, but correctable, -5; and Unacceptable, -9. But then the two districts' methodologies diverged. District VII also followed the central office's suggestion that this criterion be based upon the new statewide performance ratings. Before, districts gave RFP respondents a score based either on the district's own rating system or on the old statewide system. As late as May, 1990, District VII gave Leggate a score of 9 based on its own rating system that only took District VII work into account. 2/ The new statewide rating system was based on work done for the DOT, in any district, but only since October 1, 1989, with a score of zero ("acceptable") given to any respondent with no DOT work since October 1, 1989, unless submission of a demonstration appraisal report warranted a higher (or, presumably, a lower) score. The DOT central office memorandum also suggested that, if the new rating system is used, the RFPs should notify respondents of the change. District VII did not follow that suggestion. Instead, it relied on a mass mailout to appraisers on its mailing list, as well as verbal advice imparted at various conferences, to advise prospective bidders of the new rating system and the demonstration appraisal report option. The evidence was that, at some point in time, probably in the spring of 1990, the Petitioner received notice of the new statewide rating system and the demonstration appraisal report option. Leggate did not have DOT work after October 1, 1989, and did not submit a demonstration appraisal report with his response. Using the new statewide rating system, District VII gave Leggate a zero. Putnam and Cuddeback each got a five. Putnam got his five points by submitting a demonstration appraisal report. Leggate claims that it should have gotten a nine, the same score it got on this criterion in May, 1990. If it had, it would have been the highest scoring respondent on both of the District VII RFPs. On the other hand, District II chose not to follow the DOT central office memorandum's suggestion, believing it not to be fair or accurate to give appraisers who had high ratings in prior years a zero score, for merely "acceptable," just because they did not have DOT work after October 1, 1989. District II felt this was especially unfair because not much DOT appraisal work had been available after October 1, 1989, and many good appraisers who submitted responses to the Alachua County RFP would lose a high rating through nothing reflecting adversely on them or their ability. (District II apparently did not feel the "demonstration appraisal report" option adequately addressed the perceived unfairness.) District II decided to score the respondents to its RFP based on their rating in the out-of-date statewide rating system. Using this system, both Leggate and Hale got a five. 3/ On September 26, 1990, Leggate inquired of DOT's District I office in Bartow as to his performance rating and was told by letter dated September 29 that Leggate had no rating in District I but that his statewide rating was 15. The evidence was that this rating of 15 was on a different scale than the -9 to +9 scale used in the RFPs and would equate to a five on the RFP scale. One can surmise that this rating may have been based on the same out-of-date statewide rating that District II used, but the source and meaning of the rating is not clear from the evidence. It is not inherently illogical or arbitrary for District VII to score respondents differently than District II did on this criterion of the RFPs. Since the work is being procured and contracted by and for the districts, it is "appropriate" for the DOT to allow the districts the discretion to choose whether to use their own rating system or to use the statewide rating system. At the same time, the Petitioner did not prove facts on which the DOT would be compelled to require the districts to follow their own rating systems, rather than the new statewide system. The evidence adequately explicated a rational basis for DOT's suggestion that the districts use the new statewide rating system--the new statewide system is based on recent experience and addresses all of the appraisers' recent experience. To address the possibility that formerly rated appraisers, like Leggate, might not have recent enough experience, the DOT provided for the demonstration appraisal option. While perhaps not the best method for rating performance, the new statewide system has a rational basis and is not arbitrary. The next criterion of which the Petitioner complains is entitled "Understanding of the project (maximum points possible, 10). Under this criterion, the contracting agency is to rate the completeness of the RFP respondent's work plan, together with the respondent's demonstrated understanding of the project complexities and particular appraisal skills, knowledge and ability possessed by the respondent, as described in a maximum of three pages of narrative. District VII gave Leggate a six on RFP 7002 and a seven on RFP 7003; it gave Putnam an eight on RFP 7002, and it gave Cuddeback a nine on RFP 7003. District II gave Leggate a 7.67 to Hale's 6.33. In all cases, the scores were based entirely on the written submission of each RFP respondent describing the respondent's understanding of the project. The evaluators scored the submission based on the perceived relative merits of the appraisal issues raised and possible solutions offered by the RFP respondents. The Petitioner did not place the other responses in evidence, and its response could not be compared with the others. Apparently accepting that his submission was not as complete as it could have been (or as others were), Leggate implied that it relies in part on his credentials and experience to demonstrate his understanding of the project. But the RFPs clearly were designed to score credentials and experience separately, and the Petitioner should have recognized that this criterion was limited to an evaluation of the three-page written submission. Awarding points separately for an RFP respondent's ability to communicate in writing his understanding of the project at hand is legitimate as part of a rational attempt to differentiate the qualifications of the RFP respondents. District VII used one criterion omitted by District II, giving five points for office location 50 miles or less from the Hillsborough County courthouse. Assuming that this criterion was intended to rate the RFP respondents' access to the court records they would have to use during the appraisal work, Leggate pointed out that the appraiser awarded the contracts would have to use the Pinellas County courthouse to access the pertinent court records and that, although the Petitioner got five points for office location, its office actually is more than 50 miles from the Pinellas County courthouse. The Petitioner argued that the criterion is arbitrary. The Department's evidence, however, was that the criterion was added to give an advantage to local appraisers with working knowledge of local conditions and that the 50 mile limitation was used specifically to include Leggate and other appraisers from Lakeland, known to District VII to be good appraisers with local knowledge. The Petitioner did not prove either that the criterion should be invalidated or that five points should be subtracted from its score. As can be seen by the foregoing Findings of Fact, the Petitioner has not proven its entitlement to any additional points on any of the RFP response evaluations in issue in this case. (Besides, as to the Alachua County RFP, even if the Petitioner were given all of the additional points claimed, it still would not be the highest scoring respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Transportation enter a final order dismissing the bid protests in these cases and awarding the appraisal contracts to John C. Putnam (RFP 7002), George Cuddeback (RFP 7003) and Richard S. Hale (Alachua County RFP). RECOMMENDED this 1st day of February, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of February, 1991.
Findings Of Fact The Petitioner, Ana Caos, M.D., is a applicant for a restricted license to practice Medicine in the State of Florida pursuant to the provisions of Section 458.311(8), Florida Statutes. Successful completion of the Florida Board Examination is a prerequisite to licensure under Section 458.311(8), Florida Statutes. In an effort to meet that prerequisite, the Petitioner has already taken the Florida Board Examination six times since October 1, 1966. The Petitioner has passed portions of the licensure examination, but thus far she has not received a passing grade on the Basic Sciences portion of that examination. The Petitioner seeks to continue taking the licensure examination until she achieves a passing grade on all portions of the examination. On January 19, 1993, the Board of Medicine filed and served an order regarding the Petitioner's licensure application. The order reads as follows, in pertinent part: You are hereby notified pursuant to Section 120.60(3), Florida Statutes, that the Board of Medicine voted to DENY your application for licensure as a physician by examination. The Board of Medicine reviewed and considered your application for licensure by examination on November 19, 1992, in a telephone conference call originating in Tallahassee, Florida and has determined that said licensure by examination be denied, stating as grounds therefore: That you have failed to pass the FLEX examination six times since October 1986. Subsection 458.311(2), Florida Statutes, prohibits licensure of any individual who has failed the FLEX examination five times after October 1, 1986. Although the Board previously permitted you to sit for the FLEX examination for a sixth time in 1992, it has since that time determined that this provision applies to all applicants for licensure. The Board of Medicine has never adopted a rule to the effect that Section 458.311(2), Florida Statutes, applies to applicants for a restricted license under Section 458.311(8), Florida Statutes. The Board of Medicine has an existing rule that interprets several provisions of Section 458.311(8), Florida Statutes (1991). (See Rule 21M-22.020 (1)(a)-(c), Florida Administrative Code.) At the Board meeting on July 11 and 12, 1992, the Board of Medicine discussed proposed amendments to the existing rule and voted to initiate rulemaking to amend Rule 21M- 22.020(1), Florida Administrative Code, by adding to it a new subsection (d) reading as follows: (d) The phrase "successfully completes the Florida Board Examination" is interpreted as requiring obtaining a passing score as defined by Rule 21M-29.001(2) within the time frame set forth in Section 458.311(2), Florida Statutes. Specifically, if the applicant has failed the examination five times after October 1, 1986, the applicant is no longer eligible for licensure. At its meeting on July 11 and 12, 1992, the Board of Medicine instructed its legal counsel to initiate rulemaking to adopt the rule amendment quoted above. For reasons unknown to the Board's Executive Director, the Board's legal counsel had not yet filed the proposed rule amendment for adoption as of the date of the formal hearing in this case. On March 12, 1993, eleven days after the formal hearing in this case, notice of proposed rulemaking was published in the Florida Administrative Weekly. The proposed rulemaking noticed on March 12, 1993, is the same as, or substantially the same as, the proposed language described in Paragraph 5, above. The proposed rulemaking noticed on March 12, 1993, is presently the subject of a rule challenge petition filed by the Petitioner in this case. See Case No. 93-2166RP. The Petitioner in this case is also the Petitioner in Case No. 93-1801, which involves a petition filed pursuant to section 120.57(1), Florida Statutes, to challenge the proposed denial of the Petitioner's application for a license.
Findings Of Fact Based upon the parties' factual stipulations, the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: On August 28, 1992, Petitioner submitted to the Department its application for licensure as a mortgage lender. 1/ On October 28, 1992, the Department sent Petitioner a letter announcing its intent to deny Petitioner's application for licensure as a mortgage lender. The text of the letter read as follows: This is to inform you that your Application for Licensure as a Mortgage Lender for Citifirst Mortgage Corp. is hereby denied. The denial is based on Section 494.0072(2)(k), Florida Statutes. Section 494.0072(2), Florida Statutes, "Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection may be taken: . . . (k) Acting as a mortgage lender or correspondent mortgage lender without a current active license issued under ss. 494.006-494.0077." The Department's investigation revealed Citifirst Mortgage Corp. has acted as a mortgage lender without a current, active license. Please be advised that you may request a hearing concerning this denial to be conducted in accordance with the provisions of Section 120.57, Florida Statutes. Requests for such a hearing must comply with the provisions of Rule 3-7.002, Florida Administrative Code (attached hereto) and must be filed in duplicate with: Clerk Division of Finance Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 (904) 487-2583 within twenty-one (21) days after receipt of this notice. Failure to respond within twenty-one days of receipt of this notice shall be deemed to be a waiver of all rights to a hearing. Should you request such a hearing, you are further advised that at such a hearing, you will have the right to be represented by counsel or other qualified representative; to offer testimony, either oral or written; to call and cross examine witnesses; and to have subpoenas and subpoenas duces tecum issued on your behalf. Petitioner timely requested a formal hearing on the proposed denial of its application. The matter was referred to the Division of Administrative Hearings, where it is still pending.
