The Issue Whether the Department of Revenue, Child Support Enforcement Program, may levy bank accounts held jointly by Petitioner and Donald F. Ziesmer and apply the funds to reduce or satisfy Mr. Ziesmer's past due child support obligation.
Findings Of Fact On September 4, 1992, an Order and Judgment was filed in the case of Shirley Skubish v. Donald F. Ziesmer (Skubish v. Ziesmer), Case No. 85-1368-CA, in the Circuit Court of the 19th Judicial Circuit, in and for Martin County, Florida. Pursuant to this Order and Judgment, Donald F. Ziesmer was ordered to pay $48.00 per week in current child support for two minor children, and an additional $5.00 per week on a child support arrearage of $4,571.00, which was established as being owed by Mr. Ziesmer as of August 19, 1992. (Joint Stipulation). On May 19, 1994, an Order of Contempt was filed in Skubish v. Ziesmer, under which, inter alia, Mr. Ziesmer's child support obligations as set out in the September 4, 1992, Order and Judgment were continued, and a child support arrearage of $6,108.37, was established as being owed by Mr. Ziesmer as of May 5, 1994. (Joint Stipulation). On May 14, 1998, an Enforcement of Child Support Agreement and Order on Stipulation was filed in Skubish v. Ziesmer, under which Mr. Ziesmer's child support obligation, as set out in the September 1992 Order and Judgment were continued, and a child support arrearage of $1,246.08, was established as being owed by Mr. Ziesmer as of May 6, 1998. (Joint Stipulation). On January 29, 1999, a Recommended Order and Order on Motion for Enforcement, Contempt and Income Deduction was filed in Skubish v. Ziesmer, in which Mr. Ziesmer's child support obligation, as set out in the September 1992 Order and Judgment was continued, and a child support arrearage of $2,686.08, was established as being owed by Mr. Ziesmer as of December 2, 1998. (Joint Stipulation). On December 28, 1999, a Recommended Order and Order on Motion for Enforcement, Civil Contempt and IBO was filed in Skubish v. Ziesmer, under which, inter alia, Mr. Ziesmer's child support obligations as set out in the September 4, 1992 Order and Judgement were continued, and a child support arrearage of $5,182.08, was established as being owed by Mr. Ziesmer as of December 1, 1999. (Joint Stipulation). The official payment records of the Martin County Clerk of Court established that Mr. Ziesmer owed past due child support in Skubish v. Ziesmer, in the amount of $7,534.08, as of November 9, 2000. (Joint Stipulation). On or before November 9, 2000, Petitioner and her boyfriend, Donald Ziesmer, opened a joint checking account (account number: 262746-8), and a joint savings account (account number: 262746-0), (hereafter, "the FCU joint accounts") with the Florida Credit Union, Gainesville, Florida. (Joint Stipulation). At the time that the accounts were opened and at all times material, Petitioner and Mr. Ziesmer were living together on Petitioner's Social Security disability income and gifts from her father, and Mr. Ziesmer's Veterans Administration disability income and gifts from his mother and other relatives. At no time material were either Petitioner or Mr. Ziesmer working for a living or earning any income. Petitioner was receiving Social Security disability benefits of about $530.00, per month, during the period of September 2000 through November 2000. Her benefits were deposited into an EBT account in her name, only, with Citicorp Electronic Financial Services, Inc., Tampa, Florida. (Joint Stipulation). Petitioner made a one-time deposit in September 2000, of a lump sum disability payment of $659.00. Her Social Security disability payments were made to Petitioner monthly by an EBT card in an uneven amount which was not a multiple of $20.00. An EBT card works like an ATM card for purposes of withdrawals. Most ATMs only permit withdrawals of cash in 20-dollar increments, with fees attaching to each withdrawal. Because Petitioner's EBT monthly credit was in an amount which was not a multiple of 20-dollars, she could not access the balance of approximately $13.00 each month unless she had a checking account. Also, she needed to write checks so she could prove she had paid certain domestic bills. The accounts were opened primarily to allow Petitioner to access her last $13.00 each month. The accounts were opened as joint accounts because Petitioner's bad credit kept her from being able to open a checking account in her name alone. Petitioner and Mr. Ziesmer both intended that the accounts be used only by Petitioner, and Petitioner is the only one who used the accounts. Petitioner and Mr. Ziesmer have never been married to each other. On November 9, 2000, Respondent mailed a Notice of Freeze to the Florida Credit Union, Gainesville, Florida, by certified mail, return receipt requested, regarding any accounts held by Mr. Ziesmer. The Notice was received by the credit union on November 13, 2000. (Joint Stipulation). Pursuant to the Notice of Freeze, the Florida Credit Union froze the FCU joint accounts on November 13, 2000. On November 16, 2000, Respondent mailed a Notice of Intent to Levy on Mr. Ziesmer, by certified mail, return receipt requested. Mr. Ziesmer received the Notice after November 16, 2000. (Joint Stipulation). The Notice of Freeze and Notice of Intent to Levy satisfied Respondent's statutory notice requirement in Section 409.25656, Florida Statutes. Petitioner filed a timely Petition for Administrative Hearing on November 29, 2000. (Joint Stipulation). Respondent Department's agency representative, Pamela Ellingsworth, Revenue Specialist II, testified that it is the Department's standard procedure to give any joint account holders, who do not owe the back child support, the opportunity to show the source of accounts frozen by the Department. She further testified that the Department normally releases back to the non-debtor/non-obligor joint account holder those funds which the non-debtor can establish are his or her own funds, separate and apart from those of the child support debtor/obligor. According to Ms. Ellingsworth, if a percentage of contributions to the account(s) can be determined, the Department's standard procedure is to release back that percentage of proven funds to the non-debtor/non-obligor. Between October 1, 2000 and November 13, 2000, thirteen deposits were made into the FCU joint accounts. Twelve deposits were of cash only. One deposit, on October 6, 2000, was from a check for $150.00 ($130.00 "net" deposit) written to Petitioner by her father. (Joint Stipulation, modified by testimony as to "father"). Petitioner testified, without refutation, that the funds deposited came only from the two sources: Petitioner's Social Security benefits and gifts by cash or check from Petitioner's father. Petitioner and Mr. Ziesmer testified, without refutation, that no deposits to the accounts were made by Mr. Ziesmer. Although both witnesses have mental disabilities and take heavy medication, they were credible on this issue because credit union statements and other documents regarding the FCU accounts were admitted into evidence, which documents materially mirror their testimony regarding amounts received, deposited, and disbursed. (Petitioner's Exhibits A, B, C, and D). Mr. Ziesmer's income from disability payments at all times material was only $101.00 per month, with one slightly larger one-time lump sum payment. The amounts he received in gifts varied. He did not recall exact amounts. He gave Petitioner cash for food and no monies of his were deposited into the joint accounts. The Department established that in September 2000, the couple signed a lease together on a house for $550.00 per month. However, their testimony shows they were evicted less than two months later for failure to pay, and they no longer live together.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is
The Issue Whether the Petitioner should receive general revenue funds allocated to the Department of Children and Family Services.
Findings Of Fact The Petitioner is an 18 year-old female who is eligible for services as an individual with mental retardation. The Department (or its predecessor) first provided benefits to the Petitioner in 1985 based upon such eligibility (Downs Syndrome). Although an applicant for services in the Department’s District 15, the Petitioner currently attends a residential placement in Miami, Florida. From the undisputed evidence, Petitioner is performing well in her placement and is learning life skills. Petitioner exhibits child-like behaviors, however, and is dependent on adult supervision for her well being. The Petitioner is a client of the Department’s Developmental Disabilities Program and would have received the benefits requested in this cause but for the lack of funds. It is the Department’s position that the appropriations allocated to the Department by the Legislature did not provide sufficient funds to meet the Petitioner’s claim and that it would be unlawful for the Department to exceed its appropriated budget. Because the Department does not have funds for all of the eligible recipients (clients), the Department prioritizes the claims and places clients whose benefits are not provided on a waiting list. In fact, the Petitioner is on the Medicaid Waiver Program waiting list for the services sought. The Petitioner’s mother has provided for her daughter and incurred debt to do so. She must have financial assistance in order to keep the Petitioner at the school where she is doing well. The Department provides assistance for persons like Petitioner only when they are deemed to be “in crisis.” The Department maintains that the Petitioner does not currently meet its definition for “crisis” intervention. The Petitioner’s services from the Developmental Disabilities Program were canceled without notice to the Petitioner in 1988. The Petitioner timely sought benefits in 1998 or 1999 and would be receiving the benefits now sought had the Department properly processed the application through the correct program. The Department appropriates funds through its district offices. In this case, District 15 (where the Petitioner’s mother resides) does not have funds available to meet the Petitioner’s claim. Whether statewide funds are unavailable is unknown. Were the Petitioner’s mother to abandon the Petitioner, it is unlikely the Petitioner could provide for her own needs; she would be in “crisis.”
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Children and Family Services enter a final order granting Petitioner’s request for services. DONE AND ENTERED this 23rd day of December, 2002, in Tallahassee, Leon County, Florida. J. D. PARRISH 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 23rd day of December, 2002. COPIES FURNISHED: Paul F. Flounlacker, Jr., Agency Clerk Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204B Tallahassee, Florida 32399-0700 Josie Tomayo, General Counsel Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204 Tallahassee, Florida 32399-0700 Laurel Hopper, Esquire Department of Children and Family Services 337 North Fourth Street Fort Pierce, Florida 34950 William N. Swift, Esquire William N. Swift, P.A. 901 Southwest Martin Downs Boulevard Suite 208 Palm City, Florida 34990
The Issue This case was initiated by a letter dated October 22, 1984, from the Department of Revenue ("Department") to National Christian Network, Inc. ("NCN") informing the organization that its Consumer Certificate of Exemption Number 05- 00852-00-15 would be revoked effective November 22, 1984, in accordance with Section 212.084(3) Florida Statutes. John Fox, Executive Vice president, responded with a timely request for an administrative hearing. The Department contends that NCN, as a radio and television network, does not qualify for a religious exemption under Subsection 212.08(7)(a) Florida Statutes and regulations interpreting that law. NCN argues that it is entitled to the certificate as a religious, charitable or educational organization. The only witness produced by either party was Raymond Kassis, and the facts elicited through his testimony are uncontroverted. One exhibit, the Articles of Incorporation, was placed into evidence by stipulation. The Department submitted its Proposed Finding of Fact, Conclusions of Law and Recommended Order; these have been considered and the proposed findings of fact have been incorporated below.
Findings Of Fact National Christian Network, Inc. was incorporated as a Florida nonprofit corporation on October 11, 1978. Its purposes, as stated in Article II, Articles of Incorporation include the following: * * * To establish, operate and maintain television and/or radio networks and/or stations. To produce and broadcast to the general public religious, charitable and/or educational programs either by television or radio, or both, for the purpose of educating and instructing the general public in religious, charitable or educational matters; to promote, extend and improve religion, charity and education and to participate in religious, charitable and/or educational programs in the united states, [sic] including but not limited to the State of Florida; to promote programs designed to increase public awareness and understanding of the needs and activities of religion, charity and/or education in the several states, including the State of Florida, and to encourage the public to give support, financial and otherwise, to such purposes. To acquire, take, receive, purchase, own, hold, use, manage, lease, mortgage, pledge, encumber, sell and convey, or otherwise dispose of any property, including but not limited to real, personal and mixed, tangible and intangible; to issue bonds, notes, evidences of indebtedness, receipts and obligation; to receive donations, subscriptions and contributions; to make donations to organizations created for similar or like purposes, and to have and exercise all other corporate rights and powers, to do all lawful acts necessary or desirable to carry out its purposes consistent with the laws of the State of Florida (as they now exist or from time to time may be amended), and Sec. 501(c)(3) of the Internal Revenue Code (as it now exists or from time to time may be amended) and not inconsistent with these Articles of Incorporation. * * * The primary purpose of NCN, in the words of its President, is to operate a national television network. Transcript, p. 10. NCN maintains status as an organization under Section 501(c)(3) of the Internal Revenue Code and holds non-commercial, educational, F.C.C. licenses for radio and television. The network activities are conducted at NCN's facility in Cocoa, Florida, twenty-four hours a day, and consist primarily of religious services by its seventy-eight multi-denominational member churches. Members include Protestant, Catholic and Jewish organizations. Some, but not all, of the church services are produced directly in the studio. The facility does not include a chapel. NCN maintains a cost share plan which pays for the broadcasts. Member organizations who can afford to pay, contribute their share; the others are given free air time. Funds for the network are solicited over the air. Funds are also solicited for charitable, educational and religious projects of the member churches. Free air time is provided to a wide variety of charitable organizations for fund raising activities. Some educational programs are aired; however, the network is not part of the system established by the Florida Department of Education pursuant to Sections 229.805 or 229.8051 Florida Statutes. The essence of NCN is that of a conduit, a medium for other organizations to transmit religious worship services into the homes of its viewers and listeners. It also, to a lesser degree, provides the medium for organizations to conduct charitable and educational activities.
Recommendation On the basis of the foregoing, I recommend that the intended agency action be upheld and that Consumer Certificate of Exemption No. 05-00852-00-25 be revoked in accordance with Section 212.084(3) Florida Statutes. DONE and ORDERED this 21st day of October, 1985, in Tallahassee, Florida. MARY CLARK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of October, 1985.
The Issue The issue in this proceeding is whether Petitioner Monroe Lee Kelly, the minor son of his personal representative and mother, Kimberly Maffei Kelly, should immediately receive developmental services or remain on a waiting list for such services.
Findings Of Fact Monroe Lee Kelly is three years old and displays verbal apraxia. Verbal apraxia is delayed speech development. He became a client of Developmental Services on July 28, 2000, after a legislatively designated funding cut-off date of July 1, 1999. Monroe Kelly was receiving speech therapy through Children's Medical Services. However, because he turned three years old he no longer qualifies for services under the medical program even though his apraxia is still a problem. Therefore, the medical program referred Monroe Kelly to Developmental Services for evaluation. Petitioner's mother was also informed by the Department that her son could receive speech therapy to ameliorate this condition from the school system. Verbal apraxia puts Monroe Lee Kelly at risk of having a developmental disability, but is not itself a developmental disability. Testing at a later date will ascertain whether he actually has a developmental disability. Until such testing can be accomplished, however, pursuant to federal law and long-standing policy, the Department regards Monroe Lee Kelly as a client because of his risk status. His mother, for personal reasons, did not apply for benefits through the Medicaid Waiver program. Thus Monroe Lee Kelly is a client of the Developmental Services Program of the Department and is therefore eligible to receive developmental services from that program. The only question is whether Monroe Lee Kelly should receive those services for which he is eligible immediately or remain on the waiting list. Currently there are approximately eight thousand persons who became clients of the Developmental Services Program after July 1, 2000. A long and complex chain of events and circumstances led to the situation faced by Monroe Lee Kelly. Prior to the 1999 legislative session and after federal litigation, the Department identified 23,361 Developmental Services clients who were enrolled in the developmental services program but were receiving inadequate services. The Governor, members of the Legislature, and the Department met to address this problem and jointly proposed to the Legislature for fiscal year 1999-2000, a plan to address the underserved clients over a two-year period. Under this plan, 15,984 of the identified 23,361 clients would be served during fiscal year 1999-2000, with the remaining 7377 clients to be added to the group in fiscal year 2000-2001. The Legislature elected to route the new moneys into the Medicaid Waiver program, because that program provided for a 45/55 State/Federal match, under which fifty-five cents of federal moneys would be provided for every forty-five cents contributed by the Florida Legislature. Since most of these clients resided in the community and not in institutions, the program utilized under this plan was not the Institutional Medicaid program, but the Home Community Based Waiver program. The Home Community Based Waiver program, also called the Medicaid Waiver program, differs from the Institutional Medicaid program. The Institutional Medicaid program is an entitlement program. The Medicaid Waiver program is not. Consequently, the moneys which fund the Medicaid Waiver program are limited and claims on them must be prioritized. The Legislature directed the Department to prioritize these limited funds by requiring that they be spent first on providing full services to the 23,361 clients already known to the Department as of July 1, 2000. The Department implemented this mandate by implementing policy that, except for crisis situations, only persons who were clients on July 1, 2000, would receive services. All others would be put on a waiting list. The Department is currently working on a Legislative Budget Request for the coming year which will address the needs of clients, such as Monroe Lee Kelly who came into the system after July 1, 2000. Even so, Monroe Lee Kelly is not eligible for the Medicaid Waiver since Ms. Kelly has declined to apply for Medicaid. The funds she seeks come from another source, the Individual and Family Support appropriation. Nevertheless, for the reasons set forth below, the result in this case is the same as if her child had been on the Medicaid Waiver. In order to consistently apply the legislative intent behind this appropriation scheme to all Developmental Services clients, the Department has applied the prioritization described in paragraph 7, not only to the appropriations made through the Medicaid Waiver program, but also to those relating to the Individual and Family Support appropriation. The prioritization is required because, in the past two years, the Legislature has not appropriated any new funds under the Individual and Family Support Program. Thus, since the existing client base in Developmental Services remained stable, the new client base has increased by approximately 8,000 clients since July 1, 1999, and the Department can only provide funds to new clients by withholding services from existing clients who received these services in past years. An untenable result. Moreover, the interests of fairness require that the allocation of Developmental Services money be made on a consistent basis. This is particularly true inasmuch as many of the clients who receive Medicaid Waiver funds also receive Individual and Family Support funds. Finally, the Department's prioritization puts at the top of the list those clients who are in crisis. Under these circumstances, the Department's decision to allocate the Individual and Family Support moneys entrusted to it by the Legislature in the same manner as the Medicaid Waiver moneys is not unreasonable or unfair. Because Monroe Lee Kelly became a client after July 1, 1999, he can only receive services if he is in crisis. The Department has identified six conditions which, if present, constitute a crisis which would permit it to provide services to persons who became clients after July 1, 1999. These are: A court order from a criminal proceeding requires the Department to provide services. The client is highly dangerous to himself or others, and danger will continue if services are not provided immediately. The client is living in a high risk situation in which abuse and/or neglect is occurring or likely to occur. The client is homeless, living either in a homeless shelter or on the street. The caregiver is unable to provide care for the client, no alternative arrangements are possible, and without the provision of services, the client cannot safely remain with the caregiver. Other circumstances exist which will present a danger to the client's safety and/or security if services are not provided. Monroe Lee Kelly met none of the foregoing criteria. Consequently, the Department could not provide him the services his mother sought on his behalf.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Children and Family Services enter a Final Order leaving Monroe Lee Kelly on the waiting list of clients to be served by the Department's Developmental Services Program. DONE AND ENTERED this 19th day of December, 2000, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of December, 2000. COPIES FURNISHED: Kimberly Maffei Kelly 9127 Foxwood Drive Tallahassee, Florida 32308 John R. Perry, Esquire Department of Children and Family Services 2639 North Monroe Street, Suite 100A Tallahassee, Florida 32399-2949 Virginia A. Daire, Agency Clerk Department of Children and Family Services Building 2, Room 204B 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Josie Tomayo, General Counsel Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204 Tallahassee, Florida 32399-0700
The Issue Whether Gary Savage committed the statutory violations alleged in the Amended Administrative Complaint and, if so, what penalty is authorized for such violations.
Findings Of Fact The Parties and Principle Allegations The Department is the state agency charged with the licensing of insurance agents in Florida, pursuant to authority granted in chapter 626, parts I and IX, Florida Statutes, and Florida Administrative Code Chapter 69B-231. Mr. Savage is a 75-year-old registered investment advisor and financial planner who also is licensed to sell life insurance in Florida. The Department’s Complaint seeks to revoke Mr. Savage’s license as an insurance agent. Counts I through III and V through VIII concern eight clients, whereby Mr. Savage earned commissions for selling them annuities and, based on agreements they signed, charged them annual one-percent financial planning service fees tied to the value of their portfolios, including the annuities. Each of these counts alleged the following statutory violations: Engaging in unfair insurance trade practices for knowingly collecting an excessive premium or charge. § 626.9541(1)(o)2., Fla. Stat.; Demonstrating a lack of fitness or trustworthiness to conduct insurance business. § 626.611(1)(g), Fla. Stat.; Demonstrating a lack of reasonably adequate knowledge and technical competence to engage in insurance transactions. § 626.611(1)(h), Fla. Stat.; Engaging in fraudulent or dishonest insurance practices. § 626.611(1)(i), Fla. Stat.; and Misappropriating, converting, or unlawfully withholding moneys belonging to others in conducting insurance transactions. § 626.611(1)(j), Fla. Stat. Count IX charged Mr. Savage with two violations concerning adverse administrative action taken by the Financial Industry Regulatory Authority (“FINRA”) against his securities license: Failing to timely report final administrative action taken by FINRA against his securities license. § 626.536, Fla. Stat.; and Being suspended and fined for violating FINRA’s rules. § 626.621(12), Fla. Stat. At the time of the hearing, Mr. Savage was not working in the financial services industry because FINRA suspended him for several months. During his suspension, Mr. Savage continued to meet with his insurance clients, though he currently has no appointments with life insurers to sell their products. Wearing Two Hats - An Investment Advisor and Insurance Agent Mr. Savage has worked in the investment industry for over 50 years, initially focusing on securities but evolving into financial advising and estate planning work. He has taken numerous courses and examinations relevant to securities law, financial planning, and tax law. Mr. Savage owns two investment advisor businesses: Wall Street Strategies, Inc. (“Wall Street”), is a stock brokerage firm that handles securities transactions; and Advanced Strategies, Inc. (“Advanced Strategies”), is a registered investment advisor firm, offering clients financial planning, tax management, and estate planning advice. In order to provide a wide variety of products to his financial planning clients, Mr. Savage also is licensed as a nonresident agent in Florida to sell life insurance, including annuities.2/ Annuities provide a guaranteed income stream over a term of years, but also come with substantial penalties if they are surrendered or cancelled before the term expires. Fixed index annuities, like those Mr. Savage sold to the clients at issue here, offer portfolios of funds tracking stock market indexes. Owners choose from around six portfolios and can then reallocate by choosing different portfolios each year. Mr. Savage considers himself an investment advisor who is licensed to sell insurance, which is what he tells new clients. Indeed, his businesses are securities and investment advisor firms, not insurance agencies. Mr. Savage’s client base is diverse. Many have portfolios with annuities and other investment products. Some have portfolios with no annuities. Others have portfolios with only annuities, like most of the clients at issue. In order to procure new clients, Mr. Savage held financial planning seminars where diverse speakers discussed financial and estate planning, and tax management. Mr. Savage discussed the types of insurance products he preferred, including fixed index annuities. Other speakers discussed real estate, oil, and investment trusts, which were beneficial from a tax perspective. Most of the clients at issue attended such a seminar and later met with Mr. Savage to discuss their financial plans. When Mr. Savage first met with the clients at issue, he asked them to bring tax returns, investment statements, wills and/or trusts, and other documents relevant for a financial planning discussion. They completed a new client form with information about their assets, investments, and objectives. He often met several times with new clients to develop a plan for them to reach their financial, estate, and tax management goals. To provide financial planning services, Mr. Savage—— like most investment advisors——charged an annual one-percent fee based on the total value of the portfolio. He has reduced or waived his fee if the clients’ situation warranted it or if they continued to purchase products for which he received commissions to compensate him for providing financial planning services. Before that are charged an annual fee, Mr. Savage’s clients signed a “Service Fee Agreement” (“Fee Agreement”), which was on “Advanced Strategies, Inc., Registered Investment Advisor” letterhead and provided as follows: Advanced Strategies charges a 1% (one percent) financial planning retention fee annually. This fee is based upon the total combined value of accounts including annuities, indexed life, mutual funds, income products and brokerage accounts that we manage or provide service for. This amount is tax deductible as a professional fee. The Fee Agreement offered to provide several financial planning services3/: Address, ownership, and beneficiary changes; Duplicate statements and tax returns; Required minimum distribution and withdrawal requests, and deposits; General account questions; One printed analysis per year; Annual review; Asset rebalancing when applicable; Informing client of new tax laws, changes in estate planning, and new exciting products and concepts. The Fee Agreement noted that the non-refundable fee was due on the service anniversary date and that non-payment would result in discontinuation of the planning services until paid in full. Mr. Savage confirmed that the Fee Agreement was voluntary. If clients wanted to purchase a product, but did not want him to manage their portfolio or provide the outlined services, they did not have to sign the agreement. In that event, Mr. Savage would procure the product and not provide financial planning services. All of the clients at issue here purchased annuities from Mr. Savage. He helped them complete the applications with the insurance companies and, if necessary, assisted them with transferring or closing out other investments used to pay the premiums. He ensured that the insurers received the paperwork and the premiums. Once the annuities were procured, he received commissions from the insurers. The Complaint did not allege that he acted unlawfully in recommending annuities to the clients or receiving commissions from the insurers. All of the clients at issue also signed the Fee Agreement and Mr. Savage provided them with services every year.4/ Some of the services were things an insurance agent technically could handle, such as answering client calls, making address and beneficiary changes, providing duplicate statements, assisting with the paperwork for required minimum distributions, withdrawals, and deposits, and asset reallocation. Other services were things that an agent could not provide, such as tax management/credits, duplicate tax forms, assistance with estates, trusts, and wills, and financial planning advice. But, even as to the services an agent technically could provide, Mr. Savage used his financial planning expertise to advise these clients as to a number of decisions relating to their annuities. For instance, although agents can assist with reallocation, required minimum distributions, and withdrawals, Mr. Savage’s securities and financial planning expertise allowed him to make recommendations that took into account an analysis of the stock market, the economy, and the clients’ financial circumstances and overall goals. An agent is not required to have that expertise, which is one reason he charged the clients an annual service fee. Many of these clients did not recall Mr. Savage providing most of the services listed in the Fee Agreement, but the weight of the credible evidence reflects otherwise. He analyzed asset reallocations for these clients every year and, when he believed reallocation was appropriate, he undisputedly made it happen. He provided annual account analyses consolidating the clients’ investment statements. He met with some of them every year to conduct an annual review and, for those he did not meet, he offered to do so in their annual invoice letter. Whenever the clients asked for assistance with questions, address, beneficiary, or ownership changes, withdrawals or required minimum distributions, or deposits, among others, he performed the task. And, as he confirmed and some of the clients acknowledged, the Fee Agreement made it clear that the services were available, even if they did not need all of them in a particular year or did not think to ask. Although some of the clients testified that Mr. Savage failed to tell them that his fee was optional, all of them had a chance to review the Fee Agreement before voluntarily signing it. The agreement noted that the fee was a “financial planning retention fee” based on the value of the accounts “that we manage or provide service for,” and that non-payment “will result in the discontinuation of my/our planning services.” These clients believed they hired Mr. Savage as an investment advisor and many understood that such advisors do charge fees for providing services. More importantly, no client testified that Mr. Savage said his annual fee was required to procure the annuities or was a charge for insurance. Nothing in the Fee Agreement gave that indication either. Mr. Savage credibly confirmed that he did not charge a fee for insurance; rather, the client paid the fees for financial planning services. And, if they decided they no longer wanted Mr. Savage’s services and stopped paying his fee, they took over management of their annuities without losing access to them or the money in them. The Department concedes that Mr. Savage may wear two hats, as both the agent selling an annuity and the financial advisor managing his client’s portfolio. It contends, however, that Mr. Savage violated the insurance code by selling annuities to these clients and thereafter charging them annual fees——tied to the value of the annuities——to provide services that he should have provided for free after earning commissions on the sale of those annuities. The Department’s investigator, Ms. Midgett, testified about annuities, commissions, and insurance agent services based on her experience in the industry as both a former agent and certified chartered life underwriter.5/ Ms. Midgett confirmed that the Department approves both the premiums and commissions applicable to annuities. Once the premium or deposit is paid, the commission is earned; if an additional deposit is made into the annuity, the agent would earn another commission. Ms. Midgett testified that it is improper for an agent to receive a commission and knowingly charge a client any fees with respect to that annuity under section 626.9541(1)(o). However, she admitted that a financial advisor may charge service fees on annuities if they did not receive a commission on the sale. And, if the annuity is ever rolled into a non- insurance product, that agent could charge service fees on that asset because they are no longer tied to the annuity. Ms. Midgett also testified about the services agents are expected to provide. Once an agent sells a product, he or she becomes the agent of record and does “things such as answer questions, beneficiary changes, address changes, yearly reviews, anything to keep that client and to help them in any way they can.” According to her, “it’s basic 101 insurance that an agent services their clients,” which is “extremely important if you want to build your book of business and to keep a client happy.” Importantly, however, Ms. Midgett conceded that no statute or rule specified what services agents were required to provide once they sold an annuity. “It’s just understood when you’re an insurance agent that you’re going to service your clients. It’s part of the sale of the product.” She believed agents learned this in the course study to obtain a license. Although Ms. Midgett testified that Mr. Savage should have provided most of the services listed in the Fee Agreement for free once he earned commissions on the sale of the annuities, she conceded that at least two of them——duplicate tax forms and informing the client of new tax laws——were not services agents would do. She also agreed that agents could not advise clients as to taking money from an annuity and investing in stocks, mutual funds, real estate trusts, or other investment-related options as “those are all investment advisor functions.” Ms. Midgett initially admitted having no knowledge of whether insurance agents were trained in asset reallocation, though she “would assume so” because “[i]f you have a license to sell the product, then obviously you have to have the knowledge of how to be able to service that product and make the allocations.” When she testified several months later in the Department’s rebuttal case, she stated that the manual used to obtain a license in Florida had a chapter on annuities that “touched on” reallocation. But, she admitted she was not an expert on reallocation or analyzing market conditions, and she had only previously worked with one agent who sold annuities, though he did advise his annuity clients on reallocation. In sum, the Department conceded that no statute or rule articulated the services an agent is required to provide upon receiving a commission. The appointment contracts between the agents and the insurance companies, two of which are in the record, apparently do not specify the services agents are expected to provide. At best, the evidence established what a good agent should do to build a book of business; the evidence did not establish what services an agent, like Mr. Savage, was legally required to provide for receiving a commission. Count I – Kathy Butler Ms. Butler met Mr. Savage while working at a yacht club. In February 2011, they met at his office and she filled out a new client form with financial information. In March 2011, Mr. Savage assisted Ms. Butler with the application for a fixed index annuity for $50,000. On that same day, she signed the Fee Agreement, which she understood to be paying for his services as an investment advisor to manage the annuity and ensure it was being invested correctly; she believed he received income from the insurance company. In January 2012, she purchased another fixed index annuity for $8,000. Mr. Savage procured both annuities. Between 2012 and 2015, Ms. Butler received annual invoices from Mr. Savage and paid about $3,265 in service fees. At this point, Ms. Butler deals directly with the insurance companies, though Mr. Savage is still listed as her agent. The weight of the credible evidence shows that Mr. Savage answered general account questions, made a beneficiary change, conducted annual reviews when requested, sent annual account statements, analyzed reallocation each year and, when he recommended reallocation in 2014 and 2015, he handled the paperwork. Ms. Butler knew she could avail herself of the services in the Fee Agreement, even though she chose not to request many of them. Count II – Beverly Wilcox Ms. Wilcox met Mr. Savage at a seminar in early 2009. In February 2009, they met at his office, she completed a new client form, and she signed the Fee Agreement. She believed he was a financial advisor and that she would owe him money, but she did not read the Fee Agreement before signing it. In March 2009, Mr. Savage assisted Ms. Wilcox with the application to purchase a fixed index annuity for $120,000. He procured the annuity, as requested. Between 2010 and 2016, Ms. Wilcox received yearly invoices from Mr. Savage and paid about $6,500 in fees, after which she decided to deal with the annuity company directly. The weight of the credible evidence shows that Mr. Savage answered questions when asked, offered to conduct annual reviews each year, sent annual account statements, analyzed reallocation each year and, when he recommended reallocation in 2010 and 2012, he handled the paperwork. Count III – Joseph Cerny Mr. Cerny met Mr. Savage while working at a yacht club and knew he was a financial advisor. Mr. Cerny purchased several fixed index annuities and other investments from Mr. Savage, who helped him complete the paperwork and procured the policies. Between 2003 and 2004, he bought two annuities for $100,000 each and two mutual funds for about $30,000 each. In 2008, he bought an annuity for $10,000. In 2010, he bought another annuity for $119,400. Mr. Savage did not charge fees for the first few years. Mr. Cerny believed he received compensation from the companies. However, in March 2010, Mr. Cerny signed the Fee Agreement. Between 2011 and 2012, he received two invoices, paying the first for $1,266.84 but refusing to pay the second. Mr. Cerny and Mr. Savage ended their relationship at that point. The weight of the credible evidence shows that Mr. Savage answered questions, provided annual statements, assisted with making withdrawals when requested, met with Mr. Cerny yearly, analyzed reallocation each year and, when he recommended reallocation in 2010 and 2011, he handled the paperwork. Count V – Marion Albano Ms. Albano met Mr. Savage at a retirement seminar in early 2007. In February 2007, they met at his office to go over her investments, including several annuities. Based on his recommendation, she surrendered her old annuities and purchased a fixed index annuity for about $1.6 million. He assisted her with the application and procured the annuity. In February 2007, Ms. Albano also signed the Fee Agreement. Mr. Savage told her there was a service charge to manage the annuity and she agreed because her brother pays the same rate on his managed brokerage account. She was never worried about losing the annuity if she failed to pay the fee. Ms. Albano received invoices from Mr. Savage every year from 2008 through 2015 and testified that she had paid between $110,000 and $120,000 in fees during that time. She had to pay some of the fees out of her distributions. The weight of the credible evidence shows that Mr. Savage answered account questions, corresponded with her daughter about his recommendations, provided her with an account analysis each year, met with her annually to review her account, and assisted her with required minimum distributions and withdrawals. He analyzed reallocation each year and, when he recommended reallocation in 2010 and 2011, he handled the paperwork. Count VI – Jane D’Angelo Ms. D’Angelo and her late husband, whose son-in-law was an insurance agent, met Mr. Savage at an estate planning seminar in early 2003; they believed he was an investment advisor. In March 2003, he came to their home and they completed a new client form, indicating they had several types of investments, including annuities. Between 2003 and 2016, the D’Angelos invested with Mr. Savage. In 2003, they purchased a tax credit investment for $10,000. In 2005, they purchased a similar investment for $19,000, which resulted in tax credits totaling $17,174. Between 2005 and 2011, they purchased eight fixed index annuities from Mr. Savage. He assisted them with the applications, informing them that the companies paid him directly. He procured the following annuities, some of which were purchased by transferring money from their existing annuities: In April 2005, they bought an annuity for $250,000; in May 2007, they bought an annuity for $32,789.78; in May 2008, they bought an annuity for $29,510; in March 2009, they bought three annuities for $337,554, $550,000, and $6,000; in May 2011, they bought two annuities, one for $40,715 and another for $150,889; and, in June 2011, they bought an annuity for $24,667. Prior to 2010, they paid no service fees. However, in April 2010, they signed the Fee Agreement. Although they were surprised and felt like they had to sign, Ms. D’Angelo agreed they were not coerced or told the annuities would lapse if they failed to do so. Indeed, she never lost access to the annuities even after she stopped paying Mr. Savage’s fees in 2015. Mr. Savage sent them annual invoices from 2010 through 2015, totaling $54,000 in fees. Mr. Savage agreed to waive the 2010 fee and, ultimately, they only paid about $14,511 total. In 2016, Ms. D’Angelo informed Mr. Savage that she no longer needed his services. She had been dealing directly with the insurance companies herself, though they have provided her with names of individuals if she wanted someone to advise her. The weight of the credible evidence shows that Mr. Savage provided numerous services to the D’Angelos on the investments he managed for them.6/ He had discussions with them, sent them annual statements, and assisted them with deposits and transfers between annuities, required minimum distributions and withdrawals, income riders, and beneficiary and ownership changes. He analyzed reallocation every year and handled the paperwork when he felt it was appropriate. He also offered to meet annually and held those meetings in years in which they were requested. Count VII – Ernest Blougouras Rev. Ernest Blougouras, a Greek Orthodox priest, attended several financial planning seminars with Mr. Savage. They met privately in February 2005, at which he completed a new client form listing his investments, which included fixed annuities, CDs, mutual funds, bonds, and stocks. Rev. Blougouras purchased fixed index annuities and other investments from Mr. Savage. He told Rev. Blougouras that he received commissions for selling the annuities. Mr. Savage assisted with the applications and procured the policies. Over the last 14 years, Rev. Blougouras purchased nine fixed index annuities. In March 2005, he bought an annuity for $347,003; in April 2005, he bought an annuity for $229,458; in August 2005, he bought an annuity for $102,227; in June 2006, he bought an annuity for $8,300; in May 2007, he bought an annuity for $41,143; in June 2009, he bought an annuity for $50,000; in July 2009, he bought an annuity for $14,308; and, though the record is unclear as to the date, he bought another annuity that was worth $40,572 in 2010. Since 2011, he bought an additional annuity and several non-insurance investments, such as real estate trusts and energy funds. Prior to 2010, Mr. Savage did not charge Rev. Blougouras service fees because he continued to purchase annuities. However, in 2010, Mr. Savage decided to start charging an annual service fee and sent Rev. Blougouras the Fee Agreement. Rev. Blougouras believed that Mr. Savage’s services would be cancelled if he failed to pay the fee and he would have to hire another advisor. He signed the Fee Agreement and continues to use Mr. Savage’s services. Mr. Savage has sent annual invoices to Rev. Blougouras every year since 2010. The record only contains the 2010 invoice for $9,883 and Rev. Blougouras could not recall how much he paid overall. However, he confirmed that he has paid every invoice he has received either himself or with distribution checks he received from the annuities. The weight of the credible evidence shows that Mr. Savage provided numerous services to Rev. Blougouras. He prepared paperwork and documents for required minimum distributions and withdrawals, held meetings to review and organize his tax paperwork, copied documents requested, and made address changes when requested. He analyzed asset reallocation every year and, when he recommended reallocation in 2010 and 2011, he completed the necessary paperwork. Count VIII – George Flate Mr. Flate and his wife met Mr. Savage at a financial planning seminar in 2010. In February 2010, they met Mr. Savage and completed their new client form listing their investments, including fixed annuities, CDs, mutual funds, and stocks. They also signed the Fee Agreement, which Mr. Flate believed was a standard service agreement. They thought they hired Mr. Savage as an investment advisor and never believed they would lose access to the annuities if they stopped paying his fees. Based on Mr. Savage’s recommendation, the Flates purchased two fixed index annuities: one annuity was issued in April 2010 for approximately $22,000, and the other annuity was issued in May 2010 for approximately $22,500. Mr. Savage assisted them with filling out the applications and handled the paperwork to ensure the annuities were issued. Between 2012 and 2015, Mr. Savage sent the Flates invoices for his annual service fees every year. In total, they paid approximately $1,506 in service fees. In 2015, the Flates terminated their relationship with Mr. Savage. They have worked with two financial advisors since then, neither of whom charged them service fees relating to the annuities. The weight of the credible evidence shows that Mr. Savage provided numerous services to the Flates. Each year, he met with them to go over their account, provided them with account analyses, analyzed reallocation and, the two to three times they agreed with his recommendations, he handled the paperwork. He handled withdrawals and address changes for them when requested, and he provided them with information as to changes in tax law and estate planning, though they did not believe that was necessary since they had tax and estate lawyers. The Flates understood that Mr. Savage was available to answer their questions and provide the services if they asked. Count IX – FINRA Disciplinary Proceeding On July 14, 2016, two former clients of Mr. Savage’s filed a Statement of Claim with FINRA alleging that he had recommended investments that were not suitable for them. Over Mr. Savage’s objections to proceeding with the hearing as scheduled, the arbitration panel awarded the clients over $725,000 in damages, fees, and costs. The clients filed a petition in Florida circuit court to approve the arbitration award. Mr. Savage responded in opposition and moved to vacate the arbitration award on grounds that it violated his due process rights. On November 9, 2017, the circuit court issued a final judgment awarding over $769,000. On December 4, 2017, Mr. Savage appealed the circuit court’s order to the Second District Court of Appeal. On June 12, 2018, while the appeal was pending, Mr. Savage signed a Letter of Acceptance, Waiver and Consent (“AWC”) with FINRA. The AWC stated that Mr. Savage accepted and consented, without admitting or denying, the following findings: Wall Street failed to apply for a material change in its business operations, i.e., to sell oil and gas interests, private placements, and non-traded real estate investment trusts, before engaging in more than 50 such transactions, many of which were consummated by Mr. Savage; Mr. Savage failed to timely update his FINRA Form U4 within 30 days of the Statement of Claim being filed against him in July 2016; Mr. Savage failed to timely respond to FINRA’s requests for information relating to an upcoming examination of Wall Street; and Wall Street failed to maintain the minimum net capital requirements of $5,000 while engaging in securities transactions. Mr. Savage agreed to three sanctions: (1) a five- month suspension from associating with any FINRA registered firm; (2) a three-month suspension from association with any FINRA registered firm in a principal capacity, to be served following the five-month suspension; and (3) a $30,000 fine. The AWC confirmed that Mr. Savage waived his procedural rights relating to these alleged violations and made clear that it would become part of his permanent disciplinary record that could be considered in future actions brought by FINRA or other regulators. He was precluded from taking positions inconsistent with the AWC in proceedings in which FINRA was a party, but was not precluded from taking inconsistent positions in litigation if FINRA was not a party. The five-month suspension began on June 13, 2018, and ended on November 17, 2018. The three-month suspension began on November 18, 2018, and ended on February 17, 2019. In the interim, on August 16, 2018, FINRA notified Mr. Savage by letter that it was suspending his securities license indefinitely for his “failure to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.” This letter is not in the record and, as such, it is unclear whether Mr. Savage had an avenue to challenge that suspension directly. Mr. Savage had challenged the underlying arbitration award, which remained pending on appeal in the Second District Court of Appeal. On November 7, 2018, the Second District affirmed the circuit court’s arbitration order. On November 20, 2018, Mr. Savage put the Department on notice of the FINRA disciplinary actions, including the AWC from June 2018 and the decision of the Second District affirming the arbitration award.
Conclusions For Petitioner: David J. Busch, Esquire Department of Financial Services Room 612, Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 For Respondent: Michael Buchholtz, Esquire The Law Office of Michael Buchholtz Post Office Box 13015 St. Petersburg, Florida 33777
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services issue a final order suspending Mr. Savage’s license as an insurance agent for twelve months. DONE AND ENTERED this 30th day of September, 2019, in Tallahassee, Leon County, Florida. S ANDREW D. MANKO 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 30th day of September, 2019.
Findings Of Fact In 1975 the Florida Legislature passed the Medical Malpractice Reform Act, Chapter 75-9, Laws of Florida, now codified in Chapter 768, Florida Statutes. Part of this legislative package included the creation of the Fund. This legislation was passed in response to a medical malpractice insurance crisis which arose when the primary underwriter for the Florida Medical Association sought to stop issuing medical malpractice policies in Florida, thus making it difficult, if not impossible, for physicians or hospitals to obtain medical malpractice insurance coverage at reasonable rates. As a result of this problem, many physicians began to practice defensive medicine, curtail or abandon their practices or practice without coverage of any kind. The Fund is a private not-for-profit organization, participation in which is totally voluntary for its member-health care providers. Insofar as Petitioners are concerned, membership in the Fund is but one of several options available to provide legally required evidence of financial responsibility in order to obtain licensure as a hospital facility in Florida. Physicians, hospitals, health maintenance organizations and ambulatory surgical centers who become members of the Fund must maintain at least $100,000 in primary professional liability insurance. Membership in the Fund grants to each participant a limitation of liability above the $100,000 in primary coverage. To the extent that any settlement or judgment exceeds the primary coverage of the participant, it is paid by the Fund without limitation. The Fund is operated subject to the supervision and approval of a board of governors whose membership is required by law to consist of representatives of the insurance industry, the legal and medical professions, physicians' insurers, hospitals, hospitals' insurers and the general public. The Department is charged by statute with certain regulatory functions concerning the Fund. As the law existed in 1980 a base fee for Fund membership was set by statute at $500 for physicians, after an initial $1,000 enrollment fee for the first year of participation, and at $300 per bed for hospital members. The statute required the Department to set additional fees based upon the classifications of health care providers contained in the statute. In the event that base fees are insufficient to pay all claims asserted against the Fund for a given fund year, the Department is empowered, upon request of the Board of Governors of the Fund, to order assessments against Fund participants to meet any such deficiency. Under the original legislation, all classes of health care providers could be assessed unlimited amounts to make up any deficiencies. As a result of legislative amendments which became effective July 1, 1976, the amount which participants, other than hospitals, could be assessed was limited to the amount each Fund member had paid to join the Fund for that particular coverage year. 1976 legislative amendments also required that each fiscal year of the Fund, which runs from July 1 through June 30, be operated independently of preceding fiscal years, and further required that occurrences giving rise to claims in a particular fund year be paid only from fees or investment income on those fees collected for that particular year. Thus, it is entirely possible for the Fund to experience deficits in a given year, and yet hold surplus funds for other years. On March 14, 1983, the Department of Insurance issued a "Notice of Assessment for 1980-81 Fiscal Fund Year" (hereinafter called the "Notice of Assessment). (exh. 20) Notice of this Notice of Assessment was published in the Florida Administrative Weekly, March 25, 1983, Vol. 9, no. 12. The Notice of Assessment announced that the Insurance Commissioner intended to levy and authorize the Fund to collect an assessment in the amount of $23,684,511 from those health care providers that were members of the Fund in fund year 1980-81 (exh. 20). Each of the hospitals named as Petitioners in the Petition for Administrative Proceedings in Case Dos. 83-1067 and 83-1068 were members of the Florida Patient's Compensation Fund during the fund year 1980-1981. (exh. 40; P.H.S. V 1) The chart below contains the following information concerning fund year 1980-81: the amount of the total proposed assessment described in the Notice of Assessment (dated March 14, 1983); the amount of the losses experienced by doctors and hospitals, respectively; the amount of the fees originally paid by doctors and hospitals; and the amount of the proposed assessments for doctors and hospitals; 1980-1981 Fund Year - Total Assessment $23,684,511 DOCTORS HOSPITALS Losses $19,086,800 Losses $29,798,500 Fees Paid 4,299,117 Fees Paid 6,015,827 Assessments 4,322,233 Assessments 18,734,918 (P.H.S. V 9) The Department computed the portion of the assessment to be paid by the different classes of health care providers for the 1980-1981 fund year based upon an "indicated rate method." This method is represented by the following formula: The Department started with the actuarially indicated rate for each class of health care provider as described in the October, 1981 Actuarial Report prepared by Tillinghast, Nelson, et al. This is called the "indicated rate by class." The Department then applied the following formula for each class: Indicated Rate by Class x No. of Members in the Class = Total indicated fees by Class Total Indicated Fees by Class divided by total Indicated Fees for ALL Classes = Percentage of Indicated Fee by Class Percentage of Indicated Fee by Class x Total Expected Loss for ALL Classes = Expected Loss by Class (Expected loss is ALL losses for the fund year including claims previously paid, reserves established on claims asserted and IBNR [incurred but not reported].) (P.H.S. V 12) The "indicated rate method" for allocating assessments among the various classes of health care providers was selected by the Department as the method which most fairly reflected the classifications prescribed in Section 768.54(3)(c), Florida Statutes. The record in this proceeding establishes that this method is the most feasible mechanism for fairly reflecting classifications established by statute, and, at the same time, providing immediate funds necessary to meet all claims against the Fund. (P.H.S. V 13) The difference between the results derived by the "indicated rate method" and the amounts reflected in the Notice of Assessment is due to the application of the statutory cap on assessments against physician members, as applied by the Department of Insurance. (P.H.S. V 14) Exhibit #17 shows (a) the calculations utilized by the Department in spreading the assessments for the 1980-81 fund year, (b) the amount each class would have paid under the "indicated rate method" for the fund year 1980-81 and (c) the amount actually described in the 1980-81 Notice of Assessment of the Department of Insurance. The Notices of Assessment issued by the Department of Insurance for fund years 1980-1981 allocated the "excess assessments" (which could not be applied to physician members because the 768.54(3)(c)'s limitation on the amount physicians could be assessed) among the other classes of health care providers based upon their percentage of "expected losses." (P.H.S. V 16) The amounts of the assessments sought by the Fund, and described in the Notices of Assessment, were calculated by the Fund by using the following formula: Total fees paid during the Fund Year + Investment Income attributable to the Fund Year Expenses allocated to that Fund Year Amount paid on claims for that Fund Year Amount reserved for all known claims for that Fund Year. (P.H.S. V 17) The fees ordered by the Department of Insurance and collected by the Fund plus the interest income generated by such fees for fund year 1980-81 are inadequate to cover claims against the Fund for that year. (P.H.S. V 19) Petitioners, for purposes of this proceeding, do not contest: (a) the method by which the Fund establishes reserves; (b) the amount of the reserves established for any individual claim file; or (c) the amount of the total deficit described in the Notices of Assessment dated March 14, 1983 for fund year 1980-1981. Nonetheless, Petitioners do not concede that the Fund needs all of the money described in the Notice of Assessment dated March 14, 1983 at this time. (P.H.S. V 33,34) The record in this cause establishes that as of March 14, 1983, there existed a deficiency in the Fund's account for the 1980-1981 fund year of at least $23,684,511 for the payment of settlements, final judgments and reserves on existing and known claims. Approximately $19,405.00 of this deficit is directly attributable to one judgment - Von Stetina v. Florida Medical Center. This was a malpractice judgment against a hospital which has been affirmed on appeal by the First District Court. An appeal has been filed in the Florida Supreme Court. (exh. nos. 1, 2, 18, 19, 26, 27 and 38) In view of the statutory cap on the amounts that may be assessed against physician members of the Fund, the foregoing dollar amounts for assessments for the 1980-81 fund year, and the manner in which they are proposed to be allocated among the remaining classes of health care providers are appropriate. The original fees for the 1980-1981 fund year were set in June of 1980. The Fund by letter dated April 21, 1980 requested that the Department approve an increase in membership fees for physicians and surgeons in the amount of twenty-five (25) percent and a redefinition of rate classes that would move eighteen (18) percent of the physicians and surgeons from Class 3 to Class 2. The Department published notice in the Florida Administrative Weekly and notified interested parties on its mailing lists that a public hearing was to be held on June 2, 1980. This hearing was held pursuant to 627.351, 768.54, and Chapter 120, Florida Statutes. The purpose of the hearing was identified as "to afford the Fund an opportunity to present evidence and agreement in support of its filing and, further, to afford any affected person an opportunity to present evidence and argument relating to the filing." A hearing was in fact held on June 2, 1980. The Fund presented evidence and argument in support of its request for twenty-five (25) percent increase in fees. No parties argued or presented evidence contending that the fees should have been higher. Subsequent to the hearing, the Department notified the Fund by letter dated June 12, 1980 that its request was approved. Acting on the Department's approval, the Fund sent all prospective members of the Fund for the 1980-81 year membership forms. These forms notified each health care provider what the fees for membership for all health care providers would be. In order to join the Fund each health care provider was required to fill out and sign these forms, thereby agreeing to pay the membership fees and any future assessments which might be levied. Both Petitioners and Respondent have submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that those proposed findings of fact are not included in this Recommended Order, they have been specifically rejected as being either irrelevant to the issues involved in this cause, or as not having been supported by evidence of record.
Findings Of Fact 1 In either April or May, 1983, HRS District III, Respondents in this case, advertised a request for proposals to operate a spouse abuse shelter in a subdistrict of HRS District III in accordance with the following schedule: The request for proposal (RFP) package was to be picked up by 5 p.m., May 20, 1983; the applicant was to notify HRS of its intent to submit a proposal by 5 p.m., May 20, 1983; and the proposal was to be filed with HRS no later than 5 p.m., June 3, 1983. The contract in question was for the period July 1, 1983 through June 30, 1984. Linda Tucker, President of the Petitioner's Board of Directors, found out about the solicitation from her Vice President, Alice Mulrooney, who had received word of it through an administrative letter sent to her in her capacity of an officer on the County Rape Council. Ms. Tucker and Ms. Mulrooney both telephonically spoke with Carol Laxton, the HRS official in Gainesville who was stewarding this solicitation. It was not clear which of the two spoke with her first. Ms. Tucker spoke with Ms. Laxton on May 20, 1983, and requested to be furnished with a copy of the RFP. Both Tucker and Mulrooney indicated they told Ms. Laxton that Petitioner was not yet incorporated. Both agree Ms. Laxton advised them the requirement for incorporation could be waived and that the proposal should be submitted anyway, including a letter from Petitioner's lawyer to the effect that the incorporation papers had been forwarded to the office of the Secretary of State. On May 25, 1983, Petitioner contacted representatives of the Hernando County Commission relative to county funding of at least a portion of that local source of matching funds required to make up at least 25 percent or the overall proposed operating budget as required by Florida Statutes and as set out in the proposal. At that time, Petitioner was advised that while the Commission supported the Petitioner's proposal in concept and fully hoped to lend its financial support, it could not officially do so until after the county's budget hearings were completed and it was determined that the requested funds were in fact available. A letter to this effect was submitted to Ms. Laxton by the Chairman of the Commission on June 7, 1983. In the interim, before the proposal was submitted, both Ms. Tucker and Ms. Mulrooney discussed this possible defect, as well, with Ms. Laxton. Again, both ladies contend Ms. Laxton advised them this criterion could be waived, as well. Petitioner submitted its proposal on time. However, at the time of submittal, the Petitioner was not in fact incorporated. The proposed corporate charter was forwarded to the Secretary of State on June 2, 1983 (a letter to this effect was sent the same day to Ms. Laxton by Petitioner's attorney), and approved on June 13, 1983. Also, at the time of submission, the proposal listed as budgeted resources donated land and two homes having a rental value of $4,800 per year as an in-kind resource, $182 as cash client contributions and $3,750 as a cash contribution by the Hernando County Commission. It is this last funding source that was committed in theory only and was not firm. Taken together, the three sources totaled $8,732, which would be slightly over 28 percent of the total yearly budget of $31,052. However, since the commitment from the County Commission was not firm and was contingent on funds being available, it could not be considered; and the remaining sum of $4,982 is only 16 percent of the budget. Ms. Laxton admits talking with both Tucker and Mulrooney on several occasions about the proposal and the difficulties they were having. They indicated to her they were having problems getting incorporated, but that their attorney was working on it. She admits telling them to send whatever they had, which included a status letter from their attorney. She also admits stating to them that some requirements of the RFP could be waived, but does not think incorporation was one and is sure she did not tell them the matching funds requirement could be waived. After hearing the evidence presented and considering it along with its relative probabilities and improbabilities, it is found that the Petitioner's representatives may have reasonably inferred the incorporation requirement could be waived. However, it is unlikely that Ms. Laxton would have even inferred anything as significant and sensitive as a matching fund requirement could be waived. If Ms. Tucker and Ms. Mulrooney inferred that from Ms. Laxton's comments, it was unfortunate, but in error. In fact, the County Commission did ultimately approve a commitment to Petitioner in the amount of $3,750. They have also received additional cash contributions of $2,300 and additional in-kind contributions of $5,000. None of these latter resources were in hand or firmly committed by the June 3, 1983 proposal submission deadline, however. At the present time, Petitioner is operating a shelter without Respondent's funds. They have requested assistance from the successful bidder, but have been turned down. There is, however, substantial but non-financial community support for Petitioner's operation.
Recommendation Based on the foregoing, it is RECOMMENDED: That Petitioner's protest be rejected. RECOMMENDED this 4th day of January, 1984, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings Department of Administration 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of January, 1984. COPIES FURNISHED: LINDA TREIMAN, ESQUIRE 11 NORTH MAIN STREET BROOKSVILLE, FLORIDA 33512 JAMES A. SAWYER, JR., ESQUIRE DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES 1000 N.E. 16TH AVENUE BUILDING H GAINESVILLE, FLORIDA 32601 MR. DAVID PINGREE SECRETARY DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES 1323 WINEWOOD BOULEVARD TALLAHASSEE, FLORIDA 32301
The Issue The issue in this case is whether Petitioner, Affordable Home Ownership Corporation, is eligible for a consumer certificate of exemption as a charitable institution pursuant to Section 212.08(7)(o), Florida Statutes.
Findings Of Fact Petitioner, Affordable Home Ownership Corporation (hereinafter referred to as "AHO"), is a Florida nonprofit corporation. Respondent, the Department of Revenue (hereinafter referred to as the "Department"), is an agency of the State of Florida. Among other things, the Department is charged with responsibility for implementing and administering Florida tax laws, including Chapter 212, Florida Statutes. During 1996, AHO submitted an application for an exemption under Chapter 212, Florida Statutes, as a charitable organization. According to the Articles of Corporation of AHO, its purpose is: To raise the economic, educational and social levels of the underprivileged residents of Lake City (Columbia County), Florida, and its trade area, who are substantially underemployed and have low income, by fostering and promoting community-wide interest and concern for the problems of such residents, and to that end; Racial tension, prejudice, and discrimination of economic and otherwise may be eliminated; Sickness, poverty and crime may be lessened and; Educational and economic opportunities may be expanded among the residents of Lake City (Columbia County), Florida, and its trade area. To expand the opportunities available to said residents to own, manage, and operate business enterprises in economically underprivileged or depressed areas; to assist said residents and groups in developing management skills necessary for the successful operation of business enterprises; to provide financial support for the successful operation of business enterprises by said residents and to assist said residents in obtaining such financial support from other sources. To aid, support and assist by gifts, contributions or otherwise, other corporations, community chests, funds and foundations organized and operated exclusively for charitable, religious, scientific, literary or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholders or individuals, and no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation. To do any and all lawful activities which may be necessary, useful or desirable for the furtherance, accomplishment, fostering or attainment of the foregoing purposes, either directly or indirectly, and either along or in conjunction or cooperation with others, whether such others be persons or organizations of any kind or nature such as corporations, firms, associations, trust, institutions, foundations, or governmental bureaus, departments or agencies. The Department conceded in its proposed recommended order that AHO meets the requirement for exemption in this matter that it be designated a Section 501(c)(3) charitable organization by the United States Internal Revenue Service. The services provided by AHO are provided without charge to its clients. Those services include recruiting families who are qualified for federal home loans who are committed and able to provide their time and labor to construct their own housing. AHO brings several such families together to share the labor and effort necessary to build housing for each family. Each family shares in the labor of constructing the home of each other family in the group. AHO assists the families prepare mortgage applications necessary to receive federally subsidized loans and provides credit counseling necessary for families to qualify for such loans. Once a family qualifies for a loan, AHO assists in the selection of house plans, the selection of construction materials, the organization of the family groups, teaches general construction techniques and assists with all aspects of completing construction of housing. AHO also assists in bookkeeping necessary to administer mortgage loans. AHO does not act as a general contractor. Nor does AHO provide construction labor or materials, or the funds necessary for construction. AHO receives administrative grants through the state's Housing Finance Agency as a Community Housing Development Organization. AHO's expenses in providing its services are entirely expenses of the organization. AHO's total expenditures are for its day-to-day operations. No funds are expended directly for clients.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Department of Revenue denying the certificate of exemption sough by Affordable Home Ownership Corporation. DONE AND ORDERED this 2nd day of June, 1997, in Tallahassee, Leon County, Florida. LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this this 2nd day of June, 1997. COPIES FURNISHED: Rufus L. Smith Executive Director, A.H.O.C. Affordable Home Ownership Corporation Post Office Box 7347 Lake City, Florida 32055 Kevin J. ODonnell Assistant General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Linda Lettera General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue in this proceeding is whether Petitioner Ryan Flint, the minor son of his personal representative and mother, Madeline Flint, should immediately receive developmental services or remain on a waiting list for such services until funding is available.
Findings Of Fact At the time of the hearing, Ryan Flint was three years old and has been identified as being on the "autism spectrum." Autism spectrum puts Ryan at risk of having a developmental disability, but is not itself a developmental disability. Testing at a later date will ascertain whether he actually has a developmental disability. Until such testing can be accomplished, however, pursuant to federal law and long-standing policy, the Department regards Ryan Flint as a client because of his risk status. The parties stipulated that Ryan is eligible for services of the Developmental Services Program. Ryan became a client of Developmental Services on June 20, 2000. Despite the rejection language of the notice of denial letter, Ryan was placed on a waiting list and may ultimately be provided the requested services from Respondent. Currently, there are approximately eight thousand persons who became clients of the Developmental Services Program after July 1, 1999. Ryan was receiving services through Children's Home Society. However, because he turned three years old he no longer qualifies for services under that program. Children's Home Society referred him to Developmental Services for evaluation. Mrs. Flint recalls that the "intake" for services was done May 11, 2000. It was Mrs. Flint's impression from the intake interview that Ryan would receive the requested services. This continued to be her impression when Ryan's service plan was written in June of 2000. Ryan currently receives some occupational therapy services through the local school board. However, these occupational services are limited to those which are only educationally necessary such as writing skills and do not extend to other non-educational skills such as running. A long and complex chain of events and circumstances led to the situation faced by Ryan Flint. Prior to the 1999 legislative session, the Department identified 23,361 Developmental Services clients who were either not getting services from the developmental services program or who were not receiving adequate services. The Department's Legislative Budget Request for fiscal year 1999-2000, included a plan to address the underserved clients over a two-year period. Under this plan, 15,984 of the identified 23,361 clients would be served during fiscal year 1999-2000, with the remaining 7377 clients to be added to the group in fiscal year 2000-2001. The Legislature elected to route the new moneys into the Medicaid Waiver program. That program provided for a 45/55 State/Federal match, under which fifty-five cents of federal moneys would be provided for every forty-five cents contributed by the Florida Legislature. Since most of these clients resided in the community and not in institutions, the program utilized under this plan was not the Institutional Medicaid program, but the Home Community Based Waiver program. The Home Community Based Waiver program, also called the Medicaid Waiver program, differs from the Institutional Medicaid program. The Institutional Medicaid program is an entitlement program. The Medicaid Waiver program is not. Consequently, the moneys which fund the Medicaid Waiver program are limited and claims on such programs must be prioritized. The Legislature directed the Department to prioritize these limited funds in proviso language of the 1999-2000 Appropriations Act: . . . Priorities for this funding, in order, are as follows: 1) Transitions for those requesting transfers from Intermediate Care Facilities for the Developmentally Disabled (ICF/DD) institutional placements into Home and Community Based Waiver residential placements, and 2) Meeting the needs of identified under-served participants in the Home and Community Based Waiver Services after accurately assessing the actual costs of each person's support plan. The 2000 Appropriations Act contained proviso language identical to that found in the 1999 Appropriations Act referenced in paragraph 9. The Department implemented this legislative mandate by implementing policy that, except for crisis situations, only persons who were clients on July 1, 1999, would receive services. All others would be put on a waiting list. Ryan Flint is not eligible for the Medicaid Waiver Program. The funds Mrs. Flint seeks come from another source, the Individual and Family Support appropriation. However, as a matter of policy, the Department has applied the prioritization described in paragraph 11, not only to the appropriations made through the Medicaid Waiver program, but also to those relating to the Individual and Family Support appropriation. This policy was communicated to the Department's District Administrators and Developmental Services Program Administrators in a memorandum dated May 22, 2000. Utilizing this policy, the result in this case is the same as if Ryan had been on the Medicaid waiver. Jo Ann Braun, a Human Services Counselor with the Department, was not aware of the new policy until August of 2000. Thus, she could not have been aware of the new policy at the time she wrote Ryan's service plan which was in June 2000. According to Ms. Braun, as this policy was in the process of being disseminated through the Department, there may have been some clients who did not meet the crisis criteria and who entered the system after July 1, 1999, who received services. However, once the Department staff received and began implementing the policy, new clients were put on the waiting list and did not begin to receive services. In the past two years, the Legislature has not appropriated any new funds under the Individual and Family Support Program. Thus, since the existing client base in Developmental Services remained static, the new client base has increased by approximately 8,000 clients since July 1, 1999. Since the client base increased by 8,000 but the funding did not increase, the Department was faced with a decision as to how to fairly and consistently use the funding that was available. The Department determined that the only way it could provide funds to new clients would be by withholding services from existing clients who already received these services. However, it is not the policy of the Department to take money from someone who already is receiving services and give it to someone new. Faced with two choices, neither of which was desirable, the Department implemented a policy which requires that the allocation of Developmental Services moneys be made on a consistent basis. That is, the Department elected to apply these moneys in a manner consistent with the Medicaid Waiver appropriation. Moreover, many of the clients who receive Medicaid Waiver funds also receive Individual and Family Support funds. Additionally, the Department's prioritization puts at the top of the list those clients who are in crisis. Under these circumstances, the Department's decision to allocate the Individual and Family Support moneys in the same manner as the Medicaid Waiver moneys is not unreasonable or arbitrary. Applying the Department's policy, Ryan can only receive services if he is in crisis because he became a client after July 1, 1999. The Department has identified six conditions which, if present, constitute a crisis which would permit it to provide services to persons who became clients after July 1, 1999. These are: A court order from a criminal proceeding requires the Department to provide services. The client is highly dangerous to himself or others, and danger will continue if services are not provided immediately. The client is living in a high risk situation in which abuse and/or neglect is occurring or likely to occur. The client is homeless, living either in a homeless shelter or on the street. The caregiver is unable to provide care for the client, no alternative arrangements are possible, and without the provision of services, the client cannot safely remain with the caregiver. Other circumstances exist which will present a danger to the client's safety and/or security if services are not provided. The parties stipulated that Ryan Flint met none of the foregoing criteria. Consequently, the Department did not provide him the services his mother sought on his behalf.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Children and Family Services enter a Final Order leaving Ryan Flint on the waiting list of clients to be served by the Department's Developmental Services Program, and providing those services to him as soon as funds become available to do so. DONE AND ENTERED this 12th day of January, 2001, in Tallahassee, Leon County, Florida. BARBARA J. STAROS 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 12th day of January, 2001. COPIES FURNISHED: Madeline Flint 1327 Conservancy Drive Tallahassee, Florida 32312 John R. Perry, Esquire Department of Children and Family Services 2639 North Monroe Street, Suite 100A Tallahassee, Florida 32399-2949 Virginia A. Daire, Agency Clerk Department of Children and Family Services Building 2, Room 204B 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Josie Tomayo, General Counsel Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204 Tallahassee, Florida 32399-0700
