The Issue The issue in this case is stated in three counts set forth the Administrative Complaint1/: Count I, whether Respondent, Ronald C. Hormes ("Hormes"), is guilty of violating section 475.624(15), Florida Statutes (2008),2/ by failing to exercise reasonable diligence when preparing or developing an appraisal report; Count IV, whether Hormes is guilty of obstructing an investigation in violation of section 475.626(1)(f); and Count V, whether Hormes is guilty of failing to properly and adequately supervise a registered trainee appraiser in violation of section 475.624(4); and Florida Administrative Code Rule 61J1-4.010.
Findings Of Fact The Division is responsible for monitoring all licensed and certified real estate appraisers in the state. It is the Division's duty to ensure that all appraisers comply with the standards set forth in relevant statutes and rules. Hormes has been a certified residential real estate appraiser for approximately 30 years. He operates a family-owned real estate appraisal business. At all times material hereto, Mariano M. Alvarez II ("Alvarez"), a state-registered trainee real estate appraiser, was performing appraisal duties under Hormes' supervision. Alvarez is one of approximately 55 trainees who have worked under Hormes' supervision since 1993. Alvarez first became a trainee in Hormes' office in May 1997. He left the office early in 2004, but returned as a trainee in July 2004. Alvarez remained a trainee in Hormes' office until April 2011. At issue in this case are three appraisals which will be referred to collectively herein as the "Townsend" appraisal. In May 2008, Alvarez was technically working as a trainee with Hormes. However, Hormes had not given Alvarez any assignments since some time in 2007. Alvarez had become engaged in the operation of a business outside the area of real estate appraising and was not actively seeking work from Hormes in the appraisal field. In the Spring of 2008, Alvarez received a request to engage in some appraisal work. He received an assignment letter for appraisal work from Karen Maller, an attorney representing some members of the Townsend family who were in a dispute concerning land and property left in an estate. The assignment letter dated May 30, 2008, asked Alvarez to prepare an appraisal and also to be an expert witness in an upcoming trial. It appears the assignment letter was emailed to Alvarez, i.e., there is no physical address for Alvarez on the letter. Most assignments are commenced by way of a letter setting forth the scope of the intended work to be performed. Sometimes the assignments are made by way of email, but hard copy letters are most common. The assignment letter was sent directly to Alvarez; Hormes was not an addressee on the letter, and it was not copied to him. A real estate appraisal trainee is generally not authorized to accept appraisal assignments directly. Alvarez apparently accepted the assignment from Maller and began working on the Townsend appraisal. The correspondence listed below followed the initial assignment letter: A June 30, 2008, letter from Maller concerning the upcoming trial dates in January 2009. The letter contained no physical address, but had email addresses for both Alvarez and Hormes. The email address for Hormes was his personal address, not his work address. A September 8, 2008, email from Maller to Alvarez, copied to Hormes, indicating receipt of Alvarez's draft appraisal. A September 14, 2008, email from Maller to Alvarez, copied to Hormes, seeking a draft for the residential portion of the appraisal. A September 15, 2008, email from Maller addressed to both Alvarez and Hormes, providing comments on the appraisal that had been submitted. A November 7, 2008, letter addressed to Alvarez (only) at Hormes' business address. Hormes does not admit any knowledge of the assignment accepted by Alvarez prior to receiving Maller's emails in September. At that time, Hormes became concerned and called Maller to inform her that she was not a client of his office. Hormes left messages with Maller concerning this fact, but it is unclear whether he ever talked directly to Maller. Hormes also attempted to call Alvarez about the purported assignment. Hormes testified that, "I put in, you know, phone calls to him. He is difficult to contact." Again, it is unclear at what point in time Hormes initially talked directly to Alvarez about this matter. After Hormes contacted Maller to inform her that she was not his client, Maller then sent Alvarez a letter in which Hormes was not copied. That letter dated November 7, 2008, basically reiterates the facts concerning the upcoming trial in January 2009, one of the two purposes set forth in the original assignment letter to Alvarez. The computer-generated footer at the bottom of the letter states: T:\Carrie\Geiger,William\ Townsendv.Morton\Correspondence\Witness 002-Alvarez.doc, as compared to the footer on the original (June 30, 2008) letter which says: F:\Carrie]Geiger,William\Townsendv.Morton\ correspondence\Alvarez-Hormes 001.wpd. Clearly the November correspondence was meant for Alvarez only. The reason for that change cannot be determined from the evidence presented at final hearing in this matter. It may reasonably be inferred that as of November, Maller no longer considered both Hormes and Alvarez her expert appraisers. Instead, the November 7, 2008, letter is addressed solely to Alvarez as "Expert-Appraiser." Alvarez was using Hormes' office during the time he was acting as a trainee. Hormes expected each of his trainees to do their work at his office, rather than operating remotely. Trainees had access to the office computers, fax machines, copiers, and a library of information. That being the case, it is difficult to ascertain why Hormes had difficulty contacting Alvarez once he found out about the Maller assignment. That is, if Alvarez was using Hormes' office to prepare the appraisal, he would seem to be accessible to Hormes. During his interview with the Division's investigator in December 2009, Hormes acknowledged some supervisory involvement with the Townsend appraisal. Hormes could not remember making any statement to that effect to the investigator at the final hearing in this matter. However, the investigator received confirmation from both Hormes and Alvarez that the appraisals provided to Maller were only in draft form. The investigator's testimony in this regard is credible. Hormes' attorney wrote a letter to the Division dated December 9, 2009, in which Hormes was described as the "Supervising Appraiser" for the Townsend appraisal. The attorney who wrote the letter was eventually released by Hormes based upon issues relating to competency. The attorney's law firm did not require Hormes to pay for that attorney's work. Hormes seemed to insinuate at final hearing that the release of his attorney indicates that the statements made in the December 9, 2009, letter were inaccurate. However, there was no competent or persuasive evidence to support that insinuation.3/ During the investigation undertaken by the Division concerning the propriety of the Townsend appraisal, Hormes and Alvarez were questioned by an investigator at a single interview. During that interview, Alvarez did most of the talking and responded to most of the questions about the appraisal. It is clear that Alvarez had the greatest amount of knowledge and information concerning the Townsend appraisal, but it is unclear how much knowledge Hormes had. Hormes was at least aware of the work that Hormes had done on the appraisal. The Townsend appraisal was, by everyone's admission, not an acceptable work product. It was flawed in many areas and failed to meet the minimum standards for a real estate appraisal. Hormes simply says that Alvarez had "gone rogue" and that he had done the appraisal on his own. At final hearing, Hormes disavowed any direct work on the appraisal or that he supervised Alvarez's work on the appraisal. In fact, Alvarez admitted to the investigator that he had forged Hormes' signature on the reports and that Hormes was not aware of that fact. During the course of the investigation by the Division, Hormes was asked to provide copies of the Townsend appraisal, along with the two other draft appraisals that Alvarez had been working on for Maller. Hormes advised the investigator that he would provide copies of the report, but he did not provide them. Portions of the work file from Hormes' office were provided to the investigator, but copies of the reports were never provided to the Division. Hormes contends he never knew about the Townsend appraisal and, therefore, did not have a work file concerning the report. However, if Alvarez was working on the reports using Hormes' office and equipment and Alvarez was still under Hormes' supervision at the time of the investigation, it is difficult to reconcile Hormes' stated inability to have the appraisal reports and Alvarez's work file made available. Further, as Alvarez's supervising appraiser, it seems that Hormes would be able to direct Alvarez to provide the reports. Alvarez was retained as a real estate appraisal trainee in Hormes' office throughout the investigation and during the preparation for final hearing in this matter. At some point just prior to the final hearing, Alvarez was released by Hormes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Real Estate, finding Respondent, Ronald C. Hormes, guilty of Count V of the Administrative Complaint. A fine of $1,000.00 and a two-year period of probation should be imposed. DONE AND ENTERED this 10th day of June, 2011, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 10th day of June, 2011.
Findings Of Fact Based on evidence presented, the following Findings of Fact are made: AHCA is the state agency responsible for the administration of the CON program in Florida pursuant to Section 408.034, Florida Statutes. After comparative review of the applications of various applicants for nursing home beds in Osceola County, AHCA noticed its intent to issue a CON to Arbor for the construction of a new 120-bed community nursing home. The proposed decision would deny a CON to the Oaks for the construction of 61 additional nursing home beds to an existing 59-bed facility and also deny a CON to Osceola for the construction of 60 additional nursing home beds to an existing 120-bed facility. Stipulations Facts set forth in paragraphs 3., through 8., below, are the subject of stipulation between the parties and are accepted in this proceeding. The following sections of the three CON applications which are the subject of this proceeding are admitted into evidence without further proof or foundation witnesses: each applicant's corporate resolution; notice of publication; the page entitled "Certification of the Applicant"; the page entitled "Identification of Principal Parties"; pages relating to the CON remittance form and payment; all Audited Financial Statements; and the letters or resolutions of project financing. The three CON applications are admitted into evidence for identification and authentication, but not for the truth of the matters asserted therein. All three CON applications and corresponding letters of intent were timely received by AHCA and the local health council and all required publications occurred. There is remaining a fixed numeric need for 131 nursing home beds in District VII. The statutory criteria and provisions applicable to and governing this proceeding are Section 408.035(1) and Section 408.037(2), Florida Statutes. Provisions of Section 408.037(3) and (4), Florida Statutes are satisfied. Rules 59C-1.008, 59C-1.036, Florida Administrative Code, are applicable to this proceeding. As to review criteria set forth in Section 408.035(1) and (2), Florida Statutes, the parties stipulated: As to subparagraph (a), there is a need for 131 remaining beds as stated in the fixed need pool. The remainder of that criterion is at issue. Subparagraphs (b), (c), (d), (i), (l), (m), (n), and (o) are in dispute. Subparagraphs (e), (f), (g), (j) and (k) are not applicable or not at issue. As to Section 408.035(2), Florida Statutes, subsection (b), (c) and (d) are at issue, but subsections (a) and (e) are either not applicable, not at issue, or are included within the stipulations as to section (1) above. As to subparagraph (h) in 408.035(1), Florida Statutes, the only sections of this review criteria in dispute are the availa- bility of "funds for capital and operating expenditures, for project accomplishment and operation," and "the extent to which the pro- posed services would be accessible to all residents of the service district." The remainder of (h) is either not in dispute or not applicable. Arbor's Proposal CON Number 7756 Arbor has operated in the State of Florida since August 6, 1985, and currently owns and operates ten nursing homes in Florida. Arbor maintains a corporate structure which devotes substantial financial, manpower and other resources to its individual nursing homes. The individual nursing homes are directed by well-established, centralized corporate policies in the areas of finance, quality of care, quality assurance, prototype services, structural design, subacute services, and all areas of nursing home operations. Arbor has in place extensive dietary mechanisms and procedures to serve the nutritional needs of its residents. Arbor provides pharmaceutical, nutritional support, and medical supply support to its facilities through wholly-owned subsidiaries. Arbor has extensive in-house design and construction capabilities and employs architects, engineers, interior designers, health planners, real estate selection and zoning experts, and estimators. Arbor also has in place extensive mental health programs with regard to persons suffering from Alzheimer's or related dementia. Arbor's application proposes a 120-bed nursing home in Osceola County, Florida. Arbor's proposal includes a specified commitment to an 18-bed subacute unit, one bed dedicated to pediatric patients, one bed dedicated to AID's patients, one bed dedicated to hospice care, one bed dedicated to respite care, the establishment of an inpatient and outpatient rehabilitation program and mental health program, and a minimum of 72 percent of its total annual patient days provided to Medicaid patients. The Oaks Proposal, CON Number 7770 The Oaks, located in Osceola County, is a 59-bed existing facility which was built in 1971. It has historically experienced a high (approximately 90 plus percent) occupancy rate and is the oldest facility of its kind in Osceola County. The Oaks' facility is located downtown in the City of Kissimmee, landlocked in an urban setting. The Oaks proposes a 61-bed addition which would include a cognitive behavioral disorders unit. The Oaks' application was conditioned for 71.6 percent Medicaid patient days. The application did not condition the specific number of beds for the cognitive behavioral disorders unit. Osceola's Proposal, CON Number 7769 Osceola operates a 120-bed home in St. Cloud, Florida. Located on a five acre site encompassing numerous trees and grassy areas, Osceola proposes the addition of 60 nursing home beds to its existing facility. While the application of Osceola agreed to a condition of 71.6 percent Medicaid and a condition for a Medicare/oncology and Alzheimer's/dementia special care units, Osceola did not specifically condition the CON for a specific number of beds in either unit. The Osceola facility was originally constructed pursuant to a CON obtained by Arbor. Arbor then sold the facility to Osceola. ALLOCATION FACTORS Relationship to District and State Health Plans Section 408.035(1)(a), Florida Statutes District Health Plan The District VII local health plan contains three allocation factors to be used in the evaluation of community nursing home applications. Factor I of the local health plan gives preference to applicants proposing to locate beds in designated zip codes in Orange County. This factor is not applicable to any of the three applicants because these applications are for Osceola County. Factor II gives preference to applicants proposing services for a newborn or pediatric population. Neither Osceola nor Oaks proposes services for newborns or pediatric patients and therefore do not receive preference under this factor. Arbor is committed to a condition for the reservation of one bed for pediatric patients and has described the types of patients it expects to serve and the sources from which it expects to receive pediatric referrals. Arbor qualifies for preference under this factor. Factor III gives preference to applicants who propose the development of a specific specialty service (e.g., medically complex, psychiatric disorders, AIDS/HIV positive) or commit to work with an existing provider of specialty services. Arbor has conditioned its application on the provision of several specialty services that are not readily available to residents of Osceola County, including a specialized subacute care unit, respite care, hospice care, services to AIDS patients and pediatric patients, and mental health/dementia programs. Arbor qualifies for priority under this factor. Neither the Oaks nor Osceola's applications met the preferences in the local health plan. State Health Plan The Florida state health plan contains 12 allocation factors for reviewing CON applications for community nursing home beds. Factor I provides a preference for applicants proposing to locate in subdistricts with occupancy rates exceeding 90 percent. Osceola County's historical and current occupancy rates exceed 90 percent occupancy. All applicants qualify for preference under this factor. Factor II provides a preference for applicants who propose to serve Medicaid patients in proportion to the average subdistrict-wide percentage of nursing homes. All applicants meet this preferential requirement. Factor III provides preference to applicants proposing specialized services to special care residents including AIDS, Alzheimer's, and mentally ill residents. Arbor has conditioned its application on the provision of several specialty services that are not readily available to residents of Osceola County, including a specialized subacute care unit, respite care, hospice care, services to AIDS patients and pediatric patients, and mental health/dementia programs. Arbor qualifies for priority under this factor. Neither the Oaks nor Osceola have clearly defined the special programs that they would offer in their respective facilities, the number of beds those programs would offer, nor the need for these services. Oaks and Osceola are not consistent with Factor III and should not receive preference. Factor IV provides preference to applicants proposing a continuum of services. While all applicants meet this preference in degree, none offer adult day care. All propose to offer respite care. On balance, Arbor proposes to offer a multi-level continuum of services, inclusive of respite care, general and restorative nursing care, specialized subacute care, other less intensive levels of subacute care, and should receive preference. Factor V provides preference to applicants proposing facilities that provide maximum resident comfort and quality of care. Innovative quality of life features that minimize institutional appearances and create a residential- style environment qualify Arbor for priority under this factor. The sixth state health plan allocation factor provides preference to applicants proposing innovative therapeutic programs that enhance residents' physical and mental functional level and that emphasize restorative care. Arbor presents plans to implement such activities that will contribute to enhancement of residents' physical and mental functioning. Multiple levels of rehabilitative services will be offered to provide support and restorative assistance to residents. Arbor qualifies for priority under this factor. A preference is accorded by Factor VII to applicants proposing charges that do not exceed the highest Medicaid per diem rate in the subdistrict. Arbor's charges will exceed the highest Medicaid per diem rate in the subdistrict. The Oaks and Osceola will not exceed the highest rate and receive preference under this factor. All applicants receive preference under Factor VIII for a history of providing superior resident care in existing facilities in Florida and other states. Both Osceola and the Oaks have consistent histories of superior care. Arbor seeks and obtains accreditation from the Joint Commission for the Accreditation of Healthcare Organizations (JCAHO) for its facilities and its subacute programs, implements patient care strategies which are attentive to the individual needs of the residents, provides innovative approaches to high quality of care. Factor IX provides preferences to applicants proposing staffing levels which exceed the minimum staffing standards contained in licensure administrative rules. All applicants' propose staffing ratios that exceed minimum staffing ratios under the licensure rules. Factor X provides preference to applicants who will use professionals from a variety of disciplines to meet the residents' needs for social services, special therapies, nutrition, recreation activities, and spiritual guidance. All applicants meet requirements for this preference. Factor XI provides preference to applicants who document how they will ensure residents' rights and privacy, if they use resident council, and if they plan to implement a well-designed quality assurance and discharge planning program. All applicants meet requirements for this preference through existing programs or, as regards Arbor, have adequately documented plans to protect residents' rights and privacy, inclusive of a residents' council and provision of an effective discharge planning program. Factor XII provides a preference to applicants proposing lower administrative costs and higher resident care costs compared to the average nursing home in the district. Osceola does not meet this preference. The Oaks and Arbor qualify for the preference. Arbor proposes higher resident care costs than the district average consistent with this preference. The proposed administrative costs are higher than the district average; however, these administrative costs are explained and justified by the higher acuity subacute services proposed by Arbor, which require coordination of an interdisciplinary team to provide necessary treatments. Arbor best qualifies for priority under this factor. Statutory Review Criteria: Section 408.035(1)(b): The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, inad- equacy of like and existing health care ser- vices and hospices in the service district of the applicant. Arbor's Subacute Facility Subacute services, as defined within Arbor's application, by expert witnesses, and by JCAHO, are a level of care that is higher than that which nursing homes traditionally provide in skilled and general beds but which are below the level of acute care provided in a hospital. Evolution of these services results from pressure by third party payors to discharge patients from hospitals as soon as they no longer need a hospital's high intensity acute care. Selective services are provided by some nursing homes on a subacute basis with concomitant higher staffing, more expensive and sophisticated equipment, and other facilities and capabilities not traditionally available in a nursing home. Arbor proposes provision of subacute services, delivered through an interdisciplinary team to patients with complex medical problems and involving application of a higher intensity of treatments and services than have historically been provided within nursing homes. Lynne Mulder, an expert planner for the Petitioners declined to opine whether the subacute beds proposed by Arbor were not needed in Osceola County. Daniel J. Sullivan, expert planner presented by Arbor, ventured the opinion that the eighteen subacute care beds which Arbor proposes to construct in its dedicated subacute unit were needed in Osceola County. Sullivan based his opinion on a subacute need methodology developed by Arbor and his independent analysis to determine the need for subacute beds in Osceola County. Subacute care, by definition and as it is rendered in Arbor's existing facilities, is high-intensity medical care given to patients sometimes having multi-system failure that requires medical direction, physician intervention, specialized therapies and nursing care at a higher level than traditional skilled care. Arbor's subacute units can and do routinely provide the type of oncology services which Osceola has proposed to provide in its dedicated unit. Arbor entered the emerging subacute market in 1988, and operates one total subacute facility. Additionally, there are subacute units included in all Arbor facilities approved and under construction in Florida. Arbor also operates 22 subacute units in existing facilities. Arbor's proposed subacute unit is an integral part of Arbor's continuum of care. On one side of the proposed facility, is a 60-bed unit which would render services considered to be traditional nursing home care. The other side of Arbor's building is a 60-bed unit encompassing its skilled and subacute wing. Within that wing is the proposed location of an 18-bed specialized subacute unit which will render high intensity services for medically complex patients and 42 additional skilled nursing home beds for patients who range in multiple levels of acuity. The subacute wing of Arbor's facilities are specifically designed for the provision of such services with larger rooms which accommodate different types of additional equipment, have medical gas outlets, accommodate different power and lighting requirements, and have bathrooms which are designed for the provision of subacute services to patients. JCAHO, the nationally recognized organization which establishes standards of care for various health care industries, implemented its accreditation program specifically for subacute care in January of 1995. This accreditation process involves review by JCAHO of facility staffing, the physical plant, "self-definition" of subacute, care plans, and organizational structure. Arbor's Bayonet Point facility was the first facility in Florida to receive JCAHO subacute accreditation. Presently only four facilities in Florida have been accredited by JCAHO for the provision of subacute care and two of those facilities are Arbor facilities. Osceola's Alzheimer's Unit and Oncology Unit Osceola has proposed an Alzheimer's unit and an Medicare/oncology unit as a portion of its proposed 60-bed addition. Osceola's application failed to "condition" its proposed unit to a specific number of dedicated Alzheimer's beds. As a consequence, AHCA did not accord Osceola preference under the specialized services provision of the applicable local health plan. Osceola already has a condition for its existing facility which requires a 16-bed Alzheimer's unit, notwithstanding that Osceola's administrator admits to not having any experience in operating an Alzheimer's or dementia unit; admits that the Alzheimer's patients at the facility are currently mainstreamed; and admits that the facility does not currently have an Alzheimer's unit. Notably, the administrator stated there were no conditions of which he was aware other than specified Medicaid percentages which were applicable to the facility. Neither of Osceola's two expert operations witnesses, the facility's administrator and the facility's Director of Nursing, have experience in a facility operating a separate Alzheimer's unit. As established by testimony of Mulder, Osceola or any other nursing home in Osceola County, could construct and implement such an unit within its existing facility without a CON. A special Alzheimer's unit, however, is not required to provide superior care to persons suffering from Alzheimer's or related dementia. As established by testimony of Marion Leeman, Arbor's expert witness in long-term care nursing, quality assurance and improvement, such specialized units are unnecessary to provide a good quality of care to such individuals. Persons in Osceola's existing facility who suffer from Alzheimer's receive superior or excellent care. Forty to forty-five percent of Osceola's existing patients currently have Alzheimer's or some form of dementia and are mainstreamed with the facility's general population. As acknowledged by Osceola's expert planner, Lynne Mulder, the literature on separate Alzheimer's units presents arguments on both sides as to the benefit of such units. Mulder also acknowledged that research on the benefits of such units is currently inconclusive. Mulder also acknowledged that the type of training, staffing, and expertise which the application states Osceola will use in its proposed unit could be implemented in any facility without a dedicated unit. Further, she did not believe that Arbor's application was somehow negative or inferior because it does not propose a special Alzheimer's unit. Marion Leeman, Arbor's expert who has had experience working in facilities and for entities which both "mainstream" Alzheimer's patients and which operate secured units, opined that Arbor will offer all the services in its facilities that Osceola's witnesses had testified would be offered in its proposed "locked" unit since Arbor provides extensive resources including, but not limited to, programmatic, staffing, and selectivity in hiring with regard to the treatment of persons with Alzheimer's or related dementias. Osceola did not establish what types of patients would go into its proposed dementia/Alzheimer's unit. Osceola's planner opined that "there is a place for mainstreaming and there is a place for a special care unit. They serve different types of residents at different stages of the disease." Although Osceola has not yet developed the admission criteria for the Alzheimer's unit, the testimony of Sharon Walter, an expert for Osceola, establishes that it is not the intent of Osceola that all Alzheimer's patients would go into the Alzheimer's unit. Osceola has failed to demonstrate that its proposed dedicated Alzheimer's unit is needed in Osceola County. Osceola also proposed an oncology unit as a portion of its proposed 60-bed addition, but failed to "condition" its proposed unit to a specific number of dedicated oncology beds. As a result, Osceola was not accorded preference under the specialized services provision of the applicable local health plan. Osceola could provide oncology services in the present facility's subacute unit in accordance with current CON conditions, but, despite existence of the condition, does not. Osceola's oncology unit is a proposal without a documented track record although Osceola has treated oncology patients in the past without a special unit. Notably, with the exception that there will not be any persons in the oncology unit whose primary payor source is Medicaid (at the present rates), admission criteria for the oncology unit is not yet firmly established. Based on testimony of Osceola's administrator, it is uncertain whether other types of patients would go into the "oncology unit" if those beds were unoccupied. Both the administrator and Osceola's planner professed a lack of knowledge of a nursing home having an oncology unit. Oncology services are subacute services. A subacute unit, with proper training and staff, could offer all the same advantages as an oncology unit. The oncology unit proposed by Osceola would provide oncology services, for which Osceola is already conditioned, in a subacute unit. Osceola currently provides excellent and superior care to cancer patients without a dedicated oncology unit. Osceola, and any other nursing home in Osceola County, could implement an oncology unit without a separate CON. All the services Osceola proposes to provide in its oncology unit could be provided in Arbor's skilled or subacute wing. At present, Arbor has numerous patients receiving oncology-type services in the subacute units in its present facilities. Osceola has failed to prove a need for the oncology unit proposed in its application. Lynne Mulder, testifying on behalf of Osceola, acknowledged that there was no formula she could utilize to determine the need for oncology beds. The oncology need analysis presented in Osceola's application is not a reasonable basis for projecting need for an oncology unit. The Oaks' Cognitive and Behavioral Disorders Unit As previously noted, the Oaks' application failed to "condition" its proposed cognitive and behavioral disorder unit (CBDU) to a specific number of dedicated beds, and consequently is not accorded preference under the specialized services provision of the applicable local health plan. While the specific number of beds was not conditioned by the applicant, the Oaks' CBDU would utilize approximately 32 beds. Residents of the unit would be those persons with behavioral problems resulting from either psychological difficulties or organic brain disease. The Oaks has failed to demonstrate that the services it proposes to provide in its CBDU are either needed or, in the alternative, could not be provided in the Oaks' existing facility. The Oaks' administrator currently has twenty-six persons in his facility who have behavioral disorders (twelve of whom he believed to be appropriate for placement in the proposed unit). All of these persons are receiving superior care. The facility could implement the same types of activities, the same staffing levels, and the same types of training that are proposed without the construction of a special unit. The most significant difference between the way the facility renders the services now and the way the services would be rendered in its proposed unit is that the proposed unit is a "locked" unit. The Oaks' admissions criteria to the proposed unit is also confusing. Certain persons with Alzheimer's might be appropriate for admission into the CBDU while other persons with Alzheimer's might not. Certain persons with cognitive disorders might remain in the nursing home population at large even after the unit was opened. Persons in the CBDU might be as young as eighteen, despite the facility's Director of Nursing having significant concerns about persons younger than thirty-five being placed into the unit. The needs of the twelve persons currently in the Oaks' population who would be appropriate for placement on the CBDU are currently being met. In addition to responding to needs of Osceola County, the unit will draw from outside the subdistrict, including from Orange County, areas as far out as Tampa and Melbourne, and also to the south of Osceola County. The primary focus of the unit would be upon those persons with a primary diagnosis of a psychiatric disorder. There is a psychiatric hospital only a block and a half away from the Oaks' facility. The proposed CBDU would treat the same population as a psychiatric hospital except the patients would have "medical issues." Under AHCA regulations, a psychiatric hospital should admit someone with a primary diagnosis of schizophrenia or a primary diagnosis of manic depression or a primary diagnosis of anxiety disorder. There are significant concerns with the appropriateness of placing patients in a nursing home who have a principal psychiatric diagnosis. The Oaks' application is inconsistent as to exactly what types of proposed services would be offered in their CBDU. The Oaks' planner acknowledged that there was no established admissions criteria and no existing database to reveal the bed need for cognitively impaired patients in Osceola County outside of the general nursing home bed need. Almost every nursing home has patients with some form of a cognitive disorder. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Osceola is a superior-rated facility, but is not JCAHO accredited. This applicant's ability to provide quality of care is related to its management contract with National Health Care. If NHC ceased to manage the facility, it is possible that the personnel and resources which comprise Osceola's quality of care mechanisms could be removed. The Oaks is also a superior-rated facility. It is a facility that is old and needs to be remodeled. The patient mix at present is 100 percent Medicaid. Arbor has a history of providing superior quality of care in its facilities. The majority of Arbor's facilities which are eligible for a superior rating (several are too new to be eligible for a superior rating) have a superior rating from the State of Florida. Arbor has obtained accreditation for its facilities from JCAHO, a private non-profit organization which sets standards for health care facilities, which is the highest level of accreditation achievable. Arbor's quality improvement program, "CORE" program, and dietary programs ensure a high quality of care in Arbor's facilities. Additionally, Arbor provides an excellent quality of care to persons suffering from dementia or Alzheimer's and has special training, special programs, and special activities in place to assure that these residents receive superior care. Arbor also has in place extensive mental health programs and quality assurance mechanisms to further ensure that residents in Arbor's facilities receive the best possible care. Section 408.035(1)(d): The availability and adequacy of other health care facilities and services and hospices in the service district of the applicant, such as outpatient care and ambulatory or home care services, which may serve as alternatives for the health care facilities and services to be provided by the applicant. Other health care facilities available to provide the subacute services Arbor has proposed are highly utilized. There is little flexibility left in the utilization of existing subacute beds. Based on testimony of Arbor's expert, Daniel Sullivan, absent the approval of the Arbor project there would be significant problems for patients in accessing those services in Osceola County. Conversely, availability or adequacy of other health care facilities with regard to the proposed services of the Oaks and Osceola applications presently exists. The Oaks and Osceola propose additions to existing facilities. The existing facilities of the Petitioners may be upgraded without obtaining a CON or significant new construction to provide the specialty services which both applicants propose. The Oaks proposes the construction of a CBDU. The Oaks is, however, currently serving persons who would be appropriate for placement in the unit and those persons are receiving superior care. The facility currently has planned programs for people with cognitive or behavioral disorders. The Oaks could, in its present facility, implement the same types of activities, the same staffing levels, and the same types of training which the proposed unit would provide. If need were established, the Oaks could be even awarded beds for a CBDU outside of the fixed need pool, given the proper application. Likewise, the existing facility which Osceola operates is available and adequate to provide the special programs proposed by Osceola's application. Osceola proposes an Alzheimer's unit. Osceola currently services Alzheimer's patients, "mainstreams" them, and they currently receive superior care in the facility. Osceola's expert planner acknowledged that the type of training, staffing and expertise its application proposes for its proposed unit could be implemented in a facility without a dedicated unit, and that Osceola's proposed Alzheimer's unit could be put into place in its existing facility without a CON. Osceola also proposes an oncology unit in its applied-for addition. Osceola treats oncology patients now without a special unit and provides excellent and superior care to those patients. Any additional services sought to be provided in the proposed oncology unit could be provided now without such a unit. Osceola's expert planner acknowledged that the oncology unit could be implemented in its existing facility without a CON. The existing facilities of the Oaks and Osceola are available and adequate to provide the specialized services proposed in their applications. There are no other health care facilities which are available or adequate to provide the specialized subacute services which Arbor proposes to provide in Osceola County. Section 408.035(1)(h) and (i): The avail- ability of resources, including . . . funds for capital and operating expenditures for project accomplishment and operation . . . Immediate and long term financial feasibility of the proposal. Robert Beiseigel, a financial expert, testified on behalf of both Petitioners' in an attempt to establish that Arbor had omitted certain projects from Schedule 2 of its application. That testimony is not credited because the rule establishing the reporting date for capital expenditures which were planned or pending had recently changed. Beiseigel acknowledged that as to each and every capital project which he contended was omitted from Schedule 2, he had no personal knowledge as to any aspect of the transaction or the timing of the transaction as of the effective reporting date. Testimony of Arbor's financial expert, Joseph D. Mitchell, establishes that Schedule 2 of the Arbor application is accurate, Arbor's project is feasible both in the short-term and in the long-term, and Arbor has the financial strength to accomplish the project. Mitchell, a certified public accountant who represents 150 long-term care facilities, was formerly a C.P.A. on staff for the CON office and has been qualified as an expert 30-35 times. He testified that he personally reviewed the pertinent documents pertaining to the transactions referenced by Beiseigel and that none were transactions which were required to be included on Schedule 2. In Mitchell's opinion, Schedule 2 of Arbor's application was actually overstated by 17 million dollars. As established by testimony of Arbor's health care finance expert, Daniel J. Sullivan, the Oaks' project will not be financially feasible in the short-term and fails to demonstrate immediate financial feasibility. Based on Sullivan's opinion, the Oaks cannot provide the financing it anticipates obtaining based on its financial statements. The source for approximately 400,000 dollars in funding is not indicated in the Oaks' application. Sections 408.035(1)(l) and (m): Impact of the project on cost of health services; cost effectiveness; construction costs. Petitioners presented no evidence as to the impacts their proposed services would have upon the costs of providing health care services in Osceola County. On the other hand, Arbor demonstrated that its subacute unit would provide services which might otherwise be provided in the acute care setting with a resulting savings of 30 percent to 60 percent to the health care delivery system. Four of the eight nursing homes in Osceola County, including the two Petitioners, are under common ownership, through the person of Mr. Michael Siemer and/or corporations he owns and controls. The health care market in Osceola County will benefit by the approval of Arbor's application, a competitive alternative to a further concentration of ownership of nursing home beds under one owner in Osceola County. Arbor's facility was designed by an architect who is an expert in not only architecture and the design of nursing homes, but also specifically in the design of nursing homes with subacute units. Arbor's proposed building was designed for eighteen subacute beds and specifically incorporates several design features for the provision of subacute services. Arbor has in-house certified architects, computer-aided designers, individuals with degrees in design, project managers who are also Florida general contractors, three superintendents, one of who is a Florida general contractor, purchasing managers and licensed interior designers. Arbor's cost is below the median cost for comparable facilities primarily as the result of cost effectiveness due to having in-house architecture and construction capabilities. Testimony of Dennis O'Keefe, architectural expert for Petitioners, that Arbor's project cost per square foot was understated is not credited in view of his lack of personal knowledge or factual information as to Arbor's construction cost per gross square foot on any recent projects and his lack of any firsthand knowledge regarding whether Arbor has ever failed to construct a project for the cost projected in its CON application. In the past, Arbor has passed 100 percent of its final AHCA inspections and is currently achieving projected costs in current construction projects. Operationally, Arbor's buildings are very efficient and provide ample space and sufficient layout for Arbor to render the services which it proposes in its application. As established by testimony of William P. Bryant, Arbor's expert in the design, construction and development of long-term care facilities, total project cost for the Oaks', projected in the Oaks' application to be more expensive per square foot than Arbor's projected total project cost, was understated by 520,000 to 525,000 dollars. Osceola also proposes a significantly higher cost per square foot than does Arbor. Arbor does not own or operate a facility in Osceola County. There is no alternative to new construction for the services Arbor proposes to provide. With regard to applications of Petitioners, Osceola and the Oaks could implement the same types of activities, the same staffing levels, and the same types of training they propose to provide in their dedicated units without the necessity of construction. The services proposed by Osceola in its two dedicated units (oncology and Alzheimer's) are not only provided in the facility currently, but could be provided in the facility (with or without a dedicated unit) without a CON. Likewise, the services which the Oaks proposes to provide in its CBDU are currently provided in the facility and could also be provided in the facility (with or without a dedicated unit) without a CON. The Oaks ownership has conceded in the past the questionability of attempting to renovate the existing facility. Previously, the Oaks' ownership combined a 60 bed CON award for the Oaks with another 60 bed CON to construct an entirely new facility, stating in that application that the construction of a new facility made more sense in view of the land-locked site and current condition of the Oaks. Section 408.035(1)(n): The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Arbor's application is specifically conditioned for the provision of .20 percent of all patient days for charity care patients and 72 percent of all patient days for Medicaid patients. Osceola's current facility is subject to a Medicaid condition of 33 percent. In the application currently under consideration, Osceola commits to a Medicaid condition of 71.6 percent. Osceola's planner, Lynne Mulder, speculated at hearing that Arbor would not meet its Medicaid condition. Mulder did not have any personal knowledge whether any Arbor facility is presently out of compliance with its Medicaid conditions and did not have an opinion on whether Arbor has made a sufficient corporate commitment to meet the conditions for service to Medicaid patients agreed to in its application. Mulder's opinion that Arbor's will not meet its Medicaid condition of 72 percent is not credited. Similarly, Robert Beiseigel's testimony that Arbor would fail to meet its Medicaid percentage in order to obtain certain profit margins cannot be credited in view of his inability to demonstrate that Arbor has turned away any Medicaid patients; his lack of personal knowledge as to the margin that Arbor "expects" from any specific facility; and his lack of personal knowledge of any pending modification requests for Medicaid conditions by Arbor on any current CONs. He acknowledged that Osceola County has a higher subdistrict Medicaid occupancy than any subdistrict where Arbor has a facility. The Chief of the CON and Budget Review sections of AHCA is familiar with Arbor and its operations and did not have any concerns that Arbor would not live up to CON; certifies that Arbor has no pending requests for modification for any CON conditions; and is aware that Arbor has withdrawn one previous modification request. Arbor will certify 100 percent of its beds for Medicaid and will render skilled nursing services to Medicaid patients within the skilled and subacute side of its facilities. Subacute services will be provided to Medicaid patients within its specialized subacute units. Section 408.035(1)(o): The applicant's past and proposed provision of services which promote a continuum of care in a multilevel health care system. While all applicants meet this criterion the evidence presented best establishes Arbor's claim to a continuum of care within its proposed facility through the interaction of health care professionals in a multilevel health care system. The Oaks and Osceola proposals do not promote a continuum of care to the extent proposed by Arbor. Section 408.035(2)(b): Whether existing inpatient facilities providing inpatient services similar to those being proposed are being used in an appropriate and efficient manner. The parties have stipulated to the existence of the bed need at issue in this proceeding. The evidence also reflects that the existing facilities in the district are operating at, or near, capacity, and are being used in an appropriate and efficient manner. Section 408.035(2)(c): In the case of new construction, the alternatives to new const- ruction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable. In consideration of this criterion, the evidence discloses that alternatives to new construction in the form of sharing arrangements are not existent with regard to the Oaks. Further, modernization of that facility is definitely needed. Section 408.035(2)(d): That patients will experience serious problems in obtaining in- patient care of the type proposed, in the absence of the proposed new service. As previously noted, there is a growing emphasis by third party payors for the provision of inpatient subacute care in non-hospital settings. This phenomena and the stipulation to the need for the beds at issue in this proceeding, inferentially indicate that serious problems in obtaining subacute services will occur if that need is not met. Of the proposals presented, the Arbor proposal appears best suited at this time to meet that need.
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That AHCA issue CON Number 7765 to Arbor Health Care Company, reflecting those conditions agreed to by Arbor in its application. That AHCA deny CON Number 7769 to Osceola Health Care, Ltd. d/b/a Osceola Health Care Center and deny CON Number 7770 to Southern Oaks Healthcare, Inc. d/b/a the Oaks of Kissimmee. DONE and ENTERED this 17th day of June, 1996, in Tallahassee, Leon County, Florida. DON W. DAVIS, 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 17th day of June, 1996. APPENDIX CASE NOS. 94-6250, 94-6252 and 94-6912 The following documents my rulings on proposed findings of fact submitted by the parties. Respondents' Proposed Findings 1.-11. Accepted. Accepted, except for last sentence. Rejected, unnecessary to result. 14.-16. Accepted. Accepted, except for last sentence. Accepted. 19.-20. Rejected, subordinate to HO findings. 22.-24. Accepted. 25. Rejected, subordinate to HO findings. 26.-33. Accepted. 34. Rejected, subordinate to HO findings. 35.-38. Accepted. 39.-40. Rejected, subordinate to HO findings. 41.-44. Accepted. 45.-51. Accepted, subject to comprehensive restatement. 52.-63. Accepted. 64.-69. Rejected, subordinate to HO findings. 70. Rejected, no record citation. 71.-75. Accepted, subject to substantial restatement. 76.-82. Rejected, subordinate to HO findings. 83.-89. Accepted. Rejected, redundant. Rejected, argument. 92.-98. Adopted. Osceola's Proposed findings 1.-3. Accepted. 4.-6. Rejected, subordinate to HO findings. 7. Accepted. 8. Rejected, unnecessary to result. 9.-22. Rejected, subordinate to HO findings. 23. Accepted. 24.-31. Rejected, subordinate to HO findings. 32. Rejected, relevance. 33.-40. Rejected, subordinate to HO findings. 41. Incorporated by reference. 42.-47. Rejected, subordinate to HO findings. 48.-50. Accepted. 51.-64. Rejected, subordinate to HO findings. 65.-68. Accepted. 69.-81. Rejected, subordinate to HO findings. 82. Rejected, credibility. 83.-93. Rejected, subordinate to HO findings. 94. Accepted, except for last sentence, speculative. 95.-96. Rejected, weight of the evidence. 97.-98. Rejected, subordinate to HO findings. Rejected, no record citation. Rejected, subordinate to HO findings. Rejected, procedurally improper and subordinate. 102. Rejected, no record citation and argumentative. 103.-119 Rejected, subordinate to HO findings. 120.-121 Accepted. 122 Rejected, subordinate and procedurally improper. 123.-124. Rejected, no citation, argumentative. 125. Rejected, speculation. 126. Rejected, argumentative, speculative. 127. Rejected, weight of the evidence. 128.-131. Rejected, subordinate, weight of the evidence. Southern Oaks' Proposed Findings 1.-2. Accepted. Rejected, subordinate to HO findings. Accepted. 5.-7. Rejected, subordinate. 8. Rejected, relevance, legal conclusion. 9.-12. Accepted. 13.-15. Rejected, subordinate. 16.-18. Accepted. Rejected, subordinate. Accepted. Rejected, subordinate. Accepted. Rejected, subordinate. Incorporated by reference. 25.-26. Rejected, subordinate. 27.-28. Accepted. Rejected, subordinate. Accepted. 31.-32. Rejected, subordinate. 33.-35. Accepted. 36. Rejected, subordinate. 37.-43. Accepted. 44. Rejected, subordinate. 45.-46. Accepted. 47.-64. Rejected, subordinate. 65. Accepted. 66.-69. Rejected, subordinate. 70.-73. Accepted. 74.-77. Rejected, subordinate. 78. Accepted. 79.-103. Rejected, subordinate. 104. Accepted. 105.-118. Rejected, subordinate. 119. Accepted. 120.-123. Rejected, subordinate. Rejected, weight of the evidence. Accepted. 126.-127. Rejected, unnecessary to result. 128.-129. Rejected, weight of the evidence. 130.-131. Accepted. 132.-141. Rejected, subordinate. COPIES FURNISHED: Richard Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308 Gerald B. Sternstein, Esquire Ruden Barnett, et al. Suite 815 215 South Monroe Street Tallahassee, Florida 32302 John L. Wharton, Esquire Chris H. Bentley, Esquire Rose, Sundstrom & Bentley 2548 Blairstone Pines Drive Tallahassee, Florida 32301 R. Sam Power, Clerk Agency for Health Care Administration Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Douglas M. Cook, Director Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issue presented is whether Respondent Fred R. Catchpole is guilty of the allegations contained in the Amended Administrative Complaint filed against him, and, if so, what disciplinary action should be taken against him, if any.
Findings Of Fact Respondent Fred R. Catchpole became a licensed appraiser in the State of Florida in 1993. In 2006 he became a certified residential appraiser in the State of Florida. He is still so licensed. Since 1994 he has maintained offices at 5449 Marcia Court, in Jacksonville, Duval County, and at Unit 202, 533 Seabreeze Boulevard, in Daytona Beach, Volusia County. In 1995 he added an office at 303 Hermitage in Valrico, Hillsborough County. He has maintained all three offices continuously from then through the date of the final hearing in this cause. Since opening these offices, he has provided the addresses for all three offices to Petitioner, and Petitioner's employees have visited all three offices. When the law changed, Respondent registered his corporation Worldwide Appraisal Service, Inc., with Petitioner and specifically registered his corporation at all three addresses. Each of the three offices is a stand-alone operation, with its own separate bank accounts and separate accounting systems. Respondent has, historically, worked two days a week at each of the three offices. He considers each of those offices to be his "primary" office since they operate separately and he spends an equal amount of time in each of them. Over the years Respondent has supervised a number of trainee appraisers, among them Fred C. Bowermaster and William E. Woods. He has supervised Bowermaster from January 24, 1995, through the time of the final hearing except for one four-month time period. He has supervised Woods from August 28, 1995, through the time of the final hearing. It is noted that Petitioner's records reflect that Respondent's supervision of Woods started both in 1995 and in 1998. Bowermaster works in Volusia County at Respondent's Seabreeze Boulevard address. Bowermaster is 71 years old and is described by Respondent as "the oldest living trainee." For a while, Woods worked in Duval County and then moved to Hillsborough County. Respondent describes him as "the second oldest trainee." At all times, all required paperwork and notices of address and changes of address were filed by Respondent, Bowermaster, and Woods. When a licensee has more than one business address, Petitioner requires that the licensee register all addresses. At all times, Respondent has complied with that requirement. There is no prohibition against a licensee having more than one office or more than one business address. At all times material hereto, when Respondent has been present at one of his offices, he has maintained communication with the others. He has also had other certified appraisers assisting him in the training and supervision of his trainees. Duval County is not contiguous to Volusia County or Hillsborough County, and Hillsborough and Volusia Counties are not contiguous to each other. Petitioner has never taken any disciplinary action against Respondent, Bowermaster, or Woods.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding Respondent not guilty and dismissing the Amended Administrative Complaint filed against him. DONE AND ENTERED this 11th day of May, 2010, in Tallahassee, Leon County, Florida. S LINDA M. RIGOT 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 11th of May, 2010. COPIES FURNISHED: Robert Minarcin, Esquire Department of Business and Professional Regulation 400 West Robinson Street, Suite N801 Orlando, Florida 32801-1757 Martin A. Pedata, Esquire Martin Pedata, P.A. 150 Wildwood Road Deland, Florida 32720 Reginald Dixon, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Thomas W. O'Bryant, Jr., Director Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Suite 802 North Orlando, Florida 32801
Conclusions ARCA C.I. No.: 05-3603-000 THE PARTIES resolved all disputed issues and executed a settlement agreement, which is attached and incorporated by reference. The parties are directed to comply with the terms of the attached settlement agreement. Based on the foregoing, this file is CLOSED. Filed October 14, 2009 2:31 PM Division of Administrative Hearings. DONE AND ORDERED on this the ' day of Odo b-L,-' , 2009, in Tallahassee, Florida. Holly Benson, Secretary / Agency for Health Care Administration AP ARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BYLAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies Furnished to: Scott Wicke EmCare 1717 Main Street Suite 5200 Dallas, TX 75201 Karen Dexter, Assistant General Counsel Agency for Health Care Administration (Interoffice) Peter Williams, Inspector General Agency for Health Care Administration (Interoffice) D. Kenneth Yon, Bureau Chief Medicaid Program Integrity (Interoffice) Finance & Accounting (Interoffice) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was served to the above named addresses by mail or interoffice mail this ay of (2:/4 2009. Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. 3, Mail Stop #3 Tallahassee, Florida 32308-5403 (850) 922-5873
The Issue The issue in this proceeding is whether the intended action of Respondent, Agency for Health Care Administration, to award a contract to Intervenor, eQHealthSolutions, Inc., is contrary to the agency's governing statutes, the agency's rules or policies, or the solicitation specifications. The standard of proof for this proceeding is whether the proposed agency action is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact AHCA and the Invitation to Negotiate AHCA is the state agency responsible for administering the Medicaid Program in Florida. Medicaid is the state and federal partnership that provides health coverage for selected categories of people with low incomes. Florida's Medicaid recipient population is over 2.8 million individuals. Over one third of this population receives services on a fee-for-services basis. Florida Medicaid spending in Fiscal Year 2008-2009 was approximately $18.8 billion. AHCA’s Division of Medicaid Services is responsible for serving the Medicaid population. AHCA seeks, through the Invitation to Negotiate (ITN) that is the subject of this case, to enter into a new contract with a federally designated Quality Improvement Organization (QIO) for the development and implementation of a statewide comprehensive utilization management program. Utilization management is the process of determining the medical necessity of particular health care procedures and treatments, and their appropriateness under Medicaid or other relevant insurance plans. Prior authorization is a major part of utilization management. Prior authorization, as the name implies, requires a provider or beneficiary to propose the service to be provided, identify the reasons for it, and obtain authorization before providing the service in order to receive payment from Medicaid. It requires determinations of whether the service is covered by Medicaid, whether the service is medically appropriate in the circumstances, and whether it is the most cost effective service in the situation. KePro currently provides AHCA prior authorization services under a contract. Lakia Daniels, Government Operations Consultant for AHCA, manages the current KePro contract with AHCA. Florida law establishes three competitive procurement processes for state agencies. They are Invitation to Bid, Request for Proposal, and Invitation to Negotiate. Agencies use an Invitation to Bid when they can specifically define the scope of work for a service or establish precise specifications defining the commodity sought. Agencies may use the Request for Proposal when the purposes and uses for a service or commodity can be specifically defined and the agency can identify necessary deliverables. Agencies may use the ITN process when they need to determine the best method for achieving a specific goal or solving a particular problem. An agency uses the ITN process to identify one or more responsive vendors with which it may negotiate in order to obtain the best value for the state. The ITN process is the most flexible and least restrictive competitive procurement process. On May 19, 2010, AHCA issued ITN No. 1007, which is the subject of this proceeding. AHCA’s ITN sought vendors to provide a Comprehensive Utilization Management Program for Inpatient Medical and Surgical, Home Health, Prescribed Pediatric Extended Care (PPEC), and Therapy Services. The ITN included Attachments A through L. AHCA amended the ITN on June 25, 2010. References to ITN in this Recommended Order are to the ITN as amended. None of the parties challenged the ITN or the amendment. The contract and the utilization management to be provided under it are critical to Florida's system for controlling Medicaid costs and reducing Medicaid fraud. The ITN contained "Evaluation Criteria." It specified that the criteria were for use in the initial evaluation of vendor replies to the ITN. The ITN also said that vendors whose replies did not comply with the mandatory criteria would not be considered for evaluation. The ITN provided vendors the opportunity to develop methodologies and systems for achieving the purposes of the contract. It repeatedly stated that requirements were minimum requirements, leaving vendors free to propose better or more comprehensive services or means of providing services. The ITN stated that "[t]he use of 'shall,' 'must,' or 'will' (except to indicate futurity) . . . indicates a requirement or condition from which a material deviation may not be waived by the State." It defined a material deviation as one in which "the deficient response is not in substantial accord with the solicitation requirements, provides an advantage to one respondent over another, or has a potentially significant effect on the quality of the response or on the cost to the State." The ITN included a process for vendor questions. The process provided that AHCA's responses to the vendor questions would be posted as an addendum to the ITN. Vendor questions and AHCA answers were included in the June 25, 2010, amendment to the ITN. AHCA is using the ITN procurement process to select a vendor to undertake the substantial task of providing comprehensive utilization management for inpatient medical and surgical, home health, and prescribed pediatric extended care (PPEC), and therapy services for Florida's Medicaid population. The ITN also described providing a Neonatal Intensive Care Unit (NICU) care and home health monitoring program and retrospective medical record reviews as services under the contract. The contract will be a fixed price, also described as fixed fee, contract. The ITN schedules refer to the fee or price as cost. This and the varying use in the ITN, the responses, and the testimony of "fee", "price", and "cost" foster confusion. This Recommended Order uses "cost" to refer to the amount that vendors proposed to charge AHCA either in the aggregate for the services, or as they allocate the amount charged to various components of the services provided including specific staff, training, web site maintenance and the like. The implementation and execution period for the contract for all services, except therapy services, ends June 30, 2011. For therapy services the implementation and execution period is to end March 31, 2011. For all services the contract is to run for three years ending June 30 2014. It may be renewed for up to three years. The ITN provided vendors the anticipated annual review volume in Attachment M-1, a form vendors were required to complete. The anticipated volumes were: Prior Authorization Inpatient Services - 510,000 Prior Authorization Home Health Visits - 55,000 Prior Authorization for Private Duty Nursing, PC, and PPEC 140,000 Prior Authorization Therapy Services - 140,000 Claims Analysis, Respiratory Therapy - 1 Retrospective Medical Record Reviews - 2,000 NICU Care Monitoring Program 700 Home Health Comprehensive Care Monitoring Program - 4,000 Special Studies/Quality Improvement Projects - 1. Although the contract will be for three years, the service volumes do not vary year to year. Florida's Medicaid program has not previously required prior authorization for therapy services. Attachment M-1 sought detailed cost information about various services and components of the project from replying vendors. Effectively, it asked the vendors to allocate their proposed total costs among the various services and components used to provide the services. They include, but are not limited to, items such as prior authorization review for inpatient services, prior authorization review for home health visits, prior authorization for therapy service, NICU care monitoring, customer service, development and Maintenance of a web-based system, database development, salaries, benefits, temporary personnel, postage, rent, office equipment, advertising, telecommunicating equipment, computer equipment, overhead, and profit. The ITN described the Medicaid program and services. It described the purpose of the intended contract, giving the goals of the contract and describing general services the vendor would provide. The ITN left to the vendors the challenge and opportunity of proposing the best method for achieving the purposes of the contract and providing the services needed. The ITN also emphasized the importance of "timely, efficient, productive, consistent, courteous, and professional" performance of services. The technical specifications of the ITN included a wealth of factors and required information. Among them were: limitations on the use of subcontractors, descriptions of how beneficiary information would be protected, lobbying disclosures, client references, information about the vendor's experience and qualifications, information about management and key personnel qualifications, detailed staffing information, a draft contract implementation plan, training plans, computer hardware requirements, computer software requirements, and disaster recovery plans. A 52 page attachment to the ITN described the scope of services the successful vendor would provide. The ITN required that the vendor maintain the ability to manage the volume of work 24 hours per day, seven days a week. It required at least one Florida location where the vendor would perform its contractual responsibilities. The ITN required vendors to develop electronic review instruments for the contract services. It mandated that the instruments allow data input by reviewing professionals. It permitted vendors to provide up to 30 percent of inpatient reviews through a rules-based or criteria-driven algorithm. It permitted vendors to apply recognized medical necessity standards, so long as they met the minimum of InterQual Level of Care criteria and fulfilled all state and federal Medicaid requirements. The ITN advised that the contract would include rigorous review completion timeframes for the contract services. Examples of the timeframes follow. First level review of prior authorization reviews for elective pre-admission, admission, and continued stay inpatient services must be completed within four hours from receipt of a completed request. If a service request is referred to a physician, the ITN required physician review of the requests within one business day of when the request is complete. First level review of home health skilled nursing or nurse's aide visits must be completed with one business day of the request. Physician review must be completed within two days of the request. First level review of requests for therapy services must be completed within one business day of completion of the request. Physician review must be completed within three business days. By repeated references to subcontracting and limitations upon the practice, AHCA manifested both the importance of subcontracting and caution about the issues that could accompany subcontracting. For instance, the ITN prohibited subcontracting, assigning, or transferring any work to any party, except for subcontractors identified in the response, without AHCA's prior written consent. Prior written consent required AHCA’S review and written approval of the terms of the subcontract. The ITN also required detailed information about proposed subcontractors' Medicaid experience and other information, just as it did for key employees and Management Information Systems (MIS) employees of the vendors. The ITN required vendors to describe how they would coordinate with subcontractors and communicate with them. It emphasized that the vendor remained fully responsible for fulfilling all contractual requirements to AHCA. These are just some of the references to subcontracting and requirements for it imposed by the ITN. The tasks described by the ITN rely upon computer and internet technology for communication, analysis, efficiency, and speed. Among other things, the ITN sought a vendor that would provide a web portal for communication, for providers to submit requests for authorization, and for providers to submit information and documents necessary to support the request. The ITN made the importance of a vendor's MIS abilities, experience, and personnel to successfully accomplishing the task clear. The ITN required a detailed description of the vendor's "approach for designing, developing, and maintaining a web-based prior authorization system, which is available to authorized users and providers, as described in the ITN." AHCA identified some required characteristics and tasks that must be performed. Similarly, the ITN identified minimum requirements for system generated reports, but it did not limit the frequency or content of the reports. It left to the vendors the task of developing and maintaining the system that would perform the tasks, have the needed characteristics, and generate the reports required. The ITN required that: The Vendor shall have in-house Management Information Systems (MIS) capability. The Agency will not approve a subcontractor for this function. The Vendor shall maintain a sufficient number of qualified MIS and technical staff to continue operation of the Vendors systems, provide prompt, on-going system support and accurate data access to the Agency and its authorized service providers. It did not specifically identify this requirement as a mandatory criterion. The ITN also required vendors to provide résumés for "MIS staff." This is the only area of expertise where the requirement for résumés went beyond identified key staff positions. The vendor's staff is essential to achieving the goals of the ITN's proposed contract. Staff is key to making judgments about what services should be authorized and obtaining more information about the reasons that the service has been requested. Staff is also critical to meeting the short review timeframes. The ITN emphasized the importance of staff. It cautioned vendors that AHCA reserved the right to determine that staff was insufficient and to require the vendor to cure the insufficiency. It also required detailed information about staff including résumés, staffing charts, and minimum requirements for key staff. Protection of beneficiary privacy is another subject emphasized by the ITN. Several portions required compliance with state and federal privacy requirements, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Also, the ITN required vendors to explain in detail how they would protect patient privacy. Evaluation and Negotiation Process AHCA established a two-step process for selecting a vendor with which to contract. Stage one was evaluation of the prospective vendors' responses to the ITN. Stage two was the negotiation phase. In the evaluation phase, each vendor submitted a reply to the ITN. The replies contained the vendor's technical proposal, cost proposal, and staffing proposal for providing services identified in the ITN. It also provided information requested by the ITN and any other information that the vendor chose to include. During the evaluation stage, the vendor replies were to be evaluated, scored, and ranked based on the requirements of the ITN. The purpose of the evaluation and scoring was to determine which vendor or vendors would move to the negotiation phase. It was not to determine which vendor would be awarded the contract. The negotiation phase was to determine with which vendor AHCA would contract. In the negotiation phase, AHCA would gather more information about the vendors, their abilities, and their proposals. The negotiation phase was an opportunity for AHCA to critique vendor proposals and question vendors. It also was an opportunity for each vendor to respond to those critiques and questions as it determined best. July 14, 2010, was the deadline for submitting replies to the ITN. KePro, EQ, and Alliant ASO ("Alliant") timely submitted replies to the ITN. KePro and EQ are parties to this proceeding. Alliant is not. No vendor protested the terms, conditions, or specifications of the ITN. AHCA’s procurement office reviewed the replies for compliance with mandatory minimum requirements. All met the requirements. The Deputy Secretary for Medicaid for AHCA, Roberta Bradford, appointed seven AHCA employees to the evaluation team. They were Claire Anthony-Davis, Lakia Daniels, Princilla Jefferson, Kathleen Core, John Loar, Ryan Fitch and Scott Ward. Ms. Bradford selected these individual because of their experience and subject matter expertise in areas involved in the ITN. For example, Claire Anthony-Davis was AHCA’s Home Health Policy Analyst. She had experience in utilization management and prior authorization of home health services, as well as experience monitoring AHCA’s contracted peer review organization (PRO). Kathleen Core, AHCA’s Medical Health Care Program Analyst, managed the Pediatric Extended Care (PPEC) Services program. She had experience in Medicaid policy and prior authorization. The other evaluation team members had similarly relevant experience. The members of the evaluation team were sufficiently skilled and experienced to evaluate the ITN replies in accordance with the ITN and in compliance with Florida law. The members of the evaluation team independently evaluated the vendor replies. Each employed his or her personal skills and experience in the course of the evaluations. The evaluators had and considered written evaluation instructions, Conflict of Interest Questionnaires, the ITN, all addenda including the vendors' written questions and AHCA's answers, all the vendors' ITN replies, and the evaluation tool. The evaluation process took place over several days. Each team member completed his or her own individual, detailed score sheets for each vendor. Each of the evaluators carefully and thoughtfully scored the ITN replies to the best of their ability and in good faith in accordance with the ITN requirements. Only Ryan Fitch reviewed the financial information and scored the financial stability of the responding vendors. He rated KePro higher for financial stability than the other two vendors. He gave KePro a perfect score. This was the only time in more than two dozen reviews that Mr. Fitch has assigned a perfect score to a company. Scott Ward, AHCA's Information Technology officer, was the only evaluator to review the information technology components of the ITN responses. Mr. Ward did not review any other aspects of the proposals. Mr. Ward assigned a score of 56 to KePro's information technology response and a score of 47 to EQ's. Mr. Ward focused on responsiveness of the replies to specific and limited information technology requirements of the ITN. Those were primarily minimum technical requirements necessary for compatibility with the Agency hardware and software and compliance with AHCA information technology standards. He also checked to verify that the vendors had provided the descriptions of their information technology systems required by the ITN and descriptions of their experience with the systems. He did not and could not evaluate whether those descriptions were accurate. He did not evaluate or score the ability of the systems described to perform the tasks required. Mr. Ward also was not aware of misrepresentations by KePro in the information technology section of its response. This Recommended Order addresses those misrepresentations later. After the evaluators completed scoring, AHCA's procurement office tabulated the vendors' original cost proposals and recorded the scores in the scoring sheets. The individual evaluators ranked the vendors. Two evaluators scored EQ the highest. Two evaluators scored Alliant the highest. One evaluator scored KePro the highest. The average of all scores for each vendor was the same. AHCA invited all three vendors to participate in the negotiation phase. The letter advising the vendors that they had been selected to proceed to negotiations stated: "The negotiation and selection process will consider each company's ability to meet or exceed the requirements of the ITN." Ms. Bradford appointed an eight-person negotiation team. The team members were Darcy Abbott, Shevaun Harris, Lakia Daniels, Claire Anthony-Davis, Kathleen Core, Scott Ward, Barbara Vaughan and Anne Frost. As with the evaluation team, Ms. Bradford selected the negotiation team members because of their experience and subject matter expertise in matters related to the services addressed in the ITN. Five of the negotiators, Darcy Abbott, Shevaun Harris, Lakia Daniels, Claire Anthony-Davis and Kathleen Core, worked in the bureau of Medicaid services with direct responsibility for the current and contemplated contracts. Scott Ward was the director of AHCA Information Technology. Barbara Vaughan and Anne Frost were procurement office representatives. Scott Ward and Anne Frost also were Certified Project Management Professionals. Claire Anthony-Davis, Lakia Daniels, Kathleen Core and Scott Ward, had served on the evaluation team. Ms. Daniels is the AHCA contract manager for the current utilization management contract. Ms. Abbott is the Administrator of all Medicaid sections under the current contract. The members of the negotiation team were sufficiently skilled and experienced to conduct the ITN negotiations. Shevaun Harris facilitated the negotiation sessions. A court reporter transcribed all sessions. Shevaun Harris was the team lead and is direct managing supervisor of the project and the contract that will result from the ITN. AHCA negotiators met with KePro representatives on August 10, 2010. They met with EQ’s and Alliant’s representatives on August 12, 2010. AHCA gave each vendor the same opportunity to appear at the negotiation sessions, by telephone and in person. AHCA gave each vendor the same opportunity to answer questions from the negotiation team. The day before the first negotiation session, AHCA informed all vendors that they would not be permitted to make presentations as part of their negotiation session. This included PowerPoint and web-based presentations. AHCA did this because the negotiation team wanted to spend the time learning about the ITN replies and asking questions instead of basically listening to a sales pitch. The restriction applied equally to all the vendors. Nothing in the ITN or AHCA's letter scheduling the negotiation sessions advised the vendors that they would be permitted to use internet, PowerPoint, or any other assistive devices during negotiations. After the first round of negotiations, the AHCA negotiation team discussed the replies and negotiations. It preliminarily ranked the vendors. EQ ranked highest, but the team was concerned about EQ's costs. They were substantially greater than the costs of the other two vendors. The team consulted with AHCA senior management to ensure that the members understood the budgeted amount available for the contract and any other financial constraints on the decision. AHCA conducted a second negotiation session with EQ on August 18, 2010. It focused on costs. AHCA scheduled the negotiation to obtain more information from EQ about the basis for its costs. AHCA obtained clarification and determined that EQ was willing to reduce its costs. After the negotiation sessions, AHCA asked all of the vendors to submit their best and final offers (BAFOs). The team also concluded that EQ was the preferred vendor if it reduced its costs sufficiently. All three vendors timely submitted their BAFOs to AHCA. The request to EQ for a BAFO stated: Your proposed implementation costs exceed the Agency's budget for Fiscal Year 2010-2011. Please provide a revised cost proposal as follows: One time Implementation Costs for Therapy Services reduced by at least 70-80%. One time Implementation Costs for all other services (Inpatient, Home Health, and PPEC) reduced by at least 65-75%. In addition to the revised cost proposal, please provide the following: A detailed staffing plan to reflect the changes in the reduced Implementation costs. Best and Final Cost Proposal for Implementation Costs, Operations Year 1, Operations Year 2, and Operations 3, eliminating the costs for analysis of respiratory therapy in Year 2 and Year 3. AHCA's request to KePro for a BAFO asked KePro to: Provide a detailed staffing plan with a breakdown- of FTE's for each aspect of the ITN's scope of services which includes the number of staff, when each staff member will start, whether the staff member will be on- going and if so, when they will be phased out. Provide the number of on-site face-to- face assessments for Private Duty Nursing (PON), Prescribed Pediatric Extended Care (PPEC), and Therapy services. Provide Best and Final Cost Proposal for Implementation Costs, Operations Year 1, Operations Year 2, and Operations 3, eliminating the costs for analysis of respiratory therapy in Year 2 and Year 3. All three vendors submitted the requested BAFOs. KePro and EQ both reduced their costs. The negotiation team unanimously agreed that AHCA should contract with EQ. It did not determine a "second place" vendor. A memorandum dated September 27, 2010, (Award Memo) states the team's recommendation. It summarizes the history of the ITN issuance and reply review. The Award Memo concludes with these two paragraphs: Overall, EQ Health Solutions prevailed as the most favorable vendor. Their [sic] proposal demonstrated that they [sic] can provide qualified and experienced professionals to meet the requirements of this multi-faceted program. Out of the three respondents, their [sic] proposed approach will provide the most comprehensive quality model for utilization management. Per the recommendation of the negotiation team, and as Deputy Secretary for Medicaid, my signature below indicates my decision to award a contract for the comprehensive utilization management of Inpatient Medical and Surgical, Home Health, Prescribed Pediatric Extended Care (PPEC) and Therapy Services to EQ Health Solutions. Deputy Secretary Roberta Bradford is the AHCA official with the authority to sign off on the contract. She signed the Award Memo, but the negotiation team prepared the memorandum. Ms. Bradford deferred to the team's recommendation. Neither Ms. Bradford nor other senior management officials of AHCA reviewed any information or documents other than the Award Memo to decide upon the proposed award. The Award Memo does not explain how the EQ proposal provides the best value to the state. The Award Memo does not provide AHCA senior management with any analysis of the respective cost proposals submitted by the vendors. The AHCA files and records and records for the ITN do not contain a document that analyzes the cost differential between the vendors or that articulates how contracting with EQ would provide the best value for the state. They also do not contain a short plain statement that explains the basis for the selection of the vendor and that sets forth the vendor's deliverables and price pursuant to the contract, along with an explanation of how these deliverables and price provide the best value to the state. AHCA's practice before awarding a contract is to maintain a "solicitation file" that contains documents relating to the solicitation process. After awarding a contract AHCA creates a "contract file." Ms. Bradford did not receive or review a cost comparison of the BAFOs. She was not aware of the cost difference between the KePro and EQ proposals. She did not receive or review a written or oral presentation of the relative merits of the vendor proposals or the reasons for choosing EQ, other than the Award Memo. Ms. Bradford relied entirely upon the recommendation of the negotiation team. On September 28, 2010, AHCA posted Notice of its intent to contract with EQ on the Agency procurement website. AHCA did not post an explanation or basis for its proposed decision. Reply and Negotiation Overview As a whole, the reply of EQ and its responses in the negotiation sessions demonstrated a more thorough analysis of the tasks presented by the ITN and the challenges they presented. EQ presented more detail in descriptions of its systems and web portal than KePro did. This is true both in the narrative and the screen shots provided. EQ's reply demonstrated research and understanding of legal requirements involved in the process, such as the work needed to prepare for fair hearings. KePro did not display the same level of research and understanding. For example, KePro proposed a Facebook page for Medicaid beneficiaries, but it had not considered the legal and personal privacy issues that may arise or how to address them. Another example, addressed in detail later, is the analysis of the needs for newly established prior authorization review of therapy services. EQ identified factors and difficulties that newly imposed therapy reviews would create. It determined that therapy reviews could be more difficult and time consuming than inpatient service reviews. EQ crafted its proposal to address those factors and difficulties. KePro did not demonstrate even consideration of the differences between therapy reviews and inpatient service reviews. EQ provided a link to a demonstration site for its information technology system. There is, however, no evidence that any AHCA employee used the link. In its reply and in negotiations, KePro repeatedly referred to its experience as an AHCA contractor and specific individuals' knowledge of KePro. AHCA concluded that EQ's reply and the information EQ presented in negotiations demonstrated a greater understanding of what was needed to successfully administer the prior authorization program and how to do it. The evidence supports that conclusion. Costs and Staffing The three vendors proposed significantly different costs, i.e. fees, to AHCA for the contract. KePro proposed $38,900,064 for the life of the contract. EQ proposed $51,084,928. The third vendor, Alliant, which is not a party to this proceeding, proposed $46,325,552. EQ's proposed costs, the amount that the State will pay over the contract term, are $12,184,864 more than those of KePro. AHCA intends to contract with EQ instead of KePro, despite the twelve million dollar cost differential. This is in part because the replies and the negotiation sessions caused AHCA to conclude that KePro was "lowballing" its costs and/or unrealistic in establishing them. That conclusion is not clearly erroneous, arbitrary, or capricious. Direct personnel costs account for $5,247,861 of the twelve million dollar difference. This is due to the differences in proposed staffing. EQ proposed 136.95 FTEs for the contract. KePro proposed 85 FTEs. EQ's average compensation cost per FTE is 95,521,518. This amount is $3,358.70 than KePro's average of $92,162.482. But the compensation difference only accounts for $460,021 of the $12,184,864 difference over the contract period. The number of FTEs is what causes the difference. The difference between EQ's and KePro's plans for the Home Health Comprehensive Care Monitoring program contributed to the difference in FTEs in the vendor proposals. EQ's costs are $2,081,669 more than KePro's costs. The Home Health Monitoring program calls for visits to the homes of home health care recipients in Miami-Dade County. The visits serve several purposes. One is to verify that the patients are receiving appropriate services. Another is to determine if the patients are actually receiving services. This purpose arises from the fact that 85 percent of the Medicaid funds expended on home health services in the nation are expended in Miami-Dade County. Consequently AHCA surmises that fraud may be an issue in that county. This second purpose is part of AHCA's effort to reduce Medicaid fraud. EQ staffed these visits with two people. KePro staffed them with one. AHCA determined that two people was a better staffing proposal due to the fraud detection facet of the visits and bad experiences of individuals making similar visits in the past. AHCA's preference for the more costly EQ staffing proposal has not been proven clearly erroneous, arbitrary, or capricious. Realistic consideration of the completion timeframe requirements are one reason. Even with the use of rules driven or criteria based algorithms that will trigger some automatic approvals, people perform critical functions in the review process. The role includes nurse or other professional review of requests that do not trigger automatic approval, doctor review of all denials, communication with providers and patients, provider education, assistance preparing for fair hearings, participation in fair hearings, and training for staff and providers. EQ's greater staffing level will likely result in more satisfactory performance of these functions. The contract will include short timeframes for many tasks. Meeting the time requirements is important to prompt provision of needed medical services. EQ's staffing makes EQ more likely to meet or better the timeframe requirements. Inadequate staffing can cause delays, possible medical complications, increased costs, dissatisfied providers, dissatisfied patients, AHCA handling customer inquiries and complaints that the contractor should be handling, and friction between the State and its contractor. The ability to require more staff or impose penalties, likely to involve delay or even legal proceedings, is a poor substitute for adequate staffing from the beginning. In other areas, EQ's more costly proposals are more plausible than KePro's cheaper proposals. This too makes AHCA's decision that the KePro costs were unrealistically low not clearly erroneous, arbitrary, or capricious. The "other direct" cost category includes the following components: software, hardware, equipment purchase and rental, professional services, advertising, training, licensing, recruiting, legal, taxes, and miscellaneous. KePro proposed no costs for these components. EQ proposed costs of $1,443,691 for the same components. While the record does not reveal the basis for EQ's costs, it is more credible that there will be costs of some amount over a three year period than that there will be none. Similarly EQ's rent costs are more plausible than KePro's. This is another reason AHCA's conclusion that KePro's costs were not realistic has not been proven clearly erroneous, arbitrary, or capricious. For the implementation period, KePro allocates no rent cost. This is plausible since KePro is currently providing services and would be as it shifted from its existing contract to the new contract. It is plausible that KePro could handle the implementation work from the offices where it currently provides services. For each full year of the contract, KePro represents rent costs of around $26,000 per year or an average for the three year period of $2,177.42 per month. EQ proposes rent costs of $1,073,267. That includes implementation period rent of $43,139 and first year rent of $330,000, apparently increased by four percent per year to a third-year rent cost of $356,928. EQ's average monthly rent costs for the three full years of the contract are $28,614.67. Nothing indicates AHCA arbitrarily or capriciously accepted these costs instead of EQ's. EQ and KePro differed $242,773 in their postage, shipping, and fulfillment costs. EQ's costs were $349,137 and KePro's costs were $106,364. For the 716,000 annual authorization reviews this correlates to EQ having 48.7 cents postage, shipping, and fulfillment costs per review and KePro having 14.8 cents costs per review. The record does not establish that accepting EQ's costs was clearly erroneous, arbitrary, or capricious or even that KePro's costs of less than one postage stamp per review were reasonable. The difference between EQ's proposed cost for therapy services review and KePro's is $8,015,250. For AHCA to choose EQ as the vendor, despite the difference in proposed costs, it necessarily must have determined the EQ's costs for therapy services were more reasonable than KePro's. In contrast to the magnitude of the differences between the vendors' costs for therapy services, the costs for inpatient reviews are similar. EQ's cost for 510,000 reviews per year of inpatient services exceeds KePro's by $1,307,187 for the contract period. For each full year of the contract, differences between the vendors' inpatient review costs are relatively small. Year one KePro exceeds EQ by $8,832. Year two EQ exceeds KePro by $129,455. Year three EQ exceeds KePro by $350,287. The cost differences each year for providing 140,000 therapy service reviews are, on the other hand, dramatic. In year one EQ costs for therapy reviews exceed KePro's by $2,481,073. In year two the difference is $2,558,825. For year three the difference is $2,673,456. Year one, EQ's costs for therapy reviews are $4,788,242. This is more than EQ costs for 510,000 inpatient service reviews the same year. Year two, EQ's costs for the inpatient service reviews are only $152,490 more than its costs for 140,000 therapy reviews. Year three, EQ's inpatient service review costs exceed the therapy review costs by just $219,207. This is true even though the number of therapy reviews anticipated is 27.5 percent of the anticipated inpatient reviews. EQ justified the therapy costs in its second negotiation session. The review for therapy services is likely to consume a disproportionate amount of staff time for several reasons. Florida does not currently require prior authorization for therapy services. The change will be disruptive and time consuming. Providers, patients, patient families, and patient advocates will have to learn the system. They will have to learn how to request services. And they will have to learn how to support the service requests. As importantly, they will have to learn to accept the fact that prior authorization is now required. All these facts may reasonably be expected to cause difficulties for the vendor and AHCA. Therapy review is likely to result in a higher incidence of requests for additional information and more time spent communicating reasons for decisions than inpatient reviews. Therapy review is also likely to engender a disproportionate number of requests for reconsideration and fair hearings. This is partly due to the human reaction of people being told "no" for the first time in a system. Normal difficulties adjusting to new requirements and to a new system will also contribute. Support in the fair hearing process, which will be mandated by the contract, requires staff time. So too will the multiple communications and re-reviews that inevitably will be required as providers and patients alike learn and accept a new process. The nature of therapy services is also likely to result in more fair hearing requests. Authorization of less service than requested will be a denial of services subject to fair hearing review. In the inpatient setting, this is not always so. Often, services such as a hospital stay can be extended if review at the end of the authorized stay indicates further time in the hospital is needed. Because of these differences between prior authorization of therapy services and prior authorization of inpatient services, AHCA's decision to accept EQ's costs for therapy services has not been shown to be clearly erroneous, arbitrary, or capricious. Information Management Systems AHCA determined that EQ's proposal presented a better, fully developed and previously used information technology (IT) system than KePro. The IT systems and IT staffing proposed by the vendors were important aspects of the utilization management services to be provided under the contract. The ITN made it clear that a significant portion of the prior authorization and other systems in the utilization management services were to be facilitated through the vendors' IT systems. EQ developed its IT system. EQ has operated its system in a state Medicaid environment in Mississippi for approximately thirteen years and in Illinois for eight years. EQ’s in-house IT staff, the same staff that developed the system, will support it. KePro did not develop its proposed IT system, MedManager. Another company, Preferred Physicians Health Alliance (PPHA) developed MedManager. KePro had never used the system or managed prior authorization reviews with it. KePro was attempting to acquire PPHA's MedManager system through a purchase of PPHA’s assets in the summer of 2010. But when KePro submitted its ITN reply on July 14, 2010, KePro had not completed the asset purchase. There was no signed purchase agreement between KePro and PPHA, and no money had been exchanged. KePro did not disclose these facts in its reply. KePro represented in its ITN reply that: Our corporate system, MedManager, is wholly owned by KePro outright, including the design, software source code, and database schema. That enables us to control software changes and be responsive to change requests. We will make all system changes using our in- house, MIS staff. This statement was not accurate. KePro did not own MedManager outright and did not have an enforceable agreement to purchase it. KePro did not acquire the assets of PPHA, including MedManager until July 16, 2010. During the entire period of the ITN process from reply submission to negotiations and BAFOs, KePro and its management had never used MedManager in any setting, commercial or Medicaid. KePro’s Chief Executive Officer, Joseph Dougher, testified that KePro had hired PPHA's personnel and would rely upon them to maintain and refine MedManager. The ITN required vendors to provide résumés for the MIS personnel. KePro’s reply did not provide the résumés of any of the PPHA employees now employed by KePro. It provided only the résumé of Wayne Bolton, a KePro employee of some 20 years. Mr. Bolton had no part in developing MedManager and has not overseen use of MedManager for any prior authorization program. During KePro's negotiations with AHCA on August 10, 2010, Shevaun Harris of AHCA asked KePro Chief Executive Joseph Dougher directly if MedManager was a new system launching for the first time. Mr. Dougher stated that KePro had been using MedManager "on the commercial side of our business for about ten years." This statement was not accurate. KePro had never used MedManager. In addition, the MedManager system KePro proposed had never been used before by KePro or PPHA in a state Medicaid environment. The MedManager system was also not complete at the time of KePro's ITN reply. KePro did not disclose this to AHCA until the negotiation session. The provider portal portion of the MedManager system was not complete. The ITN made clear that the provider portal was a critical part of the system AHCA was seeking. At the time of the final hearing, KePro had not completed the provider portal. And KePro had not yet implemented it for any of its other Medicaid customers. AHCA would have been the first KePro customer to use the MedManager provider portal in a Medicaid environment. The AHCA negotiation team preferred EQ's IT system because it was fully developed and had been used in Medicaid environments for several years. Conversely team members were concerned that the KePro system was still under development. The content of the replies and communications during the negotiations provided a basis for these concerns even without the information revealed during discovery for this proceeding that KePro did not own MedManger when it submitted its reply and had not used MedManager before. AHCA's preference for the existing and tested system used by EQ is not clearly erroneous, arbitrary, or capricious. EQ's proposed disaster recovery plan is superior to KePro's. KePro proposed a tape back-up system. EQ proposed a network-based back-up system. KePro's tape back-up system saves or backs up information and data once a day at 5:00 p.m. Under this system, if the system crashes any time before the daily back-up, all the day's data could be lost. In addition, the back-up tapes would have to be transferred to another site. This will delay recovery. EQ's network-based back-up system backs up data and information continuously throughout the day. If the system crashes, all the day's data entered before the crash would be saved. A network-based back-up system also provides continuous access to the backed-up data on the network in real time rather than having tapes that would have to be delivered from another site. The network-based back-up system is superior. AHCA's preference for the EQ disaster recovery plan is not clearly erroneous, arbitrary, or capricious. Additional ITN Considerations EQ’s proposal recognized the importance of employee training to success. It provided for more training and more extensive training than KePro. AHCA determined that the training provisions added value to EQ's proposal. EQ committed to having its reviewing physicians attempt to contact the physician ordering a service before denying the service. This practice has the potential to reduce incorrect denials and therefore mitigate the costs and disruption of fair hearing disputes. KePro did not make a similar proposal. AHCA determined that this, too, added value to EQ's proposal. EQ proposed to handle all functions of the contract in-house without subcontractors. KePro proposed subcontractors. Although subcontractors were permitted, the AHCA team preferred the EQ proposal without subcontractors. This preference was based upon experience with delays and disputes arising with subcontractors under other contracts. The ITN's many subcontractor provisions issues that can arise with subcontractors made it plain that use of subcontractors was a criterion for consideration. AHCA's preference for the EQ in- house proposal was not clearly erroneous, arbitrary, or capricious. The ITN asked vendors to identify five hospitals that would be part of the NICU Care Monitoring Program. KePro identified five hospitals. EQ did not. AHCA asked EQ about this failure. EQ representatives advised AHCA of the geographic area for the hospitals and represented that they could identify them if requested. This response did not comply with the requirement to identify the five hospitals. However, identification of the five hospitals was not specified as a requirement of the ITN that could not be waived. It also has not been shown to provide EQ an advantage over KePro or to have a potentially significant effect on the quality of EQ's response or on the cost of the services to the State. The 2009 Request for Information AHCA first sought a vendor to provide the services involved here in 2009. At that time, AHCA issued a Request for Information inviting possible vendors to provide information about ways to provide the prior authorization services. KePro and EQ's predecessor, Louisiana Health Care Review, were among those providing information. AHCA reviewed their information and met with representatives of each of them. During that process one or more of the 2010 negotiation team viewed a demonstration of EQ's system. AHCA decided that it was not required to use competitive procurement to contract for the services. It selected EQ as the provider and moved toward executing a contract. In the process, Ms. Core received a more detailed explanation and demonstration of the EQ system. KePro challenged the decision and requested an administrative hearing. AHCA denied the request. KePro appealed. During the appeal, the First District Court of Appeal stayed AHCA from contracting with EQ. The court subsequently issued an opinion holding that KePro was entitled to an administrative hearing to challenge the decision to contract with EQ. Keystone Peer Review Organization, Inc. v. AHCA, 26 So. 2d 652 (Fla. 1st DCA). AHCA decided not to proceed with the hearing. Instead it began the ITN process resulting in this proceeding. Neither Ms. Core nor other AHCA negotiation team members considered the EQ system information they received during the aborted 2009 contracting efforts in deciding to contract with EQ after the ITN negotiations. If they had, it would not have mattered. EQ's ITN reply thoroughly describes and documents its MIS system. The reply also provided a link to a demonstration of EQ's system. Consequently, any information the team members may have recalled from the 2009 efforts was provided in the 2010 ITN process.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is Recommended that Agency for Health Care Administration enter a final order dismissing the formal written protest of Keystone Peer Review Organization, Inc. and awarding the contract to eQHealth Solutions, Inc. DONE AND ENTERED this 12th day of January, 2011, in Tallahassee, Leon County, Florida. S JOHN D. C. NEWTON, II 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, 2011. COPIES FURNISHED: Daniel Lake, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 J. Stephen Menton, Esquire Martin P. McDonnell, Esquire Rutledge, Ecenia, & Purnell, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32302 Robert H. Hosay, Esquire John A. Tucker, Esquire Foley & Lardner LLP 106 E. College Avenue, Suite 900 Tallahassee, Florida 32311 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Elizabeth Dudek, Interim Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Justin Senior, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308
The Issue Whether petitioner should take disciplinary action against respondent for the reasons alleged in the administrative complaint?
Findings Of Fact In response to petitioner's first request for admissions, respondent conceded that he has been licensed at all pertinent times as a registered general contractor, and that he now holds license No. RG 0016059. New Veep At one time, Alachua County building officials allowed Donald Russell, who owns Gator Aluminum, Inc. and serves as its president, to secure building permits for aluminum carport roofs and similar jobs that Gator Aluminum, Inc. performed in the county. Mr. Russell holds an aluminum specialty contractor's license. After June 5, 1986, however, the Alachua County authorities no longer allowed Mr. Russell's license to qualify his company for this work. As a result of this change, Mr. Russell sought out respondent Bruce Kirby, whom he had known for some 15 years. Mr. Kirby had spent "20 years around the aluminum business," but he worked for the University of Florida as a refrigerator mechanic at the time. Mr. Kirby became vice-president of Gator Aluminum, Inc., while continuing his employment with the University. He agreed to work for the company by reviewing applications for building permits; alerting Mr. Russell or Bob Baxter, another Gator Aluminum, Inc. employee, to any problems he saw with the plans; applying or authorizing his wife to apply and secure a building permit; and by looking over the work after it was done, before calling for inspection by a building official. For these services he was paid $50 to $100 for each job. Remodeling On March 12, 1987, Arthur and Doris Jones signed a contract with Gator Aluminum, Inc. to pour a concrete slab, install a carport roof, hang awnings, cover the roof of the main house with aluminum, and do miscellaneous other work at the Jones' residence in Archer, which is in Alachua County. Petitioner's Exhibit No. 1. Work began a week later. No building permit was posted before the concrete was poured, and none was obtained until April 6, 1987, five days after Bruce Kirby's wife applied for the permit on his behalf. Petitioner's Exhibit No. 2. Pouring the concrete slab before posting a building permit did not violate the building code, which requires no permit for such work. Only after the permit was posted did aluminum work begin. On May 11, 1987, construction completed, the Jones paid the balance due under the contract. Dry Clothes Wet Mrs. Jones was folding clothes in the new carport on May 18, 1987, when it began raining. Her husband had hardly finished remarking on the fact that none of the rainwater collecting on the carport roof was flowing through the downspouts when the roof creaked, then buckled, spilling gallons of water and damaging vehicles, lawn chairs and clay pots. Mrs. Jones escaped unscathed, but part of the roof hit Mr. Jones a glancing blow on the shoulder. The rain on the 18th was the first that anybody recalled since the carport's completion a week earlier. Experts agreed that the weight of the rainwater brought the roof down; water weighs eight pounds a gallon. But the evidence did not show why such a quantity of water accumulated on the roof. Perhaps the roof was installed without the requisite pitch, although a preponderance of the credible evidence put the vertical drop at nearly a half inch for every horizontal foot, which should have been sufficient. Debris left by workmen may have clogged the drains. No trees stood nearby. In the collapse, the carport roof pulled away from the fascia board to which it had been attached. In keeping with industry standards, the workmen had used three-inch screws in the rafter tails and three one-inch screws per pan elsewhere along the fascia board. The fascia board itself was old and riddled with dry rot, which careful inspection might have revealed, but the significance of this is unclear. Apparently, the three-inch screws pulled out of the rafters, which were sound. When Mr. Russell heard what had happened, he came promptly, and offered to replace the roof. Mr. and Mrs. Jones turned him down, however, and instructed him and all other employees of Gator Aluminum, Inc. to stay off the premises. Eventually, Gator Aluminum's insurer paid to replace the roof and for the damages the collapse had occasioned. Inspection and Supervision In the spring of 1987, Mr. Kirby's father-in-law was dying of leukemia up the country, and his own mother, who also lived out of state, had a heart attack. Even when he was in town, moreover, he was not accustomed to look over the work Gator Aluminum, Inc., performed under the authority of permits he obtained until aluminum mechanics, many of whom he had known for several years and in all of whom he had confidence, had finished the project. At no time before the roof collapsed had respondent Bruce Kirby ever set foot on the Jones job site. He never talked to Mr. Russell or anybody else about the job while it was in progress. Whether this lack of supervision contributed to the untimely demise of the carport roof was not clear from the evidence. In Mr. Kirby's experience and in the industry generally, a delay of a week or even much longer between completion of a job and the contractor's call for final inspection is not uncommon. Many jobs, including the job Gator Aluminum, Inc. undertook for the Jones, require only a final inspection. Nobody told Mr. Kirby that work at the Jones' house had finished. After Mr. and Mrs. Jones barred Gator Aluminum, Inc.'s employees from the premises, Mr. Kirby was no longer in a position to inspect the work to determine whether the job met building code requirements. He never called for a final inspection by the building official, although Mr. Russell asked that the roof be inspected, in December of 1987.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent repay $216 in grant funds expended in a manner inconsistent with Department regulations. DONE and ENTERED this 22nd day of March, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER 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 22nd day of March, 1982. COPIES FURNISHED: Sonja P. Mathews, Esquire Suite 117-Montgomery Building 2562 Executive Center Circle, East Tallahassee, Florida 32301 Agnes Miramontes 301 North Oklahoma Street Bonifay, Florida 32425
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.
The Issue The issues are whether Respondent committed an unlawful employment practice against Petitioner, and if so, what corrective action should be taken.
Findings Of Fact Petitioner is a forty-one-year-old black male. He is a 1977 graduate of the University of Florida with a bachelor's degree in Business Administration. His undergraduate major was Finance. Petitioner has approximately 30 credit hours in Accounting from the University of North Florida, which he earned between 1983 and 1988. Petitioner is currently enrolled in the University of North Florida's Masters of Public Administration program. He has completed 30 of the 39 required credit hours in that program. From November of 1979 to March of 1991, Petitioner worked for Occidental Chemical Company as an accountant. After leaving this job, Petitioner was self-employed from April of 1991 to December of 1991. Respondent's District Two office in Lake City, Florida, hired Petitioner on March 6, 1992, as a Purchasing Agent I. Respondent hired Petitioner under administrative rules pertaining to career service employees as promulgated by the Department of Management Services. Petitioner received a copy of Respondent's disciplinary and conduct standards when he was hired. Petitioner worked as a Purchasing Agent I until September of 1992. His salary during that time was $609.00 bi-weekly. In September of 1992, Respondent promoted Petitioner to the position of Accountant II in Respondent's Office of Financial Services. His bi-weekly salary was $752.91, a 23.5 percent increase. As soon as Petitioner became a member of the fiscal section, he received five weeks of intensive training relative to vouchers. This training was necessary because Respondent's central office was beginning to relinquish many functions to its district financial offices, including the vouchering process. Petitioner's direct supervisor in the fiscal section was Faye McClellan. She occupied the position of Accounting Services Supervisor I. Petitioner was indirectly supervised by David Sheffield, District Financial Administrator. On March 1, 1993, David Sheffield hired Karin Davis Charron, a white female, as an Accountant I in Respondent's Office of Financial Services. Her salary was $674.14 bi-weekly, or ten percent above the minimum for an Accountant I. Prior to her employment with Respondent, Ms. Charron had 15 credit hours in Business Administration and Accounting, which she earned at Lake City Community College. Her prior work experience included the following: (a) head cashier at a food store, October of 1983 to June of 1984; (b) accountant/bookkeeper in private business, July of 1984 to September of 1985; (c) Fiscal Assistant I, Department of Corrections, November of 1985 to April of 1987; (d) Secretary Specialist/Cashier, Department of Corrections, April of 1987 to May of 1988; and (e) Fiscal Assistant II, Department of Corrections, May of 1988 to March of 1993. In March of 1993, Petitioner completed his probationary period as an Accountant II. On March 27, 1993, Faye McClellan and David Sheffield gave Petitioner an overall performance rating of "exceeds." On June 1, 1993, Petitioner was promoted to the position of Accountant III. At this time, Petitioner's salary was increased by 10 percent to $828.20 bi-weekly. On August 20, 1993, Respondent hired Ricky Haddock, a black male, as a Fiscal Assistant II at a bi-weekly salary of $549.90. Ricky Haddock testified that soon after he was employed, Ms. Charron told him that "we can make your life a living hell." This statement is not credible due to Mr. Haddock's poor memory concerning the circumstances under which Ms. Charron allegedly made this statement. On or about March 11, 1994, Respondent promoted Ms. Charron to Accountant II with a bi-weekly salary of $766.94, a ten percent increase. Subsequently, Dave Sheffield received a promotion and vacated his position as District Financial Administrator. Linda Green, a white female, took his place. Ms. Green had over ten years of managerial experience when she accepted this position. As manager of the fiscal section, Linda Green became responsible for the direct supervision of Faye McClellan. She was Petitioner's and Ms. Charron's indirect supervisor. On or about March 17, 1994, Faye McClellan gave Petitioner a special performance appraisal. The appraisal form indicates that Petitioner, as an Accountant III, had attended voucher quarterly meetings, SAMAS contract training, payroll training, ADA training, and conduct standards training. The appraisal form described Petitioner as a team player. Of special note was his participation in the Youth Motivator Program in the Columbia County School System. Petitioner received a overall performance rating of "exceeds." Linda Green concurred in Ms. McClellan's assessment of Petitioner's job performance. On September 9, 1994, Respondent promoted Petitioner to the position of Accountant IV. The promotion increased Petitioner's salary by ten percent to $938.36 bi-weekly. Linda Green, as manager of the financial office, recommended Petitioner for this promotion. As an Accountant IV, Petitioner's duties primarily consisted of auditing consultant contracts. These contracts are the most complicated contracts that the financial office processes. Petitioner was also responsible for the payroll and for the supervision of other contract auditors. About two months after Petitioner became an Accountant IV, his immediate supervisor, Faye McClellan, requested and received a position reassignment in Respondent's purchasing office. Petitioner filed an employment application to fill the vacancy created by Ms. McClellan's reassignment. On November 21, 1994, Respondent promoted Petitioner to the position of Accounting Services Supervisor I. The promotion increased Petitioner's salary by 19 percent to $1,161.31 bi- weekly. Linda Green recommended Petitioner for the Accounting Services Supervisor I promotion. She became his direct supervisor. As Accounting Services Supervisor I, Petitioner was responsible for the direct supervision of several subordinate Fiscal Assistants and Accountants, including Ms. Charron. Petitioner was the only black supervisor in Respondent's second district. Historically, the financial section is one of the more racially diverse offices in District Two. From November of 1994 through June of 1995, there were approximately ten people working in the fiscal section. Three of these employees were black. At least two employees were members of other minorities. Petitioner, Ricky Haddock, and two other minority employees were the only employees in the financial office with a college education. On December 23, 1994, Respondent promoted Ms. Charron to Accountant IV. Her bi-weekly salary became $928.50 which was equivalent to the minimum of the pay grade for that position. Linda Green recommended Ms. Charron for the promotion to Accountant IV. Petitioner participated on the panel that selected Ms. Charron as the most qualified candidate to fill Petitioner's former position. In so doing, he reviewed her application and interviewed her for the job. There is no credible evidence to support Petitioner's current allegation that Linda Green allowed Ms. Charron to misrepresent her qualifications for the position of Accountant IV. Ms. Charron's application in February of 1994 for the position of Accountant II, and her application in November of 1994 for the position of Accountant IV, accurately describe all duties and responsibilities that she performed at Stafford's Fire Extinguisher Service in 1984-1985. In 1994, an applicant for the position of Accountant IV was required to have a bachelor's degree in accounting, or a certificate as a Certified Public Accountant, or equivalent work experience in accounting. Neither the Petitioner nor Ms. Charron possessed a bachelor's degree in accounting or a certificate as a Certified Public Accountant when Respondent promoted them to their respective Accountant IV positions. Nevertheless, the evidence indicates that they were well qualified for the position of Accountant IV, at the time of their respective appointments, based on a combination of their education and work experience. Petitioner had a bachelor's degree in Finance, over eleven years of accounting experience in private industry, and more than four years of experience in state governmental accounting. Ms. Charron, on the other hand, had less then one year of formal education in business administration/accounting, over one year of accounting experience in private industry, and more than eleven years of experience in state governmental accounting. State employees have to comply with numerous statutes and rules which do not apply to private enterprise. In this case, Ms. Charron's experience in working for the state more than compensated for her lack of formal education. As Accounting Services Supervisor I, Petitioner's supervisory responsibilities increased. In February of 1995, he directly supervised Rick Haddock and three other Fiscal Assistant II positions, two of which were vacant. He also had direct supervision over Ms. Charron. Ms. Charron, in turn, was responsible for the direct supervision of four other Accountant positions. On February 13, 1995, Petitioner signed a Review and Performance Planning (RAPP) form. This was a new form which Respondent began using just prior to implementing a major career service reform within the agency. The form states that from February 1, 1995, through January 31, 1996, Petitioner would be evaluated based on his performance of the following duties: Supervise district vouchering section. Active participation/supervision vouchering section. Coordinate workloads. Provide liaison with personnel, DOT and State Comptroller. Assist in Legislative budget request. Assist with budget preparation for various programs. Assist in formulating budget information into the different entities LBR's. Manage contract section. Manages all contracts. Verifying information and all supporting documentation for payments to vendors. Audit district disbursements. Audit disbursement for accuracy in accordance with GAP and pertinent federal/state/department rules/ regulations/statutes. The RAPP form lists the following as Petitioner's departmental responsibilities: 1. Coaching; 2. Delegation; 3. Management control; 4. Leadership/Influence; 5. EEO/Affirmative Action; 6. Performance goals; 7. Planning and organization; 8. Judgment; Resources; and 10. Safety practices. Linda Green wanted to increase the cross-training of all employees so that work would not become back-logged when one of them took leave. She also wanted to give Petitioner an opportunity to broaden his experience in other functions of the financial office. In order to accomplish her goals, Ms. Green gave Petitioner additional budget responsibility and deleted his property administration duties in February of 1995. Linda Green gave Petitioner's property administration duties to Ms. Charron. From February 1995, through May 1995, Ms. Charron spent a portion of her time working on the inventory. Ms. Charron continued to work on several special projects to supervise other accountants. As Accounting Services Supervisor I, Petitioner's desk was located in a glass enclosed area within a larger office. Petitioner was supposed to be a "working" supervisor. However, Petitioner spent an inordinate amount of time in his office with the door closed. During these times, Petitioner had long social visits with an employee from another office in the building. He discussed personal matters with an auditor from the central office on the phone for extended periods of time. At times Petitioner's door was locked, so staff could not use the computer which was located in his office. Petitioner's subordinates were reluctant to disturb Petitioner during these times even if they had a question they needed to ask him. They began to complain to Linda Green about Petitioner's unavailability. Linda Green observed Petitioner sleeping during meetings. At first she ignored the situation. However, employees from other offices began to complain about Petitioner's sleeping during meetings. Linda Green also received complaints from other employees that Petitioner was misusing state property. They claimed that he was receiving facsimile transmissions not related to department business. Linda Green began taking notes about these complaints on her computer. She did not share these notes with Petitioner. Linda Green discussed the prohibitions against misuse of state property in staff meetings. She also discussed her concerns about Petitioner's sleeping in meetings, talking on the telephone, and entertaining visitors with Petitioner personally. In February of 1995, Respondent initiated a new job classification and pay plan. The 1994 Legislature mandated this new system, which is distinct from the career service rules promulgated by the Department of Management Services. The new system is unique to Respondent as an agency. Under the new system, Respondent's employees retain career service status and benefits. However, Respondent changed position descriptions, job classifications, employment qualifications, and pay scale ranges to create more flexibility in hiring, promoting, and reassigning duties of employees within the department. The new system concentrates on the knowledge, skills, and abilities required for each position rather than a minimum qualification for each class specification. Formal education remains important, but it is not the paramount consideration in deciding whether to hire or promote employees. The focus of the new system is to ensure that employees can perform the required functions and duties of the specific positions which they occupy or for which they apply. Under the new system, Respondent can reward employees for productivity by increasing their salary without having to promote them to a new position or reclassify their existing positions. Respondent can increase or decrease salaries within a new classification, depending upon the actual duties assigned and performed by the employees. The new plan reduced the number of career service job classes from over 52 occupational groups with 1700 job classifications to 16 occupational groups divided into six levels. Respondent uses the fourth and fifth levels within an occupational group to recognize the distinctive, but equivalent, value of technical and managerial expertise. For example, each occupational group embraces a Level IV and Level V which corresponds to technical and managerial expertise respectively. A reassignment from a Level V managerial position to a Level IV technical position, or vice versa, is not a demotion or promotion, respectively. The new Level IV and Level V positions allow Respondent to reassign employees to different duties to meet the demands of the changing work load and work force without adversely affecting their work status, employment records, or incomes. Thus, Respondent can shift employees from obsolete duties to new and viable tasks where they are more productive. When Respondent initiated the new system, and for one year thereafter, Respondent's central office had to approve every reassignment from an old career service position "title" to the corresponding new title. In performing this duty, Respondent's central office verified the salary for each position to ensure that the salary corresponded to the duties assigned to that position. The initial reassignments in the new system were effective February 24, 1995. At that time, Linda Green, Ms. Charron, and Petitioner were reassigned to the new Accounting, Audit, and Tax occupational group with no change in their respective salaries. Linda Green was assigned to Level VI, as District Financial Services Manager. Petitioner was assigned Level V, Accounting Services Supervisor I, which required that Petitioner spend over 51 percent of his time supervising other employees. Ms. Charron was assigned to Level III as an Accountant IV. Petitioner continued to be Ms. Charron's direct supervisor. A personality conflict developed between Petitioner and Ms. Charron after she became an Accountant IV in December of 1994. Ms. Charron did not want the employees that she supervised to seek or receive assistance from Petitioner, even though he was her supervisor. If Ms. Charron disagreed with Petitioner, she would go over Petitioner's head to Linda Green to resolve the conflict. Petitioner resented not having total control over all of the employees under his direct and indirect supervision. His attitude became confrontational with other employees when they asked a question or made a comment that he perceived as undermining his authority. At times he was overly assertive in an effort to prove that he was right on one point or another. Linda Green did nothing to open lines of communication between Petitioner, as supervisor, and Ms. Charron, as his subordinate. Petitioner did not seek Ms. Green's assistance in resolving the conflict with Ms. Charron. As the power struggle between Petitioner and Ms. Charron ensued, dissension and poor morale became a problem in the fiscal section. On one occasion, Debbie Williams and Laura Kennon were working with the central office to correct an invoice error on one of Petitioner's consultant contracts. Petitioner questioned the method they were using to correct the problem. He wanted them to correct the error without involving the central office or the State Comptroller's office. Ms. Williams wanted to leave a proper audit trail. Before the situation was resolved, all three employees became angry and confrontational. Around the end of February 1995, a member of the financial services staff requested a meeting to discuss the problems the office was having as a result of the dissension between Petitioner and Ms. Charron. Jean Jones, District Two's Director of Administration attended the meeting. Linda Green and Jean Jones advised the staff that they could go to either Petitioner or Ms. Charron for answers to any questions about their work. Linda Green did not tell her staff in this meeting, or any other meeting, that education did not mean anything in Respondent's financial section. After the meeting was over, Jean Jones told Linda Green that some changes had to be made to better define the lines of communication within the office. Ms. Jones instructed Ms. Green to do some research and develop a solution to the problem. A large part of Ms. Charron's duties included working on special projects. These projects necessitated frequent consultations between Linda Green and Ms. Charron. There is no persuasive evidence that Linda Green showed favoritism to Ms. Charron by conspiring with her against Petitioner in private meetings and conversations. To the contrary, the dissension that existed in the office was the result of a personality conflict between Petitioner and Ms. Charron. Ms. Green's inability to establish a clear chain of command aggravated the situation. Prior to November of 1994, Respondent provided Petitioner with an abundance of training in technical and management subject areas. Some of the technical seminars included consultant procedures and negotiation, contract fund approval and encumbrance, and contractual services training. Other training programs included office staff skills enhancement, employee selection, conduct standards and discipline, district budget development, supervisory decision making, employee performance appraisal, fundamental skills of communication, fundamental skills of management, and Certified Public Management Level I. After November of 1994, Petitioner continued to receive training to enhance his career. Some of the programs he attended included review and performance planning, how to supervise people, managing change, presentation skills, budget and budget orientation, federal aid training, records retention, and management problems of the technical person in a leadership role. Linda Green encouraged Petitioner to participate in the training programs. She gave him the opportunity to develop the skills necessary to enhance his career. In the spring of 1995, Linda Green worked on training plans for all personnel in the fiscal section including Petitioner. On April 7, 1995, Ms. Green discussed Petitioner's training plan with him. On April 25, 1995, a copy of Petitioner's training plan was discovered on his desk with the word "bullshit" written across the bottom. Petitioner admits that he wrote this expletive on his training plan in the presence of Ms. Charron. In April of 1995, the State Comptroller's office rejected and returned a great number of invoices to the financial office. Linda Green responded by assigning Petitioner the responsibility of handling the returns and correcting the errors. In order to stay apprised of the situation, Ms. Green required that all mail relating to returns be directed to her before being delivered to Petitioner. She did not review Petitioner's mail unrelated to the returns. In April of 1995, Linda Green became aware that certain work assigned to Petitioner and/or Petitioner's subordinates was not being performed in a timely manner. Ms. Green had to enlist the help of other personnel to complete the work. In April of 1995, Linda Green initiated the procedure to issue reprimands to Petitioner concerning his continued misuse of the office telephones and facsimile machines, his sleeping on duty, and his social visits that wasted time. However, this procedure was delayed because Petitioner was hospitalized for surgery. Petitioner was out of work on sick leave from April 27, 1995, to May 30, 1995. During his illness, Linda Green extended Petitioner's probationary period for his Accounting Services Supervisor I position. In the 1992-93 fiscal year, the financial services office had approximately 12 primary responsibilities. The financial office gained 10 additional duties in the 1993-94 fiscal year and 18 new duties in the 1994-95 fiscal year. During this time, the number of positions in the financial office doubled. In May of 1995, Linda Green began to plan the reorganization of the financial section. She discussed the reorganization with her supervisor, Jean Jones. They made a decision to divide the responsibilities in the financial services office between Petitioner and Ms. Charron, the two established supervisors. They based the decision in part on a need to accommodate the increased work load. They also decided to split the supervision duties in an effort to improve the lines of communication within the office and to eliminate dissension. Officials in Respondent's central and district offices approved the reorganization. Under the reorganization plan, Ms. Green decided to give Petitioner responsibility for the following: supervising the concentration account; processing purchase orders, local purchase orders, local charge accounts, and utility invoice transmittals; processing travel and individual reimbursements; handling deposits; supervising warrant distribution; and processing mail. Ms. Green deleted Petitioner's duties relative to payroll and contracts. Ms. Charron's duties under the reorganization included supervision of the following: contracts, reconciliations, compliance reports, interest payments, and journal transfers. She assumed supervision of the payroll at the express request of Jean Jones. Additionally, Ms. Charron was assigned numerous special projects. When Petitioner returned to work from sick leave on June 1, 1995, Linda Green discussed the reorganization with Petitioner and Ms. Charron. She advised them that Ms. Charron would supervise four Level Two positions, one of which was vacant. Petitioner would supervise five Level One positions, all of which were occupied. Petitioner and Ms. Charron would report directly to Linda Green. Linda Green decided to have Petitioner supervise the Level One positions because they needed more supervision than the Level Two positions. Petitioner was better qualified than Ms. Charron to supervise the five entry level positions occupied by minority and non-minority employees. On June 15, 1995, Linda Green promoted Ms. Charron to Accounting, Audit, Tax Level V. Her salary was increased by 20 percent to $1,114.20 bi-monthly. The promotion was effective before the expiration of Ms. Charron's probationary period as an Accountant IV. The decisions to reorganize the section and promote Ms. Charron were made while Petitioner was absent on sick leave. Linda Green did not deliberately choose to promote Ms. Charron without consulting Petitioner as her supervisor. Moreover, Ms. Green, as manager, had no duty to consult with Petitioner before reorganizing the office. On June 16, 1995, Linda Green issued two official written reprimands against Petitioner. The first written reprimand involved a violation of Respondent's Conduct Standard 14-17.012(4)(a)6., Florida Administrative Code, for sleeping on duty. The reprimand documented the following occasions that Petitioner violated this conduct standard: November 30, 1994; December 1, 1994; January 5, 1995; March 13, 1995; March 20, 1995; March 21, 1995; March 30, 1995; June 5, 1995; and June 7, 1995. Prior to June of 1995, numerous employees were observed sleeping in meetings. The record contains no evidence that any of them were given written reprimands for sleeping on duty. Except for one of these employees, there is no evidence that their respective supervisors were aware that they were sleeping on duty. One employee, Jim Spencer, was observed sleeping on duty by his direct supervisor, Jean Jones. He was not on permanent career status at the time. Jean Jones decided to extend Mr. Spencer's probationary status rather than issue him a written reprimand. Ms. Jones made a conscious decision to give Mr. Spencer an opportunity to correct his behavior before dismissing him from employment. The second official written reprimand charged Petitioner with violating Respondent's Conduct Standard 14-17.012(4)(a)25., Florida Administrative Code, for unauthorized use or misuse of state property, services, equipment or personnel, and Respondent's Conduct Standard 14-17.012(4)(a)7., Florida Administrative Code, for loafing. This reprimand was the result of Petitioner's continued abuse of telephone privileges from January through June of 1995, misuse of the facsimile machines from February through May of 1995, and extended social visits with an employee from another office from January through March of 1995. Petitioner's alleged misuse of Respondent's facsimile machine was due to his involvement with the Safe and Drug-free Schools Advisory Council sponsored by the Columbia County School Board. Petitioner was cautioned in staff meetings on February 13, 1995, and February 21, 1995, against using state property for personal reasons. After those meetings, he received announcements of advisory council meetings on February 27, 1995, and April 26, 1995. He received a third fax transmission from the school board on May 16, 1995, while he was on sick leave. The school board solicited Petitioner's participation in the advisory council during one of Respondent's staff meetings. Respondent's employees did not have to request leave to attend the meeting. Nevertheless, Respondent did not give its employees permission to use its facsimile machines to receive notices about advisory council meetings or other volunteer work. Petitioner contacted the school board staff to tell them not to send him notices using Respondent's facsimile machines. The record is not clear as to when Petitioner made this request. Petitioner did not receive facsimile transmissions from the school board after he received the reprimand in June of 1995. The record contains evidence of four written reprimands for employee misuse of state property from December 1994, through May 1995. From February 1996, through June 1996, six employees were given written reprimands for misuse of state property. The reprimands of other employees included misuse of telephone privileges, computers, and agency stamps and stationary. These reprimands, together with competent evidence that Petitioner abused his long-distance telephone privileges as set forth below, eliminate any concern that Petitioner received disparate treatment regarding his reprimand for misuse or unauthorized use of state property. There is no evidence that Respondent has ever cited anyone but Petitioner for loafing. Nevertheless, the record supports this charge against Petitioner. Juanita Aiken works in Respondent's central office as an Disbursement Services Analyst. She testified that she often discussed personal matters with Respondent's employees in long- distance telephone conversations before she addressed the business purpose of her call. Linda Green personally informed Petitioner in January of 1995 that he needed to confine his long-distance telephone conversations with Ms. Aiken to department business. Petitioner did not heed her verbal warning. Ms. Aiken's personal telephone conversations with Petitioner did not cease until Linda Green and Jean Jones contacted her supervisor in Tallahassee. In the spring of 1995, Linda Green solicited Debra Williams' help in monitoring Petitioner's personal telephone calls. Ms. Williams declined to become involved and requested that her desk be relocated to another area. Linda Green assigned Ms. Charron a desk in Petitioner's private office in April of 1995. Ms. Charron complained to Ms. Green that Petitioner was talking on the phone for 30 to 45 minutes everyday and sometimes twice a day. The personal nature of the calls made Ms. Charron feel uncomfortable. Olu Olyewole worked for Respondent as a Distributor Computer Systems Analyst. He was responsible for connecting personal computer terminals to the networking system. He visited Petitioner regularly for extended periods of time until Ms. Green complained to his supervisor. When Mr. Olyewole visited Petitioner, the door to Petitioner's private office would often be closed. Early in 1995, Wanda Jean Hills desk was located in the glass-enclosed office with Petitioner's desk. On one occasion she could not get to her desk because she believed Petitioner and Mr. Olyewole were having a private conversation. The long social visits with Mr. Olyewole wasted time in an office that was overburdened with work. The visits interfered the performance of work by Petitioner and his subordinates. Petitioner was unavailable to his subordinates during these visits because they were reluctant to disturb his conversations, even when they needed his assistance. Linda Green did not reprimand any of her subordinates except Petitioner for misuse of state property, sleeping on duty, or loafing. However, there is no evidence that other employees under her authority violated the same conduct standards that Petitioner violated. There is evidence that Linda Green sold Amway products to employees on Respondent's property over a two-month time span. The record does not reflect the exact period of time in which Ms. Green engaged in this activity. The greater weight of the evidence indicates that Linda Green passed out Amway brochures and delivered merchandise before work in the mornings. At times, her co-workers would place an order with Ms. Green during work hours because they were familiar with Amway products and knew that she was an Amway representative. Occasionally, Respondent's employees would hand Ms. Green a check or leave one in her desk during work hours. Linda Green did not aggressively pursue her private enterprise during work hours. There is no evidence that Ms. Green's private business activities interfered with her duties or usurped a significant portion of her time as manager of the financial section. Respondent did not give Linda Green a written reprimand for conducting private business on Respondent's property. The record does not reflect whether Ms. Green was verbally reprimanded. It does not appear that her supervisor, Jean Jones, was aware that Ms. Green was involved in selling Amway products on department property. The record does not contain evidence of any written reprimand based solely on unauthorized solicitation on state property. It does contain evidence that Respondent issued a written reprimand to an employee for conducting personal business while using a state vehicle. The employee's actions, like Ms. Green's, were incidental to the performance of his duties. The employee's supervisor did not require the employee to reimburse the agency for any cost. On June 16, 1995, Linda Green gave Petitioner a special performance appraisal to evaluate his performance as a supervisor since November 21, 1994. To conduct this evaluation, Ms. Green used the performance appraisal form for supervisors and managers that was in effect when Petitioner was promoted to Accounting Services Supervisor I in November of 1994. Linda Green admits that she did not conduct the required initial review of the relevant performance standards with Petitioner within two weeks of his promotion. Nevertheless, Petitioner's claims that he was not familiar with the performance standards used by Ms. Green to evaluate his performance is not persuasive. Petitioner attended at least two seminars in performance appraisal and performance planning. Petitioner was familiar with the performance standards for a supervisor, which became effective after Respondent initiated its career service reform in February of 1995. He signed the RAPP form on February 13, 1995. The standards contained on the new appraisal form are substantially similar to the performance standards listed on the older appraisal form. Linda Green gave Petitioner an overall performance rating of "below" standards. The record supports her determination that Petitioner's work performance began to fall short of expectations after he assumed the position as an accounting supervisor. Linda Green determined that Petitioner's performance in two categories deserved the highest rating of "achieves." These two categories were EEO/AFFIRMATIVE ACTION and SAFETY PRACTICES. Linda Green determined that Petitioner's performance was substantially below expectations in at least one area of each of the remaining six categories for the following reasons: PLANNING, CONTROLLING AND ORGANIZING WORK Petitioner failed to operate his work areas efficiently. He did not notify his supervisor of job related problems. Petitioner did not take necessary and appropriate action on performance and shortcomings of subordinate employees. SUPERVISION/LEADERSHIP OF PEOPLE Petitioner failed to delegate effectively. Petitioner demonstrated dissension toward other staff members. PERFORMANCE APPRAISALS Petitioner did not take necessary and appropriate action on performance shortcomings of subordinate employees. PROBLEM ANALYSIS/DECISION MAKING Petitioner failed to inform and/or consult with necessary persons during the decision- making process. SELF DIRECTION/PERSONAL SKILLS Petitioner failed to use his work time effectively. He abused his telephone privileges. He wasted time visiting with an other employee. JOB PERFORMANCE Petitioner failed to perform specific job assignments as outlined on his position description or as assigned by appropriate management. A job applicant claimed that he earned 2400 credit hours in a U.S. Army finance school within a two-month period. Petitioner offered the applicant a job without verifying this information. Linda Green subsequently determined that the applicant had misrepresented his qualifications and withdrew the job offer. Based on this incident alone, Petitioner did not meet the standard for job performance in general. In December of 1995, Rick Haddock received a promotion to a Level II accountant. His salary increased by 20 percent to $715.27 bi-monthly. In March of 1996, Petitioner had a confrontation with Mary Caldwell, a white female accountant. Petitioner's voice was loud; he sounded very angry and threatening. The disturbance alarmed several employees who were in the vicinity. Ms. Caldwell and Petitioner went into a private office where the argument continued. Petitioner's behavior toward Ms. Caldwell was totally inappropriate. On March 22, 1996, Linda Green gave Petitioner a written reprimand for violation of Respondent's Conduct Standard 14-17.012(4)(a)16., Florida Administrative Code, involving rudeness, display of uncooperative or antagonistic attitude, actions or behavior. That same day, Ms. Green gave Petitioner a mandatory Employee Assistance Program Referral. In June of 1996, Linda Green deleted Petitioner's duties involving the budget and supervision of the vouchering section. Linda Green gave Patsy Green, a white female, Petitioner's budget responsibilities. Linda Green took this initiative because of the increased work load resulting from continued decentralization. The central office initiated a process in 1996 to conduct a periodic formal Quality Assurance Review (QAR) in each district office. The purpose of the QAR was to ensure that all vouchers were correct before they were sent to the billing office of the State Controller. Ms. Green wanted Petitioner to focus his energy on making sure that District Two's vouchers were in compliance with all state regulations. In June, 1996, Linda Green gave Petitioner additional duties including financial audits and investigations, quality assurance reports, reconciliations, comptroller returns, and liaison with the State Comptroller's office. His new duties were in-depth auditing and accounting responsibilities involving job cost reporting and making sure that the accounting system stayed in balance. Petitioner's salary was not decreased when his job description changed. At the same time, Linda Green gave Ms. Charron additional duties including contract funds management, joint participation agreements, settlement agreements, management reports, training, and numerous special projects. Ms. Green deleted Ms. Charron's supervisory responsibilities over the contract section. Linda Green received information in June 1996, that the central office intended to audit the supervisory positions in District Two. The central office wanted to make sure that all Level V positions in the Accounting, Audit, and Tax occupational group were held by employees spending at least 51 percent of their time in supervision. Petitioner and Ms. Charron were not spending 51 percent of their time in supervising the work of other employees. Accordingly, both of them were reassigned on June 14, 1996, to Level IV of the Accounting, Audit, and Tax occupational group. The working title for each of them became Accounting Services Administrator. This change was not a demotion and did not effect their respective salaries. Instead, the reassignments accurately reflected the actual duties of their positions. After Petitioner filed his Charge of Discrimination, Michael Klump, from Respondent's Minority Program Office in Tallahassee, Florida, was assigned to furnish all information requested by FCHR and to prepare the agency's response to the complaint. Mr. Klump's duties did not involve investigating the alleged charges on behalf of FCHR. Respondent's Minority Program Office prepared a letter dated September 11, 1995, addressed to Petitioner. The purpose of the letter was to advise Petitioner that the agency had received the complaint. It states that Petitioner should contact Mr. Klump if Petitioner had any additional information or questions regarding this matter. There is no competent evidence to indicate whether Petitioner received the letter from the Minority Program Office. Mr. Klump visited Respondent's District Two Office in Lake City to gather the information requested by FCHR. He did not interview Petitioner while he was there. Respondent's Minority Program Office does not routinely interview complainants who file a charge of employment discrimination with FCHR unless the complainant responds to a letter similar to the one addressed to Petitioner. There is no credible evidence that Respondent prepared its response and/or position statement to FCHR with the intention of misrepresenting material facts. Linda Green gave Petitioner a copy of her computer notes relative to dissension in the office when he first requested them. However, she edited the notes to delete the names of employees that had complained about Petitioner. At the hearing, Ms. Green produced an unedited copy of the notes which had been updated beyond the time relevant here. There is no persuasive evidence that Respondent intentionally discriminated against Petitioner on the basis of his race or gender or retaliated against him for filing his Charge of Discrimination.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Commission on Human Relations enter a Final Order dismissing Petitioner's claims of racial and gender discrimination and retaliation. Recommended this 15th day of October, 1997, 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 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 1997.
