Findings Of Fact Petitioner was born on March 14, 1960. At the time of this hearing he was 22 years old. Petitioner moved to Florida from Arkansas in March, 1981, and subsequently applied for and was issued a State certificate as a general contractor in February, 1982. While in Arkansas, Petitioner obtained a license as a master electrician (Exhibit 1) and his company, American Enterprise Electric, was licensed as an electrical contractor (Exhibit 2). The electrical contractors' license was obtained without examination, as Petitioner was doing electrical contracting when the Arkansas licensing law was passed in 1979. Petitioner started working for his father, a general contractor in Arkansas, at an early age and was doing electrical work in his early teens. He took over the electrical end of his father's contracts, prepared bids, supervised, and did most of the electrical wiring on several apartment buildings, office buildings, and single family residences through his late teens. In 1978 Petitioner started his own business as an electrical contractor in Arkansas. He subsequently added air conditioning and electronics work. Operating as Allgood Electric, Petitioner did the electrical work on residences, apartment buildings and office buildings in which others were the general contractor. In his application, Exhibit 4, Petitioner dates 3/30/78 as the start of his electrical contracting company. The last job reported on Exhibit 4 is dated 9/1/80, shortly before Petitioner moved to Florida. From 3/7/78 through 9/1/80 Petitioner lists on Exhibit 4 a total electrical contractor dollar value of $60,000 with two of these jobs accounting for $35,000. Petitioner holds no local license as an electrician or electrical contractor. No evidence was presented of the electrical contracting done by his company in Florida, although he testified he has a qualifying agent to allow his company to do electrical contracting.
The Issue The issues in this case are whether Respondents violated Subsections 626.611(7), 626.611(9), 626.611(10), and 626.611(13), Florida Statutes (2008),1 and, if so, what discipline should be imposed.
Findings Of Fact At all times material to the allegations in the Administrative Complaints, Mr. Holliday, III, was a licensed Florida surplus lines (1-20) agent, a life and health (2-18) agent, a general lines (property and casualty) (2-20) agent, an independent adjuster (5-20), and agent in charge at International Brokerage and Surplus Lines, Inc. (IBSL). Mr. Holliday, III, had been associated with IBSL since its inception in 1993. At all times material to the allegations in the Administrative Complaint, Mr. Holliday, IV, was licensed in Florida as a general lines (2-20) agent. At all times material to the allegations in the Administrative Complaint, Mr. Holliday, III, and Mr. Holliday, IV, were officers and owners of IBSL. Most recently, Mr. Holliday, III, was the secretary of IBSL. He handled the underwriting and risk placement for the agency. From approximately March 1993 to April 2009, Mr. Holliday, IV, was the president of IBSL. As president of IBSL, Mr. Holliday, IV's, duties included signing agreements which established IBSL's business function as that of a general managing agent and signing agreements which empowered IBSL to collect premiums on behalf of insureds. IBSL ceased doing business on May 1, 2009. In the insurance industry, a common method of procuring insurance involves a retail producer, a wholesale broker, and a program manager. A customer desiring insurance contacts its local insurance agent, which is known as a retail producer, and applies for insurance. The retail producer has a producer agreement with a wholesale broker, who has a producer agreement with a program manager. The program manager represents insurance companies. The retail producer sends the customer's application to the wholesale broker, and the wholesale broker contacts the program manager and forwards the application to the program manager. The program manager will provide a quote if the insurance company is willing to insure the customer. The quote is passed back to the customer via the wholesale broker and the retail producer. If the customer decides to take the insurance, the program manager will issue a binder to the wholesale broker, who will submit the binder to the retail producer. The wholesale broker will issue an invoice for the premium to the retail producer. The program manager pays a commission to the wholesale broker pursuant to its producer agreement with the wholesale broker, and the wholesale broker pays a commission to the retail producer pursuant to its producer agreement with the retail producer. When the retail producer sends the premium payment to the wholesale broker, the retail producer will deduct its commission. The wholesale broker sends the premium amount to the program manager less the wholesale broker's commission. If the customer is unable to pay the entire amount of the premium, part of the premium may be financed through a premium finance company. The premium finance company may pay the premium to the retail producer or to the wholesale broker. International Transportation & Marine Agency, Inc. (ITMA), is a program manager and is engaged in the business of selling, brokering, and servicing certain lines of policies of insurance written or issued by insurance companies. ITMA is a program manager for Pennsylvania Manufacturers Insurance Association (Pennsylvania Manufacturers), an insurance company. IBSL, a wholesale broker, entered into a producer's contract with ITMA on January 4, 2008. Wimberly Agency, Incorporated (Wimberly), is a retail producer located in Ringgold, Louisiana. In 2008, Wimberly had a producer's agreement with IBSL. Carla Jinks (Ms. Jinks) is the administrative manager for Wimberly. In October 2008, R.L. Carter Trucking (Carter) was a customer of Wimberly and applied for motor truck cargo insurance with Wimberly. Wimberly submitted an application to IBSL and requested that coverage be bound effective October 28, 2008, for Carter. IBSL contacted ITMA and received a binder for a policy with Pennsylvania Manufacturers. The cost of the policy was $9,500.00 plus a policy fee of $135.00 for a total of $9,635.00. Carter paid Wimberly $2,500.00 as a down payment and financed the remainder of the cost with Southern Premium Finance, LLC, who paid the financed portion directly to Wimberly. Wimberly deducted a ten percent commission of $950.00 and sent the remainder, $8,635.00 to IBSL. The check was deposited to IBSL's clearing account. On January 22, 2009, Carter contacted Ms. Jinks and advised that he had received a notice of cancellation effective January 22, 2009, due to non-payment to Pennsylvania Manufacturers. On the same date, Ms. Jinks received a facsimile transmission from IBSL, attaching the notice of cancellation and stating: "There was some confusion with the payment we send [sic] and we are working on getting it reinstated." There were some e-mails between Wimberly and Mr. Holliday, III, concerning the placement of coverage with another company. IBSL was unable to place coverage for Carter. By e-mail dated January 30, 2009, Ms. Jinks advised Mr. Holliday, III, that she had been able to place coverage for Carter and requested a return of the premium paid on a pro rata basis. She advised Mr. Holliday, III, that the return premium should be $7,651.35. By e-mail dated January 30, 2009, Mr. Holliday, III, stated: We will tender the return as quickly as it is processed by accounting. I do sorely regret the loss of this account, and our inability to get the Travelers quote agreed on a timely basis. By February 19, 2009, Wimberly had not received the return premium from IBSL. Ms. Jinks sent an e-mail to Mr. Holliday, III, on February 19, 2009, asking that the return premium be rushed to Wimberly so that it could be used to pay for the replacement policy. As of the date of Ms. Jinks' deposition on November 16, 2009, neither Mr. Holliday, III; Mr. Holliday, IV; nor IBSL had given the return premium to Wimberly. K.V. Carrier Services, Inc. (K.V.), is a retail producer located in Medley, Florida. In 2007, K.V. and IBSL entered into a business arrangement with IBSL. Under the arrangement, K.V. was the retailer, IBSL was the wholesale broker, ITMA was the program manager, and Pennsylvania Manufacturers was the insurance company. K.V. collected the down payments for the policy premiums from its customers and sent the down payments to IBSL. The remainder of the premiums were financed by financing companies, who sent the remainder of the premiums to IBSL. IBSL was supposed to send the monies paid for the premiums to ITMA. The following customers made down payments to K.V. and financed the remainder of their premiums with a financing company. E & E Trucking Service OD Transport, Inc. Fermin Balzaldua Eduardo Bravo Carlos Ramirez Edwin Bello Janet Rodriguez UTL, Inc. Prestige Transport USA JNL Transportation, Inc. Valdir Santos DJ Express PL Fast Carrier Ysis Transport K.V. sent the down payments for these customers to IBSL. The financing company sent the remainder of the premiums for these customers to IBSL. The total amount of premiums sent to IBSL for these customers was $19,768.45. IBSL did not send the premium payments for these customers to ITMA. The policies for these customers were cancelled for non-payment. K.V. found another company that was willing to insure K.V.'s customers. K.V. paid the down payments for the new policies from its own funds, hoping that IBSL would repay the finance company with any unearned premiums that would be returned to IBSL as a result of the cancellations. ITMA sent an invoice called an Account Current Statement to IBSL for the business conducted in the month of November 2008. The total amount owed to ITMA was listed as $55,116.32. The invoice included the premium for the policy issued for Carter, less IBSL's commission. The premiums for the policies issued to Eduardo Bravo; Fermin Bazaldua; JNL Transportation, Inc.; Janet Rodriguez; OD Transport, Inc.; and Prestige Transport USA were also included in the Account Current Statement for the business that IBSL conducted in November. IBSL was required to pay the $55,116.32 by December 15, 2008, but did not do so. ITMA received a check from IBSL dated December 31, 2008, for $25,000.00. A notation on the check indicated that it was a partial payment for the November business. The check was unallocated, meaning IBSL did not state to which premiums the partial payment should be applied. Mr. Holliday, III, claimed that IBSL had sent a bordereaux along with the check showing to which policies the payment applied. Mr. Holliday, III's, testimony is not credited. Donald Kaitz (Mr. Kaitz), the president of ITMA, communicated with one of the Respondents, who advised Mr. Kaitz that he needed another week or so to collect some premiums from his retail producers. On January 12, 2009, ITMA received a telephone call from IBSL, stating that IBSL could not pay the balance owed to ITMA and that ITMA should take whatever action it felt necessary. As a result of the communication from IBSL, ITMA issued notices of policy cancellation on all applicable policies listed in the Account Current Statement which was to be paid on December 15, 2008. Copies of the cancellation notices were sent to the insureds and IBSL. ITMA issued pro rata return premiums based on the number of days that each policy had been in effect. The return premiums were sent to IBSL by a check for $18,790.06. Additionally, ITMA sent IBSL a list of the policies that had been cancelled, showing the earned premiums which had been deducted from the $25,000.00. IBSL received and retained a net of $30,116.32, which was owed to ITMA. This amount is derived by deducting the $25,000.00, which IBSL sent to ITMA, from the $55,116.32, which was owed to ITMA. By letter dated April 2, 2009, IBSL sent K.V. a check for $524.80, which stated: We have totaled all amounts owing to IBSL by KV Carrier Service, and we have totaled all pro rated commissions owing by IBSL to KV Carrier Services for the benefit of your clients and have included our check # 1025 in the final amount of $524.80 to settle the account. All net unearned premiums for other than unearned commissions which are funded herein you must contact the insurance carriers involved and request payment under the provisions of Florida Statutes #627.7283. Federal Motor Carriers Risk Retention Group, Incorporated (FMC), is an insurance company, which sells commercial auto liability insurance, specifically targeted to intermediate and long-haul trucking companies. CBIP Management, Incorporated (CBIP), is a managing general underwriter for FMC. FMC had an agreement effective June 1, 2008, with IBSL, allowing IBSL to act as a general agent for FMC. As a general agent for FMC, IBSL was given the authority to accept risk on behalf of FMC. IBSL was given a fiduciary responsibility to accept insurance applications, provide quotes, and bind coverage. Once IBSL binds a policy for FMC, FMC issues a policy and is responsible for the risk. IBSL would receive the down payment from the retail agency, and, in most cases, the finance company would pay the balance of the premium directly to IBSL. The agreement between FMC and IBSL provided that IBSL was to provide FMC a monthly report of premiums billed and collected, less the agreed commission. The report was due by the 15th of the month following the reported month. In turn, FMC was to issue a statement for the balance due, and IBSL was required to pay the balance due within 15 days of the mailing of the statement following the month in which the policy was written. In August 2008, FMC began to notice that IBSL was selling premiums lower than FMC's rating guidelines. IBSL owed FMC approximately $186,000.00, which was due on August 15, 2008. IBSL sent FMC a check, which was returned for insufficient funds. FMC contacted IBSL and was assured that the check was returned due to a clerical error and an error by the bank. Assurances were given to FMC that funds would be transferred to FMC the following day; however, FMC did not receive payment until five days later. In September 2008, Joseph Valuntas (Mr. Valuntas), the chief operating officer for FMC, paid a visit to Mr. Holliday, III, and Mr. Holliday, IV. Mr. Valuntas expressed his concerns about the delay in receiving payment in August. He also pointed out that IBSL had taken some risks which were not rated properly and that there were some risks in which IBSL was not following the underwriting guidelines. After his visit with the Hollidays, Mr. Valuntas wrote a letter to IBSL, restricting IBSL to writing in Florida and limiting the amount of gross written premium to no more than $100,000.00 per month. IBSL did not adhere to Mr. Valuntas' instructions. An example of IBSL's conduct involved the writing of a policy for Miami Sunshine Transfer, which is a risk category designated as public delivery. Public delivery was not a standard that FMC insured and, as such, was not covered by FMC's reinsurance. Beginning on or about September 21, 2008, FMC began getting complaints from policyholders and retail agents about cancellations of policies that had been paid timely and in full. Although the retail agents had paid the premiums in full to IBSL, IBSL had not forwarded the premiums to FMC. By October 2008, IBSL owed FMC approximately $120,000.00 in past due premiums. FMC officially terminated the IBSL agreement in October 2008. IBSL sued FMC for breach of contract. On December 22, 2008, FMC received a check from IBSL in the amount of $25,122.80, but IBSL did not specify what premiums were being paid by the check. From February 1, 2006, through November 20, 2008, IBSL had a business relationship with Markel International Insurance Company Limited (Markel), an entity for which IBSL was writing insurance. IBSL was a coverholder for Markel, meaning that IBSL could produce insurance business for Markel and had the authority to collect and process premiums and bind insurance on Markel's behalf. Once the premiums were collected by IBSL, they were to be reported to Markel, and, within a maximum of 45 days, IBSL was to remit to Markel the aggregate gross written premiums less IBSL's commission. T. Scott Garner (Mr. Garner) is an expert auditor and financial analyst who currently works for Northshore International Insurance Services (Northshore), an insurance and reinsurance consulting firm. Markel retained Mr. Garner to determine the amount of money that IBSL should have sent to Markel for business transacted by IBSL for the period between February 1, 2006, and November 20, 2008. In doing his analysis, Mr. Garner used the bordereauxs which IBSL prepared and provided to Markel. Bordereauxs are monthly billing reports or accounts receivable reports. Mr. Garner also used data from Omni, which is a software system that was used by IBSL. Mr. Garner used the following procedure to determine what IBSL owed Markel. He determined how much risk IBSL wrote during the time period, that is, the gross written premium. He identified the amount of money that Markel had received from IBSL for the time period. Next he determined the amount that should have been received from IBSL, the gross written premiums minus IBSL's commissions. He compared what should have been remitted to Markel with the amount that was actually received by Markel. Based on his analysis, Mr. Garner calculated that IBSL owed Markel $1,208,656.61. Mr. Garner's analysis is credited. Respondent submitted a FSLSO Compliance Review Summary, which was done by the Florida Surplus Lines Office. At the final hearing, Mr. Holliday, III, viewed the report to mean that Markel was incorrect in the amount of money that was owed to it by IBSL. The report does not indicate that the policies on which the premium variances were noted were policies issued by Markel. Additionally, in his review, Mr. Garner eliminated duplicate transactions in determining the amount owed to Markel. The report did give a long list of policies, which should have been reported to Florida Surplus Lines Office, but IBSL had failed to report the policies.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Respondents committed the violations alleged in Counts I through V of the Administrative Complaints, dismissing Count VI of the Administrative Complaints, and revoking the licenses of Respondents. DONE AND ENTERED this 15th day of October, 2010, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 2010.
Findings Of Fact The School Board of Palm Beach County opened bids on August 9, 1989, which had been solicited in July 1989, for the purchase of a language laboratory, solicitation #SB 90-84F. The apparent low bidder was ASC Electronic, Inc. (ASC). The next lowest bidder was Mavco, Inc., d/b/a Miami Audio-Visual Company (Mavco). The other bidders were Florida State AV and Communications, Inc., and Stevens Learning Systems, Inc. The bid of ASC was $46,770.00, that of Mavco was $52,040.00. Mavco filed a protest in which it alleged that the bid by ASC was not responsive. After informal attempts to resolve the protest failed, Mavco filed a formal written protest of the school board's preliminary decision to award the bid to ASC. The timeliness of the protest has not been challenged. Mavco alleges that the equipment offered by ASC does not comply with paragraph 3F of the General Conditions of the invitation to bid, because the power supply for the language laboratory has not been approved by Underwriters Laboratories (UL). It was also alleged that the power supply is not fully insulated. The relevant provisions of the General conditions of the invitation to bid provide 1/ 3F) UNDERWRITERS' LABORATORIES: Unless otherwise stipulated in the bid, all manufactured and fabricated assemblies shall be U.L. listed or re-examination listing where such has been established by U.L. for item(s) offered and furnished. * * * 5. BRAND NAMES: Use of a brand name, trade name, make, model, manufacturer or vendor catalog number in specifications is for the purpose of establishing a grade or quality of material only. It is not the Board's intent to rule out other competition, therefore, the phase OR ACCEPTABLE EQUAL is added. However, if a product other than that specified is bid, it is the vendor's responsibility to submit with the bid brochures, samples and/or detailed specifications on item(s) bid. The Board shall be sole judge concerning the merits of bids submitted. Bidder shall indicate on the bid form the manufacturer's name and number if bidding other than the specified brands, and shall indicate ANY deviation from the specifications as listed. Other than specified items offered requires complete descriptive technical literature marked to indicate detail(s) conformance with specifications. * * * 22. SPECIFICATIONS: Any omissions of detail specifications stated herein that would render the materials/service from use as specified will not relieve the bidder from responsibility. * * * 26. SPECIAL CONDITIONS: Any and all Special Conditions that may vary from the General Conditions shall have precedence. (all emphasis in original) The minimum technical specifications for the school board's solicitation begin at page 5 of the invitation to bid. Those for the main console are found at page 9; the first is that the language laboratory console shall have a "fully insulated UL Approved student power supply." The location of this specification is somewhat confusing, because the laboratory is divided into the main console for the instructor and student positions. The quoted specification requiring UL listing applies only to power supplies for student positions, not the console, and therefore appears to have been misplaced in the specifications. It is not clear that the student positions in the language lab need to have any power supply of their own. If they do, however, they must be fully insulated and UL Approved. The bid submitted by ASC states, at page 10, that the language laboratory it bid was its own model AS4M. Its bid package does not state that ASC bid a product which varied from the school board's technical specifications. Nothing in the invitation to bid requires the bidder to list or describe a specific power supply which will be provided as a component of the language laboratory console master desk or of the student positions. Mavco's own bid submission does not state whether its student power supply (if any) is UL Approved. After the school board had designated ASC as the apparent low bidder in its bid tabulation, the school board inquired about the Underwriters Laboratory approval status of the language laboratory ASC would provide. 2/ ASC responded on August l8, 1989, as follows: The only component that would normally require a UL listing is our internal power supply. Since our entire system operates on 24VAC, UL approval for other than the power supply is not required. The high-quality German manufactured power supply has a more stringent European International Standard for meeting the requirements of the Common Market than that required by UL. If however, a UL Approved power supply is requested, we will substitute a UL Approved power supply in our console. We, therefore, respectfully request that this letter be accepted as our certification that the power supply we will install will, in every way, meet or exceed UL requirements or, as directed by you, we will substitute a fully UL Approved power supply in our console. (emphasis original) After further correspondence, on August 25, 1989, ASC wrote to the school board a brief letter, which states We appreciate this opportunity to submit our UL Approved power supply LAMBDA Model L0S-Y- 24. The attached card indicates that UL #E45040 (M) shows that this power supply is listed by UL and is in compliance with their standards. By letter dated August 29, 1989, ASC proposed to use another power supply, from Acme Transformer, Inc. The power supply is obviously a necessary component of the entire language laboratory. It is not clear whether a separate power supply is a necessary part of the student positions on the model ASC; it appears that the only power supply is part of the master console. In the invitation to bid, the school board not only prescribed technical specifications, but also described the laboratory sought on its Bid Summary Sheet as the Tandberg Educational 15-10 language laboratory, although the board permitted a vendor to bid an equal product. The analysis of the Tandberg 15-10 language laboratory performed by the national sales manager of Tandberg Educational, Inc., shows that the Tandberg laboratory is not UL Approved in its entirety; its main console power supply is not UL Approved. Bidding a laboratory with no UL approval for the main console power supply is consistent with the board's technical specifications. Mavco lays great stress on the use of the word "substitute" in the August 18, 1989, letter from ASC to the school board. ASC may have intended to supply a power unit for the main console which was not UL Approved; under the technical specifications it was not obligated to provide an approved unit. The school board's purchasing department raised the UL Approval issue with ASC, which then committed to provide a UL Approved main power supply. Lack of UL Approval for the power supply ASC first intended to use is not an indication that that power supply was in any way inadequate. There is no proof in the record that the power supply which would have been provided would not have met UL standards, had it been tested. The use of the Tandberg language laboratory by the school board as its benchmark for grade or quality, which incorporates a power supply which is not UL Approved, shows that UL Approval of the main console power supply was not required.
Recommendation It is recommended that the bid protest filed by Miami Audio-Visual Company be rejected and the bid submitted by ASC Electronic be found responsive. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 15th day of November, 1989. WILLIAM R. DORSEY, JR. 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 16th, day of November, 1989.
The Issue Whether at any time material to this proceeding there was an employee- employer relationship between Respondent, Government Employees Insurance Company (GEICO) and GEICO's general field representatives (GFR). Whether the close relationship referred to in GEICO's conflict of interest policy was limited solely to the close relationship as a result of a person's marital status or did it include any close relationship, and, in either case, was the conflict of interest policy based on a bona fide business necessity. Whether GEICO's refusal to appoint Petitioner as the GFR in GEICO's office in Neptune Beach, Florida was based on either Petitioner's marital status or her sex.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Petitioner, Lynn Cattin, has been married to her husband, Larry Cattin, continuously since June, 1972. Larry Cattin has been employed as a senior account agent with Allstate Insurance Company (Allstate) since 1979 selling insurance products, including auto and homeowner's insurance. Petitioner responded to a newspaper advertisement placed by Frank Butterfield's insurance agency and was employed by that agency in its Neptune Beach, Florida Branch Office (branch office) in March 1983. Petitioner continued to work for the Butterfield insurance agency until the end of the 1987 calendar year. Frank Butterfield is now and was at all times material to this proceeding a general field representative (GFR) of Respondent, Government Employees Insurance Company (GEICO). Approximately 80% of Butterfield's branch office income was derived from GEICO products such as homeowner and automobile insurance. Petitioner advised Butterfield of her husband's position with Allstate prior to her hiring, and requested that Butterfield advise GEICO of her husband's position with Allstate. Butterfield advised GEICO's zone manager, Hugh McClelland of Larry Cattin's position with Allstate, and was advised by GEICO that there was no objection to Butterfield hiring Petitioner while her husband was employed by Allstate. Carl Kelle and Harry Bond, both holding the position of vice-president with GEICO, and Warren Trumble, also a zone manager for GEICO were aware of Larry Cattin's position with Allstate. Petitioner was the only employee in the branch office until May, 1986, and was basically in charge except when Butterfield was in the branch office. Butterfield was present in the branch office a good percentage of the time during 1983 through 1985 but his presence in the branch office was reduced to approximately 20% after 1985. Petitioner's compensation was $13,000.00 per year when she began working for Butterfield in 1983. When Petitioner left Butterfield's employment at the end of 1987 her compensation was $20,000.00 per year. The clerical employee's compensation at the end of calendar year 1987 was $240.00 per week. GEICO provided Petitioner with business cards which identified her as "Lynn F. Cattin, Representative". During her employment with Butterfield, Petitioner had complete access to all sales information and other possible confidential information relating to GEICO in the branch office. On occasion, Petitioner would refer potential customers of GEICO's to Allstate but only where GEICO did not offer insurance to meet the customer's needs and only after making Butterfield aware of the situation. During her employment with Butterfield, Petitioner attended seminars conducted by GEICO for its GFRs. The branch office had a gross commission income during the year 1987 of approximately $7,000.00 per month with expenses for the office of approximately $3,000.000 per month including Petitioner's salary and the salary of the clerical employee. In the latter part of 1986, GEICO decided to require each office to have its own GFR. Therefore, the branch office was to have its own GFR since Butterfield would be GEICO's GFR in his office in Jacksonville, Florida. The appointment of the GFR for the branch office was to be effective January 1, 1988. Butterfield recommended Petitioner for the position of GFR in the branch office, and Petitioner was interviewed by Mr. Carl Kelle, Mr. Harry Bond, and Mr. Warren Trumble, representatives of GEICO, at a Tampa, Florida seminar. Applications of potential GFRs are presented to the GFR Board which makes the decision concerning which candidates will be appointed to the position of GFR. When Petitioner's application was considered by the Board, Gene Mahan, president of GEICO, suggested there may be a problem with the conflict of interest policy. Gene Mahan discussed the conflict of interest as it concerned Petitioner's application with William Snyder, Board Chairman of GEICO. William Snyder disapproved Petitioner's application on the basis of her husband's representation of a competing carrier, Allstate. Petitioner wrote a letter to Snyder dated July 29, 1987, requesting that he reconsider his decision. Snyder responded by letter dated August 19, 1987, assuring the Petitioner that GEICO had no concerns regarding her loyalty while employed by Butterfield and that GEICO's only concern was a "potential" concern for future problems, but that because of her husband's position with Allstate they could not consider her for the GFR position. At no time was Petitioner given any other reason than her husband's employment status with Allstate for her having been denied the GFR position with GEICO. Carl Kelle brought Petitioner's application to the GFR Board hoping there could be an exception made to the conflict of interest policy. Kelle was unaware of any exception having been made to that policy. After Petitioner was denied the GFR appointment by GEICO, Morris Burbia was appointed GFR for the branch office by GEICO, and eventually Burbia contracted with Butterfield to purchase the branch office. Petitioner worked for Butterfield until the end of the calendar year 1987 when Butterfield's management of the branch office ended. The history of GEICO's conflict of interest policy dates back to 1976. At that time GEICO was the preferred risk carrier in a group of companies. The standard company was Criterion Insurance company, now known as GEICO Indemnity. GEICO had more business than it had surplus to support, so it elected to terminate its agency appointment countrywide. The standard company, Criterion Indemnity, continued representation agreements with GFRs who were operating at the time. The GEICO companies recognized that after the withdrawal of GEICO, there were insufficient products for a GFR to continue to survive without having a preferred carrier, so permission was given to each of the GFRs to obtain a representation agreement with a preferred carrier other than GEICO. In 1978 GEICO returned to the market and offered a majority of the remaining GFRs new appointments. Part of the new agreement was that the GFRs would represent GEICO companies exclusively, and over time would cease handling the preferred risk carriers with whom they had been dealing. The GFRs were not to write new business for the other company, but could take a period of time to dispose of their old business. Over the next couple of years, the relationships with the other insurance companies were gradually disposed of by most of the GFRs. While the majority of GFRs returned to exclusive representation of the GEICO companies, a few developed subterfuges which would allow them to continue representing the other preferred risk company while giving the appearance of exclusive representation of GEICO. These included selling the other company's book of business to a wife or girlfriend who would then handle those policies out of the same or a neighboring building. At the time it was impossible for GEICO to police its GFRs adequately since there were only four zone managers covering one hundred locations around the country. Production comparisons performed by GEICO indicate that when a GFR in a conflict of interest situation is replaced the business increases. However, it was not shown that the increased business was due entirely to the absence of the alleged conflict of interest situation. There was substantial competent evidence to show that GEICO's conflict of interest policy is that GEICO prefers not to appoint an individual who has a close relationship with another individual employed by a competitor in a comparable position. The purpose of the GFR program is to penetrate the military market. The largest carrier in that market is State Farm, followed by Allstate, with GEICO in third place. There were at least three situations where male GFRs had a close relationship with another person in a comparable position that was employed by or representing competing insurance companies simultaneously with the GFR's representation of GEIC0. In first situation the GFR was terminated within the year after GEICO learned the GFR's violation of the exclusivity provision of the GFR agreement. It was only learned later that the GFR had sold this book of business to his girlfriend. In the second situation GEICO began pursuing a solution within a month after learning of the conflict. The wife of the GFR disposed of her book of business within the year, and the GFR retired within a year and a half. In the third situation there was no proof of joint representation between the GFR and his daughter. However, the situation resolved itself when the daughter took over her father's business, with GEICO's approval, after he became terminally ill. Although it took time to remedy each of these situations, there was no evidence that GEICO agreed to allow the conflict of interest to continue after learning of its existence. There was no evidence that GEICO had ever appointed a GFR where, at the time of the appointment, it was known that the GFR had a close relationship with another individual who had a comparable position with a competing company. The GFR agreement is uniform and the following are pertinent parts of GEICO's General Field Representative's Agreement (Agreement) for appointment: GENERAL Company appoints the G.F.R. to act as its representative.... * * * The G.F.R. agrees to maintain an office from which to conduct Company's business.... The G.F.R. accepts the appointment and agrees to sell. the lines of insurance offered by the Company...further agrees not to sell any lines of insurance directly competitive with those offered by Company.... * * * e. The G.F.R. shall conduct herself in a prudent businesslike manner; she shall exercise her own judgment as to the time and manner of her performance under this Agreement, and she shall be free to exercise her own judgment as to the persons from whom she will solicit applications for the lines of insurance provided by Company and the time and place of such solicitation. Nothing contained herein shall be construed to create the relationship of employer and employee between Company and the G.F.R. (Emphasis Supplied). * * * ACCOUNTING The G.F.R. shall render to the Company a daily accounting of all business...shall pay over...shall maintain bank account. approved by Company...shall not use this account for any other purpose.... The G.F.R. shall keep true and complete records and accounts of all of her transactions under this Agreement.... Company may audit the accounts. of the G.F.R. at any time without prior notice of such audit being given to the G.F.R.... * * * ADVERTISING Company may conduct independent advertising campaigns in the territory assigned to the G.F.R. The G.F.R. shall not insert any advertisements respecting Company... without first obtaining the consent of Company in writing.... PROPERTY OF COMPANY Any forms or other supplies or equipment of Company...shall always remain the property of Company.... EXPENSES OF GENERAL FIELD REPRESENTATIVES The G.F.R. shall pay all expenses which she incurs in connection with carrying out this Agreement.... OTHER REPRESENTATION The G.F.R. may represent other companies, provided prior approval for such representation is secured in writing by the G.F.R. from Company. * * * 9. TERMINATION OF AGREEMENT a. This Agreement may be terminated by either the Company or the G.F.R. upon 60 days' written notice to the other. * * * 11. BOND The G.F.R. shall be bonded in accordance with the requirements set forth by the Company. All bond premiums will be paid by the Company.... While GEICO may suggest office hours, it does not control the hours a GFR or his employers work or what hours the - office is open. While GEICO must approve the location of the office, it does not exercise complete control over the office location. The GFR is paid a salary based on the commissions earned as set forth in the schedule of commissions. GEICO does not withhold income taxes or pay social security taxes for the GFR or the GFR's employees. GEICO does not control: the hiring, firing, and salary of the G.F.R.'s employees; the office equipment purchased or the office decor; whether the GFR purchases or leases office space, and how much vacation or sick leave the G.F.R. takes or gives his employees. Although GEICO has a pension plan, profit sharing plan and a health plan for its employees, the GFR are not in those plans. Generally, GEICO sells insurance by direct mail and this is the bulk of its business. Therefore, does not spend, or is it required to spend, any significant amount of time with the GFRs and, as a result, GEICO's supervision of the GFRs is minimal. The GFR program is the only area of GEICO's business in which there is agency representation. The GFR business does not generally see growth because of renewals of previously sold policies. The GFR's only get renewal commissions for three years, therefore, there is no renewal commission after the fourth year. There were no positions comparable to the GFR position available to Petitioner in the Jacksonville area at the time she left employment with Butterfield. During time Petitioner was denied appointment as a GFR by GEICO, a number of women were appointed as GFR's by GEIC0, mainly in Texas. There is substantial competent evidence to show that GEICO's conflict of interest policy was based on a bona fide business necessity in that a conflict of interest situation such as GEICO was attempting to avoid presents a real potential for abuse and is a legitimate basis for the policy.
Recommendation Based upon the foregoing Findings of Fact, the Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, it is, therefore RECOMMENDED that the Florida Commission on Human Relations enter a final order denying relief to the Petitioner, Lynn Cattin, and dismissing the Amended Petition For Relief. DONE AND ENTERED this 1st day of November, 1989, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division f Administrative Hearings this 1st day of November, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NUMBER 88-5687 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Lynn Cattin Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the Petitioner's proposed finding of fact: 1(1); 2(2); 3(3- 5); 4(6,7); 5(4); 6(8); 7(6,9,11) 8(10); 9(5); 10(12); 11(13); 12(14); 13(31); 14(15,16,18); 15(18,19); 16(19); 17(20); 18(20,21); 19(29); 20(19); 21(41); 22(21); 23-24(32- 36); 26(38) and 27(22). Proposed finding of fact 25 is neither material nor relevant to the conclusion reached in the Recommended Order. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, GEICO Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the Respondent's proposed finding of fact: 1(3); 2(4); 3(3); 4(1,2); 5(5,6); 6(13); 7-8(14); 9(15); 10(16); 11(17); 12 (16); 13(21); 15(31); 16(34-35); 17 (32-36); 20(38); 21(39); 22(36); 23(37); 25(40); 26(12) 28(12); 29(23); 30(24); 31(25); 32(26); 33-34(27); 35(28); 62*(42). *The last paragraph is numbered 52, however, it appears to be a "typo" and should be numbered 62. Proposed findings of fact 14, 18, 19, 24, 27, and 54 are neither material nor relevant to the conclusion reached in the Recommended Order. Proposed findings of fact 36-53 and 55-61 are unnecessary, but see Finding of Fact 29. COPIES FURNISHED: Donald A. Griffin, Executive Director Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Dana Baird, Esquire General Counsel 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Margaret Jones, Clerk Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 John F. MacLennan, Esquire KATTMAN, ESHELMAN & MacLENNAN, P.A. 1920 San Marco Boulevard Jacksonville, Florida 32207 John S. Derr, Esquire GRANGER, SANTRY, MITCHELL & HEATH, P.A. Post Office Box 14129 Tallahassee, Florida 32317
The Issue The primary issue for determination in this case is whether Respondent, Bruce P. Boston, engaged in the unlicensed practice of electrical contracting in the State of Florida without being certified or registered in violation of Chapter 489, Part II of the Florida Statutes; and secondarily, if Respondent committed that violation, what penalty should be imposed?
Findings Of Fact The Department of Business and Professional Regulation (Petitioner) is a state agency charged with the duty and responsibility of regulating the practice of electrical contracting in the State of Florida. Respondent's address is 18204 Southwest 200 Street, Archer, Florida 32618. At no time material hereto was Respondent certified or registered in the State of Florida to engage in the practice of electrical contracting or to perform electrical contracting work. Mrs. Dawn Wingert is the owner of the residence located at what is currently designated as 16675 Southwest 143rd Avenue, Archer, Florida. Mrs. Wingert, as lawful owner, had the authority to enter contracts regarding the residence. The Wingert residence was previously known as 110 Park Avenue, Archer, Florida, prior to the assignment of the current address. Wingert entered into a contract with Respondent to perform construction of a carport and perform electrical contracting work at Wingert’s residence subsequent to assignment of the address of 110 Park Avenue, Archer, Florida. Respondent received compensation for the contracted work directly from Wingert via personal check, which Respondent then cashed. Terry Vargas, a licensed electrical contractor having been issued license number ER 13012448, was subsequently contacted by Respondent to perform the electrical contracting work at the Wingert residence. Vargas installed an electrical outlet on the back porch, put a flood light on the back porch, moved the switch board to a more convenient location, and put a security light in the front of Wingert’s residence. All work required electrical fixtures to be permanently affixed and become a permanent part of the structure of the Wingert residence. Although Vargas completed the electrical contracting work at the Wingert residence, Wingert paid the Respondent for the services because the work was contracted for through Respondent. At no time pertinent to this matter did Terry Vargas contract with Wingert to complete the electrical services enumerated above. After he completed the work at Wingert’s residence, Vargas invoiced Respondent for the electrical contracting work. Respondent, however, refused to pay Vargas for the electrical contracting work performed, despite having received compensation for the work from Wingert.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that Petitioner enter a final order, in accordance with Section 489.533(2)(c), Florida Statutes, requiring that Respondent pay an administrative fine in the amount of $5,000.00 to the Department of Business and Professional Regulation. DONE AND ENTERED this 20th day of February, 2007, in Tallahassee, Leon County, Florida. S DON W. DAVIS 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 20th day of February, 2007. COPIES FURNISHED: Bruce P. Boston Post Office Box 331 Williston, Florida 32696 Drew F. Winters, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Nancy S. Terrel, Hearing Officer Office of the General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Josefina Tamayo, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Are the February 13, 2014, letters of Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (Division), requiring totalisator reports to "identify the Florida [permitholder] in reports as both host and guest when applicable," statements that amount to a rule, as defined in section 120.52(16), Florida Statutes (2013).1/
Findings Of Fact Florida permits and regulates betting on greyhound racing,2/ jai alai games,3/ quarter horse racing,4/ and harness racing.5/ The Division is responsible for administration of Florida's statutes and rules governing this betting. JKC and OPKC are separate, individually permitted facilities. Jacksonville Greyhound Racing owns and operates both the JKC and the OPKC. It is not, however, a party to this proceeding. The betting system is a pari-mutuel system. This "means a system of betting on races or games in which the winners divide the total amount bet, after deducting management expenses and taxes, in proportion to the sums they have wagered individually and with regard to the odds assigned to particular outcomes."6/ Each race, contest, or game is an "event."7/ The aggregate wagers called "contributions" to pari-mutuel pools are labeled "handle." § 550.002(13), Fla. Stat. An "intertrack wager" is "a particular form of pari-mutuel wagering in which wagers are accepted at a permitted, in-state track, fronton, or pari-mutuel facility on a race or game transmitted from and performed live at, or simulcast signal rebroadcast from another in-state pari-mutuel facility."8/ The JKC offers intertrack wagering at its permitted facility located in Jacksonville, Florida. It does not offer live events. The OPKC offers intertrack wagering and wagering on live events conducted at its permitted facility in Orange Park. The Racetracks are host tracks when they transmit live greyhound racing to other in-state and out-of-state facilities for off-track wagers.9/ They are guest tracks when wagers are made at their separate permitted locations on pari-mutuel races or games conducted at third-party facilities.10/ Florida statutes and the Division's rules require detailed reports from permitholders to the Division and other permitholders, including tables of wagers, pool data, and winnings.11/ These reports are generated by "totalisators." A totalisator is "the computer system used to accumulate wagers, record sales, calculate payoffs, and display wagering data on a display device that is located at a pari-mutuel facility."12/ The Division's Form DBPR-PMW-3570 requires host permitholders to report intertrack wagering "handle" by guest on a monthly basis. The host permitholders must sign and attest to the accuracy of the information submitted in the form. Also, Florida Administrative Code Rule 61D-7.023(2) requires generation of reports for each pool within each contest to be printed immediately after the official order of finish is declared. On March 9, 2012, the Division issued a letter to AmTote International ("AmTote"), a licensed totalisator company, and copied Jacksonville Greyhound Racing, notifying AmTote that Florida permitholders and the Division would need a breakdown of the handle of the Racetracks in order to pay appropriate purses, taxes, or other liabilities. It sent a similar letter to other totalisator companies. This was an effort to be accommodating and flexible. The letter concluded: "Please continue to provide handle information broken down by source, which is required by rule to all those in the state of Florida who have been users of that information in the past." The Racetracks rely upon AmTote to provide their totalisator services. Between March 2012 and March 2014, AmTote commingled the Racetracks' wagering data into a single "community," reporting all wagering as coming from the OPKC in order to reduce interface fees paid for the totalisator service. The guest track wagering data and reports exchanged with the other totalisator companies from the Racetracks show up on the AmTote settlement files as OPKC. The reports do not differentiate between wagers made at each of the Racetracks. Before March 1, 2012, AmTote segregated wagering data as coming from either JKC or OPKC. During the two years reported by the Racetracks as a single community, the Racetracks separately provided Florida host tracks a supplemental report breaking down the sources within the common community. The Racetracks provided these supplemental reports--via email or other means--to assist Florida host tracks with reporting requirements. They did not provide them simultaneously with the other reports and data. There were frequently errors that had to be identified and corrected. In an effort to be flexible and work with the Racetracks, the Division tolerated this method of reporting for two years. But it created problems for both the Division and for the other permitholders in the state. On February 13, 2014, the Division prepared and issued correspondence to AmTote, as well as the two other Florida totalisator companies, announcing that it intended to require proper reporting of the data required by rule, including reports of each permitholder. The letter states: This letter is to address the issue of proper and complete identification of each individual permitholder in totalisator reports. Rule 61D-7.024(1), Florida Administrative Code, requires all Florida pari-mutuel permitholders to use an electronically operated totalisator. Rule 61D-7.023(9), F.A.C. states in part, ". . . Each report shall include the permitholder's name . . .," and Rule 61D-7.024(4), F.A.C. states in part, ". . . reports shall be kept logically separate . . . ." Further, Rule 61D-7.023(1), F.A.C. states, "The totalisator licensee shall be responsible for the correctness of all tote produced mutual accounting reports. " In accordance with Florida Administrative Code, the division requires each permitholder to be properly and uniquely identified by totalisator reports provided to the division and to the permitholders. In addition, the totalisators are responsible for the correctness of all tote produced mutual accounting reports. Reports provided after February 28, 2014 must properly identify the Florida Permitholder in reports as both host and guest when applicable. Improper identification of permitholders will be considered a violation of the Florida Administrative Code. On March 11, 2014, AmTote began segregating wagering data from the Racetracks in compliance with the February 13, 2014, letter. The Racetracks will incur additional financial costs if AmTote ends the reporting of all wagering data as coming from OPKC for purposes of reports provided to other totalisator companies licensed in Florida and begins segregating their wagering data by individual permitholders. These costs stem from additional interface fees incurred outside the regulatory jurisdiction of Florida. The only evidence of these costs is the testimony of Matthew Kroetz, vice-president of Operations for Jacksonville Greyhound Racing. The testimony of Mr. Kroetz about the cost of the required change is confusing because he mingles assumed costs for a third closed track as if it were reactivated and operational. Bayard Raceways is that track. The Racetracks' parent company owns it. But the likelihood and timing of that reactivation is speculative. In addition, Bayard is not a party to this proceeding. Neither is the parent company. Mr. Kroetz' testimony establishes that the current cost for the two petitioners is a total of $1,500 per month. He projects that costs for reporting, as the letter requires, would be $4,500 per month for the two Petitioners and the track that may reopen in the future. That testimony is unrebutted and consistent with his testimony that the recurring fees for all three tracks would total over $50,000 annually. It is accepted as accurate. But the $3,000 increase from $1,500 to $4,500 per month is not due solely to the reporting requirement. It is also due to lumping in the non-active track. The evidence does not support including that track, the opening of which is speculative. The monthly fee for the two operating tracks is $1,500 divided by two or $750. Subtracting that, as the current cost for an existing track, from the $3,000 increase, lowers the estimated increase to $2,250. Dividing that by three gives the increased monthly cost per track, or $750 per track. This results in the projected annual cost increase for each of the Racetracks of $9,000. Although Mr. Kroetz testified in summary that the changes would result in an increased cost of "about a thousand dollars per month per facility," that testimony is not persuasive. It is inconsistent with the more detailed testimony relied upon above and would require the improbable and unsupported conclusion that the monthly increase would be more than the existing fees.
The Issue The issue for consideration herein is whether the Petitioners, MISSCO, GENERAL, AND INTERSTATE should be placed on the convicted vendor list pursuant to Section 287.133 Florida Statutes (1991).
Findings Of Fact The facts stated in the Joint Stipulations to the extent set forth below are hereby adopted as findings of fact: On April 9, 1993, DMS issued notices of intent pursuant to Section 187.133(3)(e)(1), Florida Statutes. Jt. Stips. Appen. at pp. 72-73. On April 13, 1993, MISSCO filed petitions with DMS for a formal hearing pursuant to Section 120.57(1), Florida Statutes, to determine whether it is in the public interest for MISSCO, GENERAL, or INTERSTATE to be placed on the Florida Convicted Vendor List pursuant to Section 287.133, Florida Statutes. Jt. Stips. Appen. at p. 74-77. Subparagraph 287.133(3)(e)e., Florida Statutes, establishes factors which, if applicable to a convicted vendor, will mitigate against placement of that vendor upon the convicted vendor list. On April 5, 1991, General Equipment Manufacturers, Inc., (hereinafter "General"), a Mississippi corporation, and wholly owned subsidiary of MISSCO Corporation, was convicted of the commission of a public entity crime as defined within subsection 287.133(1)(g), Florida Statutes. Jr. Stips. p. 1, Appen. at pp. 41-43. A criminal information was filed in the United States District Court for the Southern District of Mississippi against General Equipment Manufacturers, Inc., alleging a violation of Section 1001, Title 18, United States Code and applicable Federal Acquisition Regulations which occurred on or about December 2, 1988. Jt. Stips. p. 1, Appen. at p. 40. The criminal information filed in the United States District Court, Southern District of Mississippi charged General with falsely representing on or about December 2, 1988 that the equipment schedule and price list submitted to the General Services Administration (hereinafter GSA) was General's established commercial price list. (Jt. Stips. p. 2, Appen. at p. 40. Upon entry of a plea of guilty, the Court entered a judgement against General which was filed April 5, 1991. The judgement required payment of a special assessment of $200, a fine in the amount of $10,000, without interest, and restitution in the amount of $28,000. Jt. Stips. p. 2, Appen. at pp. 40-48. The GSA issued Solicitation No. FCGS-X8-38010-N for FSC Group 66 Part II, Section P, Laboratory/Pharmacy Furniture. General submitted an offer dated August 18, 1988, and signed by Charles H. Wright, General Manager of General's SystaModules Division. In connection with its offer, General submitted its purported commercial price list dated January 31, 1987. Mr. Wright certified in Section M-FSS-330, M.3, Basis for Price Negotiation, Item (c), Certificate of Established Catalog or Market Price, that: The price(s) quoted in General's proposal is based on established catalog or market prices of commercial items, as defined in FAR 15.804-3(c), in effect on the date of the offer or on the dates of revisions submitted during the course of negotiations. Substantial quantities of the items have been sold to the general public at such prices. All of the data, including sales data, submitted with General's offer are accurate, complete, and current representations of actual transactions to the date when price negotiations are concluded. By letter dated December 2, 1988, Mr. Wright, in his capacity as General Manager of General's SystaModules Division, certified on behalf of General that: . . . all data submitted with General's offer pursuant to the discount schedule ad marketing data sheets and any other data submitted as as part of General's offer on Solicitation FGS-X8-38010-N are current, accurate, and complete a of the conclusion of negotiations, which occurred on December 2, 1988. Jt. Stips. p. 2-3, Appen. at pp. 51-53. On the basis of General's offer on Solicitation No. FGS-X8-38010-N, the GSA awarded General Contract No. GS-00F-06709 on December 13, 1988. The contract was for the period February 1, 1989, through January 31, 1992. Jt. Stips. p. 3-4, Appen. at p. 53. An investigation by the Federal Bureau of Investigation determined that General provided the GSA with fabricated price lists in connection with FGS-X8-38010-N. Jt. Stips. p. 4, Appen. at pp. 53-54. The details of the criminal information against General are discussed in the findings and determination made by the GSA Office of Acquisition Policy, dated May 18, 1992, which are incorporated herein by reference. Jt. Stips. Appen. at pp. 49-71). Particular findings are as follows: Federal debarment was imposed on General and its corporate officials Messrs. Wright and Majure. Jt. Stips. Appen. at p. 50. The debarments were effective throughout the Federal Executive Branch. The debarment precluded the award, renewal, or extension of federal contracts. Jt. Stips. Appen. at p. 50. Debarment proceedings were initiated by separate notices dated November 1, 1990 based on a referral from the Federal General Services Administration (GSA), Office of Inspector General (OIG). Jt. Stips. Appen. at p. 51. General bid on GSA Solicitation No. FGS-X3-36426-N and in connection with its offer General submitted a "dealer retail price list," and certified that: its prices were based on established catalog or market prices, substantial quantities of the items had been sold to the general public at said prices: and that all of the data submitted with its offer was accurate, complete and current representations of actual transactions up to the date when price negotiations were concluded. Jt. Stips. Appen. at p. 51. General's offer on the solicitation was accepted and it was awarded contract number GS-00F-70316 on April 19, 1984. Jt. Stips. Appen. at p. 52. On June 28, 1985 General made the same representations as to GSA Solicitation No. FGS-X8-38000-N for laboratory and pharmacy furniture. The award was made to General on December 9, 1985. Jt. Stips. Appen. at p. 52. Identical representations were made by General in response to GSA Solicitation No. FCGS-X8-38010-N issued on July 7, 1988. The solicitation was for laboratory and pharmacy furniture. The award was made to General on December 13, 1988. Jt. Stips. Appen. at p. 53. Criminal Information Number J90-00080(B) was filed in the U.S. District Court for the Southern District of Mississippi on November 15, 1990. The information was based on the FBI investigation of General's submission of false commercial price lists to GSA. The criminal information charged General with violating Title 18, U.S.C. 1001 in connection with its offer on Solicitation No. FGS-X8-38010-N. It alleged that General knowingly, willfully, and falsely represented to GSA that the equipment schedule and price lists submitted with General's 1988 offer was General's established commercial price list. Jt. Stips. Appen. at p. 54. General pled guilty to Criminal Information No. J90-00080(B) on December 19, 1990 and was ordered to pay a fine of $10,000 and to make just restitution to the GSA in the amount of $28,000. The conviction was also used as the basis for the federal debarment of General. Jt. Stips. Appen. at p. 54. Mr. Wright and Mr. Majure were also debarred by virtue of their conduct in connection with the General conviction. Jt. Stips. Appen. at pp. 54- 59. General and MISSCO are affiliated companies. General is a wholly-owned subsidiary of MISSCO. MISSCO is directed and governed by its executive committee which acts in lieu of the board of directors. Mr. Majure was a director of MISSCO, a member of MISSCO'S executive committee, a senior vice president of MISSCO, and president, director, and general manager of General. Jt. Stips. Appen. at p. 59. Mr. Majure held a position of substantial responsibility in both MISSCO and General, and through MISSCO's control group is accountable for the circumstances of General's crime. Jt. Stips. Appen. at p. 60. A decision not to impose federal debarment on MISSCO was predicated on MISSCO management's decision to ensure that it did not supply the Federal government with the same goods and services formerly provided by General during the period of General's debarment: MISSCO management made a commitment to emphasize ethical business practices: the people responsible for General's crime were no longer employed by MISSCO: the GSA administrative record (with the exception of General) does not indicate a lack of business integrity or poor performance on federal contracts. Jt. Stips. Appen. at pp. 61-63. Federal debarment of General was predicated upon the following: conviction of the crime of making false statements posed a substantial risk to government business dealings: General submitted false information on solicitations over an extended period of time: General fabricated price lists and false certification son two prior solicitations: General's crime posed a substantial danger to the integrity of the Federal government's MAS program: the accountable individuals for the crime were high-ranking officials at General. Jt. Stips. Appen. at pp. 63-66. The federal debarment proceedings found mitigating factors in that: the parties pled guilty and cooperated with the Department of Justice throughout the investigation: the parties cooperated with GSA throughout the debarment proceedings: General was not charged with deliberate overcharges on its federal MAS contracts: General promptly paid its fine and restitution: General has made good faith efforts to undertake remedial action. Jt. Stips. Appen. at pp. 68-69. On April 9, 1993, Respondent issued Notices of Intent pursuant to Section 287.133(3)(e)1, Florida Statutes, which were received by the Petitioners. Jt. Stips. p. 5, Appen. at pp. 72-73. On April 13, 1993, Petitions filed petitions pursuant to Section 287.133(3)(e)2, Florida Statutes, and Section 120.57(1), Florida Statutes, requesting an order determining that it is not in the public interest for Petitioners to be placed on the State of Florida Convicted Vendor List. Jt. Stips. p. 5, Appen. at pp. 74-75. MISSCO is a holding company which has a number of operating divisions and two wholly-owned subsidiary corporations, General Equipment Manufacturers (General) and MISSCO Exports Corporation (Exports). Jt. Stips. p. 2, Appen. at pp. 35-36. Interstate of Florida is a Division of MISSCO and is a dealer (re- seller) of General's products. Jt. Stips. p. 2. General and MISSCO are commercially distinguishable and they do not occupy the same facilities. MISSCO's primary lines of business are distribution of school equipment and supplies, office equipment and supplies, and commercial printing. Jt. Stips. p. 4. MISSCO Exports is an entity formed solely for accounting and tax purposes, has no employees, and does not engage in substantive commercial operations. Jt. Stips. p. 4. MISSCO has extensive dealings with the federal government, as supplier of goods manufactured by other entities. General is the only MISSCO entity that contracts with the government under the Multiple Awards Schedule (MAS) program. General's primary line of business is manufacturing institutional furniture. Jt. Stips. pp. 4-5. In compliance with paragraphs 287.133(3)(a) and (B), Florida Statutes, MISSCO made timely notification to the DMS and provided details of the conviction of General, by letter dated March 24, 1992 and provided copies of the criminal information, judgement and related correspondence. Jt. Stips. p. 5, Appen. at pp. 37048. Payment of the fine in the amount of $10,000 and restitution in the amount of $28,000 imposed by the conviction and judgement entered April 5, 1991 were promptly paid by General on April 15, 1991. Jt. Stips. pp. 5-6, Appen. at pp. 47-48. Subsequent to the criminal information filed in the United States District court, Southern District of Mississippi in November of 1990, General entered a plea of guilty to the charge, thus eliminating the necessity for further investigation and trial. Jt. Stips. p. 6. The GSA in its findings and determination dated May 18, 1992, cited mitigating factors favorable to General and MISSCO. The factors included, cooperation with the Department of Justice throughout its investigation; cooperation with the GSA throughout the debarment proceeding; constructive dealings by counsel for MISSCO and General with the GSA Office of General Counsel on issues relating to the restrictions on MISSCO and General's business relationship with the government and government prime contractors. Jt. Stips. p. 6, Appen. at pp. 68-69. MISSCO fully cooperated with the DMS in connection with its investigation initiated pursuant to Section 287.133, Florida Statutes. Jt. Stips. p. 6. MISSCO formally filed its disclosure pursuant to Section 287.133(3)(b), Florida Statutes with the DMS by letter dated March 24, 1992, together with exhibits attached thereto. The letter specifically referred to the criminal information filed against General and the judgement entered by the Federal District Court. A copy of the criminal information and judgement were enclosed with the letter, together with a copy of correspondence between MISSCO and the GSA. Jt. Stips. pp. 8-9, Appen. at pp. 37-39. In response to a request dated April 15, 1992 from the DMS for additional information, MISSCO promptly furnished all such information. Jt. Stips. p. 9. At its meeting held December 17, 1992, the Board of Directors of MISSCO was convened and all of the offices then held by Mr. James T. Majure, former President of General, were declared vacant and other persons were elected to those positions. Jt. Stips. p. 7, Appen. at pp. 2, 67, 70. Mr. Charles Wright was retired from General under a medical disability prior to 1990. Jt. Stips. p. 7. MISSCO Corporation fully cooperated with the GSA by proposing and implementing remedial measures including the presentation of an Ethics Seminar by Mr. Norman Roberts, past chairman of the American Bar Association's section on government contracting. Jt. Stips. p. 7. MISSCO revised its corporate Code of Ethics, revised its Employee Handbook, installed an 800 hotline telephone number permitting employees to communicate any concerns regarding business ethics, designated a Corporate Vice President as the Ethics Compliance Officer, appointed a committee of three corporate executives to monitor corporate business activities, and revised its internal audit procedures to insure that no cash is unaccounted for which might be used for the purpose of kickbacks. Jt. Stips. pp. 7-8, Appen. at pp. 28-33, 62-63. MISSCO's management undertook prompt and verifiable action to comply with the restrictions imposed on MISSCO's business dealings with the government after notices of proposed debarment. General promptly and voluntarily withdrew from the GSA contract that was tainted by the submission of a fabricated commercial price list during negotiations. Jt. Stips. p. 8. MISSCO had a code of business ethics in place when the circumstances leading to General's conviction arose. The code was amended following the initiation of debarment proceedings to specifically address the importance of truthful certifications and providing accurate information in connection with business transactions with the government. Jt. Stips. p. 8. MISSCO substantially expanded its corporate ethics compliance program and undertook extensive training in business ethics. A detailed "ethics audit" was undertaken by MISSCO, and the results of this audit were provided to the GSA. Jt. Stips. p. 8, Appen. at pp. 10-22, 28-34. General sells its products through a dealer network and not through factory direct sales. General has a dealer agreement with Interstate of Florida for the sale of its products in Florida to private and public entities. Jt. Stips. p. 9. Interstate of Florida, a division of MISSCO Corporation of Jackson, is a dealer (re-seller) of General's products. There are other dealers throughout the United States which also market and sell General's products. Interstate of Florida had gross sales of approximately $6.8 million in fiscal year 1990-91. Approximately 99 percent of those sales were to public entities. Jt. Stips. p. 9. Interstate of Florida is primarily an educational sales company which sells educational contract furnishings such as laboratory casework, auditorium seating, and folding bleachers. It has conducted business with almost every school district in Florida. The largest transactions have been conducted with the school districts of Dade and Orange Counties in Florida. The largest municipal transactions have been conducted with the City of Tallahassee. Jt. Stips. p. 10.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the Department not place the names of the Petitioners on the Florida Convicted Vendor List. DONE and ENTERED this 29th day of July, 1993, in Tallahassee, Florida. STEPHEN F. DEAN 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 29th day of July, 1993. COPIES FURNISHED: William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 Susan B. Kirkland, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 C. Graham Carothers, Esquire Ausley, McMullen, McGehee Carothers & Proctor Post Office Box 391 Tallahassee, FL 32392 Terry A. Stepp, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950
