The Issue The issue is whether Respondent properly denied payment of certain charges related to out-of-network surgical procedures pursuant to the State Employees’ PPO Group Health Insurance Plan.
Findings Of Fact At all times pertinent to this proceeding, Petitioner, who is now 29 years old, was an employee of the University of West Florida, and was enrolled as a member of the State Employees PPO Plan (Plan). She started employment with the University on December 1, 2007, and became enrolled in the Plan. Respondent was provided with the State Employees’ PPO Plan Group Health Insurance Plan Booklet and Benefits Document, effective January 1, 2007 (Plan Booklet). The Department of Management Services is responsible for all aspects of the purchase of health care for state employees, including those services provided under the Plan. Respondent is responsible for the administration of the state group insurance program. As authorized by law, Respondent has contracted with Blue Cross & Blue Shield of Florida (now known as Florida Blue) as its third-party medical claim administrator of employee health insurance benefits. The Plan Booklet contains the terms and conditions of the state group insurance program applicable to this proceeding. The booklet provides, as part of its Summary of Benefits, that: When you go to non-network providers, this Plan pays benefits based on the non-network allowance. If your provider charges more than the non-network allowance, you are responsible for any amounts above the non- network allowance. In addition, because the Plan pays a lower benefit level for non- network care, you pay more out-of-pocket for non-network care. In selecting BCBSF as the Medical Claim Administrator for the state Employees’ PPO Plan, DSGI agreed to accept the non-network allowance schedule used by BCBSF to make payment for specific healthcare services submitted by non-network providers. Keep in mind that you will receive benefits at the non-network level whenever you use non-network providers, even if a network provider is unavailable. (Emphasis added). The booklet provides, in section 6, entitled About the Provider Network, that: In an effort to contain healthcare costs and keep premiums down, BCBSF has negotiated with PPCSM network healthcare providers to provide services to health Plan participants at reduced amounts. PPCSM network providers have agreed to accept as payment a set amount for covered services . . . . Non-network providers will bill you their regular charges. You will be responsible for a larger coinsurance and/or copayment, and you will be responsible for paying the difference between the provider’s charges and the amount established as the non- network allowance for the service. The non- network allowance may be considerably less than the amount the non-network provider charges. * * * An Important Note About Using Non-Network Providers To make sure you receive the highest level of benefits from the Plan, it’s important to understand when non-network benefits are paid. When you use non-network providers, you receive non-network benefits. Here are some examples. In some situations, your network provider may use, or recommend that you receive care from, a non-network provider. For example, your network family doctor says you need to see another doctor and recommends a non-network doctor. It is your choice; you decide whether to go to the recommended non-network doctor or to ask your doctor for another recommendation to a network doctor. In this example, even though your family doctor is a network doctor, you will receive non-network benefits if you go to the recommended non- network doctor. Sometimes the health care professional you need to see is not in the network. You receive non-network benefits when you use non-network providers, even if no network provider is available. From an early age, Petitioner was plagued with symptoms of temporomandibular joint (TMJ) disorder. When she was seven or eight years old, Petitioner began to experience clicking in her jaw, and her jaw would occasionally lock. The symptoms soon abated. While she was in sixth grade, Petitioner was fitted for orthodontic braces. The braces were removed when she was 12 or 13 years old. When Petitioner was in her early teens, the clicking in her jaw reappeared. The clicking was now accompanied by pain in her jaw muscles, which was likened to that experienced from a migraine headache. Petitioner was referred to an oral surgeon regarding her jaw symptoms. The surgeon recommended a course of physical therapy for her jaw, and placed her on a diet that eliminated foods that were “chewy.” Despite those measures, Petitioner’s jaw began to periodically lock open. At the age of 16, Petitioner had her wisdom teeth removed. While that procedure resulted in a cessation of the locking, Petitioner could only open her mouth about one-quarter of the way. She was also prescribed Tylenol #3, which contained codeine, for pain. At the age of 16 or 17, Petitioner was given splints to keep her jaw in alignment. Petitioner was clenching her teeth so hard in response to the pain, that she broke several splints during the first year that she had them. By the time she was 19 years old, Petitioner’s headaches were “out of control.” She was referred to the facial pain center at the University of Florida, where she was fitted with custom-made splints. She was provided with a course of physical therapy, and was prescribed muscle relaxers. When she returned home from college for the summer, she did the recommended physical therapy, which was effective in relieving her symptoms for a few months. Petitioner was subsequently referred to Dr. Widmer, a physician at the University of Florida. Dr. Widmer performed an arthrocentesis, by which a steroid solution was injected into Petitioner’s temporomandibular joints. The procedure was ineffective. By 2006, when Petitioner was 23 years old, the opening of her mouth began to be accompanied by a “squishing” noise. Dr. Widmer referred Petitioner to Dr. Margaret Dennis. Dr. Dennis ordered an MRI of Petitioner’s jaw to determine if there was any bone damage. The MRI revealed that the bones of the temporomandibular joint were degraded, and that the disk material was calcified. Dr. Dennis increased the dosage of Petitioner’s pain medications to handle the pain associated with her condition. After a period of time, and with Petitioner having little relief from her symptoms, Dr. Dennis referred her to Dr. Mark Piper, a physician who is board-certified in oral and maxillo-facial surgery. Dr. Piper maintains his office in Tampa, Florida. Petitioner had her first appointment with Dr. Piper in August 2009. Dr. Piper ordered a level 3 MRI, which produced a clearer picture than her earlier MRI, as well as a CAT scan. He took imprints of Petitioner’s teeth, and performed a physical examination of the bones of Petitioner’s jaw. The results of the imaging and the physical exam showed severe and active degeneration of Petitioner’s temporomandibular joints, especially the right joint. To remedy Petitioner’s physical condition, Dr. Piper recommended a bilateral arthroplasty of Petitioner’s jaw, consisting of a fat graft to the right temporomandibular joint, and a procedure involving the disk tissue to the left temporomandibular joint. Given the exhaustion of more conservative forms of treatment, arthroplasty was, by this point, appropriate and medically necessary for the resolution of Petitioner’s condition. On August 25, 2009, Dr. Piper provided Petitioner with a statement summarizing his diagnosis, and providing an explanation of his recommended course of action. Petitioner provided Dr. Piper’s statement to BCBSF to explain the necessity for her proposed out-of-network treatment. The evidence suggests that Petitioner provided the CPT codes for the recommended procedures at issue. CPT codes are a system by which medical services are assigned numbers to describe those services, and are used by insurers to establish a uniform schedule of reimbursement. On a case-by-case basis, the numbers are provided by medical service providers to describe the services they have rendered. Respondent maintains a business record of all communications between it and its customers. On August 27, 2009, those records reflect that a telephonic request for information was received either from or regarding Petitioner. The notation regarding the request for information stated, in pertinent part: PRICING FOR PROC CODES 21240 AND 69990 RELATED TO TREATMENT OF TMJ NEEDED, PROV IS 62468....ALLOWANCES ARE 1168.09 AND 252.53 Petitioner acknowledged that she received the information regarding the rates, but understood the rates to be estimated amounts, and not official because the person with whom she spoke could not give final figures over the telephone. Later on August 27, 2009, Respondent’s records reflect that a second telephonic request for information was received either from or regarding Petitioner. The notation regarding the request for information stated, in pertinent part: MEMBER S REQUESTING TO SPK WITH THE VPCR [Voluntary Pre-coverage Review] AREA AS SHE WANTS PRIOR APPROVAL OF CODES 21240 AND 69990 FOR THE TREATMENT OF TMJ....I ADVISED HER OF THE PROCESS AND TO GO AHEAD AND SUBMIT THE LMN [Letter of Medical Necessity] AND SUPPORTING DOCS IF THE NON PAR PROV IS UNWILLING TO CALL OUR OFFICE..I EXPLAINED THAT THE DET WOULD BE MADE AND IF ADDTLS DOCS ARE REQD, THIS WOULD BE ADVISED ALSO, ADV MEMBER SHE CAN WITH FAX OR MAIL TO AD ON THE BACK OF INS CARD. Respondent’s records reflect no further telephonic inquiries regarding Petitioner until October 19, 2009. Petitioner scheduled her surgery with Dr. Piper for September 16, 2009. Petitioner testified that approximately one week prior to the scheduled surgery, BCBSF sent an e-mail to Petitioner providing her with the name of a network provider in Jacksonville who could perform the surgery necessary to resolve her TMJ issues. She further testified that she contacted the network provider’s office, and was advised by a Dr. Milton that the medical group could not perform the surgery. Petitioner testified that she advised BCBSF of that information, and advised BCBSF that there was no one in-network that could perform the surgery. A copy of the e-mail was not provided, nor was there evidence to otherwise corroborate the described events. Therefore, no finding can be made as to that alleged series of communications. Respondent maintains a list of network health care providers by specialty type and location. The list is available on-line. The list includes a number of oral and maxillofacial surgeons located in the Jacksonville area. However, one cannot determine from the list whether a provider is capable of performing a particular procedure under the specialty. The evidence demonstrates that Dr. Piper is an accomplished oral and maxillofacial surgeon, with particular expertise in disc removal and fat graft placement surgery for the temporomandibular joint. However, even if Dr. Piper is the surgeon most qualified to perform the procedure, that does not mean he is the surgeon singularly qualified to perform the procedure. Dr. Imray testified that he has referred patients for bilateral arthroplastic procedures on many occasions. His referrals were generally to oral and maxillofacial surgeons practicing at teaching centers in Jacksonville and Gainesville. Although he could not testify whether such surgeons were in the State Employees’ PPO network without consulting his PPO reference book, he could recall no instance of having had to refer a patient to an out-of-network provider, “because most of the teaching centers take most of the plans.” The evidence in this case failed to demonstrate that there were no network providers capable of performing the procedures medically necessary for the resolution of Petitioner’s TMJ issues. Having concluded that Dr. Piper afforded her with the greatest likelihood for a successful outcome, Petitioner proceeded with the surgery as scheduled. After a recovery period of two years, which included braces to adjust her teeth to fit her repaired and aligned temporomandibular joints, the surgery has proven to be a complete success. Petitioner testified convincingly that the surgery was a life-changing event. The total cost to Petitioner for the surgical and immediate post-operative procedures was $30,005.00. In November, 2009, Petitioner began the process of filing her claim with BCBSF. After some difficulties, the submission of the claim was completed in January, 2010. The amount billed to BCBSF was $29,976.00. The bulk of the charge, in the amount of $24,650.00, was for the procedure identified by Dr. Piper as CPT Code 21240. The documentation submitted clearly indicated -- both by the description of the CPT Code 21240 procedure as “Bilateral TMJ Arthroplasty” and by the listing of the modifier code “50”, which was the code assigned for procedures that were bilateral -- that the arthroplasty procedure was bilateral. On March 11, 2010, BCBSF notified Petitioner that it would reimburse her medical expenses related to the surgery in the amount of $1,526.57. That amount included $1,168.09 for the arthroplasty (CPT Code 21240), and $358.48 for the surgical splint (CPT Code 21085). BCBSF indicated that it would not pay the $1,650.00 charge for the operating microscope (CPT Code 69990) on the basis that the charge was incidental to the primary arthroplasty procedure, and therefore included in the $1,168.09 allowance for that procedure. BCBSF also denied payment for a ZZ Therabite (CPT Code 99070). The reimbursement amount was calculated by applying the CPT Codes provided by Dr. Piper to the BCBSF fee schedule. The amount was then further adjusted by the non-network payment allowance to reach the final reimbursable amount. The process is mechanical, and involves no exercise of discretion. In that regard, the reimbursement for the arthroplasty was identical to the estimate provided to Petitioner on August 27, 2009. The evidence demonstrates that the amounts paid to Petitioner for CPT Code 21240 procedures and the CPT Code 21085 surgical splint were accurately derived through application of the BCBSF fee schedule allowance to the procedure codes provided by Dr. Piper. However, as to the arthroplasty procedure, the evidence further demonstrates that the amount paid was based on a single procedure. The arthroplasty performed by Dr. Piper was a bilateral procedure, which was clearly disclosed on the claim form. According to Kevin Tincher, BCBSF’s senior manager of coding and professional payment, Petitioner is entitled to reimbursement for both procedures, with the reason given for not paying for both being Dr. Piper’s failure to bill each part of the bilateral procedure on separate lines of the claim form. Given the lack of any instruction requiring that the two sides of a single bilateral procedure be billed on separate lines, especially given the application of the modifier code “50” to indicate a bilateral procedure, the information provided on the claim form was neither deficient nor in error. When two procedures of the same type are performed on the same day, the BCBSF fee schedule calls for reimbursement for the second procedure at a rate of 50 percent of the allowance for the first procedure. Under that schedule, Petitioner should have been reimbursed an additional $584.05, i.e., 50 percent of the $1,168.09 allowance for the first CPT Code 21240 procedure. The evidence demonstrates that the Therabite device (CPT Code 99070) was “appropriate and acceptable” in Petitioner’s case. Thus, the device was medically necessary under the circumstances. Petitioner should have been reimbursed, at the non-network rate, for that device. During the hearing, Jessica Bonin, BCBSF’s Critical Inquiry Analyst, admitted that the post-operative CT scan -- CPT Code 70486 -- in the amount of $301.93, should have been paid, but that the claim had not been reprocessed by BCBSF. Respondent further admitted in its Proposed Recommended Order that payment in the amount of $301.93 should be made for the post-operative CT scan. It is so found. Petitioner initiated a Level I appeal with BCBSF. She provided BCBSF with as much of her medical history as she could locate, a list of medications, and all of the records, photographs, and X-rays that she could access. She also provided a letter from Dr. Piper, dated March 18, 2010, in which he detailed the services provided to Petitioner. Dr. Piper’s description suggests that the services provided to Petitioner were extensive, but did not suggest that the procedure itself varied from the procedure described in CPT Code 21240. However, Dr. Piper did reaffirm that the surgery was a bilateral procedure involving both of Petitioner’s temporomandibular joints. BCBSF did not change its decision as a result of the Level I Appeal. On May 14, 2010, Petitioner filed a Level II Appeal with Respondent. On June 16, 2010, the Level II Appeal was denied.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Management Services enter a final order finding that Petitioner is entitled to additional reimbursement for her medical expenses as set forth herein.1/ DONE AND ENTERED this 23rd day of August, 2012, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of August, 2012.
The Issue The issue in this case is whether Respondent failed to provide workers' compensation insurance coverage for employees and, if so, what penalty should be assessed.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation ("Division") is the state agency responsible for enforcing the requirement within the state that employers cover employees with workers' compensation insurance. § 440.107, Fla. Stat. (2009). Respondent, Jurgenson Trading Corporation, is owned, in part, by Julio Raudsett, and operates a "Subway" sandwich restaurant franchise in Hialeah, Florida. It is a family-owned business with a total of five employees, three of whom are related. Cesar Tolentino, an investigator for the Division, conducted a field interview of Raudsett, who admitted that he did not carry workers' compensation insurance. Tolentino checked the database in the Coverage and Compliance Automated System ("CCAS"), and there were no records showing workers' compensation coverage for the Subway employees, nor any notices of applicable exemptions. Martha Aguilar, Tolentino's supervisor authorized the issuance of a Stop-Work Order that was personally served on Raudsett by Tolentino by hand-delivery on April 17, 2009. At the same time, Tolentino served a Request for Production of Business Records for Penalty Assessment Calculation. Raudsett provided his business records, including payroll journals and unemployment tax returns. Based on Aguilar's review of the business records, the Division issued its Amended Order of Penalty Assessment ("Order") on June 8, 2009, with an assessed penalty of $19,873.79. Aguilar determined the amount of the penalty, using the following steps: (1) assigning each employee the National Council on Compensation Insurance (NCCI) class code that was applicable for restaurant workers; (2) determining how much the employee had been paid from April 2006 to April 2009 (the period of non-coverage); and (3) assigning the rate to the gross pay to calculate the insurance premium that should have been paid, then multiplying that by 1.5, as required by rule. The NCCI class codes for employees administrative staff as compared to restaurant workers are lower and, therefore, their workers' compensation insurance premiums would be lower. The business records available to Aguilar did not distinguish among employee's responsibilities. Absent that information, the penalty is, by law, calculated using the highest NCCI class code associated with that kind of business, and was correctly done in this case. Raudsett has entered into a payment plan with the Division. He objected only to that portion of the penalty that was based on his earnings, and those of his wife, Maribel Medina, who works part-time, and his father-in-law, Rolando Medina. He claims an exemption for the three of them as owners and managers of the corporation. Excluding their salaries and associated penalties, according to Joseph Cabanas, Respondent's accountant, would reduce the penalty by $10,267.67, to $9,606.12. Cabanas testified that Raudsett, an immigrant from Venezuela, was not aware of workers' compensation laws, and that was why the three owners/officers of the Respondent's corporation failed to file a Notice of Elections to be Exempt from coverage until after the Division's investigation began.
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 Financial Services, Division of Workers' Compensation, that upholds the assessment of a penalty of $19,873.79. DONE AND ENTERED this 15th day of December, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER 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 December, 2009. COPIES FURNISHED: Julie Jones, CP, FRP, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Douglas D. Dolan, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Joseph Cabanas 10520 Northwest 26 Street, Suite C-201 Doral, Florida 33172
The Issue Whether respondent's proposed rule 25-6.100(7), Florida Administrative Code, providing that electric utilities may collect municipal or county franchise fees only from customers within the municipality or county levying the fee, constitutes an invalid exercise of delegated legislative authority.
Findings Of Fact Notice of the proposed rule was published in the January 15, 1982, issue of the Florida Administrative Weekly ("FAW"). 2/ The notice set forth only the proposed amendment of the rule and did not publish the existing rule in full. At the time that the notice of proposed rulemaking was published, an economic impact statement (EIS) was made available by the Commission. 3/ A public hearing on the proposed rule was held before a member of the Commission's staff on February 4, 1982. The Cities participated in the hearing and, subsequent thereto, filed with the Commission their Motion to Dismiss or Withdraw Proposed Rules. 4/ During the pendency of the rulemaking proceeding, the Commission drafted and circulated a revised economic impact statement. The Commission's staff member circulated to the participants of the rulemaking proceeding a proposed final amendment of Rule 25-6.100 and the revised economic impact statement, requesting comments thereon. 5/ Written comments were received from various participants in the rulemaking. 6/ While the comments addressed the substance of the proposed rule, none addressed the revised economic impact statement. The Commission staff presented a written recommendation to the Commission on the proposed rule, which also included the participants' comments and the revised economic impact statement. At its regularly scheduled Agenda Conference of September 20, 1982 the Commission adopted the proposed rule recommended by its staff, as well as the revised economic impact statement. Order No. 11277 also denied the Cities' Motion to Dismiss or Withdraw Proposed Rule. 7/ Filing of the proposed rule with the Secretary of State was withheld pending a determination of validity by the Division of Administrative Hearings.
The Issue Whether Respondent committed the offenses set forth in the two-count Administrative Complaint, dated April 17, 2007, and, if so, what penalty should be imposed.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made: The Department of Business and Professional Regulation, Division of Real Estate (the "Department"), is the state agency charged with enforcing the statutory provisions pertaining to persons holding real estate broker and sales associate's licenses in Florida, pursuant to Section 20.165 and Chapters 455 and 475, Florida Statutes. At all times relevant to this proceeding, except where specifically noted, Respondent Mathew Johnson was a licensed Florida real estate sales associate, having been issued license number SL3149081. Respondent first obtained his real estate associate's license in 2003 and worked under the license of broker Jacqueline Sanderson in Orlando. When he married and his wife became pregnant, Respondent believed that he needed a more steady income than his commission-based employment with Ms. Sanderson provided. Respondent left Ms. Sanderson's employ on good terms and commenced work as the marketing manager for the downtown YMCA in Orlando. While working at the downtown YMCA, Respondent met a member of the YMCA named Tab L. Bish ("Mr. Bish"), a broker who owns First Source, Inc., an Orlando real estate sales company (sometimes referred to as "FSI Realty"). Respondent became friendly with Mr. Bish, and expressed an interest in getting back into the real estate business. Mr. Bish offered Respondent a job at First Source. Respondent had allowed his sales associate's license to lapse while he was working at the YMCA. Respondent informed Mr. Bish of that fact, and told Mr. Bish that he required a salaried position in order to support his young family. Respondent testified that Mr. Bish was happy to hire him as an office manager, because Mr. Bish wanted Respondent to perform a marketing role for First Source similar to that he had performed for the YMCA. Respondent started working at First Source in May 2005, as a salaried office manager. Mr. Bish agreed that he initially hired Respondent as an office manager, but only on the understanding that Respondent would take the necessary steps to reactivate his sales associate's license and commence selling property as soon as possible. Respondent took the licensing course again. Mr. Bish believed that Respondent was taking too long to obtain his license, and cast about for something Respondent could do during the interim. In order to make profitable use of Respondent's time, Mr. Bish began to deal in referral fees from apartment complexes. Certain complexes in the Orlando area would pay a fee to brokers who referred potential renters to the apartments, provided these potential renters actually signed leases. Among the apartment complexes offering referral fees was the Jefferson at Maitland, which in 2005 offered a referral fee of half the first month's rent. Mr. Bish placed Respondent in charge of connecting potential renters with apartment complexes, showing the apartments, following up to determine whether the potential renters signed leases, and submitting invoices for the referral fees. Mr. Bish did not authorize Respondent to collect the payments. Respondent initiated contact with the Jefferson at Maitland and began sending potential renters there. Respondent would submit invoices to the Jefferson at Maitland, payable to First Source, for each referral that resulted in a lease agreement. Respondent estimated that he submitted between 12 and 15 invoices for referral fees to the Jefferson at Maitland during his employment with First Source. Respondent obtained his license and became an active sales associate under Mr. Bish's broker's license on November 16, 2005. Mr. Bish began a process of weaning Respondent away from his salaried position and into working on a full commission basis. Respondent stopped showing apartments under the referral arrangement and began showing properties for sale. The last lease for which First Source was due a referral fee from the Jefferson at Maitland was dated December 5, 2005. In early February 2006, it occurred to Respondent that he had failed to follow up with the Jefferson at Maitland regarding the last group of potential renters to whom he had shown apartments during October and November 2005. Respondent claimed that he "hadn't had the opportunity" to follow up because of the press of his new duties as a sales associate and the intervening holiday season. However, nothing cited by Respondent explained his failure to make a simple phone call to the Jefferson at Maitland to learn whether First Source was owed any referral fees. Respondent finally made the call to the Jefferson at Maitland on February 9, 2006. He spoke to a woman he identified as Jenny Marrero, an employee whom he knew from prior dealings. Ms. Marrero reviewed Respondent's list and found three persons who had signed leases after Respondent showed them apartments: Mike Tebbutt, who signed a one-year lease on October 26, 2005, for which First Source was owed a referral fee of $532.50; Terry Ford, who signed an eight-month lease on November 14, 2005, for which First Source was owed a referral fee of $492.50; and Juan Sepulveda, who signed an eight-month lease on December 2, 2005, for which First Source was owed a referral fee of $415.00. However, there was a problem caused by Respondent's failure to submit invoices for these referral fees in a timely manner. Respondent testified that Ms. Marrero told him that the Jefferson at Maitland had reduced its referral fee from 50 percent to 20 percent of the first month's rent, effective January 2006.2 Ms. Marrero could not promise that these late invoices would be paid according to the 2005 fee structure. According to Respondent, Ms. Marrero suggested that the Jefferson at Maitland's corporate office would be more likely to pay the full amount owed if Respondent did something to "break up" the invoices, making it appear that they were being submitted by different entities. She also suggested that no invoice for a single payee exceed $1,000, because the corporate office would know that amount exceeded any possible fee under the 2006 fee structure. Ms. Marrero made no assurances that her suggestions would yield the entire amount owed for the 2005 invoices, but Respondent figured the worst that could happen would be a reduction in the billings from 50 percent to 20 percent of the first month's rent. On February 9, 2006, Respondent sent a package to the Jefferson at Maitland, via facsimile transmission. Included in the package were three separate invoices for the referral fees owed on behalf of Messrs. Tebbutt, Ford, and Sepulveda. The invoices for Messrs. Tebbutt and Sepulveda stated that they were from "Matt Johnson, FSI Realty," to the Jefferson at Maitland, and set forth the name of the lessee, the lease term, the amount of the "referral placement fee," and stated that the checks should be made payable to "FSI Realty, 1600 North Orange Avenue, Suite 6, Orlando, Florida 32804." The invoice for Mr. Ford stated that it was from "Matt Johnson" to the Jefferson at Maitland. It, too, set forth the name of the lessee, the lease term, and the amount of the referral fee. However, this invoice stated that the check should be made payable to "Matt Johnson, 5421 Halifax Drive, Orlando, Florida 32812." The Halifax Drive location is Respondent's home address. The package sent by Respondent also included an Internal Revenue Service Form W-9, Request for Taxpayer Identification Number and Certification, for Mr. Bish and for Respondent, a copy of Respondent's real estate sales associate license, a copy of Mr. Bish's real estate broker's license, and a copy of First Source, Inc.'s real estate corporation registration. Approximately one month later, in early March 2006, Mr. Bish answered the phone at his office. The caller identifying herself as "Amber" from the Jefferson at Maitland and asked for Respondent, who was on vacation. Mr. Bish asked if he could help. Amber told Mr. Bish that the W-9 form submitted for Respondent had been incorrectly filled out, and that she could not send Respondent a check without the proper information. Mr. Bish told Amber that under no circumstances should she send a check payable to Respondent. He instructed her to make the payment to First Source. Amber said nothing to Mr. Bish about a need to break up the payments or to make sure that a single remittance did not exceed $1,000. Mr. Bish asked Amber to send him copies of the documents that Respondent had submitted to the Jefferson at Maitland. Before those documents arrived, Mr. Bish received a phone call from Respondent, who explained that he submitted the invoice in his own name to ensure that Mr. Bish received the full amount owed by the Jefferson at Maitland. On March 10, 2006, after reviewing the documents he received from the Jefferson at Maitland, Mr. Bish fired Respondent. On March 29, 2006, Mr. Bish filed the complaint that commenced the Department's investigation of this matter.3 At the hearing, Mr. Bish explained that, even if Respondent's story about the need to "break up" the invoices and keep the total below $1,000 were true, the problem could have been easily resolved. Had Mr. Bish known of the situation, he would have instructed the Jefferson at Maitland to make one check payable to him personally as the broker, and a second check payable to First Source, Inc. In any event, there was in fact no problem. By a single check, dated March 15, 2008, First Source received payment from the Jefferson at Maitland in the amount of $1,440, the full sum of the three outstanding invoices from 2005. Respondent testified that he never intended to keep the money from the invoice, and that he would never have submitted it in his own name if not for the conversation with Ms. Marrero. Respondent asserted that if he had received a check, he would have signed it over to Mr. Bish. Respondent and his wife each testified that the family had no great need of $492.50 at the time the invoices were submitted. Respondent's wife is an attorney and was working full time in February 2006, and Respondent was still receiving a salary from First Source. In his capacity as office manager, Respondent had access to the company credit card to purchase supplies. Mr. Bish conducted an internal audit that revealed no suspicious charges. Respondent failed to explain why he did not immediately tell Mr. Bish about the potential fee collection problem as soon as he learned about it from Ms. Marrero, why he instructed the Jefferson at Maitland to send the check to his home address rather than his work address, or why he allowed a month to pass before telling Mr. Bish about the invoices. He denied knowing that Mr. Bish had already learned about the situation from the Jefferson at Maitland's employee. The Department failed to demonstrate that Respondent intended to keep the $492.50 from the invoice made payable to Respondent personally. The facts of the case could lead to the ultimate finding that Respondent was engaged in a scheme to defraud First Source of its referral fee. However, the same facts also may be explained by Respondent's fear that Mr. Bish would learn of his neglect in sending the invoices, and that this neglect could result in a severe reduction of First Source's referral fees. Respondent may have decided to keep quiet about the matter in the hope that the Jefferson at Maitland would ultimately pay the invoices in full, at which time Respondent would explain himself to Mr. Bish with an "all's well that ends well" sigh of relief. Given the testimony at the hearing concerning Respondent's character and reputation for honesty, given that Respondent contemporaneously told the same story to his wife and to Ms. Sanderson that he told to this tribunal, and given that this incident appears anomalous in Respondent's professional dealings, the latter explanation is at least as plausible as the former. Respondent conceded that, as a sales associate, he was not authorized by law to direct the Jefferson at Maitland to make the referral fee check payable to him without the express written authorization of his broker, Mr. Bish. Respondent also conceded that Mr. Bish did not give him written authorization to accept the referral fee payment in his own name. Respondent has not been subject to prior discipline.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order: Dismissing Count I of the Administrative Complaint against Respondent; and Suspending Respondent's sales associate's license for a period of one year for the violation established in Count II of the Administrative Complaint. DONE AND ENTERED this 21st day of September, 2007, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 21st day of September, 2007.
The Issue The issue is whether this case should be dismissed based on Petitioner's failure to appear at the scheduled final hearing.
Findings Of Fact Upon receipt of the Petition for Relief at DOAH, an Initial Order was issued on October 8, 2010, requiring Petitioner to coordinate a joint response to provide certain information within seven days or to file a unilateral response, if a joint response was not possible. Petitioner did not respond to the Initial Order. On October 15, 2010, Respondent submitted a unilateral response indicating that Petitioner had not contacted Respondent to coordinate a response. The undersigned issued a Notice of Hearing on November 5, 2010, scheduling the final hearing for December 8, 2010, at the Martin Luther King, Jr., Administrative Center in Naples, Florida. The notice included citations to the procedural statutes and rules governing the hearing and information about the parties' obligation to appear at the hearing with their witnesses and evidence. With the Notice of Hearing, the undersigned issued an Order of Pre-hearing Instructions, which required the parties to exchange witness lists and copies of their proposed exhibits at least seven days before the final hearing and to file their witness lists with DOAH. The Order warned that failure to comply with these requirements "may result in the exclusion at the final hearing of witnesses or exhibits not previously disclosed." The foregoing Orders and notice were mailed to Petitioner at his address of record in New York, New York, and none of these envelopes was returned as undeliverable. Petitioner resides in New York, but as specified in the FCHR Determination of No Cause, Petitioner is a frequent visitor to Naples, Florida, where his mother lives in a condominium she owns at Park Shore Landings. Indeed, it was Petitioner's rental of a unit at Park Shore Landings, on multiple occasions spanning multiple weeks that gave rise to Petitioner's complaint filed with FCHR. On November 23, 2010, Respondent filed a Motion for Continuance because of difficulties coordinating Petitioner's deposition to accommodate Petitioner's holiday travel plans and scheduling conflicts. A continuance was granted for good cause shown, and the final hearing was rescheduled for February 15, 2011, at 9:00 a.m., in Naples, at a location to be determined at a later date. The Order stated that the previous Order of Pre-hearing Instructions remained in full force and effect. An Amended Notice of Hearing was issued on December 9, 2010, to specify the hearing location: Martin Luther King, Jr., Administrative Center, 5775 Osceola Trail, Naples, Florida. This notice repeated the hearing date (February 15, 2011) and time (9:00 a.m.). The notice also reiterated that the parties were required to appear at the time and place of the hearing with their witnesses and evidence and that failure to appear may result in dismissal. The notice listed the name, address, and telephone number for the hearing room contact person at the hearing site. The notice was mailed to Petitioner at his address of record and was not returned undeliverable. On December 15, 2010, Respondent filed a notice of taking Petitioner's deposition in Naples on December 22, 2010, at a court reporter's office near the scheduled location for the final hearing. On February 2, 2011, the undersigned issued another Amended Notice of Hearing to advise that any party desiring a court reporter had to make arrangements at the party's own expense, with notice to the other party and to the undersigned. This notice repeated the final hearing date (February 15, 2011), time (9:00 a.m.), and location (Martin Luther King, Jr., Administrative Center, 5775 Osceola Trail, Naples). The notice also repeated the name, address, and telephone number for the hearing room confirmation contact person. Like all previous notices of hearing, the notice reiterated that parties were required to appear at the time and place of the hearing with their witnesses and evidence and that "[f]ailure to appear at this hearing may be grounds for entry of an order of dismissal." On February 8, 2011, in accordance with the Order of Pre-Hearing Instructions, Respondent filed its witness list, with names and addresses for five witnesses and a certification that Respondent's exhibits had been provided to Petitioner. No witness list was filed by Petitioner. On February 10, 2011, Respondent gave notice to the undersigned and to Petitioner that Respondent had retained a court reporter to record the February 15, 2011, final hearing. The undersigned traveled from Tallahassee to Naples on Monday, February 14, 2011, and stayed overnight at a hotel in Naples, in order to convene the hearing scheduled for 9:00 a.m., the next morning. On February 15, 2011, the undersigned arrived at the noticed hearing location at approximately 8:30 a.m. Counsel for Respondent (from Tampa) and four of Respondent's witnesses were already present. Arriving at the same time as the undersigned was Respondent's fifth witness and the court reporter. At 9:00 a.m., the undersigned went on the record to convene the scheduled hearing to allow counsel for Respondent to enter his appearance for the record and to announce that Petitioner had not appeared or contacted anyone to explain his absence. The undersigned then recessed the hearing for 20 minutes in case Petitioner was running late. At 9:12 a.m. (as time-recorded by the undersigned's mobile phone), the undersigned called her assistant at DOAH to determine whether Petitioner had called DOAH or submitted anything in writing that would explain his failure to appear for the scheduled hearing. The undersigned's assistant stated that no calls or filings had been received and that she would call the undersigned on her mobile phone immediately, if Petitioner contacted her. Meanwhile, to make sure that Petitioner was not on the premises unable to find the hearing room, one of Respondent's representatives checked at the front desk, where anyone entering the building would have to check in and go through the security procedures, and verified that Petitioner had not arrived. Shortly after 9:20 a.m., the undersigned went back on the record to state that Petitioner had still not appeared, nor had Petitioner contacted DOAH or someone at the hearing site. The undersigned recited the steps taken to verify the absence of contact by Petitioner; reviewed the file, noting the multiple notices and Orders mailed to Petitioner; and confirmed Petitioner's address of record to which the notices and Orders were mailed and not returned as undeliverable. Respondent represented that Petitioner did not show up for the first deposition scheduled in coordination with Petitioner's calendar, but that Petitioner did appear the second time his deposition was set. Respondent also represented that Petitioner did not provide Respondent with a witness list or copies of any proposed exhibits. Respondent had no other information about Petitioner's whereabouts or intentions. Based on Petitioner's failure to appear and present a prima facie case to meet his burden of proof, the convened hearing was adjourned shortly before 9:30 a.m. Those present took some time to pack up computers and files and move furniture to restore the room to its prior configuration. Thus, it was after 9:30 a.m., when the undersigned exited the building, after checking again at the front desk to verify there was still no sign of, or word from, Petitioner. The undersigned drove to a hotel located eight minutes from the hearing site. Upon arrival, the undersigned's mobile phone rang, but could not be answered before the call went to voice mail. A voice mail message was left by the undersigned's assistant, time-recorded at 9:51 a.m. The message was that the undersigned's assistant had just spoken with Mr. Ziolkowski, who had called to say that he was at the hearing site, but no one was there. Petitioner told the assistant that he had been at the emergency room until an hour earlier (i.e., until 8:45 a.m.), and he went straight to the hearing site. The undersigned's assistant asked Petitioner why he had not called sooner, and his only response was that he did not have his mobile phone; but when asked how he was calling her then, he said he was calling from his mobile phone, and he gave the assistant his mobile phone number, which had not been provided previously. Petitioner then asked the undersigned's assistant about rescheduling the hearing. She explained that she had no authority to address his request; if Petitioner wanted the undersigned to consider a request for relief, it had to be submitted in writing and should provide any explanation and documentation he had as to why he could not be at the hearing and why he could not call. A memorandum from Mr. Ziolkowski was filed at DOAH by fax on February 16, 2011, at 2:40 p.m. The one-page memorandum, with no attachments and no certificate of service indicating service on Respondent, stated in pertinent part: Please accept my apologies for not being able to communicate with you yesterday regarding my delayed appearance to your courtroom. I was in the emergency room at Naples Community Hospital until 8:11 am Tuesday (2/15/11). I went straight from the hospital to the Administrative center and I didn't have my mobile phone or directions to the Administrative center and finally I reached the Administrative center at approximately 9:30 a.m. Petitioner ended the memorandum with a request to reschedule the final hearing. Copied onto the bottom of the page was a small label, perhaps a hospital-issued identification bracelet bearing Petitioner's name and date of birth, a reference number and several other numbers, "NCH 02/15/11," and a bar code. The undersigned issued a Notice of Ex-Parte Communication with the memorandum attached, which was mailed to both parties. On February 28, 2011, Respondent filed its Objection to Petitioner's Request for Re-Hearing. Respondent's objection asserted that the documentation offered by Petitioner was insufficient to prove that Petitioner was at Naples Community Hospital until 8:11 a.m. on February 15, 2011, because the identification label only showed a date, February 15, 2011, which could be as early as 12:01 a.m., or as late as many hours after the scheduled hearing. Petitioner chose not to provide the documentation that he apparently had to show the precise time that he left the emergency room--8:11 a.m. (more than 30 minutes earlier than he told the undersigned's assistant on the telephone). Such documentation would also likely reveal such information as the time of day or night when Petitioner was clocked in at the emergency room; why Petitioner presented at the emergency room; what, if anything, was wrong with Petitioner; and whether he received any treatment or whether treatment was deemed unnecessary. Respondent's objection went on to note that even assuming the accuracy of Petitioner's stated departure time of 8:11 a.m., from Naples Community Hospital, that hospital has only two campuses, "one of which is six minutes and the other is fifteen minutes away from the location of the hearing." Respondent's objection concluded, "At bottom, Petitioner was not in the emergency room at the time of the hearing, had ample time to attend the hearing, and has provided no evidence to support his request to re-schedule the duly-noticed February 15, 2011 hearing."
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, John Ziolkowski's, Petition for Relief. DONE AND ENTERED this 8th day of March, 2011, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of March, 2011.
Findings Of Fact Respondent is licensed by Petitioner to operate its business at 13 S. E. Sixth Street, Fort Lauderdale, Florida. Although Respondent has attempted to qualify to operate a branch office, Petitioner has neither approved nor licensed Respondent to operate a place of business other than at the aforestated address. The 1979-80 edition of the Yellow Pages telephone directory published by Southern Bell Telephone and Telegraph Company for the Hollywood, Florida, area carried a listing for Checkmate lnternational Detective Agency, which listing recites 9481 S. W. 49th Street, Cooper City, Florida, as the Respondent's address, and 434-1926 as the Respondent's telephone number. The listing does not include the address at which Respondent is licensed. The identical advertisement appears in the 1980-81 Yellow Pages directory published by Southern Bell Telephone and Telegraph Company for the Hollywood, Florida, area. The address in Cooper City listed as the business address for Checkmate International Detective Agency is the home of Mr. Mutnich and his employee, Cyndee Heyl. Although Mr. Mutnich insists he did nothing to cause the erroneous listing and even spoke to some unidentified person at some unidentified time regarding the error, he presented no evidence to show any specific efforts on behalf of Respondent to correct the erroneous listing or to prevent the advertised telephone number from being provided to callers by Directory Assistance or to disconnect the telephone number after the listing first appeared. Additionally, no evidence was presented to show efforts made to either delete the advertisement from the following year's directory or to change or disconnect the telephone number. Respondent has further failed to present any testimony or documentation showing any definitive action to prevent this same "erroneous" listing from appearing in any editions of the telephone directory to be printed in the future. In accordance with Petitioner's policy, the fine assessed against the Respondent in the amount of $100 is the amount normally levied by the Division for a first offense.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED THAT: A final order be entered requiring Respondent to pay to the Petitioner the amount of $100 by a date certain. RECOMMENDED this 26th day of June, 1980, in Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: W. J. Gladwin, Jr., Esquire Assistant General Counsel Department of State The Capitol Tallahassee, Florida 32301 Mr. Steven T. Barnes, Chief Bureau of License Issuance Department of State The Capitol Tallahassee, Florida 32301 Mr. Thomas Mutnich Checkmate International 13 South East Sixth Street Fort Lauderdale, Florida The Honorable George Firestone Secretary of State The Capitol Tallahassee, Florida 32301
The Issue The issues are whether Respondent has made unauthorized payments to Superior Insurance Group, its corporate parent, and whether Respondent has properly disclosed these payments on its financial reports filed with Petitioner.
Findings Of Fact Respondent is a domestic stock insurance company operating under a certificate of authority to transact in Florida the business of property and casualty insurance. As a nonstandard automobile insurer, Respondent primarily deals with policyholders whose driving records and accident histories preclude their coverage by standard automobile insurers. Superior Insurance Group, Inc. (formerly GGS Management, Inc. (GGS)) owns Respondent; Symons International Group, Inc. (Symons) owns Superior Insurance Group, Inc. (Superior Group); and Goran Capital, Inc. (Goran) owns 73 percent of Symons. Although publicly traded, Goran was founded, and probably is still controlled, by the Symons family. Superior Group serves as Respondent’s managing general agent. GGS changed its name to Superior Group in early 2000; where appropriate, this Recommended Order refers to this entity as GGS/Superior Group. Respondent owns Superior American Insurance Company (Superior American) and Superior Guaranty Insurance Company (Superior Guaranty), which are both domestic stock insurance companies authorized to conduct in Florida the business of property and casualty insurance. Also engaged in the nonstandard automobile insurance business, Superior American and Superior Guaranty transfer all of their premiums and losses to Respondent under a reinsurance agreement. All financial information concerning Superior American and Superior Guaranty, which, for the purpose of this case, are mere conduits to Respondent, are included in the financial information of Respondent. On or about April 30, 1996, GGS acquired the stock of Respondent, as well as other assets, from an unrelated corporation, Fortis, Inc. or one of its subsidiaries. From the regulatory perspective, the acquisition started when, as required by law, on or about February 5, 1996, GGS filed with Petitioner a Form A application for Petitioner’s approval of the acquisition of Respondent. This was an extensive document, consisting of more than 1000 pages. One of the purposes of the application process, as described in Section 628.461, Florida Statutes, is to assure the adequacy of the funds used by the entity acquiring the insurer. The proposed acquisition is described by the Statement Regarding the Acquisition of More Than Five Percent of the Outstanding Voting Securities of Superior Insurance Company . . . by GGS Management, Inc., dated February 5, 1996 (Acquisition Statement). The Acquisition Statement states that GGS Management Holdings, Inc. owned GGS. (The distinction between GGS and GGS Management Holdings, Inc. is irrelevant to this case, so “GGS,” as used in this Recommended Order, shall also refer to GGS Management Holdings, Inc.) According to the Acquisition Statement, Symons owned 52 percent of GGS; GS Capital Partners II, L.P., owned 30 percent of GGS; GS Capital Partners II Offshore, L.P., owned 12 percent of GGS; and three mutual funds (probably all affiliates of Goldman Sachs) owned the remaining 6 percent of GGS. GS Capital Partners II, L.P., was owned by 100 investors, including The Goldman Sachs Group, L.P. (16.54 percent), “wealthy individuals and trusts, corporate pension funds, foundations and endowments, family trusts/corporations and one state pension fund.” The ownership of GS Capital Partners II Offshore, L.P., resembled the ownership of GS Capital Partners II, L.P. The Acquisition Statement states that GGS “will be the manager of all insurance operations for [Respondent] and will act as the holding company for [Respondent] and [an Indiana nonstandard automobile insurer known as Pafco whose stock Symons was contributing to GGS].” The Acquisition Statement projects the stock-purchase price, which was expressed as a formula, to be about $60 million. Citing the $2 billion in capital of the two Goldman Sachs limited partnerships and the $50 million in capital of Goran, the Acquisition Statement assures that “GGS has tremendous wherewithal to fund the growth needs of [Respondent] . . ..” Alluding to Goran’s 20 years’ experience in managing nonstandard automobile insurance companies, the Acquisition Statement represents that the Goldman Sachs limited partnerships and Goran “possess the capital and leadership resources to support the proposed activities of [Respondent].” According to the Acquisition Statement, the Goldman Sachs limited partnerships and Goran “anticipate that the acquisition of [Respondent] is but the first step in an effort to build a significant non-standard auto insurance company.” The Acquisition Statement describes the respective contributions of the two owners of GGS: Symons will contribute Pafco, which then had a current GAAP book value of $14 million, and the Goldman Sachs limited partnerships will contribute $20 million in cash. With the backing of Symons and the Goldman Sachs limited partnerships and secured by all of the stock of Respondent and GGS, GGS will execute a six-year promissory note with The Chase Manhattan Bank (Chase) for $44 million. Drawing $40 million from this credit extension and using the $20 million cash contribution of the Goldman Sachs limited partnerships, GGS will fund the anticipated cash purchase price of $60 million. The Acquisition Statement represents that GGS will be able to service the debt. Due to the cash contribution of the Goldman Sachs limited partnerships, the Chase debt represents only two-thirds of the purchase price. Due to the cash contribution of the Goldman Sachs limited partnerships and the stock contribution by Symons, the Chase debt represents only about one-half of the initial capital of GGS. The Acquisition Statement states that GGS will service the Chase debt in part by “the combination of the management activities of both Pafco and [Respondent] within GGS, billing fees, other non-insurance company activities and anticipated insurance company operating economies which will result from the combination of these two operations [Pafco and Respondent].” The equity contributions of cash and stock “contribute significantly to the financial stability of GGS, allowing GGS to service the debt using operating cash flows only, including, if necessary, normal dividends from earned surplus as a secondary source of debt service funds. GGS does not anticipate using dividends from either Pafco or [Respondent] as a primary source of debt service funds.” The Chase Credit Agreement, which is dated April 30, 1996, requires GGS to use its best efforts to cause Respondent to pay "cash dividends or other distributions or payments in cash including . . . the payment of Billing Fees and Management Fees" in sufficient amounts to pay all principal and interest due under the financing instrument. The Chase Credit Agreement defines "Billing Fees" as: "fees with respect to the payment of premiums on an installment basis that are received by an Insurance Subsidiary from policyholders and in turn paid to [GGS] or received directly by [GGS] . . .." The Chase Credit Agreement defines "Management Fees" as: "all fees paid by an Insurance Subsidiary to [GGS] that are calculated on the basis of gross written premiums." With respect to the "Management Fees" described in the Chase Credit Agreement, the Acquisition Statement describes a five-year management agreement to be entered into by GGS with Pafco and Respondent (Management Agreement). The Management Agreement, which GGS and Respondent executed on April 30, 1996, provides that GGS “will provide management services to both Pafco and [Respondent] and will receive from [Respondent] as compensation 17% of [Respondent’s] gross written premium” and a slightly lower percentage of premiums from Pafco (Management Fee). Under the Management Agreement, Respondent “will continue to pay premium taxes, boards and bureaus costs, legal and audit fees and certain computer costs.” The Acquisition Statement states that Respondent’s “operating costs" were about 21%, so the 17% cap “will allow [Respondent] to see a significant and immediate improvement in its overall financial performance”-- over $1 million in 1994, which was the last year for which financial information was then available. The Management Agreement gives GGS the exclusive right and nondelegable and nonassignable obligation to perform a broad range of business actions on Respondent’s behalf. These actions include accepting contracts, issuing policies, appointing adjustors, and adjusting claims. The Management Agreement requires GGS to "pay [Respondent’s] office rent and occupancy operating expenses from the amounts that it receives pursuant to this Agreement.” In return, the Management Agreement requires Respondent to pay GGS “fees for the business placed with [Respondent as follows:] Agents commission plus 17% not to exceed 32% in total.” The scope of the services undertaken by GGS in the Management Agreement is similarly described in the Plan of Operation, which GGS filed with Petitioner as part of the application. The Plan of Operation provides that, in exchange for the 17 percent “management commission,” GGS assumes the responsibility for all aspects of the operating expenses of the book including underwriting, claims handling and administration. The only expenses which remain the responsibility of [Respondent] directly are those expenses directly related to the insurance book, such as premium taxes, boards and bureaus, license fees, guaranty fund assessments and miscellaneous expenses such as legal and audit expenses and certain computer costs associated directly with [Respondent]. In response to a request for additional information, Goran’s general counsel, by letter dated March 13, 1996, to Petitioner’s application coordinator, added another document, Document 26. The new document was a pro forma financial projection for 1996-2002 (Proforma) showing the sources of funds for GGS to service the Chase debt. The seven-year Proforma contains only two significant sources of income for GGS: “management fee income” and “finance & service fee income" (Finance and Service Fees). By year, starting with 1996, these respective figures are $28.6 million and $7.0 million, $34.2 million and $8.6 million, $38.1 million and $9.9 million, $42.6 million and $11.0 million, $47.5 million and $12.3 million, $53.0 million and $13.7 million, and $59.3 million and $15.3 million. Accounting for the principal and interest payments over the six-year repayment term of the Chase Credit Agreement, the Proforma shows ending cash balances, during each of the covered years, culminating in a final cash balance, in 2002, of $43.9 million. By letter dated March 29, 1996, Goran’s general counsel informed Petitioner that an increase in Respondent’s book value had triggered an increase in the purchase price from $60 million to $66 million. Also, the book value of Pafco had increased from $14 million to $15.3 million, and the cash required of the Goldman Sachs limited partnerships had increased from $20 million to $21.2 million. Additionally, the letter states that Chase had increased its commitment from $44 million to $48 million. A revised Document 26 accompanied the March 29 letter and showed the same income projections. Reflecting increased debt-service projections, the revised Proforma projected lower cash balances, culminating with $39.8 million in 2002. During a meeting in March 1996, Mr. Alan Symons, president and chief executive officer of Goran and a director of Superior Group and Respondent, met with three of Petitioner's representatives, including Mary Mostoller, Petitioner's employee primarily responsible for the substantive examination of the GGS application. During that meeting, Mr. Symons informed Petitioner that GGS would receive Finance and Service Fees from Respondent's policyholders who paid their premiums by installments. Ms. Mostoller did not testify, and the sole representative of Petitioner who attended the meeting and testified candidly admitted that he could not recall whether they discussed this matter. In response to another request for additional information, Respondent’s present counsel, by letter dated April 12, 1996, informed Petitioner that the “finance and service fee income” line of the Proforma “is composed primarily of billing fees assessed to policyholders that choose to make payments on a monthly basis,” using the same rate that Respondent had long used. The letter explains that the projected increase in these fees is attributable solely to a projected increase in business and not to a projected increase in the rate historically charged policyholders for this service. In an internal memorandum dated April 18, 1996, Ms. Mostoller noted that GGS would pay the Chase Credit Agreement through a “combination of the management fees and other billing fees of both Pafco and [Respondent].” Later in the April 18 memorandum, though, Ms. Mostoller suggested, among other things, that Petitioner condition its approval of the acquisition on the right of Petitioner to reevaluate annually the reasonableness of the “management fee and agent’s commission”--omitting any mention of the "other billing fees." On April 30, 1996, Petitioner entered a Consent Order Approving Acquisition of Stock Pursuant to Section 628.461, Florida Statutes (Consent Order). Incorporating all of Ms. Mostoller's recommendations, the Consent Order is signed by Respondent and GGS, which "agree to and consent to all of the above cited terms and conditions . . .." The Consent Order does not incorporate by reference the application and related documents, nor does the Consent Order contain an integration clause, which, if present, would merge all prior written and unwritten agreements into the Consent Order so as to preclude the implementation of such agreements in conjunction with the Consent Order. Among other things, the Consent Order mandates the following: [Respondent] shall give advance notice to [Petitioner] of any proposed changes in the [Management Agreement] and shall receive written approval from [Petitioner] prior to implementing those changes. In addition, for a period of three (3) years, [Petitioner] shall reevaluate at the end of each calendar year the reasonableness of the fees as reflected on Addendum A of the [Management] Agreement[.] Furthermore, [Petitioner] may at its sole discretion, and after consideration of the performance and operating percentages of [Respondent] and any other pertinent data, require [Respondent] to make adjustments in the [M]anagement [F]ee and agent's commission. GGS . . . shall file each year an audited financial statement with [Petitioner] . . .. In addition to the above, for a period of 4 years from the date of execution of this Consent Order . . .: [Respondent] shall not pay or authorize any stockholder dividends to shareholders without prior written approval of [Petitioner]. Any direct or indirect contracts, agreements or transactions of any type or nature including but not limited to the sale or exchange of assets among or between [Respondent] and any member of the Goran . . . holding company system shall receive prior written approval of [Petitioner]. That failure to adhere to one or more of the above terms and conditions shall result WITHOUT FURTHER PROCEEDINGS in the Treasurer and Insurance Commissioner DENYING the above acquisition, or the REVOCATION of the insurers' certification of authority if such failure to adhere occurs after the issuance of the Consent Order approving the above acquisition. The Consent Order addresses the Management Fees and the commissions payable to the independent agents who sell Respondent's insurance policies. However, the Consent Order omits any explicit mention of the Finance and Service Fees, even though GGS and Respondent had clearly and unambiguously disclosed these fees to Petitioner on several occasions prior to the issuance of the Consent Order. On its face, the Consent Order requires prior approval for the payment of Finance and Service Fees, which arise due to a contract or agreement between Respondent and GGS/Superior Group. The Consent Order prohibits "direct or indirect contracts, agreements or transactions of any type or nature including . . . the sale or exchange of assets among or between [Respondent] and any member of the Goran . . . holding company system," without Petitioner's prior written approval. The exact nature of these Finance and Service Fees facilitates the determination of their proper treatment under the Consent Order and the facts of this case. Ostensibly, the Finance and Service Fees pertain to items not covered by the Management Fees, which cover a wide range of items. In fact, the Finance and Service Fees arise only when a policyholder elects to pay his premium in installments; if no policyholder were to pay his premium by installments, no Finance and Service Fees would be due. The testimony in the record suggests that the Finance and Service Fees pertain to services that necessarily must be performed when policyholders pay their premiums by installments. This suggestion is true, as far as it goes. Installment payments require an insurer to incur administrative and information-management costs in billing and collecting installment payments. Other costs arise if late installment payments necessitate the cancellations and if reinstatements follow cancellations. Installment-payment transactions are undeniably more expensive to the insurer than single-payment transactions. The record as to these installment-payment costs, which are more in the nature of a service charge, is well- developed. However, the Finance and Service Fees also pertain to the cost of the loss of the use of money when policyholders pay their premiums by installments. Installment-payment transactions cause the insurer to lose the use of the deferred portion of the premium for the period of the deferral. The record as to these costs, which are more in the nature of a finance charge or interest, is relatively undeveloped. At the hearing, Mr. Symons testified that an insurer does not lose the use of the deferred portion of the premium for an established book of business. Mr. Symons illustrated his point by analyzing over a twelve-month period the development of a hypothetical book of business consisting of twelve insureds. If an insurer added its first insured in the first month, added a second in the third, and so forth, until it added its twelfth insured in the twelfth month, and each insured chose to pay a hypothetical $120 annual premium in twelve installments of $10 each, the cash flow in the twelfth and each succeeding month (assuming no changes in the number of insureds) would be $120-- the same that it would have been if each of the insureds chose to pay his premium in full, rather than by installment. Thus, Mr. Symons' point was that, after the first eleven months, installment payments do not result in the loss of the use of money by the insurer. Mr. Symons' illustration assumes a constant book of business after the twelfth month. However, while the insurer is adding installment-paying insureds, the insurer loses the use of the portion of the first-year premium that is deferred, as is evident in the first eleven months of Mr. Symons' illustration. Also, if the constant book of business is due to a constant replacement of nonrenewing insureds with new insureds--a distinct possibility in the nonstandard automobile market--then the insurer will again suffer the loss of the use of money over the first eleven months. Either way, Mr. Symons' illustration does not eliminate the insurer's loss of the use of money when its insureds pay by installments; the illustration only demonstrates that the extent of the loss of the use of the money may not be as great as one would casually assume. The Finance and Service Fee is sufficiently broad to encompass all of the terms used in this record to describe it: "installment fee," "billing fee," "service charge," "premium fee," and even "premium finance fee." However, only "installment fee" is sufficiently broad as to capture both types of costs covered by the Finance and Service Fee. The dual components of the Finance and Service Fee are suggested by the statute authorizing its imposition. Section 627.902, Florida Statutes, authorizes an insurer or affiliate of the insurer to "finance" premiums at the "service charge or rate of interest" specified in Section 627.901, Florida Statutes, without qualifying as a premium finance company under Chapter 627, Part XV, Florida Statutes. If the insurer or affiliate exceeds these maximum impositions, then it must qualify as a premium finance company. The "service charge or rate of interest" authorized in Section 627.901, Florida Statutes, is either $1 per installment (subject to limitations irrelevant to this case) or 18 percent simple interest on the unpaid balance. The charge per installment, which is imposed without regard to the amount deferred, suggests a service charge, and the interest charge, which is imposed without regard to the number of installments, suggests a finance charge. The determination of the proper treatment of the Finance and Service Fees under the Consent Order is also facilitated by consideration of the process by which these fees were transferred to GGS/Superior Group. As anticipated by the parties, after the acquisition of Respondent by GGS, Respondent retained no employees, and GGS/Superior Group employees performed all of the services required by Respondent. The process by which Respondent transferred the Finance and Service Fees to GGS/Superior Group began with Respondent issuing a single invoice to the policyholder showing the premium and the Finance and Service Fee, if the policyholder elected to pay by installments. As Mr. Symons testified, Respondent calculated the Finance and Service Fee on the basis of the 1.5 percent per month on the unpaid balance, rather than the specified fee per installment. The installment-paying policyholder then wrote a check for the invoiced amount, payable to Respondent, and mailed it to Respondent at the address shown on the invoice. Employees of GGS/Superior Group collected the checks and deposited them in Respondent's bank account. From these funds, the employees of GGS/Superior Group then paid the commissions to the independent agents, the Management Fee (calculated without regard to the Finance and Service Fee) to GGS/Superior Group, and the Finance and Service Fee to GGS/Superior Group. Respondent retained the remainder. Finance and Service Fees can be considerable in the nonstandard automobile insurance business. Many policyholders in this market lack the financial ability to pay premiums in total when due, so they commonly pay their premiums in installments. At the time of the 1996 acquisition, for instance, about 90 percent of Respondent's policyholders paid their premiums by installments. For 1996, on gross premiums of $156.4 million, Respondent earned net income (after taxes) of $1.978 million, as compared to gross premiums of $97.6 million and net income of $5.177 million in 1995. At the end of 1996, Respondent's surplus was $57.1 million, as compared to $49.3 million at the end of the prior year. "Surplus" or "policyholder surplus" for insurance companies is like net worth for other corporations. In 1996, Respondent received $2.154 million in Finance and Service Fees, as compared to $1.987 million in the prior year. However, Respondent did not pay any Finance and Service Fees to GGS in 1996. For related-party transactions in 1996, Respondent's financial statements disclose the payment of $155,500 to GGS and Fortis for "management fees," assumed reinsurance premiums and losses, and a capital contribution of $5.558 million from GGS, of which $4.8 million was in the form of a note. These related-party disclosures for 1996 were adequate. In August 1997, Symons bought out Goldman Sachs' interest in GGS for $61 million. Following the 1996 acquisition, Goldman Sachs had invested another $3-4 million, but, with a total investment of about $25 million, Goldman Sachs enjoyed a handsome return in a little over one year. Mr. Symons attributed the relatively high price to then-current valuations, which were 100 percent of annual gross premiums. More colorfully, Mr. Symons' brother, also a principal in the Goran family of corporations, attributed the purchase price to Goldman Sachs' "greed. " At the same time that Symons bought out Goldman Sachs, Symons enabled GGS to retire the Chase acquisition debt. The elimination of Goldman Sachs and Chase may be related by more than the need for $61 million to buy out Goldman Sachs. The 1996 Annual Statement that Respondent filed with Petitioner reports "total adjusted capital" of $57.1 million and "authorized control level risk-based capital" of $20.7 million, for a ratio of less than 3:1. Section 8.10 of the Chase Credit Agreement states that GGS "will not, on any date, permit the Risk Based Capital Ratio . . . of [Respondent] to be less than 3 to 1." Section 1 of the Chase Credit Agreement defines the ”Risk-Based Capital Ratio" as the ratio of Respondent's "Total Adjusted Capital" to its "Authorized Control Level Risk-Based Capital." In August 1997, Symons raised $135 million in a public offering of securities that probably more closely resemble debt than equity. After paying $61 million to Goldman Sachs and the $45-48 million then due Chase under the Credit Agreement (due to additional advances), Symons applied the remaining loan proceeds to various affiliates, as additional capital contributions, and possibly itself, for cash-flow purposes. The $135 million debt instrument, which remains in place, requires payments over a 30- year term, provides for no repayment of principal until the end of the term, and allows for the deferral of the semi-annual dividend/interest payments for up to five years. Symons exercised its right to defer dividend/interest payments for an undetermined period of time in 2000. The payments that are the subject of this case took place from 1997 through 1999. During this period, on a gross basis, Respondent paid GGS $35.2 million in Finance and Service Fees. In fact, $1.395 million paid in 1999 were not Finance and Service Fees, but were SR-22 policy fees, which presumably are charges attributable to the preparation and issuance by GGS of certificates of financial responsibility. Because Respondent's financial statements did not separate any SR-22 fees from Finance and Service Fees for 1997 or 1998, it is impossible to identify what, if any, portion of the Finance and Service Fees in those years were actually SR-22 fees. Even though SR-22 fees represent a service charge without an interest component, they are included in Finance and Service Fees for purposes of this Recommended Order. For 1997, on gross premiums of $188.3 million, Respondent earned net income of $379,000. For 1998, on gross premiums of $179.8 million, Respondent suffered a net loss of $8.122 million. For 1999, on gross premiums of $170.5 million, Respondent suffered a net loss of $19.232 million. Respondent's surplus decreased from $65.1 million at the end of 1997, to $57.6 million at the end of 1998, to $34.2 million at the end of 1999. In its Quarterly Statement filed as of September 30, 2000, Respondent disclosed, for the first nine months of 2000, a net loss of $5.89 million and a decline in surplus to $24.0 million. By the end of 2000, Respondent's surplus decreased to $21.6 million. However, at all times, Respondent's surplus exceeded the statutory minimum. For 1999, for example, Respondent's surplus of $34.2 million doubled the statutory minimum. Respondent also satisfied the statutory premium-to-surplus ratio, although possibly not the statutory risk-based capital ratio. As of the final hearing, Petitioner had required Respondent to file a risk-based capital plan, Respondent had done so, Petitioner had required amendments to the plan, Respondent had declined to adopt the amendments, and Petitioner had not yet taken further action. From 1997-1999, Respondent's annual statements, quarterly statements, and financial statements inadequately disclosed the payments that Respondent made to GGS. The annual statements disclose "Service Fee on Ceded Business," which is a write-in item described in language chosen by Respondent. Petitioner's contention that this item appears to be a reinsurance transaction in which Respondent is ceding risk and premiums to a third-party is rebutted by the fact that the Schedule F, Part 5, on each annual statement discloses relatively minor reinsurance transactions whose ceded premiums would not approach those reported as "Service Fee on Ceded Business." Notwithstanding the unconvincing nature of Petitioner's contention as to the precise confusion caused by Respondent's reporting of the payment of Finance and Service Fees, Respondent's reporting was clearly inadequate and even misleading. The real problem in the annual statements, quarterly statements, and financial statements is their failure to disclose Respondent's payments to a related party, GGS. Respondent unconvincingly attempts to explain this omission by an imaginative recharacterization of the Finance and Service Fee transactions as pass-through transactions. These were not pass-through transactions in 1996 when Respondent retained the Finance and Service Fees. These were not pass- through transactions in 1997-1999 when Respondent properly accounted for these payments from policyholders as income and payments to GGS as expenses. The proper characterization of these transactions involving the Finance and Service Fees does not depend on the form that Respondent and GGS/Superior Group selected for them-- in which policyholders pay Respondent and Respondent pays GGS/Superior Group--although this form does not serve particularly well Respondent's present contention. Even if Respondent had changed the form so that the policyholders paid the Finance and Service Fees directly to GGS/Superior Group, the economic reality of the transactions would remain the same. Even if policyholders paid their installments to Respondent, GGS/Superior Group, or any other party, the Finance and Service Fees would initially vest in Respondent, which, under an agreement, would then owe them to GGS/Superior Group. The inadequacy of the disclosure of the Finance and Service Fees is a relatively minor issue, in itself, in this case. In its proposed recommended order, Respondent invites direction as to how Petitioner would like Respondent to report these payments in the future. The major impact of Respondent's nondisclosure of these payments is that none of the statements filed after the 1996 acquisition notified Petitioner of the existence of these payments. It is thus impossible to infer an agreement or even acquiescence on the part of Petitioner regarding Respondent's payment of Finance and Service Fees to GGS/Superior Group. The major issue in this case is whether the Consent Order authorizes Respondent to pay $35 million in Finance and Service Fees after the 1996 acquisition or, if not, whether Petitioner has approved of such payments by any other means. As already noted, the Consent Order authorizes the payment of agents' commissions and Management Fees, but not Finance and Service Fees. To the contrary, the Consent Order prohibits the payment of Finance and Service Fees for four years, at least without Petitioner's approval, because of the provision otherwise prohibiting agreements, contracts, and the transfer of assets involving Respondent and its affiliates. As noted in the Conclusions of Law, the absence of an integration clause invites consideration of oral agreements that may have preceded the execution of the Consent Order. The Consent Order is somewhat of a hybrid: Petitioner orders and Respondent consents. However, the Consent Order is sufficiently an agreement to be subject to interpretation under normal principles governing the interpretation of contracts. Respondent contends that such agreements encompassed the payment of Finance and Service Fees because Respondent disclosed such payments several times to Petitioner prior to the issuance of the Consent Order. (Any testimonial assertion of an explicit agreement by Petitioner to the payment of the Finance and Service Fees is discredited.) Respondent repeated disclosures to Petitioner of the Finance and Service Fees began with the Acquisition Statement at the start of the application process. The parties discussed these fees in March 1996. The Proformas disclose two main revenue sources from which GGS/Superior Group could service its acquisition debt: Management Fees and Finance and Service Fees. And the Proformas project almost exactly the amount that Respondent paid GGS in Finance and Service Fees from 1997-99. Although the ratio of Management Fees to Finance and Service Fees was 4:1 in the Proformas, this ratio does not minimize the role of the Finance and Service Fees. Based on gross revenues, this ratio is no indication of the relative profitability of these two sources of revenue. In fact, in 1999, the expenses covered by the Management Agreement exceeded the Management Fees by $3 million. The Finance and Service Fees are thus an important component of the revenue on which GGS intended to rely in servicing the acquisition debt. However, neither the clear disclosure of the Finance and Service Fees nor Petitioner's recognition of the importance of these fees in servicing the acquisition debt necessarily means that Petitioner agreed to their payment. By a preponderance of, although less than clear and convincing, evidence, the record precludes the possibility that Petitioner agreed in preclosing discussions or the Consent Order to preapprove the Finance and Service Fees. In this respect, Petitioner treated the Finance and Service Fees differently from the Management Fees, which Petitioner agreed to preapprove, subject to annual reevaluation for the first three years. At the level of a preponderance of the evidence, it is possible to harmonize this construction of the Consent Order with Respondent's repeated disclosures of the Finance and Service Fees. The Acquisition Statement mentions dividends as a revenue source--although a "secondary" source--and the Consent Order clearly did not impliedly preapprove the payment of dividends. Aware of the reliance of GGS upon the Finance and Service Fees to service the Chase acquisition debt, Petitioner may have chosen, for the first four years, to consider Respondent's requests for approval of the Finance and Service Fees, based on the circumstances in existence at the time of the requests. This interpretation is consistent with the testimony of Petitioner's employee that he believed that Petitioner would be able to restrict Respondent's payment of Finance and Service Fees to GGS/Superior Group because Petitioner's approval was required for the payment of dividends. The payments are pursuant to a contract or agreement for services and, as such, are not dividends, but the Consent Order requires Petitioner's approval for all contracts and agreements during the first four years. The common point is that Petitioner understood that its approval would be required for Finance and Service Fees, which had not been preapproved like Management Fees. During the application process, GGS may not have been concerned by Petitioner's failure to preapprove the Finance and Service Fees. At the time of the 1996 acquisition, as contrasted to the period after the 1997 refinancing, GGS enjoyed a relatively light debt load due to Goldman Sachs' equity investment and the "tremendous wherewithal" of its 48 percent co-owner. Another practical distinction between the Finance and Service Fees and the Management Fees militates against finding that the Consent Order impliedly approves the Finance and Service Fees and militates in favor of a finding that GGS viewed these fees as more contingent and less likely to be needed than the Management Fees. At the start of the application process, GGS submitted to Petitioner a form Management Agreement. At no time did GGS ever submit to Petitioner a form Finance and Service Agreement. The contingent nature of the Finance and Service Fees, relative to the Management Fees, is reinforced by the fact that, in 1996, Respondent retained the Finance and Service Fees. Respondent's contention that the Finance and Service Fees were a component of the agreement between it and Petitioner is not without its appeal. The contention is sufficient to preclude a finding by clear and convincing evidence that the agreement between the parties did not include a preapproval of Finance and Service Fees. Unlike the Management Fees, the maximum amount of the Finance and Service Fees is set by statute. Two consequences follow. First, Petitioner might not have found it necessary to incorporate these fees in a written agreement, as long as the maximum amount were acceptable to Petitioner, because the law establishes a ceiling on the fees and identifies the services for which they are compensation. Second, Petitioner might not have found it necessary provide for annual reevaluation of the fees, again due to the applicable statutory maximum. In one respect, the relatively contingent quality of the Finance and Service Fees inures to Respondent's benefit, at least in theory. If no policyholder paid by installments, there would be no Finance and Service Fees; however, as a practical matter, the Finance and Service Fees are almost as pervasive as the Management Fees. More importantly, though, the Finance and Service Fees, especially when imposed as a percentage of the unpaid balance, contain a significant interest component. Paying these fees to GGS/Superior Group, Respondent denies itself the investment income attributable to this forbearance. Alternatively, to the extent that the Finance and Service Fees defray services, as they do to some unknown extent, the greater weight of the evidence, although not clear and convincing evidence, establishes that these services are among the services that GGS/Superior Group undertook in the Management Agreement. These factors militate strongly against treating the Finance and Service Fees as an implied exception to the provision of the Consent Order requiring approval of all contracts or agreements with affiliates during the first four years. For these reasons, Petitioner has proved by a preponderance of the evidence, although not clear and convincing evidence, that GGS/Superior Group and Respondent needed Petitioner's approval for all payments of Finance and Service Fees prior to April 30, 2000. To the extent that, as discussed in the Conclusions of Law, Petitioner withholds such approval, the next issue is to determine the amount of Finance and Service Fees that GGS/Superior Group must return to Respondent. The determination of the amount of the repayment is substantially affected by two facts. First, Petitioner's approval is not required for any Finance and Service Fees that Respondent paid GGS/Superior Group after April 30, 2000. The Consent Order did not require Petitioner's approval for such payments, which were not dividends, for which approval would always be required, if inadequate surplus existed. Second, GGS/Superior Group is entitled to a dollar-for-dollar credit, against any liability for improperly received Finance and Service Fees, for about $20 million that it directly or indirectly transferred to Respondent since the 1996 acquisition. Half of the $20 million credit arises from Management Fees that GGS did not collect from Respondent in 1996 and 1998. As Petitioner notes, there is little, if any, documentation concerning these uncollected fees. Mr. Symons persuasively testified that the proper characterization of these amounts is dependent upon the outcome of Petitioner's effort to disallow the Finance and Service Fees already paid by Respondent. Petitioner must credit to GGS/Superior Group these $10 million in fees as an offset to the $35.2 million (or such lesser amount remaining after any retroactive approvals from Petitioner) that Respondent improperly paid GGS/Superior Group in Finance and Service Fees. Also, in 1997, GGS contributed about $10 million to Respondent's capital. As was the case with the uncollected Management Fees in 1996 and 1998, the record contains little, if any, documentation concerning the transfer, including any conditions that may have attached to it. Petitioner should credit GGS/Superior Group with this sum as an offset against the $35.2 million (or such lesser amount remaining after any retroactive approvals from Petitioner) that Respondent improperly paid GGS/Superior Group in Finance and Service Fees. As for the remaining $15 million in Finance and Service Fees that Respondent improperly paid to GGS through 1999 and any additional amounts through April 30, 2000, the impropriety arises because Respondent failed first to obtain Petitioner's approval--not because any transaction was otherwise necessarily improper. Concerning the remaining $15 million, then, Petitioner should give Respondent and GGS/Superior Group an opportunity to request retroactive approval for the payment of all or part of this sum, without regard to the lateness of the request. Applying any and all factors that Petitioner would ordinarily apply in considering such requests, Petitioner can then reach an informed determination as to the propriety of this $15 million in Finance and Service Fees. If Petitioner determines that Respondent must obtain from GGS/Superior Group repayment of any Finance and Service Fees, then Petitioner may consider the issue of the timing of the repayment. As Petitioner mentions in its proposed recommended order, an evidentiary hearing might be useful for this purpose. Obvious sources would be setoffs against Management Fees and Finance and Service Fees that Respondent is presently paying Superior Group.
Recommendation It is RECOMMENDED that the Department of Insurance enter a final cease and desist order: Determining that, without the prior written consent of the Department, Superior Insurance Company paid Finance and Service Fees to GGS/Superior Group in the net amount of approximately $15 million, plus all such amounts paid after the period covered by this case through April 30, 2000. Requiring that Superior Insurance Company immediately file all necessary documentation with the Department to seek the retroactive approval of all or part of the sum set forth in the preceding paragraph. If any sum remains improperly paid after implementing the procedure set forth in the preceding paragraph, establishing a reasonable repayment schedule for Respondent to impose upon Superior Group--if necessary, in the form of setoffs of Management Fees and Finance and Service Fees due at the time of, and after, the Final Order. Determining that Superior Insurance Company inadequately disclosed related-party transactions and ordering that Superior Insurance Company comply with specific guidelines for the reporting of these transactions in the future. DONE AND ENTERED this 1st day of June, 2001, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 1st day of June, 2001. COPIES FURNISHED: Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307 S. Marc Herskovitz Luke S. Brown Division of Legal Services Department of Insurance 200 East Gaines Street, Sixth Floor Tallahassee, Florida 32399-0333 Clyde W. Galloway, Jr. Austin B. Neal Foley & Lardner 106 East College Avenue, Suite 900 Tallahassee, Florida 32301
The Issue The issues in this case are whether Petitioner was overpaid certain wages by the Respondent, and, if so, whether repayment is warranted.
Findings Of Fact Petitioner was an employee of the Department until December 13, 2005. She was employed as a corrections officer and, as such, was eligible for criminal justice incentive pay. Criminal justice incentive pay is paid separately and apart from regular salary payments through a separate payment system used by the Department. A person whose employment with the Department is terminated would not be terminated automatically from the incentive pay payment system. Upon her termination from employment with the Department, Petitioner continued to receive incentive pay by direct deposit to her bank account. This occurred on five occasions following her termination. The total amount of the overpayments to Petitioner after taxes was $111.13. The Department asked Petitioner to return the money that had been overpaid, but Petitioner did not comply with the request. In her request for a formal hearing, Petitioner alleged some error in the amount of overpayments being claimed, but no evidence was presented to support that allegation at the final hearing. The Department presented evidence as to each of the incentive pay payments to Petitioner following her termination from employment. Respondent averred that all taxes withheld from the incentive payments would be credited to Petitioner upon return of the overpayment amount.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Corrections requiring repayment of the incentive payments made to Petitioner in the sum of $111.13. DONE AND ENTERED this 9th day of October, 2006, 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 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of October, 2006. COPIES FURNISHED: Jennifer Sullivan 38618 Kapok Avenue Zephyrhills, Florida 33542 Matthew M. Deleo, Esquire Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399 James R. McDonough, Secretary Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 Rosa Carson, General Counsel Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-6563
