The Issue The issues in the case are whether the allegations of the Second Administrative Complaint are correct, and, if so, what penalty, if any, should be imposed.
Findings Of Fact At all times material to this case, Respondent was an insurance agent, holding Florida license number A020887, and was licensed as a Resident Life, Health & Variable Annuity (2-15); Life (20-16); Life & Health (2-18); General Lines, Property & Casualty Insurance (2-20); and Health (2-40) agent. Respondent has been licensed in Florida since February 14, 1994, and has consistently met all continuing education requirements applicable to his licensure. At all times material to this case, Respondent was employed as an account executive by HRH of Southwest Florida, Inc. HRH of Southwest Florida, Inc., is a subsidiary of HRH, Inc., a large provider of insurance agency services. Respondent is not and has never been an officer, director, manager, or shareholder of HRH of Southwest Florida, Inc. HRH of Southwest Florida, Inc., provided insurance and risk management services to businesses. Insofar as is relevant to this case, HRH of Southwest Florida, Inc., offered to its clients both fully insured health benefit plans and partially self-funded health benefit plans. Fully insured health benefit plans are those in which an employer pays a premium (sometimes with an employee contribution) to an insurer, and health benefit insurance coverage is provided to participants in the plan. Petitioner has the responsibility for regulating fully insured health benefit plans sold in the State of Florida. Partially self-funded health benefit plans include those where an employer's funds (again sometimes with an employee contribution) are used to cover health expenses of plan participants. The employer's funds are collected by a third- party administrator responsible for paying claims out of the employer's funds, and for obtaining stop-loss insurance to cover claims in excess of the funds available from the employer. Properly created, partially self-funded health benefit plans may be exempt from regulation by state authorities under the provisions of the federal Employee Retirement Income Security Act (ERISA). In the April 2001, HRH of Southwest Florida, Inc., began offering to clients in Lee, Manatee, and Sarasota Counties, a health benefit product made available by Meridian Benefit, Inc. (MBI). MBI had no authorization to operate as an insurer in the State of Florida. Based on information provided to HRH of Southwest Florida, Inc., MBI was operating as a third-party administrator for partially self-funded health benefit plans. The information provided to HRH of Southwest Florida, Inc., initially came from Thomas Mestmaker and Associates, a managing general agency representing MBI, and was confirmed through information subsequently provided by MBI. The plans were presumed by Respondent to be exempt from regulation by Petitioner under the provisions of ERISA based on the information provided by MBI. According to the information provided to Respondent and to HRH of Southwest Florida, Inc., the MBI plan included establishment of a single employer trust (SET) on behalf of each business. Health claims from each business' employees would be paid from the funds contributed to the trust by the employer. "Stop-loss" insurance would be obtained to cover claims in excess of an employer's contribution. The information provided by Respondent to his clients was provided to Respondent or to HRH of Southwest Florida, Inc., by MBI and affiliated other sources. Based on such information, Respondent presumed that MBI was a stable organization and that the stop-loss coverage was in place. Respondent had no specific training related to ERISA- qualification of health benefit plans. He has sold other plans that he believed were ERISA-qualified plans to other employers in Florida. Typically, a business owner would initially contact HRH of Southwest Florida, Inc., seeking health benefits for employees. A representative of HRH of Southwest Florida, Inc., such as Respondent, would research a variety of options for the business owner and then present the options to the client. The evidence establishes that the MBI health benefit plan was one of several options (including both fully-insured and partially self-funded plans) presented to clients. A client was free to choose the MBI plan, another plan presented, or no plan at all. Clients generally reviewed health benefit plans on an annual basis, at which point the process of presenting various options was repeated. Respondent eventually sold the MBI plan to ten or twelve business clients seeking to provide health benefits to employees. Clients choosing to obtain health benefits through the MBI plan submitted information related to the client's employees through Respondent and HRH of Southwest Florida, Inc., to MBI, which would respond with a preliminary rate proposal. After a client chose to accept the rate proposal, representatives from HRH of Southwest Florida, Inc., including Respondent, would assist client employees in completing applications. The applications were submitted to MBI, which in turn established actual rates and communicated the actual rate directly to the client. Clients who chose to accept the final rate proposal then executed documents purportedly establishing an SET. The documents apparently were created by MBI, and were delivered to clients through representatives of HRH of Southwest Florida, Inc., including Petitioner. After execution by the clients, the documents were returned to MBI. Some clients received a general document on MBI letterhead titled "Technical Aspects of SET SINGLE EMPLOYER TRUST" wherein clients were advised that the SET was an "Employee Welfare Benefit Plan" that was "designed to conform to the Employee Retirement Income Security Act of 1974, as amended." The document described the process of establishing rates and advised that MBI was the plan administrator. The document also referenced a trust document and stated that the trust custodian was First Union National Bank. The document stated as follows: At First Union an account will be established for each single employer trust into which all contributions received by the trust from the employer group will be deposited. Any income earned from funds deposited in that account will be credited to that account and any fees charged by the bank will be charged to that account. Some clients received a disclosure document from "Hilb, Rogal and Hamilton of Sarasota" specifically applicable to the client, which provided that the client "intends to establish a SINGLE EMPLOYER TRUST Employee Welfare Benefit Plan," that client contributions would be made to a trust, and that "all benefits funded by the Plan will be paid out of the assets of the Trust." The document further provided that "[I]n its discretion, the Trust may purchase stop-loss insurance to pay any claims in excess of the amounts held in the Trust." Clients were provided with a document titled "DIRECTIVE TO ESTABLISH A HEALTH AND WELFARE BENEFIT PLAN UNDER ERISA" wherein each client provided information, including the number of total and participating employees and the plan coverage sought. The document required the signature of a client's representative and authorized MBI to establish a "Health and Welfare Benefit Plan under ERISA." Clients were provided with a document titled "HEALTH AND WELFARE PLAN - PLAN DOCUMENT," a lengthy document that set forth the specific health care benefits provided to each client under the selected benefit plan. Each client was provided with a document titled "HEALTH AND WELFARE PLAN SUMMARY" which essentially summarized the plan being provided to the client, identified as the "Plan Sponsor." The document identified MBI as the plan administrator and the claim administrator. The document provided as follows: The Plan conforms to and is governed by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan is not a policy of insurance. Neither the Plan Sponsor, nor any trust established to fund the benefits hereunder, is an insurance company. At various times, clients were provided with a document titled "WELFARE BENEFIT PLAN TRUST." In some instances, the document purported to be a trust agreement between the client and First Union, the designated custodian. In other instances, the "WELFARE BENEFIT PLAN TRUST" document did not identify the name of the trust custodian. In all cases, the document identified the plan administrator as MBI, and provided that MBI could "elect such financial institution as it deems appropriate to serve as the custodian with respect to the Trust. . . ." The document further provided that the plan administrator could "remove the Custodian at any time upon sixty (60) days notice in writing to the Custodian . . ." and that the custodian could resign with like notice to the plan administrator. In the agreements where First Union was designated the custodian, removal of the custodian required the client to designate a replacement custodian. In the agreements where no designation was made, the document provided that the plan administrator would designate the replacement custodian. Once the documents were executed and returned to MBI, MBI directly invoiced clients for payment of funds, and clients paid such funds directly to MBI. There is no evidence that Respondent was involved in handling funds transferred from the client to MBI. There is no evidence that Respondent received any information related to any trust accounts that may or may not have been established under the agreement between the client, a trust custodian, and MBI. There is no evidence that Respondent received cancelled checks or copies of account statements. There is no credible evidence that custodial accounts were established by MBI or that contributions submitted to MBI by employers were deposited into custodial accounts. Some checks from multiple employers appear to have been deposited into a single account at First Union. Some checks were deposited into the PNC Bank. There is no credible evidence as to the distribution of the deposited funds. Although under the terms of the trust agreement not all clients were required to approve substitute custodians, there is no evidence that any client required to approve a substitute custodian was ever asked to do so. There is no evidence that the plan administrator complied with the trust document language related to removal of the custodian. At some point in 2002, questions arose about the source of funds available to pay claims in excess of employer contributions. The information initially provided to clients by Respondent was that stop-loss insurance was in place to cover such claims. However, according to a letter on MBI letterhead dated February 25, 2002, to Thomas E. Mestmaker and Associates, "MBI is responsible for any amounts due under adjudicated claims in excess of the contribution amount of its client, assuming that all payments, obligations and bills submitted to the client are timely paid, and the Plan is in good standing with MBI." The letter further states, "MBI is responsible for any excess, subject to the terms and conditions of the initial Directive together with the Plan Trust Agreement, as applicable." There were apparently concerns regarding the soundness of MBI and their ability to handle losses. In March of 2002, information available to Respondent indicated that the stop-loss coverage MBI had supposedly obtained would not be renewed. Respondent began to prepare to move his MBI clients to other benefit plans. A letter to Respondent dated April 11, 2002, on MBI letterhead and purportedly from the Controller of MBI states in part as follows: Meridian Benefit Inc. has acted as an administrator for ERISA-based health plans that it has developed for years. Meridian Benefit Inc. has credibly sufficient contributions and reserves necessary to pay claims for these plans. Moreover, the finances of Meridian Benefit Inc. have been and continue to be sound. Since Meridian Benefit Inc. is a privately held company, we cannot share our detailed financial data, however through management and underwriting Meridian Benefit Inc. has been able to control claims and group losses. MBI then advised Respondent and others that the stop- loss insurance was in place via a statement dated June 19, 2002, indicating that "reinsurance" was being provided by American National Life Insurance Company effective July 1, 2002. As MBI or affiliated entities issued statements regarding the soundness of the MBI plan and the availability of stop-loss coverage, Respondent made the information, including the aforementioned letters, available to clients. The parties have stipulated that American National Life Insurance Company did not provide "reinsurance" or stop-loss insurance relative to any health and welfare benefit plan with MBI as plan administrator. There is no credible evidence that any stop-loss insurance was actually ever obtained by MBI on behalf of employers. In early 2003, MBI informed employers that the employers would be responsible for payment of claims in excess of contributions. By letter dated February 19, 2003, MBI issued a letter to clients which indicated that if a client's claims exceeded contributions, MBI would "advance funds" against the employer's account and then would "approach the employer for repayment of the deficit." The letter further provided that if MBI and the employer "cannot successfully negotiate repayment for the advance, MBI will unfortunately, be forced to stop payment on any existing or future claims." The February 19 letter clearly contradicted earlier affirmations that stop-loss insurance was in place to cover claims in excess of contributions. The evidence fails to establish from where funds "advanced" by MBI would have come. Respondent testified that he did not know the source of the funds. The evidence establishes that Respondent made no independent effort to review MBI or the MBI plan being offered to clients, to determine whether or not stop-loss insurance was actually in place by contacting the insurer identified by MBI as the stop-loss insurer, or to determine whether client funds were being deposited into custodial accounts. By letters dated February 20, 2003 (the day after notifying employers that they would be required to reimburse MBI for funds "advanced"), MBI advised employers of account deficits and directed the employers to pay the deficits. On or about May 15, 2003, MBI filed for Chapter 7 bankruptcy in the United States District Court in New Jersey. MBI had an agreement with Healthcare Sarasota, a local employer organization with an existing network of healthcare providers (a preferred provider organization or "PPO"), to permit MBI plan participants to utilize the Healthcare Sarasota provider network. Client benefit claims were handled between the PPO and MBI. On occasion, representatives of HRH of Southwest Florida, Inc., including Petitioner, became involved in resolving claim issues at the request of clients, but Petitioner had no direct involvement in paying claims. Prior to and by the time MBI filed for bankruptcy, there were numerous unpaid health benefits claims incurred by employees of the employers who became involved with the MBI plan through Respondent. Some employers have paid the claims and are seeking restitution from various parties. Other claims remain unpaid. Although the evidence fails to clearly establish the amount of the remaining unpaid claims, it is clear that at the time of the hearing, thousands of dollars in health benefit claims remain unpaid by any responsible party. Some employees of businesses that participated in the MBI plan have had unpaid claims forwarded by health providers to debt collection agencies. Petitioner has disseminated information to the public and to licensed agents about potential difficulties that may result from participating in health benefit plans that are not subject to state regulation. There is no evidence that licensed agents are required to read the information disseminated by Petitioner, and there is no evidence that Respondent did so. Child Development Center In mid-2001, Respondent met with a representative of the Child Development Center (CDC) to present various options for health benefit coverage for CDC employees. CDC chose to provide health benefits through the MBI plan. A CDC representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA." The document was dated June 21, 2001, with an effective date of July 1, 2001, and signed by Respondent, identified as the "Benefit Consultant." A CDC representative executed the document titled "WELFARE BENEFIT PLAN TRUST." The document provided an effective date of July 1, 2001, but was executed on September 19, 2001. The document stated that the trust custodian would be First Union. Nothing on the document indicated that First Union had agreed to be the custodian. Included with the information provided by Respondent to CDC was the letter dated February 25, 2002, from MBI to Thomas Mestmaker and Associates stating that MBI was responsible for amounts due under adjudicated claims in excess of the employer's contribution. By July 2002, there were no apparent problems with coverage or claims paid, and CDC renewed its participation in the MBI plan. By January 2003, problems with CDC claims payments were occurring and CDC representatives requested from Respondent an accounting of claims paid. The accounting was not immediately made available, although at some subsequent and unidentified time CDC received the information. In March 2003, an employee of CDC located information on the internet indicating that the States of Colorado and North Carolina had issued "cease and desist" orders against MBI. The CDC representative forwarded the information to "Tyla Heatherly" an employee at HRH of Southwest Florida, Inc., and asked that it be provided to Respondent. Respondent thereafter advised the CDC representative that the problems in other states were related to the type of plans that were being offered in those states, and that the CDC plan was an ERISA-qualified SET. By letter from MBI to CDC dated May 5, 2003, MBI advised CDC that MBI was "experiencing severe financial problems and is in the process of winding-down its business." The letter advised CDC to "make immediate arrangements" to obtain either a different third party administrator or to obtain other health benefit coverage. Beginning June 20, 2001, CDC paid funds by check to MBI pursuant to the invoices that MBI delivered directly to CDC. Although the CDC checks to MBI were deposited, the evidence fails to establish that the CDC funds were deposited into a custodial trust account for the benefit of CDC. Family Counseling Center of Sarasota, Inc. At some point in 2001, Respondent met with a representative of the Family Counseling Center of Sarasota, Inc. (FCCS), to present various options for health benefit coverage for FCCS employees. FCCS chose to provide health benefits through the MBI plan. An FCCS representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA" dated October 31, 2001, and signed by Respondent, as the "Benefit Consultant." By his signature, an FCCS representative acknowledged receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document indicating an effective date of December 1, 2001, which was also signed by Respondent. An FCCS representative executed the document titled "WELFARE BENEFIT PLAN TRUST." The document has an effective date of December 1, 2001, but the date of execution was January 3, 2002. The document stated that the trust custodian would be First Union. Nothing on the document indicated that First Union had agreed to be the custodian. Included with the information provided by Respondent to FCCS was the letter dated February 25, 2002, from MBI to Thomas Mestmaker and Associates stating that MBI was responsible for amounts due under adjudicated claims in excess of the employer's contribution. Respondent provided to FCCS the MBI letter to Respondent dated April 11, 2002, advising that MBI had sufficient contributions and reserves necessary to pay claims and was in sound condition. Respondent provided to FCCS the document on MBI letterhead dated June 19, 2002, stating that American National Life Insurance Company was providing "reinsurance." Towards the end of the first year of the MBI plan, FCCS learned that renewal of the MBI plan would involve a substantial cost increase. FCCS initially intended to change benefit plans due to the cost increase, but Respondent apparently negotiated with MBI to reduce the price increase to 40 percent over the initial year cost. FCCS renewed the MBI plan because even with the rate increase the MBI plan was still less expensive than other available benefit plans. FCCS received the MBI letter dated February 19, 2003, stating that if a client's claims exceeded contributions, MBI would "advance funds" against the client's account and then would "approach the employer for repayment of the deficit." The evidence fails to establish whether the letter was provided to FCCS by Respondent or by MBI. By letter from MBI to FCCS dated February 20, 2003, MBI advised FCCS that the client needed to submit "a one-time payment of $163,670.75 to bring your account into a positive position or an increase in your contribution of 200% effective 5/1/2003." The letters of February 19 and 20, 2003, contradicted the assurances by Respondent to FCCS that stop-loss coverage was in place to address claims in excess of employer contributions. FCCS contacted Respondent to advise him of the situation. By letter from FCCS to the chief executive officer of HRH of Southwest Florida, Inc., dated April 25, 2003, FCCS advised that MBI was not paying claims and that some of the staff were having accounts turned over to collection agencies for non-payment. By letter from MBI to FCCS dated May 5, 2003, MBI advised FCCS that MBI was "experiencing severe financial problems and is in the process of winding-down its business." The letter advised FCCS to "make immediate arrangements" to obtain either a different third party administrator or to obtain other health benefit coverage. FCCS paid funds by check to MBI pursuant to the invoices that MBI delivered directly to FCCS. Although the FCCS checks to MBI were deposited, the evidence fails to establish that the FCCS funds were deposited into a custodial account for the benefit of FCCS. Sarasota Land Services In the beginning of 2002, Respondent met with a representative of Sarasota Land Services (SLS) to present various options for health benefit coverage for SLS employees. SLS chose to provide health benefits though the MBI plan. An SLS representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA." The document was executed on February 11, 2002, with an effective date of March 1, 2002, and was signed by Respondent, as the "Benefit Consultant." By her signature, the SLS representative acknowledged receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document indicating an effective date of March 1, 2002, which was also signed by Respondent. An SLS representative executed the document titled "WELFARE BENEFIT PLAN TRUST." The document indicates the agreement was executed on February 11, 2002, and was effective as of March 1, 2002, but the SLS representative's signature was dated September 10, 2002. The document did not identify the name of the trust custodian, but provided that MBI could "elect such financial institution as it deems appropriate to serve as the custodian with respect to the Trust. " SLS received the disclosure document from "Hilb, Rogal and Hamilton of Sarasota" titled "DISCLOSURE AND ACKNOWLEDGEMENT REGARDING THE SARASOTA LAND SERVICES BENEFIT PLAN" dated March 1, 2002. The SLS representative's signature on the disclosure form is dated September 10, 2002. By letter from MBI to SLS dated February 20, 2003, MBI advised SLS that the claims history required an increase in SLS's contribution of 100 percent effective March 1, 2003. Upon receipt of the letter, the SLS representative contacted Respondent and discussed the situation. The discussion included references to the stop-loss insurance coverage that the SLS representative expected to cover claims in excess of contributions. SLS did not renew its participation in the MBI plan. Beginning February 12, 2002, SLS paid funds by check to MBI pursuant to the invoices that MBI delivered directly to SLS. Although the SLS checks to MBI were deposited, the evidence fails to establish that the SLS funds were deposited into a custodial account for the benefit of SLS. SLS also paid an administrative fee directly to HRH of Southwest Florida, Inc. The evidence does not establish what, if any, of the administrative fee was paid to Respondent. Center For Sight In the fall of 2001, the Center For Sight (CFS) entered into an agreement with MBI to obtain health benefit services for CFS employees. CFS was already participating in the MBI plan in March 2002, at the time the CFS representative who testified at the hearing became employed at CFS. A CFS representative executed on July 17, 2001, the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA." The document indicated an effective date of August 1, 2001, and was signed by Respondent, as the "Benefit Consultant." By their signatures, CFS representatives acknowledged receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document indicating an effective date of August 1, 2001. CFS representatives executed the document titled "WELFARE BENEFIT PLAN TRUST" with an effective date of August 1, 2001, although the document was executed on September 1, 2001. The document indicated that the trust custodian would be First Union. Nothing on the document indicated that First Union had agreed to be the custodian. The CFS representative who testified at the hearing was the chief operating officer for CFS. He reviewed the MBI plan upon beginning his employment. He testified that claims payment problems began "instantaneously," but stated that Respondent was helpful in getting claims processed and paid. He testified that he had no problems with Respondent. The CFS representative had concerns about the provision of stop-loss insurance and asked Respondent to obtain a copy of a policy, but the policy was never provided to CFS. However, prior to renewal in July 2002, Respondent provided to CFS the MBI document dated June 19, 2002, stating that American National Life Insurance Company was providing "reinsurance." At the end of the first year, Respondent presented various health benefit options to CFS, but despite the claims payment problems, CFS renewed the MBI plan in July 2002 because the MBI plan was substantially less expensive than other benefit plans. At some subsequent time, Sarasota Memorial Hospital and other local providers began to refuse services to CFS employees covered under the MBI plan, apparently because claims were not being paid. CFS received the MBI letter dated February 19, 2003, stating that if a client's claims exceeded contributions, MBI would "advance funds" against the client's account and then would "approach the employer for repayment of the deficit." By letter from MBI to CFS dated February 20, 2003, MBI advised FCCS that the client needed to submit "a one-time payment of $5,471.66 to bring your account into a positive position or an increase in your contribution of 15% effective 4/1/2003." By letter dated April 18, 2003, to MBI and copied to Respondent, CFS set forth a list of concerns related to claims which were unpaid or had been denied and to "high administrative cost" and asked that there be a resolution to the problems. Eventually CFS paid approximately $300,000 in pending employee claims using CFS funds and sought health benefits from another source. Beginning July 19, 2001, CFS paid funds by check to MBI pursuant to the invoices that MBI delivered directly to CFS. Although CFS checks to MBI were deposited, the evidence fails to establish that the CFS funds were deposited into a custodial account for the benefit of CFS. Michael's Gourmet Group Prior to 2002, Respondent had an existing relationship with Michael's Gourmet Group (MGG) and had previously assisted MGG in obtaining health benefits from various sources. In March of 2002, Respondent met with a representative of MGG to present various options for health benefit coverage for MGG employees. MGG chose to provide health benefits through the MBI plan. As he did in presenting available health benefit options to clients, Respondent informed MGG that the MBI plan was a partially self-funded plan and that stop-loss insurance would cover claims in excess of the MGG contributions. An MGG representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA." The document was executed on February 27, 2002, with an effective date of March 1, 2002, and was signed by Respondent, as the "Benefit Consultant." Although the evidence includes a "HEALTH AND WELFARE PLAN SUMMARY" document applicable to MGG and indicating an effective date of March 1, 2002, there are no signatures on the document. An MGG representative executed the document titled "WELFARE BENEFIT PLAN TRUST" with an effective date of March 1, 2002, although the document was executed July 24, 2002. The document did not identify the name of the trust custodian, but provided that MBI may "elect such financial institution as it deems appropriate to serve as the custodian with respect to the Trust. " MGG received a document from "Hilb, Rogal and Hamilton of Sarasota" titled "DISCLOSURE AND ACKNOWLEDGEMENT REGARDING THE SARASOTA LAND SERVICES BENEFIT PLAN" dated March 15, 2002. The MGG representative's signature on the disclosure form is dated July 24, 2002. MGG received the MBI letter dated February 19, 2003, which stated that if a client's claims exceeded contributions, MBI would "advance funds" against the client's account and then would "approach the employer for repayment of the deficit." By letter from MBI to MGG dated February 20, 2003, MBI advised MGG that the claims history required an increase in MGG's contribution of 300 percent effective March 1, 2003. Subsequent to receipt of the two letters, MGG discontinued its participation in the MBI plan. Beginning February 27, 2002, MGG paid funds by check to MBI pursuant to the invoices that MBI delivered directly to MGG. Although MGG's checks to MBI were deposited, the evidence fails to establish that MGG's funds were deposited into a custodial account for the benefit of MGG. MGG also paid an administrative fee directly to HRH of Southwest Florida, Inc. The evidence does not establish what, if any, of the administrative fee was paid to Respondent. Cheddar's Casual Cafe In September 2001, Respondent met with a representative of a restaurant chain known as Cheddar's Casual Cafe (Cheddar's). Respondent presented various options for health benefits to Cheddar's, and the Cheddar's representative chose to provide health benefits through the MBI plan. A Cheddar's representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA" dated December 18, 2001, and signed by Respondent, as the "Benefit Consultant." By his signature, the Cheddar's representative acknowledged receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document indicating an effective date of January 1, 2002. By his signature, the Cheddar's representative on January 14, 2002, executed the document titled "WELFARE BENEFIT PLAN TRUST" with an effective date of January 1, 2002. The document indicated that the trust custodian would be First Union. Nothing on the document indicated that First Union had agreed to be the custodian. Beginning February 5, 2002, Cheddar's paid funds by check to MBI pursuant to the invoices that MBI delivered directly to Cheddar's. Although Cheddar's checks to MBI were deposited, the evidence fails to establish that Cheddar's funds were deposited into a custodial account for the benefit of Cheddar's. Cheddar's also paid an administrative fee directly to HRH of Southwest Florida, Inc. The evidence does not establish what, if any, of the administrative fee was paid to Respondent. Cheddar's representative inquired as to the stability of MBI and was advised by Respondent that MBI was stable. The Cheddar's representative relied on Respondent's representation when the Cheddar's health benefit plan came up for renewal towards the end of 2002. Although Respondent presented health benefit plans from several companies, Cheddar's renewed the MBI plan, even though some employees had experienced late claims payments. By claim denial dated February 28, 2003, MBI denied the hospital claim for a Cheddar's employee because the claim was over 120 days old, but there is no evidence that Respondent was advised of the denied claim. By letter dated April 29, 2003, to MBI, Cheddar's cancelled coverage as of April 1, 2003. The letter states that "there are a substantial number of unpaid claims from calendar years 2002 and 2003" and asserts that MBI has been unresponsive to complaints about the problems. A copy of the April 29, 2003, letter was sent to Respondent with a cover letter expressing dissatisfaction with the MBI plan, with the MBI operation, and with Respondent's representation of MBI.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order suspending the insurance licensure of Bradley W. Beshore for a period of 78 months. DONE AND ENTERED this 10th day of March, 2005, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 10th day of March, 2005.
Findings Of Fact The following findings of fact are based upon stipulations entered into and adopted by the parties on December 15, 1986, January 9, 1987, and January 12, 1987, which were confirmed by all parties at the final hearing: The League is a wholly owned instrumentality of its member cities. The League is charged in its bylaws to work for the general improvement of municipal government and its effective administration in this state. Further, it is charged with representing its membership on statewide issues affecting municipal government. The City is a municipal corporation organized and existing under the laws of the State of Florida. The City has five (5) "local law" municipal retirement funds, including three (3) police plans and two (2) firefighter plans, all of which receive excise tax revenue from the tax fund established in Chapters 175 and 185, Florida Statutes. The Department has responsibility for administering Chapters 175 and 185, Florida Statutes (1986). On November 7, 1986, the Department published notice in the Florida Administrative Weekly of its intent to adopt rules to implement Chapters 175 and 185, Florida Statutes, pertaining to municipal firefighter and police pension funds and to provide for interpretations, standards, applications, enforcement and administration thereof. The published notice stated there would be a public hearing on December 2, 1986, and the public hearing was held on that date. On November 26, 1986, the League filed its petition for administrative determination of the invalidity of certain of the proposed rules. The League represents over 390 cities throughout the State of Florida. As part of their municipal administration, many of these cities maintain firefighter pension funds that receive premium tax pursuant to Chapter 175, Florida Statutes, and police officer pension funds that receive premium tax pursuant to Chapter 185. A number of these cities maintain "local law plans" as defined by proposed rules 4-14.028 and 4-54.019; a number of the League's member cities maintain "chapter plans" as defined by the same proposed rules. Such plans are required by the proposed rules to meet certain standards which affect the cities' responsibilities in relation to said plans. Thus, the League, which is required to work for the effective administration of municipal government, is substantially affected by the proposed rules. The City is a substantially affected party pursuant to Section 120.54(4)(a),(d), Florida Statutes. All cities operating pension plans which receive funds pursuant to Chapter 175 and Chapter 185 have a duty to adequately fund said plans annually to meet the normal costs of the plan as well as fund any actuarial deficiency over a 40 year period. A number of local law plans presently have procedures and provisions which vary from the procedures and provisions in those sections of Chapters 175 and 185 which are addressed by proposed rules 4-54.024, 4-54.035, 4-54.036, 4- 54.037, 4-54.039, 4-54.040, 4-54.041, 4-54.044 and 4-54.047. The Department has copies of all pension plans which receive funds pursuant to Chapters 175 and 185 in their possession. Case No. 86-4722RP involves a challenge to certain proposed rule amendments to Chapter 4-54, Florida Administrative Code. Case No. 86-4723RP involves a challenge to certain proposed rule amendments to Chapter 4-14, Florida Administrative Code. Many of the proposed rule amendments to Chapters 4-14 and 4-54, Florida Administrative Code, which are being challenged are substantially similar. The statutory authority relied on for corresponding, similar proposed rule amendments in Chapters 4-14 and 4-54 are substantially similar, and the legal issues involved in the challenge to those corresponding proposed rules are identical. As a result of the public hearing held by the Department on December 2, 1986, the Department has agreed and stipulated to modify and/or withdraw certain proposed amendments to Chapter 4-54 which follow, as well as corresponding proposed amendments to Chapter 4-14, and in consideration thereof the Petitioners have agreed to withdraw their objections thereto: 4-54.018 Scope. These rules apply to all municipal firefighters in this State who participate in a pension fund which receives money from the premium tax provided for in ss. 175.101-175.131, Florida Statutes, as well as all municipal firefighter pension boards and municipalities having a municipal fire- fighter pension fund or system which receives state excise tax revenue from the tax fund established in Chapter 175, Florida Statutes, except as otherwise provided herein. The Department shall withdraw subsections (2) and (3) and renumber subsection (4) of proposed rule 4-54.023. The Department shall withdraw subsection (8) and renumber subsections (9), (10) and (11) of proposed rule 4-54.048. The Department shall withdraw subsection (3) of proposed rule 4-54.031. The League agrees to withdraw its challenge to proposed rule 4-54.032, but said withdrawal shall not prejudice its right to later challenge said rule pursuant to Sec. 120.56, Florida Statutes. The City did not object to this proposed rule. The Department shall amend subsection (2)(a) of proposed rule 4-54.024, Florida Administrative Code, to read: 4-54.024(2) A "professionally qualified" consultant means a consultant who meets the following minimum criteria: (a) he must offer his services on a "hard dollar" or flat fee as opposed to or in addition to a commission type basis. The League shall withdraw its objections to proposed rule 4-54.038. The City did not object to this proposed rule. 4-54.020 Minimum Standards Except as otherwise provided herein and Chapter 175, Florida Statutes, Chapter 175, excluding Section 175.351, Florida Statutes, provides minimum standards for (a)(line through original) all chapter funds. and (b) for all local law funds established on or after October 1, 1986. (line through original) Except as otherwise herein and in Chapter 175, Florida Statutes, Section 175.351, Florida Statutes, provides minimum standards for all local law funds. (established prior to October 4, 1986.(line through original) 4-54.029(4) The Department of Insurance shall withhold distribution of Chapter 175 tax revenues as allocated to a Chapter Fund or Local Law Fund which is not in compliance with the applicable requirements of Chapter 175 or Section 175.351. (or these rules.(line through original) 17. The application of Sections 175.071(5), 175.121, 175.162, 175.171, 175.181, 175.191, 175.231, 175.251, 175.261 and 175.333, Florida Statutes, will have an economic impact as defined in Section 120.54, Florida Statutes, (actuarial or administrative costs) on a number of local law municipal pension funds and those municipalities (including the City) that are not presently complying with these sections. The impact of these applications is ascertainable within an identifiable range. The issue of whether these statutory sections, and resulting economic impact, are made applicable to these funds by the provisions of Chapter 175, Florida Statutes, or by the proposed changes to Chapter 4-54, Florida Administrative Code, is not resolved by stipulation or agreement of the parties. During the hearing and also subsequent thereto, the parties further stipulated that: There is a difference in benefits available under the City's pension plans for firefighters enacted by special act and ordinance, and benefits available under a Chapter 175, Florida Statutes, plan. In their respective proposed final orders, Petitioners have listed the proposed rules which remain at issue, following stipulations and voluntary dismissals. (See League proposed finding of fact 23 and City proposed conclusion of law 4.) Proposed rules at issue are: Rule Chapter 4-54 Rule Chapter 4-14 4-54.024(3) 4-14.033(3) 4-54.027 4-14.036 4-54.029(2) 4-14.037(2) 4-54.033(2) 4-14.040(2) 4-54.034 4-14.041 4-54.035 None 4-54.036 4-14.042 4-54.037 4-14.043 4-54.039 4-14.045 4-54.040 4-14.046 4-54.041 4-14.047 4-54.045 4-14.051 4-54.047 None 4-54.048(3)(5)(6)(7)(10) 4-14.053(3)(5)(6)(7)(10) 4-54.049 4-14.054 The following findings of fact are based upon the evidence presented at final hearing: Based on the testimony of Dr. John J. Fenstermaker, who was accepted as an expert in English grammar and sentence structure, the phrase "approved by a majority of the firefighters" found in Section 175.351(13), Florida Statutes, modifies the nouns "board of trustees of the pension fund" and "official pension committee", instead of the verb in the sentence. However, the phrase does not mean that a majority of firefighters must approve the membership of the board of trustees or official pension committee. Rather, it means that a majority must approve action by the board of trustees or committee relative to the placement or use of certain income. A reasonable construction of the statute is that majority approval is required for the board of trustees or committee to act, but not that the make-up or membership of these bodies must be approved each time they propose to place or use certain income from the premium tax referred to in said statute. Proposed rule 4-54.048(7), Florida Administrative Code, is therefore authorized by, consistent with, and implements Section 175.351(13), Florida Statutes. The City's firefighter and law enforcement pension plans have received distributions of state premium tax funds pursuant to Chapters 175 and 185, Florida Statutes, for the last five years. The provisions of the City's local plans are very similar. Actuarial valuations of the City's firefighter and law enforcement pension plans are performed by the City's actuary as required by Chapter 112, Part VII, Florida Statutes. The City's local pension plan for firefighters does not presently apply or conform to the requirements of: Section 175.071(5), Florida Statutes, which requires the board of trustees to retain an independent consultant professionally qualified to evaluate the performance of professional money managers at least once every three years; Section 175.171, Florida Statutes, which deals with optional forms of retirement income; Section 175.181, Florida Statutes, which concerns the designation of beneficiaries; Section 175.191, Florida Statutes, dealing with disability benefits; and Section 175.261, Florida Statutes, regarding reports to Respondent. The Department promulgated an Economic Impact Statement in connection with the proposed rules in Chapter 4-54 which states, in pertinent part, that: Pursuant to Section 120.54(2), Florida Statutes, the State of Florida, Department of Insurance has considered the economic impact associated with the implementation of proposed Rule Chapter 4-54 which relates to municipal firefighters' pension funds. Chapter 175, Florida Statutes, was amended by Chapter 86-41, Laws of Florida, generally effective on October 1, 1986 with some exceptions. The amendments of Chapter 175, Florida Statutes, contained in Chapter 86-41, Laws of Florida, had and will have an economic impact upon the Department, the municipalities receiving state excise tax funds provided for in Chapter 175, Florida Statutes, and the firefighters' pension boards of trustees and pension funds. That economic impact was addressed fully in the legislation and enactment of Chapter 86-41, Laws of Florida. These rules, which augment, interpret, and provide for definitions, application and enforcement of Chapter 175, Florida Statutes, as amended by Chapter 86-41, Laws of Florida, will have no additional impact or nominal additional impact on those entities affected by Chapter 86-41, Laws of Florida. * * * 2. An Estimate of the Cost or Economic Benefit to all Persons Directly Affected by the Proposed Action. Insurance Companies: None. Insurance Agents: None. General Public: None. Municipalities: None, except for minor interest cost if a violation of 175.131, Florida Statutes occurs. Firefighter Pension Boards: None. * * * 5. A statement of the Data and Methods Used in Making Each of the Above Estimates. METHODOLOGY Costs and benefits of the proposed rule are estimated on marginal basis, i.e., additional costs or benefits over and above those associated with normal operations of the affected entity. The relevant costs or benefits to any economic impact are the net additions associated with implementation of the action. DATA The data used in calculating costs and benefits are derived from Departmental experience and statistics. The estimated cost to the agency for implementing the proposed changes was made by responsible agency staff personnel. The Department's Economic Impact Statement for proposed rule Chapter 4-14 is substantially similar to the above. It is clear from the Notice published by the Department, as well as its Economic Impact Statement, that the proposed rules which are here at issue implement Chapters 175 and 185, as amended by Chapters 86-41 and 86-42, Laws of Florida, respectively.
Findings Of Fact Petitioner, who is black, was hired by Respondent on September 28, 1987. Respondent is in the business of providing health care institutions with management personnel to supervise environmental-services employees of the institutions. The management personnel supplied by Respondent for the typical customer consist of an on-site director, assistant director, and several supervisors. Respondent hired Petitioner as a supervisor for assignment to Holmes Regional Medical Center (Holmes). At the time, Respondent had six employees working at Holmes. The responsibilities of a supervisor typically include the management of 10-25 persons. The management responsibilities require, among other things: 1) "daily informal walk-through inspections of each area"; 2) "formal written inspections of each area or the job supervised with the employee at least every month"; 3) "aggressive[ness] in becoming acquainted with all key hospital personnel"; 4) the "develop[ment of] a good professional relationship with each [key hospital employee]"; and 5) the recruitment of personnel to be hired by the customer for assignment to the supervisor's department. Petitioner had limited relevant experience before joining Respondent. Petitioner had operated his own janitorial business, but had limited experience in supervision. As was the case with all employees, Respondent provided Petitioner with a fairly extensive orientation and training process. Prior to assuming his supervisory responsibilities, Petitioner successfully completed the training program, although he showed signs of ignoring the Medi-Dyn way of doing things and adhering to the ways of his former janitorial business. On December 28, 1987, Petitioner received his three-month evaluation, which employed a five-point rating. Petitioner averaged ratings of about "3," but received "marginal" ratings of "4" in areas such as initiative, planning, development of subordinates, training effectiveness, administrative ability, organization, and personnel management. Petitioner was responsible for supervising various areas of Holmes, including certain outbuildings, primarily during the late-evening and early- morning shift. The condition of these areas did not improve following the three-month evaluation. On January 25, 1988, a Holmes representative sent Respondent's director, Jeff Wahlen, a memorandum listing several complaints concerning the cleanliness of the diagnostic services area, for which Petitioner was responsible. On February 4, 1988, a representative of a user of one of the outbuildings for which Petitioner was responsible sent Petitioner a letter expressing "deep concern and frustration over the highly unsatisfactory work by [Respondent] at our hospital." On February 8, 1988, the supervisor of the health and fitness area at the hospital sent Mr. Wahlen a memorandum complaining that the cleanliness of the health and fitness area, for which Petitioner was responsible, was "getting worse." On February 9, 1988, Mr. Wahlen sent a memorandum to Petitioner itemizing numerous ;operational concerns" and establishing deadlines for achieving corrections of the noted problems. All of these deadlines were within February. On February 10, 1988, a representative of the bloodmobile/donor center sent a memorandum to Mr. Wahlen objecting to the uncleanliness of their work areas. Mr. Wahlen met with Petitioner that day and discussed cleaning problems in the bloodmobile/donor center areas. On February 18, 1988, Mr. Wahlen sent Petitioner a follow-up memorandum. Mr. Wahlen reminded Petitioner that the February 9 memorandum required that several objectives should already have been satisfied, but Mr. Wahlen had not received confirmation that these matters had been taken care of. On February 29, 1988, the supervisor of the health and fitness center sent Petitioner a memorandum informing him that many items on checklists dating from the prior November had still not been addressed. She advised Petitioner that she was considering the termination of the center's contract with Respondent. On March 10, 1988, Petitioner received a six-month evaluation in which his performance was rated as marginal, and he was placed on probation for 45 days. Petitioner received various tasks that he was to complete during the probationary period. He subsequently completed a large number of them. From April 13-15, 1988, Alfred Tambolio, who is the national operations director for Respondent, conducted a hospital-wide audit of the Holmes facility. He found that the areas within Petitioner's responsibility were unclean and in unsatisfactory condition. A week or two later, Mr. Tambolio returned to Holmes for a follow-up inspection. While examining the operating room, for which Petitioner was responsible, a physician told Mr. Tambolio and Petitioner that the area was "filthy." Leaving the operating room, with which Petitioner had displayed insufficient familiarity, Mr. Tambolio asked Petitioner to take him to the labor and delivery area, for which Petitioner was also responsible. Petitioner was unable even to find the area, and they had to ask a hospital employee for directions. Numerous other problems surfaced and many problems previously identified by Mr. Tambolio had not been corrected. By memorandum dated May 13, 1988, Mr. Wahlen reviewed Mr. Tambolio's second visit and informed Petitioner that he was being terminated. Mr. Wahlen acknowledged that Petitioner had recently been recommended for a satisfactory evaluation, but that Mr. Wahlen had declined to approve the tentative evaluation. Mr. Wahlen explained that, in essence, Petitioner's realization of certain goals did not outweigh his failure to provide satisfactory service in many other respects. Respondent replaced Petitioner with a person of Hispanic origin. As of May 1, 1988, Respondent employed a total of five blacks, one Hispanic, and one American Indian among its 27 employees serving as supervisors, assistant directors, and directors. Two of the eight directors were black.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Petition for Relief filed by Petitioner be dismissed. ENTERED this 26th day of June, 1989, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of June, 1989. COPIES FURNISHED: Donald A. Griffin Executive Director Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Dana Baird, Esquire General Counsel Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Margaret Agerton, Clerk Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Arthur Dennis, pro se 792 Cecilia Street Palm Bay, Florida 32909 Lynn Dunning Vice President, Operations Medi-Dyn, Inc. 8400 East Prentice Avenue Suite 800 Englewood, Colorado 80111
The Issue The issue presented is whether Petitioner is entitled to a consumer certificate of exemption as a religious institution.
Findings Of Fact Petitioner, Greater Miami Jewish Cemetery Association, Inc., is a Florida not-for-profit corporation chartered on June 23, 1931, and is an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1954. Petitioner is a non-stock membership corporation which has three constituent members, namely, Beth David Congregation of Miami, Florida; Beth El Congregation of Miami Beach, Florida; and Beth Jacob Congregation of Miami Beach, Florida, which synagogues are existing Florida not-for-profit corporations exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. Petitioner maintains and operates two cemeteries in Miami, Dade County, Florida, which are dedicated to burial of members of its constituent member synagogues and other persons of the Hebrew faith, including free burial plots for indigent persons of the Hebrew faith, and, as such, have been classified under the State of Florida Funeral and Cemeteries Act as "church cemeteries." It is a religious obligation of the Hebrew faith to provide for and bury the dead. It is usual for synagogues to maintain cemeteries for their members. No synagogue is located on the premises of Petitioner because some Jews are forbidden to be on the grounds near dead bodies. Accordingly, Jewish cemeteries do not have synagogues on the premises, and, conversely, synagogues do not have cemeteries on their premises, as some churches do. Petitioner does have, however, a room or chapel area where religious services are conducted by Petitioner's constituent members, the three synagogues. Those religious services and activities conducted there include burial services, services on religious holy days, and memorial services.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered granting Petitioner's application for a consumer certificate of exemption. DONE AND ENTERED this 24th day of September, 1998, in Tallahassee, Leon County, Florida. LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1998. COPIES FURNISHED: Max R. Silver, Esquire Silver & Silver 150 Southeast Second Avenue, Suite 500 Miami, Florida 33131 William B. Nickell, Esquire Department of Revenue 501 South Calhoun Street, Suite 304 Tallahassee, Florida 32301 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399
The Issue As the parties have stipulated, the issue in this case is whether Respondent Florida Housing Finance Corporation (the “Corporation”) properly interpreted Rule 67-48.032(2), Florida Administrative Code, and the corresponding provisions on the same subject found in paragraph 2, at page 2, of the Corporation’s 2000 Qualified Allocation Plan (collectively, the "Instructions"), when it applied the Instructions to determine the substantial interests of Petitioners and Intervenors.
Findings Of Fact The evidence presented at final hearing established the facts that follow. The Corporation and Its Duty to Allocate Federal Income Tax Credits The Corporation is a public corporation that administers governmental programs relating to the financing and refinancing of housing and related facilities in Florida. It is governed by a nine-member board composed of eight persons whom the governor appoints plus the Secretary of the Department of Community Affairs, sitting ex-officio. Among other things, the Corporation is the state's designated "housing credit agency" as defined in the Internal Revenue Code. As such, the Corporation has the responsibility and authority to establish procedures necessary for the allocation and distribution of low-income housing federal tax credits, which are created under and governed almost entirely by federal law. These tax credits, which are designed to encourage the development of low-income housing for families, provide a dollar-for-dollar reduction of the holder’s federal income tax liability and can be taken each year, for up to ten years, that the low-income housing project for which the credits were awarded continues to satisfy Internal Revenue Code requirements. Housing tax credits are allotted annually to the states on a per capita basis and then awarded, through state-administered programs, to developers of rental housing for low-income and very low-income families. Once awarded, there is a market for these tax credits; consequently, a developer may sell them at a discount to obtain immediate cash for its project. As a populous state, Florida receives between $18 million and $18.5 million in federal tax credits each year. The Corporation allocates the state's share of tax credits to eligible recipients pursuant to a Qualified Allocation Plan ("QAP") that federal law requires be prepared. The QAP, which must be approved by the governor, is incorporated by reference in Rule 67-48.025, Florida Administrative Code. In accordance with the QAP, the Corporation employs various set-asides and special targeting goals that play a substantial part in determining which applicants will receive tax credits in a particular year. While targeting goals are "aspirational" in nature, set-asides are relatively inflexible. Thus, special targeting goals may be met if credits are available. In contrast, credits that were reserved (or "set- aside") for specific project types will be awarded to applicants whose developments fall within the defined set-aside. The set-asides that have spawned the instant dispute are the Geographic Set-Asides and the Non-Profit Set-Aside. The Geographic Set-Asides require that a pre-determined portion of the available tax credits be awarded to applicants in each of the following county groups: Large County, Medium County, and Small County. In 2000, the allocation percentages for these groups were 64%, 26%, and 10%, respectively. The Non-Profit Set-Aside, which is a function of federal law, requires that at least 12% of the credits be awarded to non-profit applicants. None of the other set-asides is either at issue here or affects the analysis or outcome. The same is true of the special targeting goals. For simplicity's sake, therefore, special targeting goals will be ignored in the discussion that follows, and it will be assumed, unless otherwise stated, that the Geographic and Non-Profit Set-Asides are the only factors (besides merit) that affect the Corporation's award of tax credits. The Petitioners and Intervenors (Collectively, "Petitioners") Lakesmart is a Florida limited partnership which has as one of its general partners a non-profit corporation. In the 2000 application cycle, Lakesmart applied to the Corporation for an award of tax credits from the Medium County allocation. Lakesmart is a "Non-Profit Applicant" for purposes of the Non- Profit Set-Aside. RPK is a Florida limited partnership. In the 2000 application cycle, RPK applied to the Corporation for an award of tax credits from the Large County allocation. For purposes of the Non-Profit Set-Aside, RPK is a "for-profit Applicant." Meadow Glen and Coral Village are Florida limited partnerships. Each has a non-profit corporation as one of its general partners. Both applied to the Corporation in the 2000 application cycle for an award of tax credits from the Medium County allocation. Each is considered a "Non-Profit Applicant" for purposes of the Non-Profit Set-Aside. Evaluation, Ranking, and the Tentative Funding Range To distribute the finite amount of tax credits available each year, the Corporation has designed a competitive process whereby potential recipients file applications that the Corporation grades according to selection criteria set forth in the QAP. Points are assigned based on compliance with these criteria. At the end of the evaluation process, each applicant that met the threshold requirements will have earned a final score that determines its rank in terms of relative merit, with higher-scored projects being "better" than lower-scored projects. Because of the set-asides, however, credits are not awarded simply on the basis of comparative scores. Instead, the Geographic Set-Asides require that the applicants be sorted and ranked, according to their scores, within the Large County, Medium County, and Small County groups to which they belong and from whose credit allocations the successful applicants will be funded. As a result, therefore, if the several applicants with the three highest scores in the entire applicant pool were all in the Large County group and the applicant with the fourth highest score were in the Small County group, for example, then the latter applicant would be ranked first in the Small County group. This means, to continue with the example, that if the first- and second-ranked projects in the Large County group were to exhaust the credits allocated to that group, then the applicant with the third highest score overall would not be funded, while the applicant with the fourth highest score in the applicant pool (but ranked first in a county group) would be funded. 16/ After the Corporation has sorted the applicants by county group and ranked them, within their respective groups, from highest to lowest based on the applicants' final scores, it draws a tentative funding line within each group. Applicants above these lines are within the tentative funding range and thus apparently successful. Conversely, an applicant below the tentative funding line in its county group will not receive tax credits unless, to satisfy a set-aside or fulfill a special targeting goal, it is moved into the funding range. In the 2000 application cycle, a preliminary outcome which had occurred only once before, in 1997, happened again: the aggregate of credits requested by the non-profit applicants within the tentative funding range did not amount to the Non- Profit Set-Aside percentage — 12% in 2000 — of total available credits. Therefore, the Corporation needed to elevate as many apparently unsuccessful non-profit applicants into the funding range — and concomitantly to remove as many apparently successful for-profit applicants from the funding range to make room for the favored non-profit applicant(s) — as necessary to fulfill the 12% quota. An Aside on Categorical Ranking The separation of applicants into three groups according to the Geographic Set-Asides, and the effect that has on determining which applicants will receive credits, was mentioned above. To better understand the parties' dispute regarding the procedure for satisfying the Non-Profit Set-Aside when, as in 2000, it is necessary to award credits to a putatively unsuccessful non-profit applicant at the expense of a putatively successful for-profit applicant, a second, more detailed look at the implications of categorical ranking will be helpful. Because of the Non-Profit Set-Aside, the set of all qualified applicants ("Applicant Pool") is divided into two classes: non-profit and for-profit corporations. As will be seen, the class of non-profit corporations is further separated, for purposes of the Non-Profit Set-Aside, into two subclasses: domestic non-profits and out-of-state, or foreign, non-profits. Finally, to repeat for emphasis, all qualified applicants, regardless of class or subclass (if applicable), fall within one of three groups according to the Geographic Set-Asides: Small County, Medium County, and Large County. The following chart depicts the relevant classification of applicants within the Applicant Pool: Applicant Pool Non-profits For-profits Domestic Foreign Small County Medium County Large County Because, as the chart shows, each applicant fits into several categories, applicants may be ranked in order of their comparative scores in a variety of combinations, depending on how they are sorted, e.g. all applicants, all Large County for- profits, all foreign non-profits, etc. Once the Corporation has drawn the tentative funding lines (which, recall, are county group-specific) and determined preliminarily which applicants will receive funding and which will not, two additional categories exist: applicants within the funding range and applicants below (or outside) the funding range. Owing to the nature of the instant dispute, however, the only non-profits discussed below are those outside the tentative funding range, unless otherwise stated, and the only for-profits considered are those within the tentative funding range, unless otherwise stated. 1/ The above makes clear, it is hoped, that a reference to the "highest scored" applicant, without more, may describe many applicants, such as the highest scored domestic non-profit, the highest scored non-profit in the Small County group, the highest scored foreign non-profit in the Large County group, and so on. More information is needed to pinpoint a particular entity. For ease of reference, and to facilitate the discussion and disposition of the present dispute, the following abbreviations will be used in this Recommended Order as shorthand descriptions of applicants’ defining characteristics: Abbreviation Meaning NP Non-profit applicant FP For-profit applicant High- highest scored Low- lowest scored D domestic entity (i.e. organized under Florida law) F foreign entity (i.e. organized under the law of a state other than Florida) S, M, and L Small, Medium and Large County, respectively ! highest or lowest scored within the indicated category; e.g. High- NP(S!) means highest scored non- profit within the Small County group; Low-FP(S!) means lowest scored for-profit in the Small county group x, y variables Combining these abbreviations provides an increasingly precise description, as more information is added. For example: Combination Description High-NP Highest scored non-profit in some, unknown category High-NP[D!] Highest scored domestic non- profit, unknown group; is not necessarily the highest scored non-profit in the class of non- profits High-NP[F!] Highest scored foreign non-profit, unknown group; is not necessarily the highest scored non-profit in the class of non-profits High-NP[D!](S) Highest scored domestic non- profit, located in the Small County group; not the highest scored non-profit within the Small County group High-NP[D](S!) Highest scored non-profit in the Small County group; is a domestic corporation but is neither the highest scored non-profit nor highest scored domestic non-profit High-NP[D](S) Highest scored domestic non-profit in the Small County group; is neither the highest scored non- profit, the highest scored domestic non-profit, nor the highest scored non-profit in the Small County group Low-FP! Lowest scored for-profit in the class of for-profits Low-FP(M!) Lowest scored for-profit in Medium County group; is not necessarily the lowest scored for- profit in the class of for-profits The Controversy: Gored Oxen and Leapt-Over Frogs The solution to the problem that arose in the 2000 application cycle when an insufficient number of non-profit applicants wound up initially within the tentative funding range is found in two places: Rule 67-48.032, Florida Administrative Code, and the 2000 QAP. Although the language of the two is not identical, the parties agree that the rule and the pertinent QAP provisions have the same meaning, despite their differences in wording. The undersigned has concluded, however, that the differences, though subtle, substantially affect the outcome of this case. It is necessary, therefore, to read them carefully. Rule 67-48.032(2), Florida Administrative Code, provides in pertinent part: To ensure that the minimum 10% is set aside, the Corporation has determined that an initial allocation of 12% to qualified Non- Profits will be met. In order to achieve the initial 12% set aside, Applications from Applicants that qualify or whose General Partner qualifies as a Non-Profit entity pursuant to Rule 67.48.002(71), F.A.C., HUD Regulations, Section 42(h)(5)(c), subsection 501(c)(3) or 501(c)(4) of the Code and organized under Chapter 617, Florida Statutes, or organized under similar state law if organized in a jurisdiction other than Florida and meet scoring threshold requirements shall be moved into the funding range, in order of their comparative scores, with Applicants whose Non-Profit entity is organized under Florida law receiving priority over Non-Profit entities of other jurisdictions, until the set-aside is achieved. The last Non-Profit Development that is moved into the funding range in order to achieve the 12% initial set-aside shall be fully funded even though that may result in a higher Non-Profit set-aside. This will be accomplished by removing the lowest scored Application of a for-profit Applicant from the funding range and replacing it with the highest scored Non- Profit Application below the funding range within the applicable Geographic Set-Aside pursuant to the QAP. This procedure will be used again on or after October 1, if necessary, to ensure that the Agency allocates at least 10% of its Allocation Authority to qualified Non-Profit Applicants. Any for-profit Applicant so removed from the funding range will NOT be entitled to any consideration or priority for the receipt of current or future Housing Credits other than placement on the current ranking and scoring list in accordance with its score. Binding Commitments for Housing Credits from a future year will not be issued for Applicants so displaced. Paragraph 2, at page 2, of the Corporation’s 2000 QAP states: [The Corporation] has determined that an initial allocation of 12% to qualified Non- Profits will ensure that the 10% requirement will be met in the event that all Developments included in the initial 12% do not receive an allocation. In order to achieve the initial 12% set-aside a tentative funding line will be drawn. Then, Applications from Non-Profit Applicants that meet scoring threshold requirements shall be moved into the tentative funding range, in order of their scores with Applicants whose Non-Profit entities are organized under Chapter 617, Florida Statutes, having priority, until the 12% set-aside is achieved. This will be accomplished by moving the lowest scored Application of a for-profit Applicant in the funding range down in ranking so it is ranked below the lowest Non-Profit Applicant within the funding range and moving the highest scored Non-Profit Applicant organized under Chapter 617, Florida Statutes below the funding range within the applicable Geographic Set- Aside pursuant to the QAP up in ranking so it is ranked one ranking space above the for-profit Applicant that was moved down in ranking. If no such Applicant exists, the highest Non-Profit Applicant organized under similar statutes from another state which is below the funding range within the applicable Geographic Set-Aside pursuant to the QAP, will be moved into funding range in the same manner as stated in the previous sentence. This procedure will be used again on or after October 1, 2000, if necessary, to ensure that the [Corporation] allocates at least 10% of its Allocation Authority for 2000 to qualified Non-Profit Applicants. Any for-profit Applicant so removed from the funding range will NOT be entitled to any consideration or priority for the receipt of current or future housing credits other than placement on the current ranking and scoring list in accordance with its score. Binding Commitments for housing credits from a future year will not be issued for Applicants so displaced. The last Non- Profit Applicant moved into the funding range, in order to meet the initial 12% set- aside or in order to meet the minimum 10% set-aside after October 1, 2000, will be fully funded contingent upon successful credit underwriting even though that may result in a higher Non-Profit set-aside. After the full Non-Profit set-aside amount has been allocated, remaining Applications from Non-Profit organizations shall compete with all other Applications in the HC Program for remaining Allocation Authority. The Corporation's interpretation of Rule 67-48.032, Florida Administrative Code, and paragraph 2 of the 2000 QAP (collectively, the "Instructions") to determine the procedure for satisfying the Non-Profit Set-Aside in connection with the 2000 application cycle has caused considerable controversy — and led to this proceeding. The controversial interpretation was publicly manifested on September 15, 2000, when the Corporation published a preliminary ranking sheet on its web site which reflected adjustments that its staff had made to fulfill the Non-Profit Set-Aside. Within days, adversely affected applicants were complaining that the Corporation's staff had misinterpreted the Instructions. The Corporation's staff had construed the Instructions to mean that when it is necessary to displace a for-profit within the tentative funding range to satisfy the Non-Profit Set-Aside, the following procedure must be followed: Remove Low-FP!(x!) and replace it with High- NP[D](x). 2/ If there is no domestic non- profit in county group x, then replace Low- FP!(x!) with High-NP[F](x!). 3/ This construction permits High-NP[D!], if there is one, High- NP![F!] if not, to remain outside the funding range, because it might not be in county group x. In practice, the process that the Corporation’s staff had settled upon operated, in the circumstances presented, to the detriment of Petitioners. Here is how it worked. After the tentative funding range was established, the lowest scored for- profit in the class of for-profits was in the Small County group. 4/ There were no non-profits, domestic or foreign, in that group to elevate, however, and so Low-FP!(S!) could not be removed; the fall-back procedure was followed. See endnote 4. As it happened, RPK was Low-FP(L!) and had a lower score than Low-FP(M!). Thus, under the Corporation's staff's interpretation of the Instructions, as revealed by the rankings posted on September 15, 2000, High-NP[D](L!) was moved into the funding range in the place of RPK, even though High-NP[D](L!)'s final score was lower than that of Lakesmart — which was High- NP. (Coral Village and Meadow Glen were the second- and third-ranked domestic non-profits, respectively, in the Medium County Group. Sorted by class, Lakesmart, Coral Village, and Meadow Glen would be ranked first, second, and sixth in the class of non-profit applicants.) 5/ The second lowest-scored for-profit in the class of for-profits was also in the Large County group. Thus, it became Low-FP!(L!) after RPK was removed. It, too, was replaced by the Large County non-profits that became, in turn, High-NP[D](L!) as the next highest-ranked non-profit in that group was moved up into the funding range to satisfy the 12% Non-Profit Set-Aside. In all, the Corporation's staff proposed to elevate — and hence award tax credits to — four non-profit applicants whose final scores were lower than Lakesmart's and Coral Village's. One of those four putative beneficiaries had a lower final score than Meadow Glen's. Lakesmart and others who disagreed with the Corporation’s staff advanced an alternative interpretation of the Instructions. In their view, to ensure that the Non-Profit Set-Aside is met requires the following maneuver: Remove Low-FP(x!) and replace it with High- NP[D!](x). 6/ If there is no domestic non- profit outside the funding range, then replace Low-FP(x!) with High-NP. 7/ This interpretation admits the possibility that Low-FP! might remain in the funding range, because it might not be in county group x. Under this interpretation, favored by all Petitioners, Lakesmart and Coral Village would be elevated into the funding range, rather than being "leap-frogged" by lower-scored non- profits, and RPK would not be displaced. (Of course, Petitioners' interpretation would require that some other for- profit ox be gored — one having a higher score than RPK's.) These competing interpretations of the Instructions were presented to the Corporation's board for consideration at its public meeting on September 22, 2000. After a discussion of the issues, in which members of the public participated, the board voted unanimously to accept the interpretation that the staff had acted upon in preparing the September 15, 2000, rankings. Later in the same meeting the board adopted final rankings, which were prepared in accordance with the approved interpretation, that resulted in the denial of Petitioners' applications for tax credits. The 1997 Awards: Precedent or Peculiarity? Petitioners maintain that their interpretation of the Instructions is supported by a supposed precedent allegedly set in 1997 that, they say, was binding on the Corporation in 2000. In the 1997 cycle, it so happened that after drawing the tentative funding lines, the sum total of credits sought by non-profits within the preliminary funding range failed to reach the then-required threshold of 10%. Thus, for the first time, the Corporation faced the need to replace higher-scored for- profits (that were apparently in line for funding) with lower- scored non-profits that otherwise would not have received credits. The QAP that governed the 1997 awards provided for the Non-Profit Set-Aside but was silent on the procedure for satisfying it: The Agency will allocate not less than 10% of the state’s allocation authority to projects involving qualified, non-profit Applicants, provided they are non-profits organized under Chapter 617, Florida Statutes, and as set forth in Section 42(h)(5) of the Internal Revenue Code, as amended, and Rule Chapter 9I-48, Florida Administrative Code. Respondent's Exhibit 2, page 8. Rule 9I-48.024(3), Florida Administrative Code (1997), did contain directions for carrying out the required substitution. It prescribed the following procedure for elevating non-profits: If 10% of the total Allocation Authority is not utilized by Projects with Non-Profit Applicants, Applications from Non-Profit Applicants that meet scoring threshold requirements shall be moved into the funding range, in order of their comparative scores, until the 10% set-aside is achieved. This will be accomplished by removing the lowest scored Application of a for-profit Applicant from the funding range and replacing it with the highest scored Non-Profit Application below the funding range within the applicable Geographic Set-Aside pursuant to section (2) above. Petitioners' Exhibit 1. These provisions will be referred to hereafter as the "1997 Directions," to distinguish them from the Instructions. Gwen Lightfoot was the Corporation's Deputy Development Officer in 1997. In that capacity, she was directly responsible for implementing the rules relating to the award of low-income housing tax credits. To satisfy the Non-Profit Set- Aside, Ms. Lightfoot followed the 1997 Directions as she understood them. In so doing, she sorted the eligible non- profits by class (i.e. without regard to their respective county groups) and ranked them in score order, from the highest scoring project to the lowest scoring project. 8/ Then, Ms. Lightfoot moved the highest scoring non-profit in the class of non-profits to a position immediately above the for-profit with the lowest score in the same geographic set-aside as the favored non-profit so that the non-profit project would be fully funded. That is, she replaced Low-FP(x!) with High-NP!(x!). This process was repeated, moving the next highest ranked non-profit to a position immediately above the lowest-ranked for-profit in the same geographic set-aside as the elevated non-profit, until the Non-Profit Set-Aside was met. Although the Corporation presently argues that its board was not fully informed in 1997 as to the procedure that Ms. Lightfoot followed in fulfilling the mandate of the Non- Profit Set-Aside, a preponderance of evidence established that Ms. Lightfoot's actions were within the scope of her authority and taken in furtherance of her official duties; that the board was aware of what she had done; and that the board took no action to change the results that followed from Ms. Lightfoot's interpretation and implementation of the 1997 Directions. Ms. Lightfoot's application of the 1997 Directions, in short, was not the unauthorized act of a rogue employee. Rather, as a matter of fact, her action was the Corporation's action, irrespective of what any individual board member might subjectively have understood at the time. In the years following the 1997 awards, Rule 9I- 48.032, Florida Administrative Code, was re-numbered Rule 67- 48.032 and amended three times, the most recent amendment becoming effective on February 24, 2000. As a result, the 1997 Directions evolved into the language of Rule 67-48.032(2) which, though not identical, retains the essential meaning of its predecessor. During the same period, the QAP was also amended three times, the version controlling the 2000 application cycle having been approved by the governor on December 16, 1999, and adopted by reference in the Florida Administrative Code on February 24, 2000. Unlike the revisions to Rule 9I-48.032(3), however, the changes in the QAP that relate to the issue at hand are significant, because the 2000 QAP sets forth a procedure for fulfilling the Non-Profit Set-Aside when the collective amount of credits sought by non-profits in the tentative funding range falls short of the mandated mark, whereas the 1997 QAP did not.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Corporation enter a final order dismissing the petitions of Petitioner Lakesmart, Petitioner RPK, and Intervenors Meadow Glen and Coral Village. DONE AND ENTERED this 7th day of February, 2001, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 7th day of February, 2001.
The Issue Whether Petitioner qualifies for the renewal of a consumer certificate of exemption as a qualified religious organization pursuant to Section 212.08(7)(o), Florida Statutes?
Findings Of Fact Petitioner is an active not-for-profit corporation organized under the laws of the State of Florida. It maintains exempt status under Section 501(c)(3) of the Internal Revenue Code. The Respondent is the state agency charged with the administration of the tax laws of the State of Florida, including those dealing with the grant or denial of consumer certificates of exemption to qualified organizations. Reverend Roy Harthern is an ordained Assembly of God minister who previously had a career as a minister in several churches in Texas and Florida, as well as founding a Christian magazine and a Christian television station in Florida. The Reverend and Mrs. Harthern are evangelists and Bible teachers. In 1983, Reverend Harthern and his wife, Pauline, founded the organization from which the Reverend and Mrs. Harthern practice an itinerant ministry. They preach in different established churches each week, both inside and outside of the State of Florida and the United States. In the past, Reverend Harthern has had a regular religious show on television. Reverend Harthern also writes, records religious tapes and has a weekly radio program on a station owned by others. Petitioner does not have an established physical place of worship at which nonprofit religious services are regularly held; does not provide transportation for church members or other services; and does not provide services to state prisoners. There has been no substantial change in the type or nature of Petitioner's ministry since its founding in 1983. Respondent issued a certificate of exemption to Petitioner in 1983 as a "religious organization." Petitioner has renewed the exemption, in five-year intervals, ever since. Respondent has never sought to revoke or suspend Petitioner's exempt status since 1983. On July 18, 1997, Petitioner applied to renew its consumer certificate of exemption as a "religious organization." Its previous certificate was issued on October 6, 1992, and was due to expire on October 5, 1997 There has been no substantive changes to the implementing statute during the relevant time period. On October 13, 1997, Respondent issued its Notice of Intent to Deny to Petitioner on the grounds that Petitioner did not have an established physical place of worship at which nonprofit religious services and activities were regularly conducted.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Revenue enter a Final Order denying Petitioner's renewal application for exemption, and the provisions of Section 212.08(7)(o)2.1., Florida Statutes. DONE AND ENTERED this 9th day of April, 1998, at Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 Filed with the Clerk of the Division of Administrative Hearings this 9th day of April, 1998. COPIES FURNISHED: Roy Harthern, President Roy Harthern Ministries, Inc. Post Office Box 915971 Longwood, Florida 32791 Rex D. Ware, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue Whether Petitioner is entitled to a consumer's certificate of exemption from sales tax as a "charitable institution" as that term is defined by Section 212.08(7)(o)2b., Florida Statutes.
Findings Of Fact Petitioner is a nonprofit organization incorporated under the laws of the State of Florida as a corporation. Petitioner has applied to Respondent for a certificate of exemption from sales and use tax based on its claim that it is a "charitable institution" within the meaning of, and pursuant to the provisions of, Section 212.08(7)(o)2.b., Florida Statutes. 2/ The Internal Revenue Service has determined that Petitioner is exempt from federal income tax under Section 501(a) of the Internal Revenue Code as an organization described in Section 501(c)(3). Edy Sanon, Petitioner's executive director, testified in general terms as to the services performed by Petitioner to persons of Haitian descent. Based on that general testimony, it cannot be determined with any degree of certainty the precise services performed by Petitioner. Mr. Sanon testified that his organization provides translation services and referral services that assist Haitian immigrants in adjusting to life in the United States, becoming employable, and obtaining services from various government agencies. Petitioner engages in fund raising and searches for governmental grants for a center where people can come for help. The extent of its resources expended on fund raising was not established. Mr. Sanon testified that Petitioner provides its services free of charge and that it served approximately 800 clients last year. Chapter 212, Florida Statutes, imposes a tax on sales, use and other transactions. Respondent is the agency of the State of Florida charged with administering Chapter 212, Florida Statutes, and its duties include the issuance of certificates of exemption from tax pursuant to Section 212.08(7)(o), Florida Statutes. Pursuant to its rule-making authority, Respondent has adopted Rule 12A-1.001, Florida Administrative Code, to implement the provisions of Section 212.08(7)(o), Florida Statutes. Although Petitioner has been recognized as a nonprofit organization by the Internal Revenue Service, Petitioner must receive a certificate of exemption from Respondent to be exempt from Florida's tax on sales, use, and other transactions imposed by Chapter 212, Florida Statutes. The provisions of Section 212.08(7)(o), Florida Statutes, and Rule 12A-1.001, Florida Administrative Code, provide the criteria for the exemption sought by Petitioner. Section 212.08(7)(o), Florida Statutes, provides, in pertinent part, an exemption from sales tax as follows: (o) Religious, charitable, scientific, educational, and veterans' institutions and organizations. There are exempt from the tax imposed by this chapter transactions involving: * * * b. Sales or leases to nonprofit religious, nonprofit charitable, nonprofit scientific, or nonprofit educational institutions when used in carrying on their customary nonprofit religious, nonprofit charitable, nonprofit scientific, or nonprofit educational activities . . . * * * The provisions of this section authorizing exemptions from tax shall be strictly defined, limited, and applied in each category as follows: * * * b. "Charitable institutions" means only nonprofit corporations qualified as nonprofit pursuant to s. 501(c)(3), Internal Revenue Code of 1954, as amended, and other nonprofit entities, the sole or primary function of which is to provide, or to raise funds for organizations which provide, one or more of the following services if a reasonable percentage of such service is provided free of charge, or at a substantially reduced cost, to persons, animals, or organizations that are unable to pay for such service: * * * (IV) Social welfare services including adoption placement, child care, community care for the elderly, and other social welfare services which clearly and substantially benefit a client population which is disadvantaged or suffers a hardship . . . 3/ Rule 12A-1.001(3)(g), Florida Administrative Code, implements the provisions of Section 212.08(7)(o), Florida Statutes, and provides, in pertinent part, as follows: (g)1. "Charitable institutions" means only nonprofit corporations qualified as nonprofit pursuant to s. 501(c)(3), United States Internal Revenue Code, 1954, as amended, and other nonprofit entities that meet the following requirements: the sole or primary function is providing a "qualified charitable service" as defined in this subsection; and a reasonable percentage of such service is provided free of charge, or at a substantially reduced cost, to persons, animals, or organizations that are unable to pay for such service. * * * 3.a. For the purpose of this subsection the following terms and phrases shall have the meaning ascribed to them except when the context clearly indicates a different meaning: I. "Persons unable to pay" means persons whose annual income is 150 percent or less of the current Federal Poverty Guidelines . . . * * * "Substantially reduced cost" means the normal charge, market price, or fair market value to a purchaser or recipient, diminished in an amount of considerable quantity. "Sole or primary function" means that a charitable institution, excluding hospitals, must establish and support its function as providing or raising funds for services as outlined in subparagraphs 1. and 2. above, by expending in excess of 50.0 percent of the charitable institution's operational expenditures towards "qualified charitable services", as defined in subparagraph 2.a. - g. within the charitable institution's most recent fiscal year. Petitioner established that it is a nonprofit organization. Petitioner did not present any financial data at the formal hearing. In the absence of that financial information, it cannot be found that Petitioner disburses more than fifty percent of its expenditures to provide or raise funds for a provider of a statutorily listed service. The absence of that information is fatal to Petitioner's application. 4/ The unchallenged testimony of Mr. Sanon was sufficient to establish for the purposes of this proceeding that Petitioner does not charge for its services. Petitioner did not establish at the formal hearing the ability of any of its client to pay a reasonable fee for the services provided by Petitioner. The general testimony of Mr. Sanon failed to establish that the translation, referral, and other services provided by Petitioner are "social welfare services" within the meaning of Section 212.08(7)(o)2.b., Florida Statutes. 5/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order that denies Petitioner's application for a certificate of exemption. DONE AND ENTERED this 1st day of December, 1998, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 Filed with the Clerk of the Division of Administrative Hearings this 1st day of December, 1998.
The Issue Whether the Health Care Cost Containment Board correctly determined the amount of the Public Medical Assistance Trust Fund assessments for the period April 1, 1986, through March 31, 1987, and the period April 1, 1987, through December 31, 1987, attributable to the operation of the Petitioner?
Findings Of Fact These findings of fact were stipulated to by the parties. Golden Glades Regional Medical Center, formerly known as Miami General Hospital, is a 352-bed acute-care hospital located at 17300 NW 7th Avenue, Miami, Dade County, Florida. It holds HRS license 2288 and has been assigned HCCB number 10-0222. Its fiscal year is the calendar year. It has been owned by Golden Glades Regional Medical Center, Ltd., a Florida Limited partnership, since December of 1987. As of January 1, 1986, and for sometime prior to that, the hospital was known as Miami General Hospital and operated with a fiscal year ending March 31. On August 15, 1986, the HCCB certified to HRS that 1.5 percent of the $40,101,199 net annual operating revenue of Miami General Hospital for its fiscal year ending March 31, 1986, was $601,517.98. (Hospital Exhibit 1) As of January 1, 1987, the owner of Miami General Hospital was Miami General Hospital, Inc. (The majority shareholder of Miami General Hospital, Inc., was International Medical Centers, Inc., ("IMC"). Miguel Recarey, Jr., was president of IMC). (HX 2, 3, 4, 5, 6 and 9) Under subsection (7) of Section 407.05, Fla. Stat., and HCCB Fla. Admin. Code Rule 10N-1.004(3)(a), an audited actual report for fiscal year ending March 31, 1987 (hereafter "the 1987 audited actual report") was due within 120 days of that date; i.e., on or about July 31, 1987. However, on May 14, 1987, prior to the date the foregoing report was required to be filed, IMC was placed in receivership by the Florida Department of Insurance in Leon County Circuit Court Case No. 87-1456. On June 2, 1987, HRS was notified by Miami General Hospital that the hospital was in receivership. (HX 7) On June 18, 1987, an involuntary petition for bankruptcy was filed in the United States Bankruptcy Court for the Southern District of Florida, in Case No. 87-2131, "In re: Miami General Hospital". The Bankruptcy Order (HX authorizing the sale of the hospital found as follows: The hospital has been operating with losses of about $1,000,000 per month for sometime. The hospital was without funds to operate other than monies supplied from IMC (which itself had been placed in receivership) or use of cash collateral as to which First American Bank and Trust claimed a secured lien. On June 29, 1987, the HCCB was notified by Miami General Hospital that Miami General Hospital had been placed in receivership May 14, 1987, and that it was placed in bankruptcy June 18, 1987. (HX 8) On June 29, 1987, Miami General Hospital timely requested an extension of time to complete or provide the 1987 HCCB prior year report contending that the receivership and bankruptcy placed the hospital in a position where it was not able to complete its financial statements. In addition, the HCCB was notified by Miami General Hospital that the hospital did not have authority to retain an accounting firm to provide audited financial statements. (HX 8) (On July 24, 1987, the HCCB granted that extension request and advised the hospital that the report should be filed no later than 60 days following the Bankruptcy Court's approval of the hiring of an accounting firm to perform the audit.) (HX 13) In the meantime, on July 9, 1987, the assets of Miami General Hospital were sold by the trustee, free and clear of all claims, to First American Bank and Trust Company (FABT). (HX 10, 11) On August 4, 1987, the HCCB was notified by Miami General Hospital that the Bankruptcy Court had instructed the hospital's management team to file all reports and audits and that a copy of the HCCB's letter of July 24, 1987, would be saved for the new owners to keep on file. (HX 14) The letter of August 4, 1987, was not acknowledged by the HCCB. On or about August 8, 1987, an application for change of ownership of the hospital's license was received by HRS. That application reflected a change of ownership date of July 9, 1987, and indicated G. H. Corporation of Miami, c/o First American Bank and Trust - Legal Counsel, as owner of the hospital. (HX 12) On August 25, 1987, a bill of sale and trustee's deed, was executed from the trustee to G. H. Corporation of Miami, a Florida corporation. (HX 15, 16, 17) On August 25, 1987, license 2232 was issued by HRS to G. H. Corporation of Miami, d/b/a Miami General Hospital. (HX 18) Under HRS licensure laws and HCCB rules, a change of ownership occurred. On September 1, 1987, C & S Health Corp. submitted an application to HRS for change of ownership of the hospital reflecting a date of change of ownership of October 26, 1987. (HX 19) On September 4, 1987, a 1987 prior year report for Miami General Hospital was submitted by G. H. Corporation to the HCCB. (HX 20) The report was prepared using unaudited data. Receipt of that report was acknowledged September 16, 1987, by the HCCB (HX 21), but the report was deemed incomplete by the HCCB because it lacked audited financial statements, and a complete report, including audited financial statements, was requested. On September 28, 1987 the HCCB was notified that G. H. Corporation of Miami owned the land and buildings comprising Miami General Hospital as of August 25, 1987. (HX 22) The HCCB acknowledged this change of ownership November 17, 1987. (HX 23, 24) By special warranty deed dated December 5, 1987 (HX 25), ownership of the hospital was transferred from G. H. Corporation of Miami to Golden Glades Regional Medical Center, Ltd., which is the current owner of the facility. On December 7, 1987, Golden Glades Regional Medical Center, Ltd., filed a hospital license application with HRS. (HX 26) On December 8 and 10, 1987, the HCCB was notified that Golden Glades Regional Medical Center, Ltd., purchased Miami General Hospital on December 9, 1987 and in HX 28, that it desired to change its fiscal year to that of the calendar year. (HX 27, 28) On December 10, 1987, license 2277 was issued to Golden Glades Regional Medical Center, Ltd., d/b/a Miami General Hospital. (HX 29) On December 16, 1987, Golden Glades Regional Medical Center, Ltd., through counsel, advised the HCCB that, while wishing to comply with all applicable rules and regulations, literal compliance may be difficult due to the prior bankruptcy. The hospital also delayed changing its fiscal year. (HX 30) On December 23, 1987, the HCCB was provided with further explanations regarding the 1987 audited financial statements. By correspondence dated December 23, 1987, the HCCB was notified, "by way of further explanation, on May 14, 1987 Miami General Hospital was placed under State receivership by the Department of Insurance, and the Department operated the Hospital until it was sold to First American Bank and Trust (FABT) on June 18, 1987. FABT operated the hospital until it was sold to Golden Glades Regional Medical Center, Ltd. on December 9, 1987. The deed was recorded on December 11, 197. Because of the wrongdoing of the former owners that led to the State control, subsequent bankruptcy sale and criminal convictions of several of the former owners of the Hospital, the filing of audited financial statements is impossible. The new owners of the Hospital are totally unrelated to its former owners". 1/ (HX 31) On December 10, 1987, HRS license 2285 was issued to Golden Glades Regional Medical Center, Ltd. (HX 32) On March 3, 1988, the HCCB was notified that the hospital had been the subject of bankruptcy and that several of its former owners (IMC) had been prosecuted for matters relating to the operation of care services. (HX 35) aa. On April 14, 1988, Golden Glades Regional Medical Center, Ltd., through counsel, requested a waiver of the requirement to file an audited actual report for the hospital's fiscal year 1987, which, in this case, involves the period from about December 6, 1987, to December 31, 1987. (HX 36) bb. On May 13, 1988, the hospital objected to being assessed based on data supplied by Miami General Hospital for that hospital's 1986 fiscal year and notified the HCCB of the several changes of ownership of the hospital during the calendar year 1987. (HX 37) cc. On February 13, 1989, the HCCB was again requested to address assessments on Golden Glades Regional Medical Center. (HX 38) dd. On February 14, 1989, the HCCB was notified of approval by Medicare of the change in the hospital's fiscal year and the unsuccessful negotiations to sell the hospital to Jackson Memorial. (HX 39) ee. On March 14, 1989, HCCB certified to HRS that Golden Glades Regional Medical Center (hereafter, "Golden Glades") had not submitted a prior year actual report for fiscal year ending March 31, 1988, and therefore HCCB certified that the 1987 net revenue of Golden Glades was that shown by Miami General Hospital's most recent prior year report, which was for March 31, 1986. (HX 40) ff. On October 19, 1989, HCCB certified that Golden Glades had not submitted a prior year report for the fiscal year ending December 31, 1987, but certified to HRS that for purposes of assessments, 1.5 percent of $40,101.189 (the net revenue in Miami General Hospital's March 31, 1986 report) was $601,518. (HX 50) gg. On November 17, 1989, HCCB notified HRS that Golden Glades Regional Medical Center had filed financial statements for the year ended December 31, 1988, however, the audit was not finalized. (HX 51) Net revenue in the financial statements for the year ended December 31, 1988, was $10,599,690. One and a half percent of that amount is $158,995. The notification of November 17 was not a certification by the HCCB. Golden Glades Regional Medical Center, Ltd., is a limited partnership. Its general partner is CNS. Collection and disbursement of Public Medical Assistance Trust Fund monies pursuant to Section 395.101(2), Florida Statutes, is the responsibility of the Department of Health and Rehabilitative Services and not the Respondent. The Department of Health and Rehabilitative Services was not a party to these proceedings. The Respondent is only responsible for calculating the amount of a hospital's Public Medical Assistance Trust Fund assessment and certifying the amount of the assessment to the Department of Health and Rehabilitative Services. The Respondent used the audited actual data for the fiscal year ending March 31, 1986, in calculating the Public Medical Assistance Trust Fund assessment of the Petitioner for the period of April 1, 1986, through March 31, 1987, and the period of April 1, 1987, through December 31, 1987. The Respondent is required by Section 395.101(2), Florida Statutes, to certify the Public Medical Assistance Trust Fund assessment of a hospital within six months after the end of the hospital's fiscal year. No exception is provided for changes in ownership of the hospital. A change in ownership does not affect the Respondent's responsibilities under Section 395.101(2), Florida Statutes.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be issued dismissing, with prejudice, the Petitioner's Petitions in these cases. DONE and ENTERED this 31st day of May, 1990, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 1990.
The Issue The issue for determination is whether Petitioner is eligible for a consumer certificate of exemption pursuant to Subsection 212.08(7)(o), Florida Statutes.
Findings Of Fact On January 31, 1994, the National Council of La Raza (Petitioner) filed an application with the Department of Revenue (Respondent) for a consumer certificate of exemption as a charitable organization. Petitioner indicated, among other things, on its application that it was a social welfare organization. Petitioner filed the application in anticipation of bringing its annual conference to Miami Beach, Florida in July 1994. 1/ Petitioner is a private, nonprofit organization which was incorporated in 1968 in Arizona. Petitioner's national headquarters is in Washington, D.C. and it has offices in Arizona, California, Illinois, and Texas. Article III of Petitioner's second amended articles of incorporation provides in pertinent part that one of its purposes is to "operate exclusively for charitable and educational purposes, including, but not limited to improvement of the condition of the Mexican American poor, and the under privileged." Article III of the amended articles of incorporation further provides in pertinent part that in carrying-out its purpose it would "conduct research and inquiry of the problems and issues that confront, with local variations and particular effects, the Chicano communities"; "promote meetings, conferences, seminars, discussions and other forms of group communication and analysis of the same among those engaged in organizational activity"; "provide technical assistance to affiliated barrio/community development organizations and to encourage, promote and facilitate mutual aid and assistance among them in order to strengthen each of them through the moral, technical and material resources of all"; "encourage and assist the development of the moral, technical and material resources of the barrios and colonias"; and "organize, exist and function as a charitable, non-profit, non-political 501(c)(3) tax-exempt organization." Also, Article III of the amended articles of incorporation provides in pertinent part that its priorities are to "serve as the national advocate and mobilizer of resources and support for barrio/community development programs"; and "deliver program support and technical assistance services to barrio/community development programs in [named] priority areas." Consistent with the purposes in Petitioner's amended articles of incorporation, Petitioner provides in its publicly disseminated literature that it provides its services through four major types of initiatives: (a) "capacity-building assistance to support and strengthen Hispanic community-based organizations"; (b) "applied research, public policy analysis, and advocacy on behalf of the entire Hispanic community, designed to influence public policies and programs"; (c) "public information efforts to provide accurate information and positive images of Hispanics in the mainstream and Hispanic media"; and (d) "special catalytic efforts which use the [Petitioner] structure and reputation to create other entities or projects important to the Hispanic community". On or about May 1, 1968, Petitioner received a federal income tax exemption from the Internal Revenue Service as an organization described in Section 501(c)(3) of the Internal Revenue Code. Petitioner's organizational classifications under Section 501(c)(3) were charitable, educational and scientific. Petitioner's Section 501(c)(3) federal income tax exemption was effective at the time of its application with Respondent for a consumer certificate of exemption. Petitioner has been granted sales tax exemption by Washington, D.C., Michigan, Texas, and the city of Los Angeles, California. Petitioner's organizational structure consists of a Board of Directors, Office of the President, Office of Finance, Office of Administration, Office of Research Advocacy and Legislation, Office of Technical Assistance and Constituency Support, Office of Institutional Development, and Office of Development and Special Events. As to the Office of Research Advocacy and Legislation (ORAL), it is responsible for conducting research and analysis of issues which have been identified by Petitioner's Board of Directors and affiliates as having a primary importance to the Hispanic community. ORAL, through its Policy Analysis Center, conducts studies and research on immigration, education, housing, poverty, welfare, census, and national farm workers issues. Also, ORAL engages in a limited amount of lobbying on behalf of the Hispanic community. ORAL's services are mainly educational. The services include providing information and pamphlets on immigration and civil rights and producing a national radio program on immigration issues. The services are delivered primarily through brochures and pamphlets which are distributed without charge to Petitioner's affiliates and certain groups and organizations. Other groups and organizations are charged a fee depending upon what the group or organization is. ORAL's services are provided to a disadvantaged Hispanic population. As to the Office of Technical Assistance and Constituency Support (TACS), it is responsible for interfacing with both Petitioner's affiliates and its branch offices to directly provide services to the disadvantaged Hispanic community. Most of TACS' assistance focuses on resource development, program operations, and management or governance needs, in addition to addressing critical community needs through national emphasis programs operated in cooperation with Petitioner's affiliates. Also, TACS provides capacity-building assistance to the staff and board members of Hispanic community-based organizations through staff and board training and on-site assistance. As to the Office of Institutional Development (OID), it is responsible for conducting research on issues new to Petitioner and directing Petitioner's services to the Hispanic community. OID coordinates, on the national level, Petitioner's new programs (program models) in education, health education, the elderly and leadership development, as well as projects involving Europe. OID implements the new programs through Petitioner's affiliates. For example, in the 1980's AIDS became a new concern for the Hispanic community and was assigned to OID. A national toll-free AIDS hot line was established by OID and maintained in its office. The hot line is advertised through various media communications, Petitioner's affiliates, and community- based organizations. Additionally, funding has been provided through OID to two (2) Florida affiliates, Centro Campesino Farmworkers Center, Inc., and the Hispanic Alliance. The funding was provided through OID's leadership initiatives to a coordinating council for the purpose of distributing post-hurricane relief to farmworkers in Florida. The offices of ORAL, TACS, and OID have under their responsibility mission activities and core activities. Core activities involve issues which are identified by Petitioner's board and its affiliate organizations as being at the core of Petitioner's existence, such as civil rights enforcement and immigration issues. These activities are not necessarily funded by a particular government contract or grant from a private foundation or corporation. Mission activities consist of activities which are important in supporting the mission of Petitioner, but are not currently funded by a particular government contract or grant from a private foundation or corporation. These activities relate to administrative functions engaged in by ORAL, TACS, and OID to support Petitioner's operations and are funded with internal funds. The offices of ORAL, TACS and OID work interdependently. A problem is identified in the Hispanic community by Petitioner and/or its affiliates and assigned to ORAL or OID; ORAL or OID conducts research and develops programs to address the problem; and TACS delivers the program services to the disadvantaged Hispanic community, working with affiliates and community-based organizations to implement the programs. A program called Project EXCEL (Excellence in Community Educational Leadership) is an educational program developed by Petitioner. The problem of illiteracy and low graduation rates was identified. Research was conducted on the problem and the program, Project EXCEL, was developed. Petitioner implemented the program through its on-site staff who had oversight responsibility and who evaluated the program and actually worked with the clients to assist in the program's evaluation; whereas, the actual direct educational services were delivered to the clients by persons working for the organizations. Project EXCEL was implemented at public schools, day care centers, and churches. Petitioner secured and provided the funding for the community-based organizations to run demonstration sites for Project EXCEL. Two Florida organizations received assistance from Petitioner regarding Project EXCEL. Centro Campesino Farmworkers Center, Inc., which holds a sales tax exemption from Respondent, utilized the Project EXCEL curriculum developed by Petitioner in providing after-school services to children of migrant farmworkers. Also, the Coalition of Florida Farmworkers Organizations, Inc., which holds a sales tax exemption from Respondent, received a grant to implement Project EXCEL and Petitioner provided a curriculum and some of its staff to assist the Coalition of Florida Farmworkers in working with the children. Both the Centro Campesino Farmworkers and the Coalition of Florida Farmworkers pay annual dues to Petitioner as affiliates. They have received from Petitioner pass-through funds as subgrants. Petitioner does not engage in direct fund raising to support the organizations. Pass-through funding is funding distributed through Petitioner to its affiliates or other outside organizations through subgrants. The funds are received by Petitioner from grants for which Petitioner applies. For both the Centro Campesino Farmworkers and the Coalition of Florida Farmworkers, Petitioner has not provided volunteers to run any of the organizations' programs or provide the organizations' services at the local level. Furthermore, Petitioner does not control, govern, or administer any of the Centro Compesino Farmworkers' or the Coalition of Florida Farmworkers' services or activities at the local level. In another instance, Petitioner identified housing problems for the Hispanic community regarding ownership, quality and availability. Research showed that, for Hispanics, there existed a low rate of home ownership, substandard housing, and discrimination. Petitioner secured funding to build low income housing and commercial developments in low income neighborhoods; at times, providing pre-development costs or professional services such as engineers and architects. As with Centro Campensino Farmworkers and the Coalition of Florida Farmworkers, Petitioner does not provide volunteers to work for its affiliate organizations at the local level (Petitioner's staff are paid employees), Petitioner does not engage in direct fund raising to support its affiliate organizations, and Petitioner does not control, govern, or administer any of the services at the local level. Also, ORAL, TACS, and OID have worked interdependently in developing programs in the health field. AIDS public service announcements have been produced by Petitioner. An AIDS national toll-free hot line is operated by Petitioner, with professional staff manning the phones to provide information to AIDS patients and others and with the costs being borne by Petitioner. As to the Office of Development and Special Effects (ODSE), it is responsible for fund raising, proposal writing, receipt of grants, Petitioner's future endowment or capital campaign. ODSE's primary responsibility is the operation of Petitioner's annual conference and Congressional awards dinner. The annual conference is held in different locations and the awards dinner is held in Washington, D.C. The annual conference is attended by thousands of participants from across the United States to discuss topics and issues relevant to the Hispanic community. Affiliates which attend pay a registration fee. Usually offered at the conference are workshops, seminars, an art show, job fair, silent auction, and an exhibit hall where corporations and governmental agencies can promote themselves. Except for the meal events, all the other activities are open to the public at no charge. As part of the conference, Petitioner sponsors a Youth Leadership Program in which the expenses are paid for 25 to 30 youths (tenth to twelfth graders), who are disadvantaged and at-risk and from various parts of the country, to attend the conference. A similar program is sponsored by Petitioner for college students. Additionally, Petitioner sponsors a one day event for area disadvantaged district school students. Petitioner's 1994 annual conference was held at Miami Beach, Florida on July 17 - 20, 1994. Petitioner provided or sponsored all of its usual activities or programs, except for a job fair. In addition, Petitioner sponsored a senior citizens day for the disadvantaged elderly. The registration fee for affiliates was $150. Petitioner's Office of Finance is responsible for the fiscal management of all internal matters and the financial practices of Petitioner. Petitioner reflects its fiscal financial picture on two documents. As a Section 501(c)(3) organization, Petitioner files federal tax returns, known as Forms 990, on a yearly basis. Additionally, Petitioner has audited financial statements prepared annually. Among other things, Form 990 reflects Petitioner's expenses found on its audited financial statements, but in greater detail. Petitioner's fiscal year is from October 1st to September 30th of each year. Expenditures associated with Petitioner's Board of Directors, Office of the President, Office of Finance, and Office of Administration are general administrative expenses. These expenditures fall within the category of supporting activities on Petitioner's audited financial statements. For the fiscal year October 1, 1992 to September 30, 1993, Petitioner's total expenditures were $5,581,316. Of this total of expenditures, $4,407,194 represented expenses for program services, per the category on Form 990, of which $126,250 represented pass-through funds to subgrantees; of which over $2.6 million represented compensation of officers and directors, etc., other salaries and wages, pension plan contributions, other employee benefits, payroll taxes, and conferences, conventions and meetings 2/ ; and of which $57,421 represented legislative advocacy. Also, of the total expenditures, $1,174,122 represented expenses for supporting activities, of which $976,044 represented general administration; and of which $198,078 represented fund raising which is money expended in writing proposals to fund Petitioner's programs. For the fiscal year October 1, 1991, through September 30, 1992, Petitioner's total expenditures were $5,150,084.00. Of this total of expenditures, $3,982,552 represented expenses for program services, including $172,620 for pass-through funds to subgrantees, over $2.3 million for compensation of officers and directors, other salaries and wages, pension plan contributions, other employee benefits, payroll taxes, and conferences, conventions and meetings, and $54,410 for legislative advocacy. Also, of the total expenditures, $1,167,532 represented expenses for supporting services, including $978,557 for general administration, and $188,975 for fund raising. Even though Petitioner claims to have 182 affiliates, only 162 affiliates were identified. Petitioner actively works with 120 of the 162 identified affiliates. Nine of the affiliates hold certificates of exemption issued by Respondent. Because of the minimal descriptions provided by Petitioner of the affiliates, only a small minority could be determined to provide services for free or at a substantially reduced cost.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order DENYING the National Council of La Raza a consumer certificate of exemption. DONE AND ENTERED this 8th day of February, 1996, in Tallahassee, Leon County, Florida. ERROL H. POWELL, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of February, 1996.
Conclusions Having reviewed the Notice of Intent to Deem Application Incomplete and Withdrawn from Further Review dated March 13, 2013 (Ex. 1), and the Administrative Law Judge’s Order Granting Respondent’s Motion to Relinquish Jurisdiction and Dismiss Case As Moot (Ex. 2), the Agency for Health Care Administration finds concludes as follows: 1. The license of the Licensee/Transferor, License Number 5799, was revoked by Final Order dated March 8, 2013. 2. The change of ownership application filed by the Petitioner/Transferee is moot because the Licensee no longer has a license. 3. The Petitioner’s change of ownership application is therefore withdrawn from further review in accordance with the Administrative Law Judge’s order. ORDERED in Tallahassee, Florida, on this 23 day of _ Marly , 2014. Sel retary th-Care Administration
Other Judicial Opinions A party that is adversely affected by this Final Order is entitled to seek judicial review which shall be instituted by filing one copy of a notice of appeal with the agency clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. Filed March 31, 2014 3:56 PM Division of Administative Hearings CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy offhis Final Order was served on the below- named persons/entities by the method designated on this .$/-day of Space , 2014. Richard J. Shoop, Agency Cler Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone (850) 412-3630 Jan Mills Shaddrick Haston, Unit Manager Facilities Intake Unit Licensure Unit Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) John E. Bradley, Assistant General Counsel Arlene Mayo-Davis, Field Office Manager Office of the General Counsel Local Field Office Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) Honorable June C. McKinney Administrative Law Judge Division of Administrative Hearings (Electronic Filing) Bernard P. Coniff, Esquire Counsel for Special Care, Inc. 760 Ponce De Leon, Suite. 101 Coral Gables, Florida 33134 (U.S. Mail) HORIDA AGENCY FOR HEALTH CARE ADMINSTRATION Pa RICK SCOTT ELIZABETH DUDEK GOVERNOR Better Health Care for all Floridians SECRETARY 1c, (OP 2% March 13, 2013 my wk eS CERTIFIED MAIL Bernard P. Coniff, Esq. Wilfred Braceras Special Care, Inc. 760 Ponce De Leon, Ste. 101 Coral Gables, Florida 33134 cense Number: 5799 Po} 300 LE 2°) Fy Certified Article Number 756 9008 9111 6923 4301 SENDERS RECORD NOTICE OF INTENT TO DEEM APPLICATION INCOMPLETE AND ENE EY DERM APPLICATION INCOMPLETE AND WITHDRAWN FROM FURTHER REVIEW Dear Sir/s: Your change of ownership (CHOW) application for a license is deemed incomplete and withdrawn from further consideration pursuant to Section 408.806(3)(b), Florida Statutes (F.S.), which states that “Requested information omitted from an application for licensure, license renewal, or change of ownership, other than an inspection, must be filed with the agency within 21 days after the agency’s request for omitted information or the application shall be deemed incomplete and shall be withdrawn from further consideration and the fees shall be forfeited’. You were notified by correspondence dated 01/18/2013 to provide further information addressing identified apparent errors or omissions within twenty-one days from the receipt of the Agency’s correspondence. Our records indicate you received this correspondence by certified mail on 01/24/2013. The requested information was reviewed by the Agency. However, your application is deemed incomplete and withdrawn from further consideration, The outstanding issues remaining for licensure are: Proof of Financial Ability To Operate Conclusion: The applicant has not met the following Statutory filing requirements for proof of financial ability to operate: ¢ The applicant failed to provide independent evidence that the funds necessary for startup costs, working capital, and contingency financing exist and will be available as needed as required under Section 408.810(8), Florida Statutes. Analysis: Staff reviewed the documents submitted by the applicant to demonstrate proof of financial ability to operate. Due to errors and omissions in the filing, staff is unable to evaluate the applicant’s financial ability to operate. Proof of Funding: The applicant did not provide adequate proof of ability to fund start-up costs, working capital, and required contingency funding as required by Section 408.810(8), Florida Statutes. : The inter-office omissions letter dated January 18, 2013, raised the following issues: 2727 Mahan Drive,MS#30 Tallahassee, Florida 32308 Visit AHCA online at ahca.myflorida.com CYHIBIT 1 Mr. Braceras * BOYNTON BEACH ASSIS. LIVING FACILITY Page 2 03/13/2013 CHOW Purchase Price The applicant did not indicate the purchase price on Schedule 1. In addition, the applicant did not provide documentation of the purchase (purchase agreement, bill of sale, etc.) and did not provide proof of available funding to complete the purchase transaction. Please provide supporting documentation indicating the availability of funds to complete the purchase. Proof may include account statements of the purchaser prior to purchase. If the purchase has already been completed (an executed bill of sale exists) please provide documentation of the transfer of funds including canceled checks, and or electronic funds transfer receipts. if the applicant borrowed any of the funds for the purchase from an institution or individual, please disclose the amount borrowed, the identity of the lender, and documentation supporting the loan. While the applicant did indicate a purchase price of $30,000, it again did not provide proof of CHOW price, potentially significantly understating its. funding requirement. Working Capital, and Contingency Financing Working capital as defined on Schedule 1 as the largest cumulative cash need from year one or two, from Schedule 7, Projected Cash Flow Statement, Line 21 of the application. In its application, the agency listed its largest cumulative cash need as $0. However, the correct figure, according to the applicants’ Schedule 7, as filed, is $62,182. In addition to providing funding for start-up costs and working capital requirement, all applicants are required by law to provide for contingency financing. Contingency financing as defined in Section 400.471(2}(e), Florida Statutes, and applies to all agency licensure and requires an applicant’s access to contingency financing in addition to funding anticipated cash flows. The purpose of contingency financing is to provide funding for unanticipated, extraordinary occurrences that the applicant cannot project. The contingency financing should cover at least one-month’s average operating expense over the first year of operations. This funding should be in addition to the funding for working capital and Start-up cost on Schedule 1. On Schedule 1, the applicant calculated its contingency funding requirement as $0. However, based on the financial projections in the application, the total annual operating expense in year one is $1,240,565; therefore, one month’s average operating expense would be $103,380. Note: the amounts above are based on the application as filed. The amounts may change due to the financial and application omissions in this notice. Together, the combined total working capital, and contingency funding requirement for the applicant is $165,562, as filed. In its initial application, the applicant did not complete the working capital or contingency funding components of the minimum funding requirement calculation. The only amount listed were pre- opening costs of $66,375. In its response to omissions, the applicant included those omitted items and adjusted pre-opening costs, which appears to have incorrectly contained the purchase price instead of it being listed separately. Because the applicant did not provide any documentation proving the purchase had been completed, and confirming the purchase price, the purchase price must be added to the minimum funding requirement. Mr. Braceras BOYNTON BEACH ASSIS. .O LIVING FACILITY Page 3 03/13/2013 As a result, the minimum funding requirement, as filed in its omission response, is $213,965 ($60,000 purchase price + $50,780 working capital + $103,185 contingency funding). Insufficient Proof of Funding The applicant did not indicate any source of funds on Schedule 1, and did not provide any supporting documentation as evidence that any required financing exist and are available for immediate use, as directed in the instructions to Schedule 1. Failure to provide proof of ability to fund the minimum funding requirement will result in denial of the application. Pursuant to Schedule 1 instructions, please provide independent, certifiable documentation of the existence and availability of these funds, Examples of documents that support funding include: * copies of current bank statements for accounts owned by the proposed agency, * letters of commitment from a bank or other independent lending source, * or a copy of a line of credit agreement indicating credit line and available credit and any restrictions, * parent company audited financial statements (Note: unaudited financial statements will not be considered as proof of funding ability). In addition, if submitting more than one document as Support for funding, attach a Separate schedule that clearly lists each item, including: Name of the financial institution Cutoff (balance) date Last four digits of the account/identification number Ending balance For a line of credit, along with the above, provide total credit line and available credit Note: any parent company or personal funds pledged to the applicant must meet the above criteria and the owner of the funds must provide a binding letter of financial commitment pledging the funds to the applicant. Note: already paid pre-opening costs being claimed must be supported by paid invoices, receipts, etc. All receipts must be accompanied by a separate schedule prepared in an orderly fashion that recaps the nature of the expenditure, amount, and that ultimately ties to the amount claimed as pre-paid expense on Schedule 1. Receipts received alone, without an orderly analysis attached will not be considered as @ source of funding. As its source of funds the applicant provided bank statements proving $143,760 (one statement indicating $4,916, and the second indicating a balance of $138,844). In addition, the applicant included a copy of a check in the amount of $30,000. Staff is unsure of the nature and relevance of the check as no explanation was given for it. However, the funding shortfall is $70,205 and even if the $30,000 check were proof of some prepaid costs, the minimum funding requirement would still be under funded by $40,205. : Since the proven funding is less than the required funding the applicant has not met the provisions of Section 408.810(8), Florida Statutes, and has not proven the financial ability to operate. Mr. Braceras BOYNTON BEACH ASSIS._D LIVING FACILITY Page 4 03/13/2013 Residential Group Care Inspection Report (DOH Form 4029 Please provide a copy of this report from your county health department. The report must be satisfactory and have a current date. EXPLANATION OF RIGHTS Pursuant to Section 120.569, ES, you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28- 106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Sincerely, Shaddrick Haston, Manage) Assisted Living Unit SH/Pottere ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS SPECIAL CARE, INC., Petitioner, vs. Case No. 13-1450 AGENCY FOR HEALTH CARE ADMINISTRATION, Respondent. ORDER GRANTING RESPONDENT’S MOTION TO RELINQUISH JUR[ISDIC]TION AND DISMISS CASE AS MOOT Respondent's Motion to Relinquish Jurfisdic]tion and Dismiss Case as Moot ("Motion") came before the undersigned on June 10, 2013, in which the Agency for Health Care Administration ("Respondent" or “ACHA") asserted that there are no disputed material facts before the undersigned in this matter. ACHA contends that license number 5799, which Special Care, Inc.,*/ is seeking with its change of ownership application, has been revoked by final agency action. Respondent further contends that since license number 5799 ceases to exist, all collateral matters regarding the license are moot, including sufficiency of an application for Petitioner, which is the issue before the undersigned. On June 17, 2013, Special Care, Inc. filed Petitioner's Objection to Respondent's Motion to Relinquish Jurisdiction and Dismiss Case as Moot ("Response"). In the Response, Petitioner did not dispute the material facts of Respondent's Motion stated in paragraphs two through six. Petitioner only alleged duress by Respondent as the reason for Petitioner's submission of a change of ownership application instead of an initial licensure application. After careful consideration of the pleadings, and there being no disputed issues of material fact to be resolved by the Division of Administrative Hearings since Petitioner's change of ownership application is moot because license number 5799 does not exist, it is, therefore, EXHIBIT 2 ORDERED that: 1. The Motion is granted. 2. The final hearing scheduled for July 10, 2013, is canceled. 3. Jurisdiction is relinquished to the Agency for Health Care Administration for entry of a final order. The file of the Division of Administrative Hearings is closed. DONE AND ORDERED this 19th day of June, 2013, in Tallahassee, Leon County, Florida. COHN, JUNE C. McKINNEY 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 19th day of June, 2013.
