Findings Of Fact Both Ryder and Disney World are self-insurers as defined by Section 440.38, Florida Statutes (1979). If the proposed rules were adopted both parties would be liable for assessments required by the rules.
The Issue The issue for determination in this proceeding is whether Petitioner qualifies for a certificate of exemption as a charitable organization within the meaning of Section 212.08(7)(o)2.b., Florida Statutes. 1/
Findings Of Fact Petitioner is a Florida corporation with its principal place of business located in Winter Park, Florida. Petitioner operates 10 additional offices throughout Florida. Petitioner is a non-profit corporation for purposes of the federal income tax. Petitioner obtained an exemption from federal income tax in accordance with Section 501(c)(3) of the Internal Revenue Code. Petitioner is engaged in the business of providing financial counseling services to the general public. Financial counseling services include debt consolidation, debt management, financial counseling, and budgeting. Debt consolidation services are those in which Petitioner negotiates a payment plan between its clients and the clients' creditors. Debt management services are those in which a client makes one payment to Petitioner and Petitioner disburses the client's money in multiple payments to the client's various creditors. Financial counseling involves assistance in the management of client cash flow and the avoidance of default on client debts. Budgeting services are incidents of the other services. Petitioner does not provide its services free of charge. Petitioner derives its revenue from client fees and payments from creditors for collection and remittance on debts owed by clients. Client fees make up approximately 25 to 35 percent of Petitioner's revenues. Creditor payments make up approximately 65 to 75 percent of Petitioner's revenues. Client fees consist of a $20 registration fee and a monthly fee of up to $15 per month for disbursing payments to creditors. The amount of the monthly fee is determined at the discretion of Petitioner's counselors based on such factors as the total debt, number of creditors, nature of the bills, and the ability of the client to pay. Petitioner's counselors are instructed to offer services to anyone who requests it without charge. Counselors have the authority to waive the $20 registration fee in particular cases. Clients are required to sign a service agreement in which they employ Petitioner to represent them in negotiating with creditors and making payments required under the terms of a negotiated plan. A client who does not pay monthly payments required under a negotiated plan for three months is dropped as a client. Client funds are deposited into a regular checking account maintained by Petitioner. The client checking account is separate from Petitioner's checking account but does not pay interest on client funds. Petitioner has approximately 3,000 clients in Florida. The annual income of Petitioner's clients ranges from $6,000 to $120,000. 2/ Approximately 73 percent of client creditors are credit card companies, finance companies, and medical groups. The remaining 27 percent are other creditors. Approximately half of the clients' creditors pay Petitioner for collecting money from their debtors and remitting payments to them. The majority of creditors who pay Petitioner a fee for debt collection pay approximately 10 to 12 percent of the debt amount collected and remitted. Approximately 10 percent of the creditors pay Petitioner 15 percent of the debt amounts collected and remitted. Petitioner does not raise funds for any other charitable organization. Petitioner does not provide volunteers for other charitable organizations. Petitioner is not a member of the National Foundation for Consumer Credit Counseling. Petitioner does not receive any contributions from any charitable or civic organizations, including United Way. Petitioner does not provide any of the services prescribed under applicable state statutes or rules for qualification as a charitable organization. Petitioner does not provide social welfare services and does not provide the services it renders free of charge or at a substantially reduced rate. A reasonable percentage of Petitioner's clients are not persons who are unable to pay, disadvantaged, or who suffer a hardship.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order denying Petitioner's application for exemption from sales tax as a charitable organization. RECOMMENDED this 22d day of September, 1995, in Tallahassee, Florida. DANIEL MANRY 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 22d day of September, 1995.
Findings Of Fact Petitioner is a residential condominium association. Petitioner owned or operated a 1000-gallon tank to store diesel oil to operate an emergency power generator. Following the discovery of an underground discharge, Petitioner closed the tank and reported the discharge to Respondent on July 12, 1994. Following the receipt of an application, Respondent, by letter dated March 22, 1995, determined that Petitioner was ineligible to participate in the Florida Petroleum Liability and Restoration Insurance Program (Program). The reason cited for the determination is: Pursuant to Section 376.3072(2)(a)3.a, F.S. the facility was required to be in compliance with the Department rules at the time of the discharge. Pursuant to Section 62-761.480, F.A.C. owners or operators of storage tank systems containing petroleum products should have demonstrated to the Department the ability to pay for facility cleanup and third-party liability resulting from a discharge at the facility. The compliance deadline for financial responsibility for this facility was December 31, 1993. At the time of discovery of the discharge, there was no documentation to demonstrate financial responsibility for this facility. Therefore, this site is not eligible for restoration coverage. Petitioner did not make any showing of financial responsibility prior to December 31, 1993. The significance of the June 29 letter from Petitioner's counsel is that, even ignoring Petitioner's failure to demonstrate financial responsibility to Respondent by December 31, 1993, Petitioner cannot prove that it met the financial responsibility requirements as of such date. Petitioner is a small business under Section 288.703(1). Upon discovery of the discharge, Petitioner promptly reported the discharge to Respondent and drained and removed the system from service. Petitioner did not intentionally cause or conceal a discharge or disable leak detection equipment. Petitioner proceeded to complete initial remedial action as defined by the rules. Petitioner never received an eligibility order from Respondent, so Petitioner was excused from applying for third- party liability coverage.
Recommendation It is RECOMMENDED that the Department of Environmental Protection enter a final order determining that Petitioner is ineligible to participate in the Program. ENTERED on July 24, 1995, 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 on July 24, 1995. COPIES FURNISHED: Virginia B. Wetherell, Secretary Department of Environmental Protection Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Kenneth Plante, General Counsel Department of Environmental Protection Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Thomas B. Hart Humphrey & Knott, P.A. P.O. Box 2449 Ft. Myers, FL 33902-2449 W. Douglas Beason Assistant General Counsel Department of Environmental Protection 2600 Blair Stone Road Tallahassee, FL 32399-2400
The Issue Whether Petitioners' Retrospective Large Risk Alternative Rating Option is in accordance with Florida law for approval as either a "deviation" or an independent rating plan.
Findings Of Fact Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company are Massachusetts-domiciled property and casualty insurers authorized to transact insurance business in the State of Florida with offices located at 175 Berkeley Street, Boston, Massachusetts. Liberty Mutual Insurance Corporation and The First Liberty Mutual Insurance Corporation are Iowa-domiciled property and casualty insurers authorized to transact insurance business in the State of Florida with offices located at 2829 Westown Parkway, Suite 300, Des Moines, Iowa 50265. Liberty Insurance Corporation is a Vermont-domiciled property and casualty insurer authorized to transact insurance business in the State of Florida with offices located at 200 Twin Oaks Terrace, South Burlington, Vermont. On or about April 23, 1991 the National Council on Compensation Insurance (NCCI) submitted a filing on behalf of its members and subscribers (which includes all the Petitioners) various items including, for purposes of this case, a request for approval of a Large Risk Retrospective Rating Option. For purposes of this case, NCCI is a workers' compensation rate making and data collection organization based in Florida. It promulgates rates and collects workers' compensation data in approximately thirty states. In response to an apparent telephone call between Mr. Watford, the Respondent Department of Insurance's actuary, and Mr. Edward Dew, Associate Actuary with NCCI, it was explained that the 1991 NCCI Large Risk Retrospective Rating Option "...proposes greater freedom of negotiation between insurer and insured for risks with over $1,000,000 in standard premium." On June 20, 1991, the Department of Insurance, in a letter from Mr. Watford to Mark Casteel, while approving portions of the NCCI filing, denied the use of the Large Risk Alternative Rating Option for the NCCI members and subscribers on the basis that it did not comport with Section 627.091(1) F.S. and that: "The Large Risk Alternative Rating Option is not a rating plan but merely an agreement to use any factors acceptable to both parties and is hereby disapproved." Subsequently, the NCCI updated the pages of its Retrospective Rating Plan Manual for Workers' Compensation and Employers Liability Insurance on file with the Department of Insurance to reflect, as of January 1, 1993, that the Large Risk Alternative Rating Option was not applicable in the State of Florida. On or about June 30, 1993, Petitioners filed their Retrospective Rating Large Risk Alternative Rating Option (hereafter, Petitioners' LRARO) with the Department. This filing was made independent of NCCI. Petitioners' LRARO is a large risk alternative rating option which was intended to be a "deviation" from the previously filed and approved Option V Plan filed by NCCI. It was designed for marketing to sophisticated employers/insureds in the workers' compensation coverage market. At present, the NCCI Option V Plan is the only retrospective rating plan filed and approved in Florida. A "deviation" is permitted under Section 627.211(2) F.S. but that section is relatively new, and historically the term has applied to "across the board" percentage of rate reductions. The letter accompanying Petitioners' LRARO filing, and outlining Petitioners' goals, states that their LRARO: "...would afford large insureds the ability to negotiate all parameters of their retrospective rating agreement without being tied to standard premium as is the case with the currently approved retrospective rating plan." As pointed out in the letter: "Standard premium is an insurance term that is contingent upon numerous variables such as experience modification, manual rates, payrolls, expense constants, etc. all of which are foreign to non-insurance businesses." By the same token, these terms are terms used and understood by the Department. The NCCI Option V Plan is a typical retrospective premium rating plan. In a typical retrospective rating plan, the insured and insurer agree that the final premium paid for the insurance will be based upon losses actually incurred in the policy period. Certain expenses, charges, taxes and assessments are prenegotiated, based upon maximum and minimum premiums. Petitioners LRARO targets Florida employers who pay in excess of $500,000 per year in workers' compensation premiums and who may only wish to purchase certain services. In this respect, the current filing is, if not "essentially the same", as testified by Mr. Watford, the Department's actuary and plan reviewer, at least is substantially similar to the prior NCCI Large Risk Retrospective Rating Option filed by NCCI in 1991 and disapproved by the Department as constituting only "factors" not a "rating plan." The prior unapproved NCCI filing catered to insureds in the $1,000,000 premium category, had no minimum and maximum deviation percentages, and had no component limitations. Petitioners' LRARO, here at issue, has set minimum and maximum parameters, .10 plus or minus, and allows underwriters to deviate only on the expense charge, excess loss premium charge, and insurance charge components. In this respect, Mr. Watford's purely descriptive phraseology that the current filing constituted a "variation" on that prior unapproved NCCI option is accepted. Mr. Watford treated the review of Petitioners' filing as if it were such a variation. He applied to it all of the information and experience gleaned during the previous plan negotiations with NCCI and with Petitioners' representatives who were involved at that time. However, he also spent seven months trying to calculate how Petitioners' 1993 LRARO would impact rates and potential insureds. In that sense, he considered Petitioner's LRARO to be a completely independent rate plan. Had he considered Petitioners' LRARO a deviation, he would have asked for more information, but since it was, in his opinion, a new rate plan or at least a modification of the approved NCCI Option V, he rejected it upon its failure to meet the requirements of the statute and applicable rules. On January 13, 1994, without requesting any further information in the interim since Petitioners' June 30, 1993 filing, the Department disapproved Petitioners' LRARO filing, claiming that it was an independent rating plan, not a deviation. The rejection was primarily on the basis that the LRARO would not allow the agency regulatory oversight as to determination of workers' compensation premiums since it proposed to allow Petitioners and prospective insureds to agree unilaterally on the various components to be used in the rating process. In support of Petitioners' claim that their filing is only a deviation, they point to the last paragraph of Page 1 of the filing memorandum which states that allowable departure from the filed retrospective rating values is warranted for certain sophisticated insurance buyers; (2) paragraph 4 of Page 3 of the filing memorandum which states that insureds would be permitted to deviate from the filed expense ratio tables, insurance charge and excess loss of premium with the agreement of the insured; and (3) the top of Page 4 of the filing memorandum which is "The expense deviation for this filing is plus or minus .10 from the currently approved table of expenses." Within each of the three variables proposed by Petitioners' LRARO (expense charge, excess loss premium charge, and insurance charge components) there are numerous listed factors to which underwriter experience and negotiation would be applied. Some of these variable factors only appear within forms and not in the LRARO's separate breakout of these items, making agency analysis even more tricky. The NCCI 1991 filing and the Petitioners' 1993 filing contain a difference in some pluses and minuses shown in some factors that Petitioners intend to use to determine a premium. However, given the 0 to -.10 Credit or 0 to +.10 Debit range and, the factors to be utilized (locations, claims, safety engineering and other service requirements) it would be difficult, if not impossible, to see what the total impact of what the combined factors of Petitioners' plan would be, and the insurer would not have on file every manual of classifications, rules, and rates, every rating plan, and every modification of any of the foregoing which are proposed to be used. All that would be on file would be the factors. At formal hearing, insufficient information was provided to justify the different factors contemplated in the filing. Also, using the minus and plus .10, the factors would likely have the effect of eliminating themselves. Furthermore, it was demonstrated that the filing plan was so dependent on agreements between Petitioners and prospective insureds that the Department could not evaluate whether the filing would be excessive, inadequate or unfairly discriminatory in its impact on rates. Even Petitioners' experts had to admit that uniformity is only guaranteed by documentation within individual insurers' files and by the sophistication of large risk buyers and competition in the marketplace. Mr. Watford's testimony is accepted that an after-the-fact market conduct exam would not be an effective way to regulate this type of practice. The NCCI Option V Plan expense component is based on industry average expenses as opposed to the specific expenses of an insurer in connection with a specific insured's policy. Petitioners' proposal, claimed to be a deviation, seeks to reflect and to be able to be tailored more closely to an individual large risk employer's individual loss experience. As an example of the confusion of the LRARO proposal, the LRARO expense component would be geared to individual risk rather than a statewide average and includes claims handling experience, safety engineering and statistical services, all subject to interpretation. The only supportive material of that expense factor was an expense exhibit which did not allow Mr. Watford to see if it were retrospective or prospective expenses involved. Similar problems existed as to the other components' factors, some of which appear only on proposed forms and which were subject to wide interpretation by individual underwriters. Once one variable is selected, it impacts every other variable and affects premiums, thus rates. Contrary to some of Mr. Watford's testimony, it appears that deviations from rating plans alone as opposed to historical base rate deviations are contemplated by Section 627.211(2) F.S. which specifically allows deviations from filed and approved rating plans that vary according to factors present in each insured's individual risk. However, the variable factors in this LRARO are so broad as to leave almost every contract for up to 5 percent of Petitioners' customer market up to independent negotiation between Petitioners' underwriters and potential customers, with almost unbridled discretion for negotiating premiums, and without effective Departmental preliminary agency oversight, opportunity for detection as to which insured's premiums to spotcheck, or how to review for enforcement of rates. Accordingly, Petitioners' plan is not a "deviation" of NCCI Option V, but an independent plan. Regardless of how the agency characterized prior filings, the agency correctly reviewed Petitioners' LRARO as an independent plan. It denied approval in part for the aforestated reasons and in part for noncompliance with Section 627.091(1) F.S., which Mr. Watford considered to be applicable to this filing because it was an independent rating plan filing and not a "deviation". That statute requires that an insurer file "...every manual of classifications, rules, and rates, every rating plan, and every modification of the foregoing which it proposes to use," Petitioners did not provide such manuals, etc. with their initial filing. It is also noted that if Petitioners thought this was a deviation, they did not file all materials under Rule 4-189.004 F.A.C., as commented upon by Mr. Watford.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Insurance enter a final order denying the Petitioner' June 30, 1993 Retrospective Rating Large Risk Alternative Rating Option. RECOMMENDED this 1st day of December, 1994, at Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of December, 1994. APPENDIX TO RECOMMENDED ORDER 94-0892 The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioners' PFOF: 1-5 Accepted. 6-10 Rejected as subordinate to the facts as found. 11-12 Accepted. 13 Rejected as contrary to the record evidence. 14-22 Accepted, except that immaterial, unnecessary, subordinate, and/or cumulative material has not been utilized. 23 Rejected as not proven and not dispositive. 24-27 Accepted. 28-31 Rejected as immaterial. 32-37 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. 38-39 Rejected as not proven. 40 Rejected as subordinate to the facts as found and as not dispositive. 41-46 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. Rejected as not proven, or if proven at least not capable of verification except on a file by file basis by the reviewer and so, subordinate to the facts as found. Rejected as subordinate. 49-50 Rejected as not proven, or if proven, at least not capable of verification except on a file by file basis by the reviewer and so, subordinate to the facts as found. 51-55 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. 56 Rejected as out of context and speculative. 57-63 Accepted but not utilized because subordinate. Illustrates the number of subjective variables which defeat the plan. 64-65 Rejected as not proven, or if proven at least not capable of verification except on a file by file basis by the reviewer and so, subordinate to the facts as found. Rejected. Not proven since almost all workers' compensation in Florida is billed this way. Accepted but not dispositive and so not adopted. 68-70 Rejected as unproven and as not dispositive for a pre-approval regulating system. 71-75 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. 76 Accepted in part as reflected in the recommended order. Rejected otherwise as not proven. Option V appears to provide sufficient flexibility within a regulated industry. 77-79 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized and not dispositive. Rejected a mere argumentation. Accepted. Accepted except for word considerably. 83-84 Rejected as not proven, or if proven, at least not capable of verification except on a file by file basis by the reviewer and so, subordinate to the facts as found. 85 Rejected as contrary to the record facts and the law. 86-92 Rejected as unnecessary, subordinate, and/or cumulative to the facts as found. Rejected as stated within the recommended order because unproven. Rejected as not proven, or if proven, at least not capable of verification except on a file by file basis by the reviewer and so, subordinate to the facts as found. Accepted Rejected as not proven, or if proven, at least not capable of verification except on a file by file basis by the reviewer and so, subordinate to the facts as found. Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. 98-100 Rejected as unnecessary, subordinate, and/or cumulative and not dispositive to the facts as found. Rejected as mere recitation of testimony or as legal argument. Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. Rejected as mere recitation of testimony or as legal argument. 104-108 Rejected as not proven, or if proven, at least not capable of verification except on a file by file basis by the reviewer and so, subordinate to the facts as found. 109-110 Rejected as mere recitation of testimony or as legal argument. 111-112 Rejected as unnecessary, subordinate, and/or cumulative and not dispositive to the facts as found. 113-116 Immaterial except to the extent it establishes the wide latitude of the underwriter as reflected in the facts as found. 117-119 Rejected as mere recitation of testimony or as legal argument. 120 Rejected as not proven. 121-123 Rejected in part as unnecessary, subordinate, and/or cumulative and nondispositive to the facts as found and in part as mere recitation of testimony and/or legal argument. 124-128 Immaterial. 129-133 Rejected in part as unnecessary, subordinate, and/or cumulative and nondispositive to the facts as found and in part as mere recitation of testimony and/or legal argument. Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. Accepted. Rejected as subordinate to the facts as found. 137-147 Largely immaterial and wholly unnecessary, subordinate, and/or cumulative to the facts as found. 148-149 Covered only as necessary in the recommended order. 150 Rejected as subordinate, and/or cumulative to the facts as found. 151-154 Immaterial. 155-158 Largely immaterial; covered only as necessary in the recommended order. 159-160 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. 161 Accepted. Respondent's PFOF: 1-9 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized. Accepted except for the word "only". Also unnecessary, subordinate and/or cumulative material has not been utilized. Accepted except for mere recitation of testimony and legal argument. COPIES FURNISHED: Wendy Russell Wiener, Esquire Mang, Rett & Minnick, P.A. Post Office Box 11127 Tallahassee, FL 32302-3127 S. Marc Herskovitz, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street Tallahassee, FL 32399-0300 Tom Gallagher, Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil, Esquire Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, FL 32399-0300
The Issue Should Respondent's license as an insurance agent in the State of Florida be disciplined for the alleged violation of certain provisions of Chapter 626, Florida Statutes, as set forth in the Administrative Complaint and, if so, what penalty should be imposed?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: The Department is the agency of the State of Florida vested with the statutory authority to administer the disciplinary provisions of Chapter 626, Florida Statutes. Respondent, at all times material to the dates and occurrences referenced in the Administrative Complaint, was licensed as an insurance agent in the State of Florida. Respondent is also currently licensed in the State of Florida as a life and life and health insurance agent. During the late 1990's, Respondent became a selling agent for an entity known as Alliance Trust, which later merged with Chemical Trust, and is now known as Chemical Trust. Respondent first learned of Chemical Trust through Jim Hicks of West Shore Agency of Michigan. Jim Hicks provided Respondent with selling and marketing materials for the investments, which were marketed as "guaranteed contracts" (Guaranteed Contract marketing materials). Respondent gave the Guaranteed Contract marketing materials to Imogene Skipper, Edward Dandignac, Dorothy Dandignac, Theodore Dostal, Alice Lowe, Robert Marsh, Julia Marsh, Raymond Grossman and Mildred Grossman and had each of them sign a compliance verification form to that effect. The Guaranteed Contract marketing materials contained a six-page U.S. Guarantee Corporation (U.S.G.C.) Balance Sheet, dated July 13, 1999, which listed several financial representations, including U.S.G.C.'s Accounts Receivable, Real Estate, Partnerships, Total Assets, Liabilities, Net Equities, Total Net Liabilities and Net Equity, Certificates of Deposit, and various accounting representations. Respondent did not have a background in financials. However, he made no effort to verify the accuracy of U.S.G.C's financial statements in order to protect his customers' investments. U.S.G.C. did not have the financial wherewithal to guarantee investors' investments. The Guaranteed Contract marketing materials listed several members of its "Staff," including Barry Goldwater, Jr. (Vice President/Director); Kenneth R. Pinckard (Executive Director/Vice President); Stephen M. Hammer (Chief Financial Officer); Kenneth Turner (Vice President/Comptroller); etc. Respondent did not verify that any of these individuals was actually on the staff of U.S.G.C. The Guaranteed Contract marketing materials asserted that U.S.G.C. had provided financial support to various charitable organizations, including Compassion International, St. Mary's Food Bank, World Missions, Salvation Army, Food for the Poor, Tennessee, US, etc. Respondent made no attempt to verify these representations. The Guaranteed Contract marketing materials, in the "Explanation of the Trust" section, falsely states, "This is a Trust and has satellite offices throughout the USA. This Trust has been providing clients steady streams of interest and the return of their principal since its inception." Respondent made no effort to verify which, if any, of these clients existed or if the clients were being provided steady streams of interest and return of their principal. The Guaranteed Contract marketing materials, in the Explanation of the Trust section, falsely states, "Profits are made by the Trust by buying and selling financial instruments and physical properties. The US Government sells Investment Grade Paper Backed by Treasury Notes on a daily basis and the Trust has Buyers purchasing large blocks at discounts. " Respondent did not know what Investment Grade Paper Backed by Treasury Notes was, and made no attempt to determine what this term implied. The Guaranteed Contract marketing materials, in the "Explanation of the Trust" section, falsely states: "The Trust also buys distressed properties with plans already drawn for conversion and then sell at a profit immediately. The Bonding Company approves all investments. This insures the integrity of each investment and its guarantee. There is in excess of SIX Billion Dollars security on the investor's investment." Respondent made no effort to verify these financial representations in order to protect his clients. Respondent made no effort to determine if U.S.G.C. was authorized to transact insurance in the State of Florida. Respondent, after reviewing the Guaranteed Contract marketing materials, considered U.S.G.C. to be a legitimate corporation. However, Respondent made no effort to determine if U.S.G.C. was a legitimate corporation, notwithstanding his testimony to the contrary, which lacks credibility. At all times material hereto, U.S.G.C. was not licensed as an insurance company or a bonding company, and, although a registered corporation in the State of Nevada, it was not a registered corporation in the State of Florida. Respondent received a document from Clifton Wilkinson, Trustee for Alliance Trust dated August 1, 1999, which stated: "News and Information Regarding Misinformation and Opinions of Some State Agencies Concerning the Nature of Alliance Trust and Similar Entities. They are exempt from State Securities Laws." Therefore, sometime around August 1, 1999, Respondent was made aware that some state agencies took the position that the investments (Guaranteed Contracts) being offered by Alliance Trust (n/k/a Chemical Trust) were securities and were not exempt from state securities laws and regulations. Respondent did not seek advice from the agency of the State of Florida charged with the responsibility of regulating securities as to whether the State of Florida considered these investments to be securities and subject to securities regulations. Likewise, Respondent did not seek any legal advice from an independent counsel as to whether these investments were in fact securities and subject to state securities regulations. Respondent made no independent inquiry into whether these investments were in fact securities and subject to securities laws and regulations, but relied solely on information received from Chemical Trust and two other agents for Chemical Trust in coming to the conclusion that these investments were not securities and not subject to securities laws and regulations. Respondent did not personally invest in the Chemical Trust investments. However, he did tell Edward Dandignac and Theodore Dostal that he had personally invested in Chemical Trust investments. Respondent earned a commission from the sale of the Chemical Trust investments. Respondent's commission from the sale of Chemical Trust investments constituted properties involved in Virgil Womack's violation of Title 18, United States Code, Section 1956(h), and were subject to forfeiture pursuant to Title 18, United States Code, Section 982(a)(1). Respondent made a payment of $63,302.29, through his attorney to the Receiver on June 18, 2001. Chemical Trust's investment product (Guaranteed Contract) was an investment contract and thereby a security as defined under Subsection 517.021(19)(q), Florida Statutes. As a security, the Guaranteed Contract was required to be registered in the State of Florida under Section 517.07, Florida Statutes, unless it was exempt from registration under Section 517.051 or 517.061, Florida Statutes. The Guaranteed Contract was neither an exempt security under Section 517.051, Florida Statutes nor an exempt transaction under Section 517.061, Florida Statutes. Therefore, the Guaranteed Contract was required to be registered in the State of Florida. An individual must be licensed in the State of Florida in order to sell or offer securities in the State of Florida. Respondent was neither licensed to sell nor to offer securities in the State of Florida. The monies paid to Chemical Trust for the investments were deposited in the personal bank accounts of Virgil Womack, Clifton Wilkinson, Lewey Cato, and Alvin Tang, the principals of Chemical Trust, and used for their personal benefit and to promote the fraudulent scheme. The Florida Department of Banking and Finance had information concerning previous securities violations by Virgil Womack and Clifton Wilkinson. Womack committed securities violations in Georgia in 1997, and Wilkinson committed securities violations in North Dakota, Iowa, Kansas, and Illinois in June 1999. This information was contained in the National Association of Securities Dealers Regulation Central Registration Depository (NASDAQ CRD) database that was accessible to the public in general, and to the Respondent specifically, through the Florida Department of Banking and Finance through telephonic communication. Imogene Skipper, age 74, of Dover, Florida, is a retired school custodian. Skipper worked as a custodian for 19 years. Skipper met Respondent in 1997 when he came to her home as a representative of Remington Estate Services, Inc., Fort Worth, Texas, to assist her in setting up a revocable living trust. The trust agreement would allow her to plan an orderly distribution of her assets without having to go through probate. In 1999, Respondent persuaded Skipper to liquidate the existing annuities with American Investors and transfer the funds to Chemical Trust. In doing so, Skipper suffered $1,665.49 in surrender charges for policy number 303313 and $1,171.25 for policy number 303467. Respondent told Skipper that Chemical Trust would reimburse her these surrender charges. Skipper purchased these annuities when her children were young. The annuities were funded by a $5.00 deduction from Skipper's weekly paycheck. Skipper was reluctant to transfer her annuity funds to Chemical Trust. However, Respondent kept reminding her that the 10 per cent return on her investment was good. Also, Skipper considered Respondent to be an honest, decent, and well respected man. Skipper invested $17,820.00 in Chemical Trust through Respondent. This figure represented two checks, each written to Chemical Trust by Skipper, in the amount of $8,910.00 each. In return Chemical Trust issued two Guaranteed Contracts in the amount of $10,158.00 each for a total of $20,316.00. The difference in amount of the two contracts ($20,316.00) and the amount of Skipper's checks ($17,820.00) was $2,496.00, which was supposed to reimburse Skipper for the surrender fees on her annuities. However, the surrender fees were $2,836.74, which resulted in Skipper not being reimbursed for surrender fees in the amount of $340.74. Respondent supplied Skipper with documents explaining the Chemical Trust investments. Respondent had Skipper sign a compliance verification stating that Respondent had fully explained and delivered documentation concerning the Guaranteed Contracts. The Cover Page of the Guaranteed Contract marketing material had "Chemical Trust" in bold print. At the bottom of the same page, the language "A Guaranteed Contract" appeared along with Respondent's name, address, and telephone number. The second page was entitled "Explanation of the Trust." The third page was titled "CHEMICAL TRUST" and consisted of information concerning "QUALIFICATIONS," "FINANCIAL STRENGTH," and "BOND PROVIDER." This page contains certain terms such as: (a) "After funds have cleared, you will receive your Contract and Surety Bond"; (b) "With over $725 million in assets to protect clients, Chemical Trust is dedicated to provide you the safety, liquidity, and protection you expect in today's uncertain environment"; (c) "U.S. Guarantee Corporation's financial statement is in excess of 2.4 billion dollars"; and "Please note: Due to confidentially U.S. Guarantee Corporation and Fidelity National will be unable to provide any information to you without the consent of the Trust. ***If you wish to contact either of these it must be coordinated by Chemical Trust." (Emphasis furnished) After her funds cleared, Skipper was provided a "Certificate of Grantor" for each investment. The first page had a bold CHEMICAL TRUST" logo and was identified as a "Certificate of Grantor." Among the terms were: (a) "SIMPLE INTEREST AT THE FIXED RATE OF 10 PERCENT PER ANNUM"; and (b) THIS PRINCIPAL AMOUNT IS SECURED BY A SURETY BOND ISSUED BY U.S. GUARANTEE CORPORATION." The guarantee of ten percent per annum interest was higher than the amount Skipper was receiving on the annuities that she had liquidated. The second page had the U.S. Guarantee Corporation logo at the top and was titled "Payment Surety Bond" with Chemical Trust as Principal, U.S. Guarantee Corporation, as Surety, and Imogene R. Skipper, as Trustee. Skipper identified the guarantee of ten percent interest and her full trust in Respondent as the factors that influenced her decision to make the Chemical Trust investments. Skipper lost her entire investment with Chemical Trust. Edward Dandignac, age 70, of Inverness, Florida, is a retired Boar's Head provision carrier. Dorothy Dandignac is the spouse of Edward Dandignac. Dorothy Dandignac, age 67, of Inverness, Florida, is a retired housewife. The Dandignacs first had contact with Respondent when he came to their home to set up a revocable living trust in April 1998. Several months after setting up the irrevocable living trust, Edward Dandignac told Respondent that he was having problems with his Oppenheimer funds, Fidelity funds, and other funds. Respondent advised Edward Dandignac that he would probably do better with an investment in some annuity. Subsequently, Respondent sold Edward Dandignac an annuity with Bradford Life and an annuity with United Life. Later, Respondent approached Edward Dandignac concerning Chemical Trust and reviewed the Chemical Trust documents with Edward Dandignac and explained to him that he could make a better return, up to ten percent. Respondent also advised Edward Dandignac that Chemical Trust would cover the surrender charges. Respondent went through the Guaranteed Contract marketing materials with Edward Dandignac. As to the integrity of Chemical Trust and U.S. Guarantee Corporation, Respondent advised Edward Dandignac the companies were "backed" and "protected." Based on Respondent's representations and the Guaranteed Contract marketing materials, Edward Dandignac determined that an investment with Chemical Trust would be secured and guaranteed. Subsequently, Edward Dandignac decided to invest part of his and his wife's life savings in Chemical Trust through Respondent. Edward Dandignac liquidated one of his annuities and had the funds transferred to Chemical Trust. Respondent advised Edward Dandignac that he had personally invested in Chemical Trust. Because Respondent had worked with the Dandignacs in getting them the annuities, which were making better money than their stock, and the fact that Respondent had also invested in Chemical Trust, the Dandignacs trusted Respondent in regard to their investment in Chemical Trust. One of the business cards given to the Dandignacs by Respondent listed "Insurance," "Estate Plans," and "Investments" as the areas in which he was involved. Edward Dandignac identified the Guaranteed Contract marketing material as being similar to the documents given to him by Respondent. This material was the same as the Guaranteed Contract marketing material provided to Skipper by Respondent. The Dandignacs expected a return on their investment with Chemical Trust but instead lost $25,444.89. Theodore Dostal, age 74, of Port Richey, Florida, first had contact with Respondent in October 1997, when Respondent delivered a revocable living trust to him through Senior Estates Services. Shortly thereafter, Respondent and Dostal discussed other investments. Between October 28, 1997, and July 27, 1998, Dostal transferred varying amounts from his revocable living trust to purchase three different annuities from Respondent with Bradford Life. Subsequently, Respondent furnished Dostal the Guaranteed Contract marketing materials identical to those provided to Skipper by Respondent. Based on the Guaranteed Contract marketing materials and Dostal discussions with, and his trust in Respondent, Dostal invested in Chemical Trust. Dostal's investment in Chemical Trust involved the purchase of: a Certificate of Grantor dated September 24, 1999, in the amount of $17,327.00; (2) a Certificate of Grantor dated September 28, 1999, in the amount $92,010.00; (3) a Certificate of Grantor dated October 11, 1999, in the amount of $10,000.00 and; (4) a Certificate of Grantor dated November 10, 1999, in the amount of $37,120.00. Each Certificate of Grantor was issued by Chemical Trust and was backed by a Payment Surety Bond backed by U.S. Guarantee Corporation Other than the terms specific to Dostal, the Certificate of Grantor and the Payment Surety Bond referenced above are the same as those issued to Skipper. Of the monies he invested with Chemical Trust, Dostal lost $56,000.00. Respondent told Dostal that he had personally invested in Chemical Trust Alice Lowe, an elderly lady, is a retired office manager. Lowe currently lives in Orlando, Florida. Lowe purchased an annuity product from Respondent in April 1998. Subsequently, Lowe liquidated her annuity and at the suggestion of Respondent invested $39,914.95 in the Chemical Trust investments, which she lost plus the surrender charges in the amount of $4,350.73 for a total loss of $44,229.85. Lowe could not recall receiving the Guaranteed Contract marketing materials. However, she did recognize her signature on the verification form which confirms that she received the Guaranteed Contract marketing materials. As such, the documents she received would have contained the same terms as the documents received by Skipper. The ten percent interest per annum was a factor in Lowe's decision to invest in Chemical Trust investment along with her confidence in Respondent. Robert Marsh, an elderly man, is a retired mechanic, and is married to Julia Marsh. Currently, the Marshes live in Bradenton, Florida. The Marshes became acquainted with Respondent about May 2, 1998, when Respondent delivered a revocable living trust to them through Remington Estate Services. After this initial contact, the Marshes' interaction with Respondent consisted of Respondent's stopping by a few times, talking to Respondent on the telephone, and discussing investments with Respondent. During all visits with Respondent, both Robert Marsh and Julia Marsh were present. Likewise, the Marshes discussed all financial matters jointly before making a final decision concerning financial matters. The Marshes had an existing annuity that was earning interest at the rate of 2.37 or 3.00 percent, which they were not pleased with. Subsequently, the Marshes transferred some of the money from the existing annuity to purchase an annuity with Respondent. Afterwards, Respondent visited with the Marshes every two to three months. During this time, Respondent discussed Chemical Trust investments with the Marshes and advised them that Chemical Trust was a "good company" that the company "had been around a long time" and "the investments" were a "good deal." The Marshes transferred, through Respondent, their funds from two annuities and an IRA to Chemical Trust. The Marshes invested over $23,000.00 in Chemical Trust investments. Originally the Marshes lost all of their investment. However, they recouped all but $2,300.00 through the efforts of the U.S. Government. The $2,300.00 was surrender charges for early withdrawal of their annuities. Based on Respondent's representations, the Marshes expected to be reimbursed for surrender charges, receive ten percent interest per annum, the principal amount to be secured by a surety bond, and to receive a $700.00 bonus. The Marshes were provided Chemical Trust's Guaranteed Contract marketing materials from Respondent, which was identical (contained the same terms) to the Guaranteed Contract marketing material provided to Skipper. Mildred Grossman, age 79, of Debary, Florida, is a retired secretary. Raymond Grossman, age 80, also of Debary, Florida, is the spouse of Mildred Grossman. Raymond Grossman is retired Methodist minister. The Grossmans became acquainted with Respondent when he came to their home to deliver a revocable living trust as a representative of Remington Estate Services, Inc. After his initial contact with the Grossmans, Respondent visited them every one to three months to check on their needs. Because the Grossmans were seriously considering the possibility that one of them would be going into a nursing home or some type of assisted living facility, Respondent encouraged the Grossmans to purchase annuities. Consequently, the Grossmans cashed in their life insurance policies and their certificates of deposit and purchased annuities from Respondent through American Investors. After they purchased the annuities, the Grossmans were still concerned as to whether they could afford potential retirement home expenses. The Grossmans discussed their concerns with Respondent, and he advised them that they could get a better return on their investment if they switched to Chemical Trust investment. Respondent represented to the Grossmans that their principal investment was protected by a surety payment bond issued by U.S. Guarantee Corporation, that they would receive a guaranteed ten percent interest per annum return for seven years, and that they would be reimbursed for surrender charges incurred when they transferred their funds to Chemical Trust. The Grossmans lost approximately $36,900.00 from their investment with Chemical Trust through Respondent. This amount constituted their life savings, leaving them about $2,000.00 in the bank. Respondent strongly suggested that the Grossmans invest in Chemical Trust. In fact, one of strongest motivating factors for the Grossmans' decision to invest in Chemical Trust was their faith and trust in Respondent. The Guaranteed Contract marketing materials provided to the Grossmans were identical (containing the same terms) to those provided to Skipper. As a result of the lost investments, the Grossmans: (1) were forced to move from a condo to mobile home; (2) cannot provide financial help to their children; and (3) can no longer afford an assisted living home. The Chemical Trust enterprise was a deliberate and largely transparent scheme to swindle Florida residents. Respondent either knew or should have known, had he made good faith attempt to verify the representations contained in the Guaranteed Contract marketing materials and the information furnished to him by other agents, employees, officers or staff of Chemical Trust, that Chemical Trust investments were worthless. Respondent failed to make a due diligence inquiry in this regard. Respondent employed either his past or then current insurance/client relationship with Imogene Skipper, Robert and Julia Marsh, Raymond and Mildred Grossman, Alice Lowe, and Edward and Dorothy Dandignac to gain their trust and then abused that trust by his failure to properly research and verify the claims made by Chemical Trust, a fellow insurance agent, others associated with Chemical Trust investments, and those otherwise contained in the Guaranteed Contract marketing materials. Respondent was the source of injury to Imogene Skipper, Robert and Julia Marsh, Raymond and Mildred Grossman, Alice Lowe, and Edward and Dorothy Dandignac by inappropriately attempting to act in multiple roles as their insurance agent and as an agent for Chemical Trust. As a result of Respondent's actions, Imogene Skipper, Robert and Julia Marsh, Raymond and Mildred Grossman, Alice Lowe, and Edward and Dorothy Dandignac were sold an investment that was nothing more than a scheme to swindle those who invested. The aggregate loss to the Chemical Trust investment scheme by Skipper, the Marshes, the Grossmans, Lowe, the Dandignacs, and Dostal was approximately $200,000. Under the circumstances of this case, the participation of Respondent in the sale of Chemical Trust investments to Skipper, the Dandignacs, Dostal, Lowe, the Marshes, and the Grossmans was "in the conduct of business under the [insurance license]" and "in the course of dealing under the [insurance] license."
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, and after careful consideration of both aggravating and mitigating factors set forth in Rule 4-231.160(1), Florida Administrative Code, it is RECOMMENDED that the Department enter a final order finding Respondent, Donald Dean Hooley, II, guilty of violating Subsections 626.611(4), (7), (8), (9), and 626.621(2), Florida Statutes, and revoking his license and eligibility for licensure as a life and life health insurance agent in the State of Florida. DONE AND ENTERED this 28th of January, 2002, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 2002. COPIES FURNISHED: Charles D. Hinton, Esquire Deane & Hinton, P.A. Post Office Box 7473 St. Petersburg, Florida 33739 Anthony B. Miller, Esquire Department of Insurance Division of Legal Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
The Issue Whether Respondent, Cox Cable, discriminated against Petitioner, Janice B. Campbell, in violation of the Florida Civil Rights Act of 1992 (“the Act”), sections 760.01–760.11 and 509.092, Florida Statutes, by disciplining and then terminating her, in retaliation for her participation in a protected activity under the Act.
Findings Of Fact Cox Cable (Cox) is a provider of telephone, internet, cable, and digital television service in several regions of Florida. Cox is an employer within the meaning of the Act and Title VII of the Civil Rights Act of 1964, as amended. Petitioner was employed by Cox in its Pensacola office from May 2000, until her termination on March 19, 2012. Petitioner held a number of different positions during her tenure with Cox, including Quality Control, Customer Care Representative and Retention Representative. Petitioner joined the Customer Retention Department in July 2010, as a Retention Representative. The primary duty of a Retention Representative is to take calls from existing customers who are requesting termination or downgrade of their existing service and save those customers for Cox. Cox trains Retention Representatives to use a “call flow” with these customers. The call flow is a quality guideline that shows representatives what offers can be made to the customer at the time of the call. When a customer or potential customer calls Cox, they encounter an automated menu of services and are directed to a specific department based on their menu selections. For example, an existing customer with technical or billing questions is routed to the Customer Care Department; a customer moving out of the area is routed to the Account Services Department; and an existing customer who wishes to downgrade or disconnect service is routed to the Retention Department. Calls waiting for a representative in a particular department are “in the queue” for that department. Calls should be answered in the order received. While a Retention Representative’s primary job is to save existing customers, they may sell services to those customers as a secondary duty. For example, a retention representative may try to save the customer money by offering to provide services the customer is receiving from another provider (e.g., telephone) with services currently provided by Cox (e.g., cable) in order to reduce the customer’s overall service cost while retaining the customer. The term for this practice is offering to “bundle” services. Cox maintains a policy against Retention Representatives taking calls transferred directly to their line from representatives in other departments in order to sell services. This practice is known as “direct transfer calls.” Retention Representatives, however, are not prohibited from taking all sales calls. They may handle, for example, a call from a customer looking to purchase services when that call comes into the retention queue (presumably because the caller pressed the incorrect key). In fact, the Retention Department has sales goals set by Cox corporate office. When goals are set for a particular product or service, Cox provides incentives to boost sales of the particular product or service. The call flow provides Retention Representatives with a tool to sell upgrades to existing services based on availability of promotional offers. The Retention Department was formerly part of the Inbound Sales Department. In May 2010, just two months before Petitioner joined, Retention was created as a separate “stand alone” department with a focus on saving existing customers. The authority of the Retention Representatives with respect to selling services was subject to much confusion during the separation of the Retention Department from the Incoming Sales Department. On September 14, 2011, the Retention Managers, Shannon Boyd-Tibbs and Daniel Lister, met with all the Retention Representatives in a “huddle” to explain the types of calls they could and could not receive. The group meeting was followed up the same day by one- on-one meetings between the Retention Supervisors and each of the Retention Representatives under their supervision. On September 14, 2011, following the huddle meeting, Petitioner met with Ms. Boyd-Tibbs who reviewed with her a document titled “Sales Performance Expectation Clarification.” The “Sales Performance Expectation Clarification” provides, among other expectations, “Closed sales should not be transferred from one sales representative to another which may impact commission or performance metrics” and “Sales representatives are not permitted to transfer sales to another representative, which would cause an increase in commissions or sales performance.” Petitioner acknowledged receipt of the “Sales Performance Expectation Clarification” by her signature dated September 14, 2011. Six days later, Retention Supervisor, Daniel Lister, further clarified the issue in an email to all Retention Representatives on September 20, 2011, stating “[I]f a sales call comes into the queue, you will be able to take care of this customer. It does not mean you should take calls that are sent directly to you by a representative from billing or various other departments.” The reasons for prohibiting direct transfer calls are three-fold. First, the practice skews the Retention Department’s sales goals, which are based on the prior year’s numbers. If sales are up based on direct transfer calls in the prior year, the current year’s sales goal is inflated and may be unattainable. Second, the practice causes customers in the retention queue to wait longer for a representative, potentially causing them to become more irate and less likely to be retained. Finally, it is unfair to other Retention Representatives who compete for incentives and bonuses based on sales. Petitioner admits taking direct transfer calls from a number of sales representatives. Despite management’s clarification of the company policy in September 2011, Petitioner continued the practice throughout the remainder of the year and into 2012. On March 13, 2012, Petitioner was suspended with pay for continuing to take direct transfer calls. Her supervisor, Ms. Boyd-Tibbs, met with Petitioner and explained the basis for her suspension. During Petitioner’s suspension, Ms. Boyd-Tibbs and Mr. Lister requested and reviewed a number of reports documenting Petitioner’s direct-transfer sales and confirming Petitioner’s disproportionate sales numbers. The final decision to terminate Petitioner was made by Dennis Huber, supervisor of both Mr. Lister and Ms. Boyd-Tibbs, but only after consultation with Human Resources and the Customer Care Sales Manager. Petitioner was terminated on March 19, 2012. Ms. Boyd-Tibbs delivered the news over the phone to Petitioner. Petitioner claims she was terminated in retaliation for reporting unethical behavior by another Retention Representative, Belinda Thompson. Petitioner claims Ms. Thompson inflated her performance numbers by failing to disconnect customers who requested termination of service, transferring certain calls back to the queue, giving unauthorized credits to customers, and other questionable practices. The evidence shows Petitioner did complain to Ms. Boyd-Tibbs about Ms. Thompson’s sales practices, which were investigated by Cox and found the complaints to be unsupported. Rather than showing that Petitioner was retaliated against, the evidence demonstrated that Petitioner was terminated by Cox on March 19, 2012, for violating company policy against taking “direct transfer” sales calls from other representatives in different departments.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a Final Order dismissing Petitioner’s Discrimination Complaint and Petition for Relief consistent with the terms of this Recommended Order. DONE AND ENTERED this 13th day of November, 2012, in Tallahassee, Leon County, Florida. S Suzanne Van Wyk 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 13th day of November, 2012.
Findings Of Fact Based upon all of the evidence, including the pleadings and supporting documents, the following findings of fact are determined: Petitioner, Dr. Frank A. Brown, is a licensed psychologist having been issued license number PY-0002079. Respondent, Board of Psychological Examiners (Board), is the state agency charged with regulating the practice of psychology pursuant to Chapter 490, Florida Statutes. The parties agree that Dr. Brown is a small business party as defined in Subsection 57.111(3)(d)1.a., Florida Statutes. On August 24, 1989, the Board issued an amended administrative complaint against Dr. Brown alleging that he had violated chapter 490 in three respects while treating patient R. B. during the period from 1978 until 1987. In general terms, the complaint alleged that: Petitioner had violated sections 490.0111 and 490.009(2)(k) by committing any act upon a patient or client, other than the spouse of the doctor, which would constitute sexual misconduct. (Count I) Petitioner had violated section 490.009(2) (s) by failing to meet the minimum standards of performance in professional activities when measured against generally prevailing peer performance. (Count II) Petitioner had violated section 490.009(2)(p) by being unable to practice the profession for which he is licensed under chapter 490 with reasonable skill or competence as a result of a mental or physical condition or by reason of illness, drunkeness, chemicals or any other substance. (Count III) The complaint was later referred to the Division of Administrative Hearings and was assigned Case No. 89-0599. An evidentiary hearing on the complaint was held on September 12 and 13, 1989. At the formal hearing the agency prosecutor voluntarily dismissed Count I, and the case was tried on the remaining two counts. On May 14, 1990, a Recommended Order was issued by Hearing Officer Diane Cleavinger recommending that all remaining charges be dismissed. Of significance to this proceeding is the allegation in Count II which charged Dr. Brown with failing to meet the minimum standards of performance in professional activities when measured against generally prevailing peer performance. Bearing on Hearing Officer Cleavinger's decision to dismiss that count was her determination that the psychologist-patient relationship ended prior to the beginning of any love affair between Dr. Brown and his former patient. Among others, the hearing officer made the following findings: 5. Respondent's psychologist/client relationship was with R. B. and did not include her husband. The interest demonstrated by R. B.'s husband in her therapy was that of a concerned husband. Dr. Brown saw him collateral to the therapy he was conducting with R. B. He met with R. B.'s husband in order to make R. B.'s termination of therapy more successful. The evidence did not show that Respondent had ever agreed to formulate a psychologist/ client relationship with R. B.'s husband and, although the husband paid R. B.'s therapy bills, he was never charged separately for the discussions he had with Respondent during R. B.'s therapy. The other contacts, referenced by R. B.'s husband's testimony as supporting a professional relationship between him and Respondent, occurred well after R. B.'s therapy had terminated. The contacts variously involved obtaining advice from Dr. Brown on the impending death of a relative during an otherwise social gathering at the B.'s home, asking Dr. Brown, during a lunch meeting, for help with sexual problems for which Dr. Brown referred him to another psychologist, and testing of the B's children for scholastic purposes. All such contacts appear to have been given in friendship and not in a professional capacity. (Emphasis added) The underscored portion of the findings was intended to make a determination that any contact between Dr. Brown and R. B.'s children was not made in a professional capacity and as to those contacts the psychological/client relationship did not exist. The recommended order was considered by the Board at a meeting held on June 7, 1990, and was adopted in toto without change. A final order was issued on July 2, 1990, dismissing all charges against Dr. Brown. During the meeting held on June 7, 1990, and while discussing an exception to the recommended order raised by the agency prosecutor, the following statement was made by Board counsel: I will express now what other concern I've had with reading this case. It does seem clear that a dual relationship was formed during that period of time when there was regulation, in that Dr. Brown gave psychological services to the children of his lover, and of her unsuspecting husband. I have - you know, I'm just going to be very honest with you. When I was reading through the transcripts, some of the thoughts that occurred to me were out of his own mouth. . . (emphasis added) This statement was made in the belief, albeit incorrect, that Hearing Officer Cleavinger's findings in paragraph 5 of her recommended order regarding a dual relationship pertained only to the husband and not to the children. Counsel's statement suggested that Dr. Brown's relationship with the children was done in a professional capacity and thus was unethical, given his romantic relationship with R. B. Accordingly, prior to the issuance of a final order in Case No. 89- 0599, on June 11, 1990, the Board's counsel authored the following memorandum to counsel for the Department of Professional Regulation (DPR): By Dr. Brown's own admission, he performed psychological services for the children of R. B. The facts surrounding the dual relationship were not included in the administrative complaint filed in Case No. 89-0599. They do, however, constitute a separate cause of action and should be brought to the attention of the probable cause panel. Responding to this memorandum, DPR counsel recommended on June 18, 1990, that DPR open a new investigation against Dr. Brown concerning the issue of a possible dual relationship, that is, the testing of R. B.'s children while Dr. Brown was engaged in a love affair with R. B. The DPR uniform complaint form described the alleged misconduct in the following manner: Subject stated during testimony in previous DPR case (89-0599 DOAH) that he had engaged in a love affair with a client whose children he was counseling. Possible violation of Section 490.009(2)(s), F. S. The matter was assigned DPR Case No. 9007566. By letter dated August 11, 1990, petitioner's counsel was advised that a complaint had been filed against his client. The letter gave the following pertinent reasons for initiating the matter: This complaint is based upon information obtained in formal proceedings in Department of Professional Regulation case number 0081809. It is alleged by the Department that during the time Dr. Brown was providing psychological services to the children of R. B., he was concurrently engaged in a love affair with her. This dual relationship is a possible violation of Section 490.009(2) (s), Florida Statutes, which prohibits a licensee from failing to meet the minimum standards of performance in professional activities when measured against generally prevailing peer performance. Dr. Brown, through counsel, put DPR on notice by letter dated September 5, 1990, that: It would be a violation of due process of law to charge Dr. Brown with a violation based upon the same set of facts previously adjudicated. The doctrines of res judicata, collateral estoppel and bar and merger are applicable. By a second letter dated September 25, 1990, petitioner's counsel again advised DPR "that the Department does not have a basis in law or fact for any allegations." On October 18, 1990, petitioner's counsel authored another letter to DPR stating in part as follows: I reiterate that it would be a violation of due process of law to charge Dr. Brown with a violation based upon the same set of facts previously adjudicated. The doctrines of res judicata, collateral estoppel and bar and merger are applicable. I respectfully request that this letter be made a part of the investigative file to be considered by the Probable Cause Panel. DPR counsel advised petitioner's counsel on September 28, 1990, that all factual and legal matters, including the objections raised in his letter, would be presented to the probable cause panel. Thereafter, DPR counsel submitted a suggested closing order to the panel proposing that a letter of guidance be issued based upon a belief of a violation of Chapter 490, Florida Statutes, as outlined in the August 17, 1990 letter sent to petitioner's counsel. By letter dated January 11, 1991, petitioner's counsel again placed the Board on notice that the subject matter of the new investigation was barred by the doctrine of collateral estoppel. The letter stated as follows: Dr. Brown was served with the notice of investigation in August, 1990. I have advised the department of Dr. Brown's position by letters dated August 13, August 20, September 5, September 25, October 1 and October 18, 1990. This investigation stems from matters resolved in favor of Dr. Brown in DPR Case number 0081809, DOAH Case Number 89-0599 in which Dr. Brown was charged with failure to meet the minimum standards of performance in professional activities when measured against generally prevailing peer performance in violation of Section 490.009 (2)(s), Florida Statutes (1981-86). Included in consideration of that charge was the scholastic testing of the children of (D. and R. B.) which is the subject of this pending investigation. The adopted finding of fact number 5 in the above case refers to the collateral relationships between Dr. Brown and (D. B.) and the children including "testing of the B's children for scholastic purposes." Finding of fact number 5 finds that: ALL SUCH CONTACTS APPEAR TO HAVE BEEN GIVEN IN FRIENDSHIP AND NOT IN A PROFESSIONAL CAPACITY. I reiterate that it would be a violation of due process of law to charge Dr. Brown with a violation based upon the same set of facts previously adjudicated. The doctrines of res judicata, collateral estoppel and bar and merger are applicable. The panel met on February 14, 1991, and considered DPR's recommendation to prosecute, the investigative report and all supplemental materials including a report from its expert consultant. The panel was also given a copy of the letter sent by Dr. Brown's counsel on January 11, 1991, which raised the collateral estoppel issue. After considering all of these materials, including the estoppel matter, the panel made a determination that respondent violated chapter 490 by providing therapy to the children while romantically involved with their mother and failing to disclose this relationship to the children's school and father. While the panel found probable cause to exist, it was advised by its counsel that the case was "weak," the chances of a successful prosecution were "minimal," and the best it could hope for was a reprimand. Accordingly, it followed the suggestion of counsel and recommended to DPR that the case be closed with a letter of guidance to the subject, which was then the most lenient form of discipline for a licensee. By the admission of counsel and panel members at that meeting, however, it was clear they knew the letter would become a part of Dr. Brown's disciplinary file, it was accessible by any member of the public examining his file, and the Board could use the letter against Dr. Brown in the event of future proceedings. In disposing of the contention by Dr. Brown that the doctrine of collateral estoppel applied, DPR and Board counsel gave the following advice: Ms. Gaffney: There's a great big legal issue in this case. That is whether or not this has been litigated. If we pursue an administrative complaint, we're going to be considering whether or not he treated the children and whether or not that's below the standards. That's easily proved testimony. But we have a pending litigation for attorney's fees on that prior case and this one is a case in which Mr. Lambert, in the materials there, there's correspondence indicating respondent's attorney, Mr. Lambert, will make legal attempts to squash the case by argument and motions to dismiss, such as this has already been litigated and so forth. Possibly double jeopardy, all that. Res judicata and double jeopardy, I think, are the two issues he's raised. I don't know whether he would prevail on that or not. I have a point of view, which is that the actual issue here was not charged in the administrative complaint when it was at the final hearing before the Board. The Board took notice of and supplements, and he said well, that's not charged. You can't do anything about that. So I don't know but that would be already double jeopardy or res judicata. Ms. Daire: I would agree with you on that, that it was not charged in the initial administrative complaint. It only came out in the testimony of Dr. Brown, when he talked about having treated the children, as well, and we could not do anything about that issue that was raised during the proceedings except to issue a new administrative complaint on his own admission. Although the panel members themselves did not discuss the issue, by finding probable cause, they implicitly accepted their counsel's advice and rejected the contention that they were precluded by the doctrine of collateral estoppel from issuing a second complaint on the stated ground. On March 27, 1991, DPR counsel, acting on behalf of the Board and in response to the panel's decision, sent a letter of guidance to respondent which read as follows: This letter is sent to inform you of the action taken in regard to the above-referenced complaint. This complaint concerned allegations that you failed to meet minimum standards of performance in professional activities in violation of Section 490.009 (2)(s), Florida Statutes. It has been determined that probable cause exists to believe that you have violated the provisions governing the practice of psychology. In light of the circumstances presented, however, this case is closed with issuance of this Letter of Guidance in lieu of further administrative action. It has been noted that your professional care for the patient's children while involved with the patient on a personal basis, without disclosure to the father and school falls below minimum standards. The Panel recommends that you review current literature regarding dual relationship issues. I would encourage you to familiarize yourself with the statutes and rules governing the practice of psychology and to abide by these provisions in the future. If you have any questions or comments regarding this matter, please feel free to contact me. On March 19, 1991, or before the letter was issued, petitioner filed a motion to set aside the probable cause determination as improvidently found. After the letter was issued, he requested a formal hearing on four separate occasions. All requests were denied and a final order was issued by DPR on April 24, 1991, denying the petition in all respects. Thereafter, petitioner appealed the letter of guidance to the First District Court of Appeal. The court reversed the Board's action and remanded the matter with instructions to dismiss the complaint. Brown v. Department of Professional Regulation, Board of Psychological Examiners, 602 So.2d 1337 (Fla. 1st DCA 1992). In dealing with the estoppel issue raised by Dr. Brown, the court noted that Hearing Officer Cleavinger had made the following findings in her recommended order: . . . and testing of the B's children for scholastic purposes. All such contacts appear to have been given in friendship and not in a professional capacity. The court went on to say The above-quoted findings of fact establishes that the sole allegation of misconduct in the 1990 complaint was actually litigated in the 1989 case. The record in that case contains evidence that the results of testing the children were submitted to the school. The Department, the Board, and the Probable Cause Panel became bound by the determination of fact that Dr. Brown did not violate section 490.009(2)(s) because a nexus between Dr. Brown's conduct and his practice of psychology did not exist. The Department, Board, and Panel are thus collaterally estopped from reasserting any charge of professional misconduct predicated on these acts. Id. at 1341. The court also noted that a letter of guidance affected Dr. Brown's substantial interests within the meaning of section 120.57, and that Dr. Brown was thus entitled to a section 120.57 hearing as requested. The court added, however, that because the agency was collaterally estopped from relitigating the issues raised in the second complaint, it was remanding the case with directions to dismiss the complaint. The parties are in agreement that the amount of attorney's fees and costs requested by petitioner is reasonable. Such fees and costs total $12,537.00.
