The Issue The issue is whether Petitioner is entitled to be registered as a risk retention group that has the right to do business in Florida.
Findings Of Fact In February 1998, Petitioner was incorporated in the State of Hawaii. On April 6, 1998, the State of Hawaii licensed Petitioner as a risk retention captive insurance company, authorized to provide its members contractual liability insurance in the manner provided by Chapter 431, Article 19, Hawaii Revised Statutes. Petitioner submitted an "Application for Registration as a Risk Retention Group" dated February 3, 1999, to Respondent. Along with the application, Petitioner furnished Respondent a copy of the plan of operation that it had previously submitted to Hawaii, an Appointment of the Insurance Commissioner of the State of Florida to accept service of process, and a resolution by Petitioner's Board of Directors authorizing the appointment. Petitioner furnished Respondent other information, including, but not limited to, the "Statement of Actuarial Opinion of PrimeGuard" for the year ended December 31, 1998, its annual statement for the year ended December 31, 1998, and its quarterly statement as of March 31, 1999, in the form prescribed by the National Association of Insurance Commissioners. Petitioner had previously furnished Hawaii and the other states in which it was doing business with this information. Respondent requested additional information for each of Petitioner's directors and officers, including the following: biographical affidavits, releases of information forms, waiving any right of confidentiality; fingerprint cards; and background investigative reports. Respondent also requested Petitioner to furnish an economic feasibility study for Florida, an organizational chart, copies of relevant Hawaii law, documents relating to the relationship between Petitioner and First Assured Warranty Corporation (FAWC), financial statements for FAWC, information regarding an entity described as "Transportation American Group," and copies of agreement relating to Petitioner's initial funding. Petitioner did not furnish Respondent with the requested information. By letter dated February 21, 2000, Respondent advised Petitioner that its application was incomplete and therefore denied. On or about June 22, 2000, Respondent issued the Amended Letter of Disapproval referenced above in the Preliminary Statement. At the time of the hearing, Petitioner was registered as a non-domiciliary risk retention group in over 30 states. In 1997, Respondent approved the registration of two non-domiciliary risk retention groups, both of which were chartered in Vermont. The business plans of these risk retention groups provide that they will spread and assume the liabilities of their members' failure to perform under home warranties that their members issue, and will directly perform those obligations should the member not do so. These groups are: (a) United Home Insurance Company, owned by Beezer Homes, USA, Inc. and its wholly-owned subsidiaries; and (b) Columbia National Risk Retention Group, owned by the Ryland Group and its wholly-owned operating subsidiaries. As of December 31, 1999, Petitioner had only three members. Two members were "third party obligors" or automobile warranty companies that market, issue and administer automotive service warranties. The third member was a "dealer-obligor." As of March 1, 2000, Petitioner had seven members. Five members were auto dealers in Oklahoma, and two were warranty companies in Colorado. FAWC was one of the two warranty companies. Petitioner had no members in Hawaii, its state of incorporation and charter. In the "insurance policy" between Petitioner and the dealers, the phrase "the Company" refers to Petitioner. The term "insured" is defined as "[t]he person, corporation, partnership or other entity, who is a member of PrimeGuard and participates in PrimeGuard's Administrator's program. In addition, the Insured issued an accepted and validated ESA [extended service agreement] to the Purchaser and is named on the ESA as the Obligor." Petitioner's Articles of Incorporation limit its board of directors to three members. Petitioner has two types of stock, series A redeemable preferred (preferred) and common. Holders of both types of stock have voting rights. The holders of preferred stock as a class are entitled to elect at least 40 percent, or two of the three directors. FAWC owns all of Petitioner's preferred stock; therefore, FAWC has the right to elect the majority of the board. Petitioner issues its members one share of common stock at a cost of $1 per share. FAWC owns 100,000 shares of common stock; it has the right to one vote per share of common stock. The six other members have one share of common stock each for a total of six votes. The holders of the common stock are entitled to vote on the third director. Because FAWC has the majority of the common stock, it also controls the election of the third director. Only the class of shareholders that elects a director may fill a vacancy in the position of that director. Therefore, FAWC will always control the election of Petitioner's board, which may take any action regarding Petitioner's management with or without a formal meeting. FAWC owns 650,000 shares of preferred stock. With one vote per share of stock, FAWC has 750,000 votes, 650,000 votes from its preferred stock and 100,000 votes from its common stock. Petitioner can take no significant action (merger, payment of dividends, or entry into reinsurance agreements) without the consent of the preferred stockholders. Therefore, Petitioner cannot take any such action without the approval of FAWC. The Articles of Incorporation state that the preferred stock is redeemable. Petitioner asserts that its goal is redemption of that stock. However, as of the date of the hearing, no preferred stock has been redeemed. The common stock issued to the five auto dealers has no investment potential. Petitioner has no authority to demand that its members make up a deficiency. On its face, Petitioner's plan of operation provides that only persons or entities who are obligated to perform under motor vehicle service warranties, and who are members and equity owners of Petitioner, are to be insured by Petitioner; the plan reflects that Petitioner has as its owners only persons or companies who comprise the membership of Petitioner and who are provided insurance by Petitioner. Additionally, the plan provides that Petitioner will not, itself, sell or provide motor vehicle service warranties or extended service warranties to consumers or owners of automobiles, but will instead accept and spread, and issue insurance policies for the liability exposure of its members' failure or inability to perform their obligations under motor vehicle service warranties, which the members have provided to consumers. Petitioner has designated FAWC as the administrator of its extended service agreement (ESA) program. FAWC is required to establish a "Dealer/Administrator Agreement" which must be signed by FAWC and dealers, who enroll in the ESA program and "sell" the ESAs. Petitioner obtains its business through FAWC and these dealer members. Petitioner's actuaries determine the prices that it will charge for the ESAs. FAWC then provides the dealers with pricing information regarding each of Petitioner's ESA programs. Petitioner issues the ESAs, not the dealers. The dealers merely sell the ESAs to their customers, the general public. When auto dealers sell a warranty to car buyers, they enter certain information into FAWC's computer system, which automatically displays the "best coverage" for the particular vehicle, based on mileage, age, and other guidelines. The dealers enter their "markup percentage or fixed dollar amount markup," which is automatically added to the "dealer cost" to produce the suggested list price. In other words, dealers are paid a commission for each warranty sold. The dealers keep the commission and remit the "net dealer cost" to FAWC. The net dealer cost first goes to FAWC, then to Petitioner as its premium for the issuance of the warranty. The dealers pay no part of the premium. FAWC decides whether to accept or reject the applications for ESAs submitted by dealers. Dealers may not sell an ESA on a vehicle that does not meet Petitioner's underwriting guidelines. FAWC's computer system generates the ESA acceptance or rejection postcards for mailing directly to the ESA holders. This is exactly the way an insurance agent sells insurance for an authorized insurer. In this case, the dealer sells a warranty issued by Petitioner. FAWC's computer system provides instant access to each dealer's complete history "in regards to monthly production." In the insurance industry, a producer is an insurance salesman. Every ESA contains "convenience benefits," including towing coverage, substitute car rental coverage, tire/road hazard protection, lost key/lockout assistance, and trip interruption protection. A customer, dealer, or transient repair facility may file a claim for service directly to FAWC. FAWC processes the claim, reports it to Petitioner, and requests claim payment from Petitioner. Petitioner sends funds for claim payment to FAWC, which issues the check for the repair directly to the customer (reimbursement), dealer, or transient repair facility. Pursuant to the ESA application, FAWC has sole discretion to determine whether a particular repair or replacement of a part is covered by the ESA. FAWC must pre- authorize all services provided under an ESA, except for certain emergency repairs. FAWC requires a dealer to "highlight the parts and labor charges for which you expect payment." A dealer must obtain an authorization number from FAWC before the dealer can begin making repairs. The only time that the dealer is involved in the claims process is when dealer makes the actual repairs. The dealer has no obligation to make the repairs. Petitioner will either repair or replace, or pay for the repair or replacement of any warranted failures to a covered vehicle. When ESA owners wish to cancel their warranties, they send FAWC a written request. FAWC processes the cancellation and requests the unearned premium from Petitioner. Petitioner refunds the unearned premium for the warranty directly to the purchaser, not the dealer. FAWC audits each dealer's earned loss ratios. FAWC will take corrective action against a dealer if necessary. Corrective action may include, but is not limited to, imposing a surcharge on all ESAs a dealer writes or negotiating a discounted repair pricing structure. If a dealer has too many claims, the dealer may be required to give up its share of common stock. In that case, Petitioner will reimburse the dealer for the price of its stock. Petitioner has purchased "New and Used Automobile Warranty Aggregate Stop Reinsurance" from Swiss Re America. In Petitioner's application to become a captive insurance company in the State of Hawaii, Petitioner could not provide financial information about its owners/insureds because it could not begin operations until it was licensed in Hawaii and registered in the jurisdictions in which it intended to market and insure risks. Petitioner provided the State of Hawaii with additional information in a supplemental application. This information indicates that Petitioner's line of business would be automotive service contracts. Petitioner projected that it would insure approximately 3,500 vehicles in the first year. Petitioner set forth the following marketing strategies: First Assured will use its own marketing force to initially solicit automobile dealers within the states of Colorado, Arizona, New Mexico and Utah. By developing a service contact [sic] that offers a variety of comprehensive coverage options, many customer-friendly features, and a competitive price, First Assured believes that it can and will capture a respectable share of the marker. Most importantly, the level of service that First Assured will provide its dealers will be unmatched in the industry. There is no evidence that Hawaii ever made a determination that Petitioner was structured properly as a risk retention group. Moreover, Hawaii did not license Petitioner as an insurer. Instead, Hawaii licensed Petitioner as a captive insurance company to provide contractual liability insurance to its members under Article 19, Hawaii Revised Statutes. Neither Petitioner nor FAWC is licensed in Florida as a motor vehicle service agreement company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent enter a final order denying Petitioner's application to register as a risk retention group. DONE AND ENTERED this 3rd day of October, 2000, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (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 3rd day of October, 2000. COPIES FURNISHED: John Keller, Esquire Margaret-Ray Kemper, Esquire Ruden, McClosky, Smith, Schuster, & Russell, P.A. 215 South Monroe Street, Suite 815 Tallahassee, Florida 32301 Robert Prentiss, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307 Honorable Bill Nelson Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300
The Issue The issue for determination in this matter is whether Respondent engaged in unlawful employment practices by discriminating against Petitioner on the basis of race or sex in violation of the Florida Civil Rights Act of 1992, as amended.
Findings Of Fact Petitioner is an African-American female who had several years of progressive experience working in the field of aerospace engineering when she was hired by Respondent in 2006 as a Quality Assurance Engineer III, the highest level for that non-management position at Respondent. Petitioner reported to Quality Manager Ken Koehler, who is a white male. When Petitioner began her employment with Respondent, Steve Schneider was the site leader. After Schneider left, Don Pearson, a white male, replaced him as the interim site leader. Pearson served in this capacity from the middle of June 2006 to February 2007. Pearson had substantial managerial and quality manager experience before joining Respondent and helped to implement the operations excellence ("op ex") program. Under Pearson, the reporting structure changed, and the quality assurance people reported directly to the manufacturing managers. As the interim site leader, Pearson had a leadership team that reported to him consisting of Wes Ryan, the head of the supply chain; Nick Miles, a value stream manager; Alan Hook, an interim quality assurance manager; Floyd Cooper, the "op ex" manager; Darlene Todd, a special projects manager; and Kris Hoffman, an interim value stream manager. Petitioner had a good working relationship with Site Leader Mark Harris and an acceptable relationship with Pearson. Both site leaders acted professionally towards Petitioner. Miles, a white male, began work with Respondent in January 2006 as an executive-level value stream manager. Miles had prior management experience with Respondent in various positions. When Koehler left as the quality manager, Respondent had already changed its management model to the value stream approach. Petitioner began to report directly to Miles after Koehler left. The value stream manager position, which was designed to streamline operations on the manufacturing floor, was a new concept to Respondent. Between May 2006 when Koehler left and February 2007, when Doug Bower started, Petitioner reported directly to Miles. Miles was Petitioner's supervisor. Morris Stevens, a white male who had been working as a supervisor, was a quality engineer level two. There were two senior level quality engineers, Petitioner and Jim Stein. Tawanna Cobble was a quality level engineer two and an African- American female. Arlene Hamilton was a quality engineer and an Asian female. Petitioner's job as a quality engineer was to monitor production activities to ensure products were of good quality. Some of Petitioner's responsibilities were to work on projects to find solutions, perform data analysis, determine what was happening with defects and test failures, and handling customer complaints. Petitioner's job duties included: exhibiting tact and consideration in dealing with her co-workers; working cooperatively in group situations; contributing to meetings and group efforts in a positive manner; maintaining sensitivity to the needs and feelings of others; supporting the organization's goals and values; treating her co-workers or supervisors with respect; maintaining the confidence of her supervisors or those above her in lines of authority or supervision; establishing positive relations with others within the organization; contributing effectively as a team member; cooperating with others and responding appropriately in interpersonal situations; inspiring trust in her co-workers and supervisors; upholding organizational values; and identifing the root cause of and solutions to problems. In her interaction with her co-workers, Petitioner was not expected: to be condescending; to make her co-workers feel badly; or to belittle her co-workers in front of others. Putting her co-workers down could be disruptive of the team approach, cause friction in the workplace, and breed stress with her co-workers. Respondent does not deem it acceptable conduct for Petitioner to call a co-worker a liar, whether in front of other co-workers or supervisors. Petitioner's statements made during a team meeting that a manager was being untruthful to a customer was not acceptable conduct in the workplace. These statements were not diplomatic and might be considered disruptive. Petitioner understood that she was expected not to undermine the authority of other managers. Respondent was involved in a program known as "op ex" while Petitioner was under its employ. "Op ex" is part of the lean enterprise or lean manufacturing process Respondent adopted to focus on prioritizing business practices with the goal of improving performance. Respondent committed to implementing this philosophy throughout its operations. "Op ex" was designed to achieve the goal of improving matrixes involving safety, quality, delivery, and costs to ensure delivery of the highest quality product on time and under cost. The "op ex" program drove quality. Respondent's employees were all required to participate in the continuous improvement activities. Petitioner was coached in "op ex". Cooper held the post of "op ex" manager. He had been the "op ex" manager since February 2006. Prior to that time he had worked in various positions as a supervisor or manager for approximately 20 years. Respondent used the value stream as part of its "op ex" program. "Root cause" relates to problem solving, data analysis, and corrective actions by defining what the actual root problem is and implementing a corrective action to keep the problem from recurring in the future. Petitioner had responsibility for group cause analysis. As part of her job responsibilities, she was expected both to report the data and to try to identify solutions to the problem. Petitioner raised numerous issues related to her failure to be promoted to positions she believed herself qualified to fill. After Koehler left as the quality manager in May 2006, a search was begun for both internal and external candidates. At this time, Petitioner sent an email to Site Leader Schneider asking to be considered for the interim quality manager position. Schneider met with Petitioner for an hour to discuss what his expectations were for the job, but three weeks later he was let go as the site leader. After Schneider left as site leader, the hiring process for quality manager took several months. Petitioner went through a group interview, then Pearson, the interim site leader, interviewed both Petitioner and Cindy Burton, a white female. Burton had been employed by Respondent for 20 years and had previously served as the quality assurance manager. Burton was qualified for the position of quality manager. Pearson concluded that based upon her prior experience as a quality assurance manager, Burton was better qualified for the position than Petitioner. Pearson offered the position to Burton. His decision to offer the job to Burton was based on the problems the company was having, including product yield in the factory, and upon her prior experience and familiarity with the customer base and product line. Burton turned down the job, and Pearson told Petitioner he would continue to seek candidates from the outside since he did not believe she had enough seasoning for the managerial position. After Burton turned down the quality manager position, Pearson interviewed eight-to-ten external candidates for the job. Resumes from the internet were also considered. Bower, a white male, who had been employed by Respondent for five years at another site, was hired on February 22, 2007. Bower was selected because he had experience as a quality assurance manager, and with one of Respondent's customers, Smith Aerospace. He had also been a production manager, and was both a certified quality engineer and quality manager. Bower was chosen for the position over Petitioner because he was better qualified and had significant prior management experience. Bower was qualified for the position based upon 10 years more of experience in the industry than Petitioner, his professional certifications, and a strong resume. Petitioner even acknowledged that Bower was better qualified than she for the quality manager job. The job description for the quality assurance manager requires a bachelor's degree in a related field, plus five years of manager level experience or a combination of education and experience. Supervision in an electronics environment is preferred. Based upon the job description alone, Petitioner lacked some of the necessary qualifications. She did not have a bachelor's degree and did not have five years of management experience. Petitioner believes she was passed over for a value stream manager position in July 2006. Prior to Pearson's becoming the interim site leader, Schneider selected Hoffman, a white female, as an interim value stream manager. Hoffman had worked for Respondent since April 18, 2005. She was a planner who planned the purchasing of parts to meet the production schedule. Hoffman had prior manufacturing experience with Burton Golf, a company she owned. Petitioner was not involved in the value stream job at the time Hoffman was selected for this position. Petitioner expressed her happiness to Hoffman when she was selected for the interim low value stream manager job. After replacing Schneider, Pearson promoted Hoffman from the interim position to the permanent value stream manager job. He sought to stabilize the leadership team at the site since a site leader and quality assurance manager had left, and rumors began to circulate that the facility might close. Pearson also had observed Hoffman's performance in the interim position in terms of team building and employing some of the "op ex" tools, as well as her team's ability to meet commitments, and deemed her the best fit for the position. Petitioner also had hoped to secure a value stream manager position that Pearson filled with Jack Cox. Pearson selected Cox because he observed that Cox had practiced and implemented "op ex" and had been a manager at several other locations during his career. Cox was better qualified for a value stream manager position than Petitioner. Cox left after six months as a value stream manager. Hoffman stepped down as a value stream manager after six months and was demoted to cell leader for the shared services area. After these changes, effective January 8, 2007, Respondent announced a search for two value stream managers, one for shared services and one for low voltage. On that same date, Pearson announced that Hoffman would become a cell leader and Martha Gentry, a white female, would become an interim value stream manager at no increase in salary from her previous position as cell leader. Petitioner asked to apply for the value stream manager position and was told it was closed to internal applicants. The position of low voltage value stream manager remained open until Darnell Rogers, an African-American male, was hired. Rogers was better qualified for the value stream manager job than Petitioner. When Koehler resigned, Hook was made the interim quality manager. Pearson continued him in this role based upon his qualifications and in the interest in maintaining some stability amidst all the changes being made. Between October 2006 and February 2007, Hook was the interim quality manager. Petitioner claimed that she was acting as the interim quality manager during this time period. She asked to be appointed the interim quality manager, but was not given the job. Although she was involved with preparing forms and the monthly review of the strategic employment during this time period, Petitioner was not part of the leadership team and was not entitled to attend leadership dinners. Petitioner was invited on one occasion to make a presentation before the executive team. Petitioner was paid $66,300 as of April 12, 2006. This was more than both Gentry ($41,000), when she served as interim value stream manager; and Hoffman (her salary increased from $56,100 to $61,817.60), when she served as interim value stream manager. Petitioner had some interactions with various employees that became an issue with respect to her assignments. Lois Speights, a female of "mixed race black and white" as she describes herself, was a quality inspector with Respondent for 13 years. She found it stressful to work with Petitioner and testified that Petitioner was condescending and arrogant towards her. Speights believed that Petitioner tried to make her feel stupid, which added to her stress level. Speights complained about how Petitioner treated her to Miles, her supervisor, during the summer of 2006. After she complained to Miles about Petitioner, the situation did not improve and Speights felt as though Petitioner treated her "like the dirt on the sole of her shoe." Petitioner also had some behavior issues that arose in team meetings. Two incidents were brought to Miles' attention. Both occurred in late summer or early fall of 2006. The first incident involved Petitioner throwing down her materials and walking out of a meeting at which she disagreed with comments being made. The second incident occurred during an "op ex" training class. Petitioner exhibited an argumentative tone with other members of the training class; expressed disagreements with how "op ex" was being handled; and, finally, threw up her hands and expressed frustration with having to do whatever the managers wanted done. Petitioner specifically disagreed with the methods of training being used by Cooper. Miles spoke with Petitioner about each of these incidents and stressed the need to act professionally and courteously at team meetings. Petitioner told Miles that she recognized her behavior was not appropriate. On December 12, 2006, Petitioner asked Stevens, a co-worker, to pull some data for her. Stevens informed her that he was too busy and that she would have to do it herself. Petitioner thereafter sent a series of emails which appeared to be disciplinary in nature concerning Stevens. Miles concluded these emails were not appropriate since Petitioner was not the supervisor of Stevens, and these could be disruptive to the balance of the team. Petitioner filed a complaint with Marty Kassulke, the Human Resources Manager, about Gentry refusing to talk to her. A meeting was held with Kassulke, Miles, Gentry, and Petitioner. The issue involved Petitioner being argumentative with Gentry, not cooperating or working well within the value stream team, and not performing tasks requested by Gentry. Petitioner had previously told Gentry she would not report to or take direction from her. Petitioner believes that Gentry overreacted. At the close of the meeting, Petitioner and Gentry shook hands and agreed to work together. Petitioner experienced issues concerning the ability to perform her job related to the Gunbay Program. This program involved Northrop Grumman as a customer. Petitioner was assigned to the project and attended periodic team meetings concerning it. These meetings were attended by material handlers, assemblers, and line inspectors. Brian Fish was the director of engineering. Matt Mulrain was the business manager whose responsibility included interacting with customers. Mulrain worked at Keltec and with Respondent for 25 years and had been a business manager for nearly three years. He was expected to be the primary contact with the customer. As the quality engineer assigned to the Gunbay Program, Petitioner had no managerial authority over the people assembling the product. Setting the schedule and deadlines was Mulrain's job. Petitioner understood she was expected to respect the lines of authority for the project and not to be disruptive at the Gunbay Program team meetings, which were held on a daily basis due to the pressure to deliver the project on time. Mulrain attended a March 22, 2007, meeting of the Gunbay Program team. The purpose of the meeting was to pull the team together, discuss the day's activities, and to identify delivery dates and completion dates for the team. About eight people attended the meeting, including Petitioner; Fish, the technical lead on the program; and Mulrain. Mulrain spoke up about the urgency of meeting the deadlines for the customer, the assemblers, and the inspectors. He had told the customer the day before this meeting when it could expect delivery. Petitioner disagreed with the deadline and spoke up at the meeting stating she did not believe the deadline could be met and that it was not appropriate for management to lie to a customer about delivery dates. Mulrain believed Petitioner was criticizing him for lying to the customer. Both Fish and Mulrain became upset at Petitioner's comments. At a meeting with Fish and Mulrain, Petitioner said she realized she may have been out of line in making her comments. Mulrain told Petitioner what she said was unacceptable and that she accused him of lying to a customer. Petitioner could have met in private with Fish or Mulrain to express her disagreement with the deadline rather than calling them out at the meeting. Although Petitioner had a good working relationship with Mulrain and Fish prior to this incident, Mulrain now believed he could not go forward with Petitioner on the team. He believed she had undermined the team. Mulrain and Fish approached Bower and asked that Petitioner be removed from the Gunbay Program team. On March 29, 2007, Petitioner was given a corrective action involving a verbal warning from Bower. Both Miles and Kassulke echoed the sentiments of Fish and Mulrain regarding the effect Petitioner's statements could have on the Gunbay Program team. Respondent's performance evaluations are done by a team. Cooper, Todd, Hoffman, and Miles attended a meeting at which forced rankings were given. A forced ranking is based upon multiple evaluators so that not a single manager or supervisor evaluates the employee. In November 2006, Kassulke appointed the evaluation teams and participated as the facilitator. The team met and discussed the different areas of evaluation and gave rankings to the six quality engineers. The outcome of the meeting was the composite scores of the forced rankings. Five categories were considered in making the rankings based upon job knowledge, results, continuous improvement, change agent, digital quotation, teamwork, and interpersonal skills. Kassulke took the ratings of the six evaluators and calculated a composite number. Respondent's practice was to display the rankings on a bell curve. Petitioner received an overall average of 1.625 on a maximum scale of 4.0. When forced onto the bell curve, Petitioner received a ranking of 1.0, making her the lowest scored engineer out of six evaluated. In January 2007, Petitioner asked Miles what she needed to do to improve her performance. Miles told Petitioner that she was perceived by some people as hard to work with. Petitioner said she needed to work on getting along better with others. Later that month, after Petitioner inquired about her performance evaluation, Miles told her that her number one issue was teamwork. Petitioner received the performance evaluation on April 24, 2007. The comment written on her evaluation which received a 1.0 was "Roni has a difficult time working in the team environment, and lacks the required tool set to excel in her current position." These comments reflected the consensus of the team meeting. Respondent had a non-discrimination and harassment policy in place during Petitioner's employment. This policy included a toll-free hotline to call if an employee experienced discrimination or harassment. Petitioner never called the hotline to complain about her treatment by Respondent. Petitioner filed a complaint with the EEOC on May 16, 2007. Harris became the site leader in March 2007. He is now the Director of Global Operations for Respondent. When he started, his mandate was to improve the performance of the operation in Ft. Walton. In April and May, he had daily walk around meetings, which included the six quality engineers. After several weeks studying the operation, he decided to realign the quality manager responsibilities. Stein and Stevens were assigned to program quality and had direct interaction with the customers. Hamilton, Cobble, Hook, and Petitioner were assigned to be process oriented quality engineers. Harris moved Petitioner to take on the dock to stock and supplier certifications to make the business better, drive down some of the costs of the business, and to give Petitioner an opportunity to do something professionally she had not done at that point. Petitioner gave Harris some ideas on how to deal with the dock to stock program which was a business initiative and problem Harris was trying to solve. The program was trying to reduce the time from the loading dock to the production floor by decreasing handling time. Petitioner received a memo effective July 2, 2007, sent by either Harris or Kassulke. The memo emphasized that "the restructure is designed to maximize [Respondent's] effectiveness and efficiencies to achieve better service and coordination for our customers, vendors and internal staff." Harris relied primarily on recommendations by Bower about the strengths or weaknesses of the quality engineers. Petitioner was made the supply quality engineer as a result. Miles had nothing to do with this restructuring. Petitioner worked in various locations during her tenure with Respondent. Prior to the June 2007 realignment, she worked in a bullpen. After the July realignment, Petitioner worked inside a fenced area that was locked at night to secure the inventory. She had a desk and chair in that area as well as three inspectors who had work stations, two white females and an African-American female. Petitioner was not satisfied with the work area to which she was assigned in the last realignment. Petitioner submitted her letter of resignation on July 30, 2007. Petitioner acknowledged that only certain of Respondent's managers even knew she was African-American. In fact, on one occasion when answering how many African-Americans attended a meeting that she attended, she answered "none." She had never talked about her race and the issue never came up until an encounter with Miles where he asked her if she was African-American and she told him she was. This encounter was awkward for Petitioner. Harris also was aware of Petitioner's race, but Pearson, the site leader, and Mulrain, the business manager, were not. Other non African-American employees received discipline from Respondent. Edgar Salcedo, an Hispanic male and a non African-American, was a program manager who received a performance improvement plan (PIP) on January 16, 2007, and was removed from the Gunbay Program. Kevin Kennedy, a white male, received a corrective action on November 12, 2007. Burton, a white female, was issued a final warning on June 3, 2008. John Irvine, a white male, received a final warning. Hook, a white male, was given a PIP as part of a corrective action dated September 13, 2007. Hoffman, a white female, received a corrective action and a verbal warning concerning her job duties and skills. She received a PIP because she was not meeting the performance expected of her position. Hoffman received a demotion as a result of her performance. Respondent's available progressive disciplinary steps include a verbal warning, written warning, final warning, and a PIP. Petitioner received only the lowest of the steps, a verbal warning. She never received a PIP. Petitioner did not receive a raise in 2007. She was not alone since 23 employees did not receive raises that year, including four quality engineers. At least 17 white employees did not receive a raise in 2007. Respondent hired and promoted other African-American employees. Cobble, an African-American female, was promoted from a quality engineer to a quality supervisor. Rogers, an African-American male, was hired in 2007 as a value stream manager. Speights, Iris Fidel, and Jennifer Williams, all African-American females, were employed as assemblers. Of the three quality engineers employed in November 2008, Yataive Harris is an African-American male, Marisol Sade is Hispanic, and Ahmad Allaoui is from Morocco. After resigning from Respondent, Petitioner was able to secure a position in her field with General Dynamics.
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 the Petition for Relief. DONE AND ENTERED this 3rd day of June, 2009, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN 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 3rd day of June, 2009. COPIES FURNISHED: Marty Denis, Esquire Barlow, Kobata & Denis 525 West Monroe Street, Suite 2360 Chicago, Illinois 60661 Bruce A. Minnick, Esquire The Minnick Law Firm Post Office Box 15588 Tallahassee, Florida 32317-5588 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Larry Kranert, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue The issue in this case is whether Petitioner proved that Respondent violated chapter 440, Florida Statutes (2014),1/ by failing to secure the payment of workers' compensation coverage as alleged in the Stop-Work Order and Amended Order of Penalty Assessment.
Findings Of Fact The undersigned makes the following findings of material and relevant facts: The Parties Petitioner is the state agency responsible for enforcing the requirement in chapter 440 that employers in the state of Florida secure the payment of workers' compensation insurance benefits covering their employees. Perez Concrete is a subcontractor/corporation registered to do business in Florida. Its principal business address is 6632 Willow Street, Mount Dora, Florida. Intervenor, KC Curb, is a contractor/corporation registered to do business in Florida. Its principal business address is 4975 Patch Road, Orlando, Florida. A representative of the FFVA Mutual Insurance Company (FFVA) testified. FFVA is a mutual insurance company in Florida which provides, among other things, workers' compensation insurance coverage. The witness was an underwriting supervisor. In general, workers' compensation policies go through a yearly review and renewal process handled by the underwriter. KC Curb had been a client of FFVA since 2006. Perez Concrete has never been a client of FFVA, and Perez Concrete is not a named insured on the workers' compensation insurance policy held by KC Curb from 2013 through 2015. There have been occasions when KC Curb picks up employees of subcontractors and includes them in its self-audits. Under those circumstances, KC Curb pays the premium for those particular subcontractor employees. If KC Curb pays a premium that includes the payroll for a subcontractor's employee, his or her workers' compensation benefits are covered by the KC Curb workers' compensation policy. FFVA performs an audit each year on all of the workers' compensation policies it writes. The final audit is performed, in part, to determine the final premium due on the account for that year. During a final audit, FFVA reviews any payroll paid to subcontractors. If those subcontractors did not have a certificate of insurance, then FFVA would include the payroll paid to that subcontractor to calculate the final premium due from the general contractor. If FFVA identified that there were certain subcontractor employees during the audit that worked for Perez Concrete, who were doing work on the subcontract with KC Curb, the premium would be calculated based upon those additional Perez Concrete employees. As a result, those Perez Concrete employees would be covered under the KC Curb workers' compensation insurance policy and entitled to benefits if injured on the job. KC Curb's final premium would be based on the final yearly audit including any subcontractor employees of Perez Concrete. The subcontractor employees would be covered for any injuries on the job that might have occurred during the year audited. The premium ultimately charged to the general contractor is based solely on the payroll, and not on named employees. KC Curb also does a monthly self-audit which only includes its payroll. The company makes a monthly premium payment based on what is shown in its monthly audit. If KC Curb picks up or includes an employee of a subcontractor on its monthly self-audit and reports pay going to that person, then that subcontractor employee is covered for workers' compensation benefits. When end-of-the-year audits are performed, the reports provided by KC Curb contains names of its own employees or a description of employees. This report would list the employees of KC Curb, but it would not list the employees of any subcontractors, only the amount of payroll for those subcontractors. The owner of Perez Concrete is Agustin Osorio, who testified. Perez Concrete builds concrete sidewalks, driveways, curbs, and inlets. It also does the framing and finishes the concrete. Perez Concrete had a workers' compensation insurance policy providing benefit to its employees in place from August 2013 through April 2015, with Madison Insurance Company. See, generally, Resp. Exhs. B-D. Perez Concrete's policy was canceled for late payments on April 10, 2015. Apparently, Perez Concrete was late with two payments, and the Madison Insurance Company canceled Perez Concrete's workers' compensation policy. Perez Concrete had two employees, in addition to Osorio, in July 2015, when it was first visited by Petitioner's compliance investigator, Stephanie Scarton. Scarton stopped by while the employees were performing a small sidewalk finished job in Rockledge, Florida, for KC Curb. During this first meeting, Osorio told Scarton that the KC Curb's workers' compensation policy "was covering me." Osorio testified that she responded "everything was all right." Upon questioning by the undersigned, Osorio clarified that the first visit of the investigator was in the middle of July 2015 at a work location in Rockledge, Florida. After discussing his operations and telling the investigator about the KC Curb policy coverage, she left. Osorio testified that Scarton called KC Curb that same day to confirm his comments, and then she told him that everything was "all right." Osorio testified that the same investigator visited again on August 19, 2015. That day, she gave him the Stop-Work Order. Osorio testified that it was during the August 19, 2015, visit that she changed her previous response and said that Perez Concrete was not covered under the KC Curb policy. As the owner, Osorio had a valid exemption for himself from workers' compensation coverage from January 2014 through January 2016. Resp. Exh. E. Osorio had a conversation with "Robin" from KC Curb (date not specified). When he asked her whether Perez Concrete was covered, she told him that his company would be covered under KC Curb's workers' compensation policy. Osorio testified that Perez Concrete pays KC Curb seven percent of the weekly revenue derived from working for KC Curb, in order to be included on KC Curbs workers' compensation policy. Perez Concrete pays an additional one percent to KC Curb to be included on its general liability insurance policy. Perez Concrete had bought its own workers' compensation policy in 2013 and in 2014. Resp. Exhs. B-D. When Perez Concrete's policy was canceled by Madison Insurance Company on April 10, 2015, Osorio contacted KC Curb about the insurance. Osorio understood that by doing so, he had secured the payment of workers' compensation insurance coverage for his employees. When Osorio contacted the KC Curb representatives, he told them that he wanted to continue working with them and asked them about the insurance coverage. Petitioner's compliance investigator, Scarton, testified. She has held that position since approximately April 2013. She conducts random site visits to verify that companies have workers' compensation coverage. She conducts approximately 80 compliance investigations per month. On July 6, 2015, she conducted a random visit at a construction site where concrete work was being performed by Perez Concrete. She spoke with Osorio who told her that he did not have workers' compensation insurance coverage, but that he was covered through another company. In checking her CCAS automated data system, she confirmed that Perez Concrete did not carry its own workers' compensation policy.2/ After speaking with Osorio and getting his explanation, she contacted KC Curb and spoke with Robin Sempier. She was informed that KC Curb paid the workers' compensation coverage for Perez Concrete. Sempier told the investigator that KC Curb was allowed to proceed in that fashion with its subcontractors under an arrangement from a previous compliance case handled by Petitioner.3/ After speaking with Sempier about Perez Concrete's situation, Scarton contacted her supervisor, Robert Serrone. He directed her to refer the case involving Perez Concrete to Petitioner's fraud unit and to let them handle the investigation. Scarton's next involvement was in August 2015, when she was contacted by her supervisor and directed to issue a stop-work order to Perez Concrete. She obtained the Stop-Work Order, and served it on Perez Concrete on August 19, 2015. Petitioner also served Perez Concrete with a business records request. Perez Concrete did not comply with the request, nor did it submit any business records to Petitioner. Upon inquiry by the undersigned, the parties stipulated on the record that the appropriate amount of the penalty would be $11,902.20, should a violation be proven. The investigator asked the KC Curb representative to send her documentation confirming that KC Curb pays the workers' compensation coverage for Perez Concrete. The investigator opined on cross-examination that the employees of Perez Concrete were not covered by KC Curb. Scarton concluded that "in accordance with the investigations that we conduct, Perez Concrete would need to carry the coverage." Tr., p. 139, line 7. She later stated that on July 6, 2015, she could not confirm insurance coverage "one way or another." Tr., p. 140, lines 6 and 13. Professor Joseph W. Little of Gainesville, Florida, was called to testify as an expert on behalf of Perez Concrete and KC Curb. He is currently employed as an adjunct faculty member at the University of Florida, College of Law. He is also Professor of Law Emeritus at the University of Florida, College of Law. He had been employed as a professor at the University of Florida, College of Law, since 1967, teaching workers' compensation law. Little is unquestionably an expert in the field of Workers' Compensation Law. Little also authored the legal hornbook entitled "Workers' Compensation," a publication of the West Publishing Company. Little reviewed the facts of the case by reviewing the documentation provided by counsel who retained him. This included the Stop-Work Order, the petition, an amended petition, motions, and orders issued in the case. He also studied the applicable statutes and administrative rules of Petitioner as well as decisional law that he felt was relevant.4/ Little testified, and the undersigned considered, that he was not aware of any decisional law in the state of Florida interpreting the word "secure" to mean "buy" or "must buy," so long as there was an agreement between the subcontractor and the prime contractor that one or the other would purchase the insurance. Tr., p. 180, line 4. Little testified that the concept of the "statutory employer" found in chapter 440 has remained in place and steady throughout the history of the statute. He pointed out other relevant statutes in chapter 440 that needed to be read in pari materia with one another. An insurance agent from Bouchard Insurance, John Manis, also testified. Bouchard Insurance is a commercial insurance agency which sells workers' compensation insurance. Bouchard Insurance represents FFVA and sells workers' compensation insurance as an agent for that company. Manis had worked on the KC Curb account since 2005. He is familiar with how KC Curb and FFVA conduct their workers' compensation business together, including the payment of premiums. When a workers' compensation policy is written, the business will give its payrolls to the agent who determines the class codes that are applied and used in the policy. At the end of each year, an audit is conducted on those payrolls to determine whether or not the business owes money to FFVA, or if a refund from FFVA is in order. Some companies, like KC Curb, do a monthly audit--during which they input their payroll and are told what premium is due for the month. When a subcontractor of KC Curb declines or fails to obtain its own insurance policy, the subcontractor's employee becomes "like an employee of KC Curb," and FFVA will charge KC Curb for those employees, as if they were its own. The names of actual subcontractor employees are provided at audit time, not during the year. Apparently, this is a common practice in the industry. The office manager for KC Curb is Sempier. She testified that KC Curb is a concrete curb construction company that has been in business for 22 years in the Orlando area. It performs concrete construction services using a combination of in- house crews and subcontractors. One of Sempier's duties is to monitor subcontractor compliance with the Workers' Compensation Laws. She characterized KC Curb as being "very on top of that." Subcontractors are required to provide KC Curb with certificates of insurance before they start any work. Subcontractors are required to produce a certificate of workers' compensation insurance, or they go under the KC Curb policy as an uninsured subcontractor. Although KC Curb requires subcontractors to get their own insurance because this is much less expensive, some of them cannot or do not secure their own, so KC Curb secures it. The subcontractor is back-charged for this coverage. In monthly workers' compensation self-audits, Sempier includes a sheet that shows payroll for KC Curb's uninsured contractors and its own employees. Those numbers are combined together along with other clerical classes and the insurance premium payment is calculated. Tr., p. 221, line 3. Although not required by the FFVA, KC Curb includes payroll numbers for its uninsured subcontractors in each monthly self-audit. Tr., p. 221, line 11. Respondent's Exhibit J, entitled "Self-Reported Payroll," was explained by the witness. The document, prepared and issued by KC Curb for 2015, includes an entry reflecting the total payroll paid each month for KC Curb. This included both KC Curb's own W-2 employees and employees of subcontractors. Tr., p. 227, line 19. The second page of Respondent's Exhibit J (with information regarding other subcontractors redacted) shows that the payroll for employees of Perez Concrete was included beginning April 2, 2015. Tr., p. 224, line 16. Respondent's Exhibit J indicates, bottom right, the number of employees that were picked up from Perez Concrete.5/ Monthly premiums are paid by KC Curb instantaneously "on-line" and are based on the total payroll numbers listed in Respondent's Exhibit J, beginning with page 2. The payment comes directly out a KC Curb's checking account. Sempier testified that once payment was made, all employees included in the payroll amounts are covered by KC Curb's workers' compensation policy, including the Perez Concrete employee number listed. Tr., p. 224, line 23, and p. 253, line 14. See Resp. Ex. J, p. 2, bottom right. Work orders are received from the subcontractors for KC Curb. Those work orders are supposed to list the names of the subcontractor's employees. In this manner, KC Curb is able to determine how many employees are going to be covered by insurance for a particular subcontractor. When KC Curb was informed that the policy of insurance for Perez Concrete had been canceled, KC Curb called Perez Concrete's insurance agent to get the exact date of cancellation. When Perez Concrete's workers' compensation insurance cancellation was confirmed, KC Curb notified Perez Concrete in writing that it needed to promptly provide new certificates of insurance. See Resp. Exh. H. Perez Concrete was likewise notified in writing of KC Curb's requirements for "KC Curb to provide Workers' Compensation Insurance for your Company." See Resp. Exh. I. Osorio testified that Perez Concrete chose to have KC Curb secure the insurance for Perez Concrete after April 10, 2015, and he signed Respondent's Exhibit I agreeing to follow the guidelines for workers' compensation insurance. Thereafter, KC Curb began to pick up and include Perez Concrete's employees on its monthly self-audits. Likewise, it started to pay a premium amount for insurance which included payroll related to Perez Concrete's employees. Sempier was contacted by Petitioner's investigator, Scarton. When she informed the investigator that KC Curb was compliant with the law and was following a procedure previously permitted, the investigator called back that same day and asked for her to get something from her agent verifying that Perez Concrete was covered. Sempier testified that she promptly obtained a letter from KC Curb's insurance confirming coverage for Perez Concrete and thought she attached it with her email back to the investigator. Tr., p. 256, line 18. She subsequently learned that she attached the wrong document to the email, and the investigator did not receive the confirmation letter.6/ The evidence indicated that in the year 2015, KC Curb provided workers' compensation insurance coverage as a "statutory employer" for the employees of approximately seven of its subcontractors.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Department of Financial Services, Division of Workers' Compensation, issue a final order withdrawing or dismissing the proposed penalty and finding that Respondent was in compliance with the statute during the relevant period of time. DONE AND ENTERED this 5th day of April, 2016, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE 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 5th day of April, 2016.
The Issue The issue in this case is whether Petitioner is entitled to receive supplemental compensation under the Firefighters Supplemental Compensation Program.
Findings Of Fact At all material times, Petitioner has been employed as a firefighter with the City of Deland Fire Department. By submitting course transcripts on September 18 and 20, 1989, Petitioner applied to the Bureau of Fire Standards and Training, Division of the State Fire Marshall, Department of Insurance for additional compensation under the Firefighter Supplemental Compensation Program. The course transcripts were from Brevard Community College and Valencia Community College. The Brevard transcript showed that, over a four-year period ending September 13, 1989, Petitioner had earned 69 semester credit hours, for which he was awarded an associate in arts degree in August, 1988. (All credit hours reported below are semester credit hours.) The courses for which Petitioner earned credits at Brevard are as follows (three credit hours for each course unless indicated otherwise in parentheses): general psychology, general chemistry I and II, general chemistry lab I and II (each 1), engineering graphics (4), college algebra, weight training (1), communications I and II, stage band (1), archery (1), fundamentals of speech communication, swimming (1), college trigonometry, first aid and safety (2), organic chemistry I and II, organic chemistry lab I and II (each 1), academic/career planning, U.S. history I and II, oceanography, introduction to physical geology, cardiopulmonary resuscitation (1), tennis (1), survey of American literature, contemporary humanities of the 20th century, and--following the receipt of the degree-- developmental psychology. After earning his associate in arts degree, petitioner took ten credit hours at Valencia Community College during the second session of the 1988-89 school year. The courses and their credit hours are: fundamentals of emergency medical technology (4), fundamentals of emergency medical technology practice (3), and emergency medical technician clinical practicum (3) By notice dated October 18, 1989, the Bureau of Fire Standards and Training, Division of the State Fire Marshall, Department of Insurance informed Petitioner that the information that he had submitted for entry into the Supplemental Compensation Program was not acceptable. The notice explains that Petitioner "does not have 18 hours fire science within degree transcript." The notice advises at the bottom: "When you have all of the appropriate paperwork properly filled out, please resubmit." By letter dated November 8, 1989, Frederick C. Stark, Chief of the Bureau of Fire Standards and Training, informed Petitioner that his transcripts failed to disclose a "major study concentration area" to qualify for supplemental compensation. The letter quotes Rule 4A-37.071(2), Florida Administrative Code: The major study concentration area, at least 18 semester hours or 27 quarter hours, must be readily identifiable and applicable as fire-related. Those major study concentration areas specifically identified in Rule 4A-37.073 are considered by the Division to be readily identifiable and applicable as fire-related. The letter advises Petitioner of his right to a hearing. Following some communications from Petitioner, Mr. Stark wrote another letter to Petitioner dated November 27, 1989. The letter states in its entirety: After further review of your transcript from Valencia Junior College, may I suggest that you take the necessary courses needed to get an Emergency Medical Technology degree. I feel that this would be the best way to go since you already have courses in this area. If I can be of any further assistance please call me at [number omitted]. Petitioner re-enrolled in Brevard Community College for the second semester starting January 8, 1990. He completed a three-credit hour course in statistics and a two-credit hour course in medical terminology. He also received credit, through a CLEP examination, for four credit hours in general biology. On June 18, 1990, Petitioner resubmitted the transcript materials showing the additional coursework at Brevard Community College. By letter dated July 10, 1990, Mr. Stark informed Petitioner that his application for entry into the Firefighters Supplemental Compensation Program had been denied for noncompliance with Section 633.382, Florida Statutes, and Chapter 4A-37, Florida Administrative Code. The letter quotes Rule 4A-37.085(2) as follows: "To be eligible to receive the Supplemental Compensation provided for by Section 633.382(3), Florida Statutes, the following requirements must be met: Possess an eligible Associate or Bachelors Degree." Prior to advising of a right to a hearing, the letter concludes: "it has been determined that your Degree is not readily identifiable and applicable as fire-related, per Rule 4A- 37.084. By letter dated July 17, 1990, to the Bureau of Fire Standards and Training, Petitioner requested a formal administrative hearing. The letter states that Petitioner had at least 18 semester hours readily identifiable and applicable as fire-related. In the July 17 letter, Petitioner asserts that he had called Mr. Stark prior to taking the additional courses and had been told that he needed only six additional semester hours, because he had 12 semester hours in approved courses. The letter claims that Mr. Stark had approved specific courses prior to Petitioner's taking them and had said it was unnecessary to confirm anything in writing. Petitioner complains in the letter that he was only lately told that he could meet the 18 semester-hour requirement only by earning a new associate degree. To earn an associate in arts or associate in science degree from Brevard Community College, a student must satisfy various requirements, such as completing a "prescribed course of study which includes at least 64 semester hours of credit," according to the college catalog. The associate in arts degree offers no opportunity to declare a major. 1/ The associate in science degree offers various majors. The associate in science technical program offers a major in fire technology that is designed to "qualify fire personnel for career advancement." The coursework described in this program represents strong evidence of the kind of courses that are fire- related. The coursework for the associate in science degree with a major in fire technology requires, among other things, the following courses and credit hours: two English courses (3 each), one physical science course (3), one chemistry course (3), one algebra course (3), two government courses (3 each), one human relations course (3), and two physical education courses (1 each). Although Petitioner did not take the identical courses required for the associate in science degree with a major in fire technology, he took comparable courses that, in each case, were more difficult than those required for the associate in science degree. The courses that Petitioner took that correspond in subject matter and credit hours to the Brevard requirements for a major in fire technology are: general psychology (3), general chemistry I (3), college algebra (3), communications I (3), fundamentals of speech communication (3), weight training and swimming (2), and U.S. history I and II (6). Other fire-related courses are first aid and safety (2) and cardiopulmonary resuscitation (1). Petitioner thus earned, prior to receiving his associate in arts degree, 26 hours in courses that are readily identifiable and applicable as fire-related. Valencia Community College is similar to Brevard Community College in offering no majors within the associate in arts degree. Valencia's associate in science degree with a major in fire science requires the following courses and credit hours: composition (3), U.S. government (3), psychology in business and industry (3), business math (3), fundamentals of speech (3), technical communication (3), introduction to general chemistry (4), introduction to sociology (3), and humanities (3). when measured against the requirements of Valencia Community College for a major in fire science, in terms of subject matter and credit hours, Petitioner earned a total of 25 or 28 credit hours in fire-related courses. Adding the first aid and cardiopulmonary resuscitation courses, Petitioner earned, in this comparison to the Valencia requirements, between 28 and 31 credit hours in courses that are clearly fire-related and within a major study concentration area that is fire-related. Neither an associate nor bachelor degree is required for Petitioner's present job as a firefighter. His job responsibilities include preventing and extinguishing fires, maintaining firefighting equipment, and conducting life support activities. His specific responsibilities include raising and climbing ladders, using chemical extinguishers, performing rescue activities, conducting fire education, performing life-support activities, and attending training courses to learn more about fire prevention and protection.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Insurance, Division of State Fire Marshall, issue an amended final order determining that Petitioner is eligible to receive supplemental compensation of $50 monthly commencing no later than the first full calendar month following the date of the initial final order entered in this case. RECOMMENDED this 11th day of April, 1991, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of April, 1991. COPIES FURNISHED: Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil, General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Attorney Lisa S. Santucci Division of Legal Services 412 Larson Building Tallahassee, FL 32399-0300 Peter T. Campbell, III 445 Clarewood Boulevard Titusville, FL 32796
The Issue The issue for consideration herein is whether the Respondent, Department of Labor and Employment Security, erred in awarding the contract in response to its Proposal No. 91-064-AS to some firm other than the Petitioner. By Petition And Notice Of Protest dated July 10, 1991, the Petitioner herein, Toplis & Harding, Inc., (Toplis), formally notified the Respondent, Department of Labor and Employment Security, (Department), that it was protesting the bid tabulation in this procurement as scored by the Department, and the following day, July 11, 1991, filed its Formal Notice of Protest regarding the same matter. Thereafter, by letter dated July 17, 1991, the Department forwarded the file to the Division of Administrative Hearings for appointment of a Hearing Officer, and by Notice of Hearing dated July 19, 1991, the undersigned set the case for hearing in Tallahassee on July 29, 1991, at which time it was heard as scheduled. At the hearing, Petitioner presented the testimony of Robert L. Russell, its head of risk management, and introduced Petitioner's Exhibits 1 through 4. Petitioner's Exhibits 5 - 7 for Identification were offered but not received into evidence. Respondent presented the testimony of Ann Lee Clayton, Director of the Department's Division of Worker's Compensation but introduced no exhibits. No transcript was presented. Only the Department submitted Proposed Findings of Fact which have been incorporated in this Recommended Order. Petitioner submitted a written summation and final argument which has been carefully considered in the preparation of this Recommended Order.
Findings Of Fact At all times pertinent to the allegations herein, the Respondent, Department, was the state agency responsible for the administration of the Florida Worker's Compensation Act. One division of the Department deals with the regulation of worker's compensation self insurers and self insurance funds. Petitioner is a 75 year old insurance adjusting and service company consisting of nearly 400 employees and 31 offices in the United States. For the purpose of this procurement, Toplis is the head of a joint venture also utilizing the services of the Fred R. White companies of Dallas, a subcontractor, and Florida agent Lee A. Black. In January, 1991, Toplis broadened its service base to include risk management consulting which is the primary function of Mr. Fred White, head of the Fred R. White companies, mentioned above as one of the partners in the joint venture. The other party, L. A. Black & Associates, is an agency for Travelers, Hartford, and Lloyds of London in Florida and is a certified minority business enterprise in this state. On April 15, 1991, Ann Clayton became the Director of the Respondent's Division of Worker's Compensation and after reviewing the administrative function of that division, determined there was a need for a study of the solvency and liquidity of self insurers and self insurance funds under the jurisdiction of the Division as well as the different ways in which those funds are regulated by the Division. In furtherance of this decision, she appointed Joe Mastrovito, Chief of the Bureau of Self Insurance, to prepare a request for proposals for such a study. The RFP in issue here, developed as a result of those directions, was distributed on June 5, 1991, and required proposals in response thereto by July 3, 1991. At paragraph 2.8 of the RFP, the proposer was required to show evidence: ... that the contract team includes individuals or firms which, by virtue of education, experience, certification and/or licensure, provides expertise in the areas of law, actuarial science, government, accounting, business management, and insurance (including claims, underwriting, and risk management). The provision went on to require that the contractor designate in the technical proposal at least one individual within the contract team with expertise in each of the above areas. The contractor was required to provide resumes for each designated team member which was to include information concerning education, experience, and current employment. This requirement for a recitation of contractor qualifications was also contained in paragraph 3.3, PROPOSAL FORMAT, of the RFP, where the foregoing request for a recitation of qualifications was repeated almost verbatim. Six firms, including Petitioner, submitted timely proposals in response to the RFP. The responses were evaluated by a team composed of Ms. Clayton and Mr. Mastrovito, as well as an actuary and an attorney, both of whom were also from the Department. This committee determined that Petitioner's proposal was nonresponsive in that the resumes of Joyce Armstrong, Fred White, and Lee Black did not support the qualifications listed for them in the RFP in the areas of economics, actuarial science, and government, respectively. Specifically, with regard to Ms. Armstrong, designated by Petitioner as its expert in the area of economics, her resume included with the RFP reflects that she "studied" economics at Southern Illinois University in 1976, but no employment in the field of economics, either before or after that date, was listed. Mr. White's expertise in actuarial science, was claimed on the basis of his resume statement that he is currently completing requirements for membership in his accrediting societies, but the resume reflects no prior work experience in that field. A similar situation pertains in the case of Mr. Black, designated by Petitioner as its expert in the area of government. Here, Petitioner's narrative indicates that Mr. Black held a "senior position" with the United States Department of Housing and Urban Development, yet his resume makes no reference to any government service or experience. At the hearing, Petitioner attempted to introduce affidavits from Mr. Black, Mr. White, and Ms. Armstrong in an effort to bolster their credentials. However, these affidavits, which were objected to by Respondent, were not received into evidence and were not considered by the undersigned. The evaluation committee also failed two of the other five offerors as being unresponsive to the RFP and a second two of the five as having a conflict of interest which disqualified them from award. Only Sterling Partners, Inc. was considered both responsive to the RFP and without a conflict of interest. Both of these categories are "pass/fail" criteria. It was only after an offeror passed both of those that its response was scored on the basis of the other factors for evaluation. Since Petitioner and the other four disqualified submittors did not pass the first two qualifications, they were not scored on the technical proposals or price. Only Sterling Partners, Inc. was, receiving 83 out of a possible 100 points. Since Sterling Partners, Inc. was the only offeror to survive the evaluation process, the team recommended a contract be issued to it.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered denying the protest of Petitioner herein, Toplis & Harding, Inc. as to Proposal # 91-064-AS. RECOMMENDED in Tallahassee, Florida this 12th day of September, 1991. ARNOLD H. POLLOCK 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 12th day of September, 1991. COPIES FURNISHED: Edward A. Dion, Esquire Department of Labor and Employment Security Suite 307, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-0657 Robert L. Russell, Esquire ARM, Risk Management Consultant Toplis & Harding, Inc. 222 South Riverside Plaza Chicago, Illinois 60606 Thomas Jones, Esquire Holland & Knight Post Office Drawer 810 Tallahassee, Florida 32302 Frank Scruggs, Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Stephen Barron General Counsel DLES 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152
The Issue The issue in this case is whether Respondent used a rating system in conjunction with certain professional liability insurance policies issued between 1982 and 1987 which violated Sections 624.418, 626.9541, 627.062, and 626.371, Florida Statutes, as alleged by Petitioner in its Order to Show Cause.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background In this disciplinary proceeding, Petitioner, Department of Insurance and Treasurer (Department), generally alleges that Respondent, St. Paul Fire and Marine Insurance Company (St. Paul), failed to apply a premium discount on certain primary and excess coverage policies St. Paul issued between 1982 and 1987. St. Paul is a foreign insurance company authorized to do business in the State of Florida and is subject to the regulatory jurisdiction of the Department. Between 1982 and June 30, 1987, St. Paul issued professional liability coverage for the University Hospital Academic Fund, later known as the Jacksonville Faculty Practice Association (Association). St. Paul ceased writing this type of coverage in the State of Florida in July 1987. The members of the Association, who are all physicians, served as faculty at University Memorial Hospital in Jacksonville, Florida. All members were employed by the University of Florida College of Medicine and ultimately by the State Board of Regents as full- time professors. Besides teaching, each of the doctors was engaged in the direct delivery of medical services to patients, and they were accordingly subject to suit for malpractice. The pricing of the policies was in accordance with a rate manual filed by St. Paul with the Department, which was the result of an actuarial process undertaken by the insurer. The rate manual specified premium rates to be charged practicing physicians and surgeons for professional liability coverage. Among other things, the rate manual contained a discount table entitled "Interns, Residents and Full-Time Teaching Physicians and Surgeons Guide (a) Rates." This discount rate provided up to a fifty percent discount for teaching physicians off the full manual rate charged practicing physicians. The amount of the discount was dependent on the amount of time each teaching physician spent in patient contact, and ranged from twenty percent to fifty percent off the manual rate. The discount only applied, however, if all of the teaching doctors from the same hospital or medical school were insured under the policy. St. Paul did not apply the discount rate to any of the premiums charged the Association during the years in question. St. Paul had also filed a "rule" with the Department in 1980, entitled "Rule For (A) Rating Sizeable Risks," which allowed it to specially rate a policy using risk, economies of scale, and competitive considerations if the account generated more than $100,000.00 per year in premiums. The use of this rule is known as "a" rating a risk. The parties agree that the Association policy generated more than $100,000.00 per year in premiums. If a policy is "a" rated, the manual rates do not apply. St. Paul asserts that pursuant to this rule, it "a" rated the policies in question and thus the manual rates, including the discount, did not apply. Between 1988 and 1995, the Association and State Board of Regents filed at least two actions against St. Paul in circuit court claiming, among other things, unjust enrichment, a lack of insurable interest being protected by St. Paul, fraud, and promissory estoppel. Those suits were unsuccessful. Sometime during the course of that litigation, but no later than 1991 or 1992, the Association discovered the discount table contained in St. Paul's rate manual and advised the Department of this fact. On January 5, 1995, the Association made a formal written request to St. Paul that the insurer apply the discount rate to the premiums previously paid and that it refund the overcharges to the Association. After St. Paul refused to refund, the Association filed a complaint with the Department, as authorized by Section 627.371, Florida Statutes. On the theory that St. Paul had not "a" rated the policies, and it failed to give the Association the premium discount required under the rate manual, the Department issued an Order to Show Cause on November 27, 1997. It seeks to have St. Paul recalculate the premiums based on the filed manual rates, including the appropriate discount, and to refund the difference, with interest, which now allegedly totals almost $5 million. St. Paul denies the allegation, contends that it properly "a" rated the policies during each year, and has demanded a formal hearing to contest the Department's proposed action. Were the Policies "A" Rated? St. Paul provided primary and excess coverage policies for the Association for the years from 1982 through June 30, 1987. During those years, St. Paul had on file with the Department a Sizeable Risk Rule for "a" rating which provided as follows: Risks developing $100,000 or more annual manual $100,000/$300,000 limits premium for Physicians and Surgeons Professional Liability may be (a) rated. "A" rating is an industry term for individually rated risk, and is authorized by Section 627.062(3), Florida Statutes. Individually rated risks are exceptions to filed rates, and the filed manual rates do not govern the rates charged for that risk. Therefore, if a policy generated more than $100,000.00 in annual premiums, the rule allowed St. Paul to individually rate a particular risk and to deviate from the premiums approved in its rate manual. As discussed in greater detail below, if St. Paul "a" rated a risk, beginning in 1984, it was required by statute to file with the Department notification that a policy had been priced in that manner. The premiums charged for each year deviated from the manually generated premium. In 1982 and 1983, the premium represented a twenty percent downward deviation. In 1984 and 1985, the premium was thirty percent less than the standard manual rates. In 1986, the premium was ten percent below the standard manual rates while in 1987 it was ten percent above the standard manual rates. Therefore, the premiums charged did not appear to have been derived from any manual rate and discount combination. This is consistent with testimony by a St. Paul witness that the policies would have been "a" rated as a matter of course because they qualified for that type of rating. It was also consistent with St. Paul's policy to always use the sizeable risk rating rule first versus the manual discount rate since it gave St. Paul a greater amount of flexibility in dealing with an account. All of the policies in question were underwritten through the Florida Service Office that St. Paul maintained in Orlando, Florida. That service office was closed in 1994, or long before this case began, and many of its underwriting files were routinely destroyed while others were misplaced. As a part of this proceeding, St. Paul requested a search for any documents from the service center relating to these policies; no documents were located. Further, the underwriters who had personal knowledge of these policies are no longer employed by St. Paul. The Department conceded that, with the exception of a few documents obtained from the files of the circuit court litigation, pursuant to its record retention policy, it had destroyed all records for the years 1982-1987, and thus it could not prove that St. Paul had never filed documents showing that the policies had been "a" rated. Even so, it seeks to prove that such filings were not made, and that the rate manual (and discount) should have applied, principally through inferences drawn from St. Paul's inability to now locate records from that time period, some of which date back 17 years. The years 1982 and 1983 Prior to 1984, there was no statute or agency rule which required that St. Paul file its "a" rates with the Department or notify the Department that a risk had been individually rated. Therefore, for the years 1982 and 1983, St. Paul had no legal obligation to file with the Department its "a" rates or notification that the risk had been individually rated. Indeed, there is no evidence that the Department even had a mechanism for approval of any such filing. Given the fact that the rates charged by St. Paul were not derived from any manual rate and discount combination, that St. Paul had a policy of always using its sizeable risk rating rule when annual premiums exceeded $100,000.00, and that the Department has no records to show the absence or presence of the filings, the more persuasive evidence supports a finding that St. Paul "a" rated the policies during 1982 and 1983. Stated differently, there is insufficient clear and convincing evidence that St. Paul failed to properly calculate the Association's rates in those years, as alleged in the Notice to Show Cause. In making the above finding, the undersigned has considered the Department's contention that during 1982 and 1983, St. Paul was a subscriber of the Insurance Service Organization (ISO), an organization which made rate filings on behalf of its insurance company members. ISO had a requirement that any company issuing a policy in Florida which was "a" rated had to file that "a" rating with the Department. Because St. Paul now has no documentation to show that the filings were made pursuant to that requirement, the Department contends that an inference may be drawn that the policies were not "a" rated. The ISO filing requirements are "internal" in nature rather than a regulatory requirement imposed by state law. Moreover, the evidence shows that St. Paul could be an ISO subscriber for some lines of insurance, but not for other lines. In other words, if St. Paul independently filed its own rate manual for a particular line of insurance, then it would not be subject to the ISO requirement that it file an "a" rating with the Department for that line of business. It can be reasonably inferred from the record that St. Paul made an independent filing for physicians and surgeons. The Department also points out that effective December 3, 1979, an internal manual required St. Paul to submit directly to the State the rate charged for any risk that was "a" rated. It goes on to argue that if the policies were actually "a" rated, St. Paul would have documentary evidence that it filed those rates with the State. Again, however, this was an internal as opposed to a mandatory regulatory requirement, and St. Paul is not charged with violating its own internal policy. The Department also points out that in 1982 and 1983, St. Paul had an internal document retention procedure in effect which required that underwriting files of the company be retained for a period of two years after expiration of the policy unless the policy had a Reporting Endorsement attached to it, in which event the entire underwriting file was to be retained for a period of ten years. In 1982, but not 1983, the policy had a Reporting Endorsement attached. This meant that under company internal procedures, the 1982 policy files would be retained until 1992. Testimony established, however, that this internal procedure was not always followed. Even assuming that the procedure was followed for the 1982 file, the time for routine destruction of that file would have occurred at least five years before this proceeding began. The years 1984 and 1985 Beginning in 1984 and continuing through 1987, Florida law required that the rates charged to individually rated risks ("a" rated risks) be filed with the Department no later than 90 days after the policy for that risk was assumed. Department Exhibits 7 and 11 are individual risk rate filings submitted by St. Paul to the Department for the years 1984 and 1985. They convincingly undercut the Department's contention that St. Paul did not "a" rate the policies, and that it must have charged an inappropriate premium during those years. Even so, the Department questioned whether the policies were "a" rated because of certain forms attached to these filings. On those forms, which appear to be data entry forms, the letter "N" had been written in a column headed "A rate." Without any evidentiary support, a Department witness opined that the letter "N" must have stood for the word "No," thus indicating that St. Paul did not intend to "a" rate the policies. But the same witness conceded that the forms were attached to a document which was intended to be an individual risk filing, and the letters to which the forms were attached identified the filing as an individual risk filing pursuant to the rule for "a" rating sizeable risks published by the Department. In addition, at the time the forms were received by the Department in 1984 and 1985, they were accepted as being adequate to fulfill the statutory requirements for filing individual risk rate filings. This was confirmed by witness Vogel, a former Department employee in 1984 and 1985 who supervised the individual with whom the letters were filed. Therefore, it is found that Department Exhibits 7 and 11 constitute individual risk rate filings for the policies issued in 1984 and 1985, and that St. Paul did not charge an excessive or inappropriate rate, as alleged in the Notice to Show Cause. The years 1986 and 1987 For the years 1986 and 1987, neither party was able to produce a copy of the filing. Because its records have been destroyed, the Department has no documentation from that period which would show the absence or the presence of the filings in question. In 1986, St. Paul had a policy of making all required filings, including individual risk ratings. In addition, Respondent's Exhibit 7 is a "Processing List" for the 1986 policy. This was a checklist used by some St. Paul offices to ensure that each policy was properly prepared and that the regulatory requirements were met. On that document, which was not credibly challenged, there is an indication by the underwriting supervisor that the "a" rate filing was prepared. This evidence is the most persuasive on the issue, and it is found that St. Paul "a" rated the 1986 policy. In 1987, St. Paul continued its policy of making all required filings, including individual risk ratings. The Department did not credibly dispute this contention, and it has been accepted as being dispositive on this issue. While the Department established that a Reporting Endorsement was attached to the 1987 policy which required St. Paul, for internal purposes only, to retain that document in the underwriting files until 1997, the evidence also shows that this procedure was not always followed. Moreover, the inability of St. Paul to now produce that document does not clearly and convincingly establish that it did not exist, or that it was never filed with the Department. Indeed, St. Paul is not charged with failing to make a required filing, and even if such an omission for that year could arguably be inferred, this would not mean that St. Paul automatically forfeited it right to "a" rate the policy, as the Department suggested at hearing. Accordingly, it is found that St. Paul "a" rated the 1987 policy, and that it charged the Association an appropriate rate. Should the Discount Have Applied? Although the foregoing findings resolve this dispute in St. Paul's favor, the Order to Show Cause alleged that St. Paul charged an illegal rate because it failed to apply the Guide (a) Rate (discount table) for "certain physicians and surgeons, who qualified for the credit/discounts." In making this allegation, the Department did not specify the names of the individuals and the amount of the discount to which each was entitled. For the purpose of resolving this issue as well, the following findings are made. As noted earlier, the Guide (a) Rate provided a rate discount for full-time teaching physicians and surgeons based on the amount of time the full-time teaching physician spent in patient contact. It was to be applied, however, "only when all Interns, Residents and/or Full-Time Teaching Physicians and Surgeons from the same Medical School or Hospital are insured in the same policy." The discount was intended to reflect the lower risk exposure of teaching physicians who spend less time in patient contact than do practicing physicians. Typically, it would be applied in academic settings where the practice of medicine was incidental to the teaching duties of the faculty. The discount rate was only applicable when: (a) the entire group being underwritten qualified for the discount, that is, they were full- time teaching physicians, residents, or interns, and (b) the entire group was covered under the same policy. If all of the covered individuals were not entitled to a discount, or if all the individuals entitled to the discount were not covered under the same policy, the discount rate would not apply. The parties agree that the insurer, St. Paul, was entitled to make this determination. The Department estimated that at least 100 physicians were covered by the policies each year. Because of the passage of time, except for 14 physicians, there is no documentation available regarding the amount of time each covered individual spent on patient contact during the years in question. As to those 14, whose questionnaires were provided by St. Paul, none claimed to have less than fifty percent patient contact, and 4 claimed to have spent all of their time in patient contact. One covered physician even claimed to be part-time rather than a full-time teaching physician, and there is indicia that some, but not all, residents may have been covered by the policies. Indeed, since no independent study of the records had been made, the Department witness could not affirmatively represent that only full-time teaching physicians were insured under the policies. It is fair to infer from the evidence that some of the covered individuals could not have been "full-time" teaching physicians, and thus they would not have qualified for any discount. Notwithstanding the foregoing documentation, a Department witness estimated that the covered individuals only had "direct, personal responsibility for the clinical course of the patient" twenty-five percent of the time. This estimate was derived from the witness' knowledge of the professional liability questionnaire currently administered to teaching physicians covered by the Board of Regents self-insured fund. That questionnaire does not, however, ask the doctors what percentage of time each spends in patient contact. Rather, they are asked to identify the percentage of time spent in clinical activities, including supervising residents. The witness then extrapolated the responses received in the current years back to the policy periods in question to arrive at the twenty-five percent figure. The estimate was not based on the witness' recollection of conditions or circumstances relating to the specific covered individuals for those specific policy periods. Moreover, there was no attempt to gather documentation concerning the individuals covered under the policies. Given these evidentiary shortcomings, there is less than clear and convincing evidence to support a finding in the Department's favor that even if the policies were not "a" rated, the Association was entitled to the Guide (a) Rate. Refund of Overcharges Given the foregoing findings, a partial refund of premiums is clearly inappropriate. Even so, the Department has provided various calculations for a refund, which warrant a brief discussion. Under one scenario, all members of the Association would be entitled to a fifty percent discount from the manual premium (yielding a $5 million plus refund, including interest) based on the assumption that every physician had no more than twenty-five percent patient contact. For the reasons stated in Findings of Fact 31 and 32, this assumption has been discredited. Under another scenario, a discount level of thirty-five percent has been arbitrarily picked, without any investigation of the status or practice of the individuals covered under these policies. A final calculation is made in the Department's proposed order again using a uniform discount rate of fifty percent for all covered individuals, less a volume discount credit, which results in premium overcharges of $1,849,116.00. After a statutory interest rate of twelve percent is added to this amount, the total overcharge, including interest, is claimed to be $4,835,702.00. Like the first calculation, there is insufficient evidence to support the fifty percent discount, even assuming that the manual rate applied. Laches St. Paul has raised the defense of laches, contending that the Department had knowledge of the issues raised in this proceeding and, to St. Paul's detriment, delayed bringing this action. In 1988, the Department undertook a Market Conduct Study of St. Paul, looking back over the prior three years. In the report relating to physicians and surgeons liability policies written, which includes the Association policies, the Department found no errors of any type. The Association's grievance which forms the basis for this proceeding was brought to the attention of the Department, but not St. Paul, in 1991 or 1992. On July 10, 1992, a former counsel for St. Paul sent a letter to a Department attorney requesting a copy of any complaint that may have been filed against it by the Association. The letter indicates that the documents which would have proved whether the individual risk rate filings had been made were then in existence. There is no evidence that a copy of the Association's complaint was ever provided to St. Paul prior to the initiation of this action. The Order to Show Cause was not issued by the Department until November 24, 1997, or more than five years later. During that five-year period, St. Paul closed its Florida Service Center, its employees scattered, and documents were misplaced or destroyed. In this respect, St. Paul was prejudiced by the delay of the Department in prosecuting the complaint. The Department also destroyed its records for the years 1982-1987 pursuant to its five-year document retention policy. Because this matter was first brought to the attention of the Department no later than 1992, at a minimum, the records from 1987 should still have been in the Department's files at that time. The absence of these records further hampers the ability of St. Paul to present an adequate defense to the charges.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Insurance and Treasurer issue a final order dismissing the Order to Show Cause, with prejudice. DONE AND ENTERED this 9th day of February, 1999, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of February, 1999. COPIES FURNISHED: Honorable Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Virginia B. Townes, Esquire Post Office Box 231 Orlando, Florida 32802-0231 P. Bruce Culpepper, Esquire Post Office Box 10555 Tallahassee, Florida 32302 Michael H. Davidson, Esquire John L. Swyers, Esquire Department of Insurance and Treasurer 612 Larson Building Tallahassee, Florida 32399-0333 Daniel Y. Sumner, General Counsel Department of Insurance and Treasurer The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300
