Findings Of Fact On September 13, 1985, respondent, Bernard Gross, was found in contempt of the Circuit Court in and for Dade County, Florida, for failing to comply with previous orders of the court to provide child support. According to the order rendered by the court, Gross was in arrears in the amount of $4,650 as of September 4, 1985. A copy of the order has been received into evidence as petitioner's exhibit 2. By letter dated October 24, 1985 petitioner, Department of Health and Rehabilitative Services (HRS), through its contractor, the Office of the State Attorney, advised Gross that it intended to intercept his federal income tax refund, if any, to satisfy the past-due child support. According to the letter, the past due amount was then $4,425. Gross was further advised he could request an administrative hearing to contest this action no later than November 25, 1985. However, the agency's letter was not postmarked until November 26, 1985, or after the point of entry had expired, and was not received by Gross until December 6, 1985. The letter further erroneously identified the amount due as an "AFDC" claim, which meant the person due the support payments was receiving assistance under the federal Aid to Families with Dependent Children program. This was incorrect. Gross was given an informal meeting with HRS personnel on January 29, 1986, for an undisclosed purpose. However, later HRS correspondence implies it was for the purpose of allowing Gross to attempt to get HRS to reconsider its earlier decision to intercept his income tax refund. When this effort was apparently unsuccessful, HRS, through its contractor, issued a Notice of Right to Hearing in Non-AFDC Cases on March 3, 1986, offering Gross an opportunity for a formal hearing. The notice made reference to the earlier court order dated September 13, 1985, and stated the arrearage due was greater than $500, the support was owed to or on behalf of a minor child, and it was more than three months past due. Gross thereafter timely requested a formal hearing. The clerk of the Circuit Court in and for Dade County maintains a central depository which has an account history for each person paying child and spousal support. According to the computer printout on Gross' account, Gross owed $4,650 as of September 4, 1985, but it decreased to $4,255 as of December 25, 1985. The amount is subject to change each week since the printout indicates Gross must pay $85 per week in child support. The printout has been received into evidence as petitioner's exhibit 1. Gross did not challenge or contest the accuracy of the numbers contained in the document. At final hearing petitioner ore tenus amended its request to claim only $4,255. That amount is the last amount shown on Gross' payment record, and is the balance due as of December 25, 1985. This date was selected by petitioner's counsel since it represents the most current data on respondent's account. Gross' former wife confirmed that Gross owed her more than $4,000 as of the end of 1985, but could not state the precise amount owed. Federal regulations (45 CFR 303.72) govern the conditions under which a federal income tax refund may be intercepted in a non-AFDC case to offset past- due support owed by the taxpayer. As is pertinent here, they require that the taxpayer owe support to or on behalf of a minor child and that it be not less than $500. Regulations also require that the agency substantiate the delinquent amount with a copy of the "court order, or an order of an administrative process established under State law, for support and maintenance of a child, or of a child and the parent with whom the child is living," "a copy of the payment record," or if no payment record exists, "an affidavit signed by the custodial parent attesting to the amount of support owed." In this regard, petitioner tendered into evidence a copy of the September 13, 1985 court order, a certified copy of the clerk of the circuit court's payment record, and offered the testimony of Gross' former wife, the latter in an effort to establish the amount owed her as of the end of 1985. Through his own testimony, and the submission of respondent's composite exhibit 1, Gross contended that various errors occurred in the administrative process that culminated in the final hearing. First, he cited the agency's failure to send its October 24, 1985 letter until November 26, or after the original point of entry had expired. He also pointed out that this notice was dated only fifty days after the court order, and that a minimum of ninety days is required by law. He further contended he had no opportunity prior to hearing to question the amount of past-due support allegedly owed. Finally, he pointed out that the court order of September 13 refers to an arrearage of $4,650, the proposed agency action on March 3 relies upon an arrearage of $4,450, and at hearing petitioner claimed the past due amount was $4,255. He did not deny that he owed the above amounts, but contended the agency was bound to seek only the amount shown in the court order, and by later changing the amount allegedly due, HRS has invalidated its claim.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered certifying a claim to the Secretary of the Treasury in the amount of $4,255 against respondent's federal income tax refund, if any. DONE and ORDERED this 23rd day of October 1986 in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 23rd day of October 1986.
The Issue The issue is whether Petitioner properly issued a Stop-Work Order and Second Amended Penalty Assessment against Respondent for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact The Division is a component of the Department of Financial Services. It is responsible for enforcing the workers' compensation coverage requirements pursuant to section 440.107, Florida Statutes. Children's Academy is a corporation operating child care centers in Miami, Florida. Children's Academy was incorporated in 1994 and has been operating with an active status since its inception. Patrick Adeleke ("Adeleke") is the sole shareholder and president of Children's Academy. Children's Academy has seven locations. Each of the seven day care centers has its own state license and occupational license. On October 5, 2011, Petitioner's investigator, Cheryl Powell ("Powell"), visited the Children's Academy location at 151 Northwest 162 Street, Miami, Florida. At the business site, Petitioner's investigator spoke to Laquisha Lewis ("Lewis") regarding the business. Lewis provided Powell a business card during the meeting that contained the seven day care centers under Children's Academy. Subsequently, Powell visited the headquarters. Adeleke was not at the business site when Powell visited the Children's Academy headquarters. The headquarters had a marquee that indicated it was Children's Academy Preschool, Incorporated. It had children, playground equipment, and was the same colors: red, yellow, and blue as the original business site Powell had visited earlier. Powell returned to the original business site and input information about Children's Academy into the Department of Financial Services' Coverage and Compliance Automated System (CCAS). She found that Respondent lacked insurance for the payment of workers' compensation coverage. Powell discovered Children's Academy's last known coverage was canceled May 19, 2003. Additionally, Petitioner's investigator verified through the CCAS that no exemptions from workers' compensation had been issued in connection with Children's Academy. Eventually, Powell spoke to Adeleke by telephone. Adeleke informed Powell that he had 27 employees working for Children's Academy and that there was no workers' compensation insurance in place. Each of the 27 employees are employed by Children's Academy under one tax ID number. Two of the seven day care center locations (Children's Academy #1 and #3) have four or more employees and the other five day care center locations (Children's Academy #2, #4, #5, #6, and #7) have three or fewer employees. Upon confirmation that Respondent lacked workers' compensation coverage and that no exemptions were in effect, the Department issued Children's Academy a Stop-Work Order ("SWO") and served a Request of Business Records for Penalty Assessment Calculation to Children's Academy ("Request"). On October 7, 2011, Respondent obtained a certificate of insurance for workers' compensation coverage. Respondent also responded to the Request and provided the Department with some of the requested records. These business records included corporate tax returns, quarterly federal tax returns, quarterly state employer's tax returns and payroll journals. The records were forwarded to Anita Proana, Penalty Auditor for the Division for review. The records listed one employer, Children's Academy, for all the business records supplied for each of the seven day care centers. All 27 employees were being paid under one corporation, with one federal employer ID number for Children's Academy. Additionally, the amounts on the payroll journals for the 27 employees matched the amount claimed as wages on the federal tax returns for Children's Academy. After Proano reviewed the records provided, she properly calculated the worker's compensation amount Children's Academy owed in workers compensation insurance for the period of October 6, 2008, through October 5, 2011, and concluded that Respondent failed to pay workers' compensation premium of $22,111.20. After the premium was multiplied by the statutory factor of 1.5, it resulted in a penalty assessment in the amount of $33,167.75. The new calculation superseded the Amended Order and a Second Amended Order of Penalty Assessment was issued on or about July 27, 2012, reducing Respondent's penalty to $33,167.75. During the hearing, Respondent admitted not having workers' compensation coverage for his employees but contested Children's Academy being a single employer. Instead, Respondent contested that the five preschools that had three or fewer employees owed any premium because each preschool was exempt.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, issue a final order affirming the Stop-Work Order and Second Amended Order of Penalty Assessment in the amount of $33,167.75 minus the payments made to date. DONE AND ENTERED this 25th day of September, 2012, in Tallahassee, Leon County, Florida. S JUNE C. McKINNEY 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 25th day of September, 2012. COPIES FURNISHED: Alexander Brick, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 alexander.brick@myfloridacfo.com Layne Verebay, Esquire Law Office of Layne Verebay, P.A. Building B, Suite 104 7800 West Oakland Park Boulevard Sunrise, Florida 33351 lverebay@aol.com Julie Jones, CP, FRP, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399
The Issue Whether the Petitioner should receive benefits for the services requested.
Findings Of Fact The Petitioner is a 20-year-old male who has been diagnosed with mental retardation. The Petitioner resides with his parents who provide for his care. Currently the Petitioner receives medical benefits through the father's health insurance. He also receives some funding through social security benefits. The Petitioner is a client of the Developmental Disabilities Program and his eligibility to receive benefits is not disputed by the Department. The Petitioner is eligible for benefits. The Petitioner applied for, and has been denied, dental, companion, personal care assistance, and respite benefits. The Petitioner would have received the benefits requested but for the lack of funding in the appropriations for the Department. Because of the lack of funding, the Department prioritizes those who will receive benefits. Unfortunately, the Petitioner is on a waiting list for the Medicaid Waiver Program, and the Individual and Family Support Program does not have sufficient funds appropriated to pay for the services requested by the Petitioner. The Department may not use general revenue funds to fund services for persons awaiting enrollment in the Medicaid Waiver program. The Petitioner's parents need assistance in providing for the care of their son. The Petitioner must be attended lest he be considered "at risk." The parents have incurred debt to provide for their son, have pursued all avenues for assistance known to them, and have unselfishly tended to his needs. The only way the Petitioner may now receive additional benefits would be if the parents abandon their son so that he might be deemed "in crisis." The Petitioner did not become a client of the Developmental Disabilities Program until after July 1, 1999.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Children and Family Services enter a Final Order denying the benefits sought by the Petitioner at this time. DONE AND ENTERED this 1st day of November, 2002, in Tallahassee, Leon County, Florida. ___________________________________ J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of November, 2002. COPIES FURNISHED: Hilda Fluriach, Esquire Department of Children and Family Services 401 Northwest Second Avenue Suite N-1020 Miami, Florida 33128 Alejandro A. Penaloza c/o Alejandro O. Penaloza 12205 Northwest 6th Street Miami, Florida 33182 Jerry Reiger, Secretary Department of Children and Family Services 1317 Winewood Boulevard Building 1, Room 202 Tallahassee, Florida 32399-0700 Josie Tomayo, General Counsel Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204 Tallahassee, Florida 32399-0700 Paul F. Flounlacker, Jr., Agency Clerk Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204B Tallahassee, Florida 32399-0700
The Issue The issue in this case is whether the Department of Revenue should apply the Petitioner's $2,500 lottery prize to reduce an outstanding Public Assistance Obligation for child support.
Findings Of Fact By a Final Order on Support entered by the Circuit Court, Thirteenth Judicial Circuit, in and for Hillsborough County, Florida, in Case No. 88-20006, on April 9, 1990, nunc pro tunc September 5, 1989, it was established that the Petitioner was the father of a child born out of wedlock on May 13, 1983, and that he owed the State a Public Assistance Obligation in the amount of $8,249 for AFDC paid to the mother for the support of the child prior to the Final Order of Support. The court ordered the Petitioner to pay $6.37 a week towards the Public Assistance Obligation and $48.96 a week for current child support. The Petitioner has met these court-imposed obligations. Notwithstanding having met the court-imposed obligations, and the intercept of an IRS income tax refund that reduced the remaining balance, $3,761.57 remained to be paid on the Public Assistance Obligation as of August 14, 1998.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order certifying that the Department of Lottery should pay the Petitioner's $2,500 lottery prize to the Department of Revenue for application to the Petitioner's outstanding Public Assistance Obligation. DONE AND ENTERED this 8th day of September, 1998, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 COPIES FURNISHED: John Reynolds 1707 Walnut Street Tampa, Florida 33607 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 8th day of September, 1998. Chriss Walker, Senior Attorney Department of Revenue Post Office Box 8030 Tallahassee, Florida 32314 Louisa Warren, Esquire Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue Whether the Respondent has sufficient general revenue funds to provide the Petitioner with services under the Respondent's Developmental Disabilities Program.
Findings Of Fact The Department is the state agency charged with administering and determining eligibility for services to developmentally disabled individuals pursuant to Florida's Developmental Disabilities Prevention and Community Services Act, Chapter 393, Florida Statutes. As of August 23, 2002, Deneale is eligible for developmental services in the areas of support coordination; adult day training and transportation; non residential habilitation; residential placement; residential habilitation; adult dental; and behavioral services. The only lawful funding source from which these services could be provided to Deneale this year is the general revenue appropriation to DCFS. By letter dated September 25, 2002, DCFS advised Deneale that, with regard to those services for which he is eligible: [W]e regret to inform you, as a conclusion of law, that your request cannot be granted within the limits of the Department's appropriated general revenue funds, and Florida law prohibits the Department from spending or committing funds in excess of its appropriation. Please see Section 393.13(2)(c) and (d), F.S., and refer to the State Spending Plan as approved by the Legislature. Florida law does in fact prohibit the use of general revenue funds to provide developmental disability services to Deneale and to similarly situated clients when the general revenue budget is in a deficit condition. Section 216.311(1), Florida Statutes, provides in pertinent part as follows: No Agency or branch of state government shall contract to spend, or enter into an agreement to spend, any moneys in excess of the amount appropriated to such agency or branch, unless specifically authorized by law. . . . When the 2002-2003 fiscal year commenced on July 1, 2002, the general revenue budget was already in a $13 million deficit. The deficit had escalated to approximately $17 million by the time of the September 25, 2002, denial of services letter, and by the time of the final hearing had climbed to $23 million. The deficit exists because once clients begin receiving benefits, they may not lawfully be denied those benefits so long as they remain eligible for services. Moreover, once a client begins to receive services, federal law mandates that they be provided with any additional services for which they may become eligible, irrespective of whether or not general revenue funds are available. The cost of furnishing services to clients already being provided services for which they are eligibile has created a deficit which, in the absence of additional funding for DCFS's general revenue appropriation, will continue to grow. The deficit is also exacerbated by inflation, and by increases in the costs of services provided to individuals already receiving benefits. Deneale was placed on a wait list for Medicaid assistance for the services for which he is eligible, retroactive to his August 2002 eligibility date. As a practical matter, there is little hope that he will be reached in a timely manner. Caring for Deneale is a demanding task. He rises at 4:00 a.m. and requires constant attention from his mother and step-father, except for the hours he spends at an adult day care program for which his family pays from dwindling personal funds. The demands of caring for Deneale have taken a severe toll on his mother's health, as well as on her marriage of 27 years duration. Mr. Satter loves his family, but is seriously considering divorce because he can no longer cope with the burden of his stepson's care. Even at the cost of her marriage, Mrs. Satter is not willing to abandon her son, which she would have to do in order for the state to step in and relieve the family of the burden of providing Deneale with the full-time care and supervision he requires to survive.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order denying Deneale the developmental services for which he was determined eligible as of August 22, 2002. DONE AND ENTERED this 18th day of April, 2003, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Laurel Hopper, Esquire Department of Children and Family Services 337 North Fourth Street Fort Pierce, Florida 34950 FLORENCE SNYDER RIVAS 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 18th day of April, 2003. Jane and Edwin Satter 1774 Southwest Columbia Street Port St. Lucie, Florida 34987 Paul Flounlacker, Agency Clerk Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204B Tallahassee, Florida 32399-0700 Jerry Regier, Secretary Department of Children and Family Services 1317 Winewood Boulevard Building 1, Room 202 Tallahassee, Florida 32399-0700 Josie Tomayo, General Counsel Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204 Tallahassee, Florida 32399-0700
Findings Of Fact In 1975 the Florida Legislature passed the Medical Malpractice Reform Act, Chapter 75-9, Laws of Florida, now codified in Chapter 768, Florida Statutes. Part of this legislative package included the creation of the Fund. This legislation was passed in response to a medical malpractice insurance crisis which arose when the primary underwriter for the Florida Medical Association sought to stop issuing medical malpractice policies in Florida, thus making it difficult, if not impossible, for physicians or hospitals to obtain medical malpractice insurance coverage at reasonable rates. As a result of this problem, many physicians began to practice defensive medicine, curtail or abandon their practices or practice without coverage of any kind. The Fund is a private not-for-profit organization, participation in which is totally voluntary for its member-health care providers. Insofar as Petitioners are concerned, membership in the Fund is but one of several options available to provide legally required evidence of financial responsibility in order to obtain licensure as a hospital facility in Florida. Physicians, hospitals, health maintenance organizations and ambulatory surgical centers who become members of the Fund must maintain at least $100,000 in primary professional liability insurance. Membership in the Fund grants to each participant a limitation of liability above the $100,000 in primary coverage. To the extent that any settlement or judgment exceeds the primary coverage of the participant, it is paid by the Fund without limitation. The Fund is operated subject to the supervision and approval of a board of governors whose membership is required by law to consist of representatives of the insurance industry, the legal and medical professions, physicians' insurers, hospitals, hospitals' insurers and the general public. The Department is charged by statute with certain regulatory functions concerning the Fund. The base fee for Fund membership is set by statute at $500 for physicians, after an initial $1,000 enrollment fee for the first year of participation, and at $300 per bed for hospital members. The statute requires the Department to set additional fees based upon the classifications of health care providers contained in the statute. In the event that base fees are insufficient to pay all claims asserted against the Fund for a given fund year, the Department is empowered, upon request of the Board of Governors of the Fund, to order additional assessments against Fund participants to meet any such deficiency. Under the original legislation, all classes of health care providers could be assessed unlimited amounts to make up any deficiencies. As a result of legislative amendments which became effective July 1, 1976, the amount which participants, other than hospitals, could be assessed was limited to the amount each Fund member had paid to join the Fund for that particular coverage year. 1976 legislative amendments also required that each fiscal year of the Fund, which runs from July 1 through June 30, be operated independently of preceding fiscal years, and further required that occurrences giving rise to claims in a particular fund year be paid only from fees or investment income on those fees collected for that particular year. Thus, it is entirely possible for the Fund to experience deficits in a given year, and yet hold surplus funds for other years. On September 22, 1982, the Department of Insurance issued a "Notice of Assessment for 1976-77 Fiscal Fund Year" and a "Notice of Assessment for 1979-80 Fiscal Fund Year" (hereinafter called the "Notice of Assessment"). The Notice of Assessment for the 1976-77 fund year announced that the Insurance Commissioner intended to levy and authorized the Fund to collect an assessment in the amount of $2,395,092 from those health care providers that were members of the Fund in fund year 1976-77. The Notice of Assessment for the 1979-80 fund year announced that the Insurance Commissioner intended to levy and authorized the Fund to collect an assessment in the amount of $16,268,997 from health care providers that were members of the Fund in fund year 1979-80. Each of the hospitals named as Petitioners in the Petition for Administrative Proceedings in Case Nos. 82-3128 and 82-3130 were members of the Florida Patient's Compensation Fund during the fund year 1976-77. Each of the hospitals named as Petitioners in the Petition for Administrative Proceedings in Case Nos. 82-3129 and 82-3130 were members of the Florida Patient's Compensation Fund during the fund year 1979-80. Each of the hospital Petitioners who were members of the Florida Patient's Compensation Fund in the fund years 1976-77 and 1979-80 paid a base fee of $300.00 per bed for participation in the Fund. The Department has never promulgated any rules pursuant to Section 768.54 and Chapter 120, Florida Statutes, pertaining to its regulation of or duties in conjunction with the Fund. The chart below contains the following information concerning fund years 1976-77 and 1979-80: the amount of the total proposed assessment described in the Notices of Assessment (dated September 22, 1982); the amount of the losses experienced by doctors and hospitals, respectively; the amount of the fees paid by doctors and hospitals; the amount of the assessments for doctors and hospitals as described in the Notices of Assessment (dated September 22, 1982); and the amount of the additional assessments sought by the Fund at the final hearing on February 14, 1983. 1976-1977 Fund Year - Total Assessment $2,395,092 DOCTORS HOSPITALS Losses $8,235,261 Losses $2,358,457 Fees Paid 1,888,258 Fees Paid 4,449,442 Assessments 1,888,258 Assessments 496,479 Addt'l Assessments -0- Addt'l Assessments 1,581,541 1979-1980 Fund Year - Total Assessment $16,268,997 DOCTORS HOSPITALS Losses $16,565,196 Losses $ 8,171,883 Fees Paid 3,361,682 Fees Paid 5,995,934 Assessments 3,681,682 Assessments 12,413,616 Addt'l Assessments -0- Addt'l Assessments 3,655,809 The following chart shows the comparison, by dollar amount and percentage, of the fees paid by each class of health care provider, the losses incurred by each class of health care provider and the surplus or deficit created by each class of health care provider for the fund Year 1976-1977: FUND YEAR 1976-1977 SURPLUS/ FEES PAID LOSS INCURRED (DEFICIT) Class I Phy. $788,495 12.3* $1,925,000 18.2* ($1,136,505) Class II Phy. 74,887 1.2 200,000 1.9 (125,113) Class III Phy. 1,024,876 15.9 6,110,261 57.6 (5,085,385) Pro. Assoc. 87,436 1.4 10,000 0.1 77,436 Hospitals 4,449,442 69.1 2,358,457 22.2 2,090,985 Amb. Surg. 5,359 0.1 0 0 5,359 HMO's 0 0 0 0 0 TOTAL *percent $6,430,495 100.0* $10,603,718 100.0* $(4,173,223) The following chart shows the comparison, by dollar amount and percentage, of the fees paid by each class of health care provider, the losses incurred by each class of health care provider and the surplus or deficit created by each class of health care provider for the fund year 1979-1980: FUND YEAR 1979-1980 SURPLUS- FEES PAID LOSS INCURRED (DEFICIT) Class I Phy. $ 860,170 8.8* $3,223,194 13.0* ($ 2,363,024) Class II Phy. 876,207 8.9 994,475 4.0 (118,268) Class III Phy. 1,625,305 16.6 12,347,500 50.0 (10,722,195) Prof. Assoc. 403,947 4.1 0 0 403,947 Hospitals 5,995,934 61.1 8,171,883 33.0 (2,175,949) Amb. Surg. 28,151 0.3 0 0 0 HMO's 15,180 0.2 0 0 0 TOTAL $ 9,804,894 *percent 100.0* $24,737,052 100.0* $(14,975,489) The Department computed the portion of the assessment to be paid by the different classes of health care providers for the 1976-1977 and 1979-1980 fund years based upon an "indicated rate method". This method is represented by the following formula: The Department started with the actuarially indicated rate for each class of health care provider as described in the October, 1981 Actuarial Report prepared by Tillinghast, Nelson, et al. This is called the "indicated rate by class." The Department then applied the following formula for each class: Indicated Rate by Class x No. of Members in the Class Total = indicated fees by Class Total Indicated Fees by Class divided by Total Indicated Fees for ALL Classes = Percentage of Indicated Fee by Class Percentage of Indicated Fee by Class x Total Expected Loss for ALL Classes = Expected Loss by Class (Expected loss is ALL losses for the fund year including claims previously paid, reserves established on claims asserted and IBNR (incurred but not reported).) Expected Loss by Class - Actual Fees paid by Class = Potential Loss Assessment by Class. Potential Loss Assessment by Class divided by Potential Loss Assessment for ALL Classes = Percentage of Potential Loss Assessment by Class. Percentage of Potential Loss Assessment by Class x Total Assessment to be Ordered by the DOI = Amount of Assessment by Class. The "indicated rate method" for allocating assessments among the various classes of health care providers was selected by the Department as the method which most fairly reflected the classifications prescribed in Section 768.54(3)(c), Florida Statutes. The record in this proceeding establishes that this method is the most feasible mechanism for fairly reflecting classifications established by statute, and, at the same time, providing immediate funds necessary to meet all claims against the Fund. The Notices of Assessment issued by the Department of Insurance for fund years 1976-77 and 1979-80 allocated the "excess assessments" (which could not be applied to physician members based upon the Department's "statutory cap" interpretation) among the other classes of health care providers based upon their percentage of "expected losses". The charts below show the amount each class of health care provider would have been assessed under the "indicated rate method" absent the "statutory cap" for the fund years 1976-77 and 1979-80 and compares that amount to the assessment described in the 1976-77 and 1979-80 Notices of Assessment: 1976-1977 FUND YEAR INDICATED RATE ASSESSMENT ACTUAL ASSESSMENT a) Class I Physicians $ 106,792 $ 788,495 b) Class II Physicians 34,712 74,887 c) Class III Physicians 2,253,588 1,024,876 d) Hospitals -0- 496,479 e) HMO -0- -0- f) Surgical Centers -0- 597 g) Professional Association -0- 9,758 1979-1980 FUND YEAR INDICATED RATE ASSESSMENT ACTUAL ASSESSMENT a) Class I Physicians $1,388,234 $ 860,170 b) Class II Physicians 1,389,633 876,207 c) Class III Physicians 9,997,395 1,625,305 d) Hospitals 3,251,180 12,413,616 e) HMO 8,232 31,442 f) Surgical Centers 15,277 58,310 g) Professional Association 219,046 403,947 The difference between the results derived by the "indicated rate method" and the amounts reflected in the Notices of Assessment is due to the application of the statutory cap on assessments against physician members, as applied by the Department. As a result of the application of the statutory cap, physician members of the Fund will not be assessed for fund years 1976-1977 and 1979-1980 in any amounts greater than those in the Notices of Assessment dated September 22, 1982. The amounts of the assessments sought by the Fund, and described in the Notices of Assessment, were calculated by the Fund by using the following formula: Total fees paid during the Fund Year +Investment Income attributable to the Fund Year -Expenses allocated to that Fund Year -Amount paid on claims for that Fund Year -Amount reserved for all known claims for that Fund Year. The Department conducted no independent actuarial study regarding fees for fund years 1976-77 and 1979-80. The fees ordered by the Department and collected by the Fund plus the interest income generated by such fees for fund years 1976-77 and 1979-80 have proven to be inadequate to cover claims against the Fund for those years. For fund years 1976-77 and 1979-80, the Fund did not seek to have the Department of Insurance increase fees for any classes of health care providers. The only fees set for or collected from physician and hospital members for the fund year 1976-77 were the statutory base fees. For the 1979-1980 year the statutory base fee was charged to all hospital health care providers. The base fee was also charged physician health care providers; however this base fee was modified by the application of relativities according to each physician's class and territory. This application resulted in the following additional fee charges or credits which generated an additional $775,000 in fees: NO SURGERY CLASS 1 MINOR SURGERY CLASS 2 SURGERY CLASS 3 Territory 01 Dade and Broward 0 250 500 Counties Territory 02 Remainder of State 88cr 117 323 The Fund requires as part of its regular course of business that all health care providers sign a membership application whereby the health care provider agrees to pay all fees and assessments charged or levied against it. Notice describing the fees to be charged is included with the membership application. All members of the Fund, including Petitioners, for the 1976-1977 and the 1979-1980 fund years signed such agreements. In addition, all health care providers were sent notice of the fee changes made for the 1979-1980 fund year. Petitioners, for purposes of this proceeding, do not contest: (a) the method by which the Fund establishes reserves; (b) the amount of the reserves established for any individual claim file; or (c) the amount of the total deficit described in the Notices of Assessment dated September 22, 1982 for fund years 1976-77 and 1979-80. Nonetheless, Petitioners do not concede that the Fund needs all of the money described in the Notices of Assessment dated September 22, 1982 for fund years 1976-77 and 1979-80 at this time. At the final hearing, the Fund contended that it should be allowed to levy and collect assessments from the hospitals for amounts in excess of the assessments described in the Notices of Assessment. To support this contention, the Fund introduced a "Monthly Financial Report" dated December 31, 1982 prepared by the Fund's staff. The Monthly Financial Report purportedly shows the Fund's deficit for the 1976-1977 and 1979-1980 fund years as of December 31, 1982. However, the report itself contains an express disclaimer stating that the report was "Unaudited -- Prepared For Managerial Purposes Only." The Fund's Board of Governors has always in the past reviewed and approved any calculations concerning an alleged deficit before a deficit is certified to the Commissioner. The Fund then submits a written request to the Department for an assessment. In this case, the Board of Governors has not certified any amount to the Commissioner other than the amounts described in the Notices of Assessment dated September 22, 1982. The record in this cause establishes that as of September 22, 1982, there existed a deficiency in the Fund's account for the 1976-1977 fund year of $2,395,092 for the payment of settlements, final judgments and reserves on existing and known claims. The record in this cause establishes that as of September 22, 1982, there existed a deficiency in the Fund's account for the 1979-1980 fund year of $16,268,997 for the payment of settlements, final judgments and reserves on existing and known claims. In view of the statutory cap on the amounts that may be assessed against physician members of the Fund, the foregoing dollar amounts for assessments for the 1976-1977 and 1979-1980 fund years, and the manner in which they are proposed to be allocated among the remaining classes of health care providers are appropriate. Both Petitioners and Respondent have submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that those proposed findings of fact are not included in this Recommended Order, they have been specifically rejected as being either irrelevant to the issues involved in this cause, or as not having been supported by evidence of record.
Conclusions Having reviewed the Notice of Intent to Deem Application Incomplete and Withdrawn from Further Review dated March 13, 2013 (Ex. 1), and the Administrative Law Judge’s Order Granting Respondent’s Motion to Relinquish Jurisdiction and Dismiss Case As Moot (Ex. 2), the Agency for Health Care Administration finds concludes as follows: 1. The license of the Licensee/Transferor, License Number 5799, was revoked by Final Order dated March 8, 2013. 2. The change of ownership application filed by the Petitioner/Transferee is moot because the Licensee no longer has a license. 3. The Petitioner’s change of ownership application is therefore withdrawn from further review in accordance with the Administrative Law Judge’s order. ORDERED in Tallahassee, Florida, on this 23 day of _ Marly , 2014. Sel retary th-Care Administration
Other Judicial Opinions A party that is adversely affected by this Final Order is entitled to seek judicial review which shall be instituted by filing one copy of a notice of appeal with the agency clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. Filed March 31, 2014 3:56 PM Division of Administative Hearings CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy offhis Final Order was served on the below- named persons/entities by the method designated on this .$/-day of Space , 2014. Richard J. Shoop, Agency Cler Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone (850) 412-3630 Jan Mills Shaddrick Haston, Unit Manager Facilities Intake Unit Licensure Unit Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) John E. Bradley, Assistant General Counsel Arlene Mayo-Davis, Field Office Manager Office of the General Counsel Local Field Office Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) Honorable June C. McKinney Administrative Law Judge Division of Administrative Hearings (Electronic Filing) Bernard P. Coniff, Esquire Counsel for Special Care, Inc. 760 Ponce De Leon, Suite. 101 Coral Gables, Florida 33134 (U.S. Mail) HORIDA AGENCY FOR HEALTH CARE ADMINSTRATION Pa RICK SCOTT ELIZABETH DUDEK GOVERNOR Better Health Care for all Floridians SECRETARY 1c, (OP 2% March 13, 2013 my wk eS CERTIFIED MAIL Bernard P. Coniff, Esq. Wilfred Braceras Special Care, Inc. 760 Ponce De Leon, Ste. 101 Coral Gables, Florida 33134 cense Number: 5799 Po} 300 LE 2°) Fy Certified Article Number 756 9008 9111 6923 4301 SENDERS RECORD NOTICE OF INTENT TO DEEM APPLICATION INCOMPLETE AND ENE EY DERM APPLICATION INCOMPLETE AND WITHDRAWN FROM FURTHER REVIEW Dear Sir/s: Your change of ownership (CHOW) application for a license is deemed incomplete and withdrawn from further consideration pursuant to Section 408.806(3)(b), Florida Statutes (F.S.), which states that “Requested information omitted from an application for licensure, license renewal, or change of ownership, other than an inspection, must be filed with the agency within 21 days after the agency’s request for omitted information or the application shall be deemed incomplete and shall be withdrawn from further consideration and the fees shall be forfeited’. You were notified by correspondence dated 01/18/2013 to provide further information addressing identified apparent errors or omissions within twenty-one days from the receipt of the Agency’s correspondence. Our records indicate you received this correspondence by certified mail on 01/24/2013. The requested information was reviewed by the Agency. However, your application is deemed incomplete and withdrawn from further consideration, The outstanding issues remaining for licensure are: Proof of Financial Ability To Operate Conclusion: The applicant has not met the following Statutory filing requirements for proof of financial ability to operate: ¢ The applicant failed to provide independent evidence that the funds necessary for startup costs, working capital, and contingency financing exist and will be available as needed as required under Section 408.810(8), Florida Statutes. Analysis: Staff reviewed the documents submitted by the applicant to demonstrate proof of financial ability to operate. Due to errors and omissions in the filing, staff is unable to evaluate the applicant’s financial ability to operate. Proof of Funding: The applicant did not provide adequate proof of ability to fund start-up costs, working capital, and required contingency funding as required by Section 408.810(8), Florida Statutes. : The inter-office omissions letter dated January 18, 2013, raised the following issues: 2727 Mahan Drive,MS#30 Tallahassee, Florida 32308 Visit AHCA online at ahca.myflorida.com CYHIBIT 1 Mr. Braceras * BOYNTON BEACH ASSIS. LIVING FACILITY Page 2 03/13/2013 CHOW Purchase Price The applicant did not indicate the purchase price on Schedule 1. In addition, the applicant did not provide documentation of the purchase (purchase agreement, bill of sale, etc.) and did not provide proof of available funding to complete the purchase transaction. Please provide supporting documentation indicating the availability of funds to complete the purchase. Proof may include account statements of the purchaser prior to purchase. If the purchase has already been completed (an executed bill of sale exists) please provide documentation of the transfer of funds including canceled checks, and or electronic funds transfer receipts. if the applicant borrowed any of the funds for the purchase from an institution or individual, please disclose the amount borrowed, the identity of the lender, and documentation supporting the loan. While the applicant did indicate a purchase price of $30,000, it again did not provide proof of CHOW price, potentially significantly understating its. funding requirement. Working Capital, and Contingency Financing Working capital as defined on Schedule 1 as the largest cumulative cash need from year one or two, from Schedule 7, Projected Cash Flow Statement, Line 21 of the application. In its application, the agency listed its largest cumulative cash need as $0. However, the correct figure, according to the applicants’ Schedule 7, as filed, is $62,182. In addition to providing funding for start-up costs and working capital requirement, all applicants are required by law to provide for contingency financing. Contingency financing as defined in Section 400.471(2}(e), Florida Statutes, and applies to all agency licensure and requires an applicant’s access to contingency financing in addition to funding anticipated cash flows. The purpose of contingency financing is to provide funding for unanticipated, extraordinary occurrences that the applicant cannot project. The contingency financing should cover at least one-month’s average operating expense over the first year of operations. This funding should be in addition to the funding for working capital and Start-up cost on Schedule 1. On Schedule 1, the applicant calculated its contingency funding requirement as $0. However, based on the financial projections in the application, the total annual operating expense in year one is $1,240,565; therefore, one month’s average operating expense would be $103,380. Note: the amounts above are based on the application as filed. The amounts may change due to the financial and application omissions in this notice. Together, the combined total working capital, and contingency funding requirement for the applicant is $165,562, as filed. In its initial application, the applicant did not complete the working capital or contingency funding components of the minimum funding requirement calculation. The only amount listed were pre- opening costs of $66,375. In its response to omissions, the applicant included those omitted items and adjusted pre-opening costs, which appears to have incorrectly contained the purchase price instead of it being listed separately. Because the applicant did not provide any documentation proving the purchase had been completed, and confirming the purchase price, the purchase price must be added to the minimum funding requirement. Mr. Braceras BOYNTON BEACH ASSIS. .O LIVING FACILITY Page 3 03/13/2013 As a result, the minimum funding requirement, as filed in its omission response, is $213,965 ($60,000 purchase price + $50,780 working capital + $103,185 contingency funding). Insufficient Proof of Funding The applicant did not indicate any source of funds on Schedule 1, and did not provide any supporting documentation as evidence that any required financing exist and are available for immediate use, as directed in the instructions to Schedule 1. Failure to provide proof of ability to fund the minimum funding requirement will result in denial of the application. Pursuant to Schedule 1 instructions, please provide independent, certifiable documentation of the existence and availability of these funds, Examples of documents that support funding include: * copies of current bank statements for accounts owned by the proposed agency, * letters of commitment from a bank or other independent lending source, * or a copy of a line of credit agreement indicating credit line and available credit and any restrictions, * parent company audited financial statements (Note: unaudited financial statements will not be considered as proof of funding ability). In addition, if submitting more than one document as Support for funding, attach a Separate schedule that clearly lists each item, including: Name of the financial institution Cutoff (balance) date Last four digits of the account/identification number Ending balance For a line of credit, along with the above, provide total credit line and available credit Note: any parent company or personal funds pledged to the applicant must meet the above criteria and the owner of the funds must provide a binding letter of financial commitment pledging the funds to the applicant. Note: already paid pre-opening costs being claimed must be supported by paid invoices, receipts, etc. All receipts must be accompanied by a separate schedule prepared in an orderly fashion that recaps the nature of the expenditure, amount, and that ultimately ties to the amount claimed as pre-paid expense on Schedule 1. Receipts received alone, without an orderly analysis attached will not be considered as @ source of funding. As its source of funds the applicant provided bank statements proving $143,760 (one statement indicating $4,916, and the second indicating a balance of $138,844). In addition, the applicant included a copy of a check in the amount of $30,000. Staff is unsure of the nature and relevance of the check as no explanation was given for it. However, the funding shortfall is $70,205 and even if the $30,000 check were proof of some prepaid costs, the minimum funding requirement would still be under funded by $40,205. : Since the proven funding is less than the required funding the applicant has not met the provisions of Section 408.810(8), Florida Statutes, and has not proven the financial ability to operate. Mr. Braceras BOYNTON BEACH ASSIS._D LIVING FACILITY Page 4 03/13/2013 Residential Group Care Inspection Report (DOH Form 4029 Please provide a copy of this report from your county health department. The report must be satisfactory and have a current date. EXPLANATION OF RIGHTS Pursuant to Section 120.569, ES, you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28- 106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Sincerely, Shaddrick Haston, Manage) Assisted Living Unit SH/Pottere ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS SPECIAL CARE, INC., Petitioner, vs. Case No. 13-1450 AGENCY FOR HEALTH CARE ADMINISTRATION, Respondent. ORDER GRANTING RESPONDENT’S MOTION TO RELINQUISH JUR[ISDIC]TION AND DISMISS CASE AS MOOT Respondent's Motion to Relinquish Jurfisdic]tion and Dismiss Case as Moot ("Motion") came before the undersigned on June 10, 2013, in which the Agency for Health Care Administration ("Respondent" or “ACHA") asserted that there are no disputed material facts before the undersigned in this matter. ACHA contends that license number 5799, which Special Care, Inc.,*/ is seeking with its change of ownership application, has been revoked by final agency action. Respondent further contends that since license number 5799 ceases to exist, all collateral matters regarding the license are moot, including sufficiency of an application for Petitioner, which is the issue before the undersigned. On June 17, 2013, Special Care, Inc. filed Petitioner's Objection to Respondent's Motion to Relinquish Jurisdiction and Dismiss Case as Moot ("Response"). In the Response, Petitioner did not dispute the material facts of Respondent's Motion stated in paragraphs two through six. Petitioner only alleged duress by Respondent as the reason for Petitioner's submission of a change of ownership application instead of an initial licensure application. After careful consideration of the pleadings, and there being no disputed issues of material fact to be resolved by the Division of Administrative Hearings since Petitioner's change of ownership application is moot because license number 5799 does not exist, it is, therefore, EXHIBIT 2 ORDERED that: 1. The Motion is granted. 2. The final hearing scheduled for July 10, 2013, is canceled. 3. Jurisdiction is relinquished to the Agency for Health Care Administration for entry of a final order. The file of the Division of Administrative Hearings is closed. DONE AND ORDERED this 19th day of June, 2013, in Tallahassee, Leon County, Florida. COHN, JUNE C. McKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 2013.
Findings Of Fact The Department administers the CDCSAP Act (the "act"). The Florida legislature makes annual appropriations to fund the CDCSAP. These funds are used to finance activities of qualified CDCs. CDCs are community-based organizations which, in concert with state and local governments and private enterprise, facilitate or financially support revenue-generating business for the purpose of community economic development, redevelopment, preservation, restoration and revitalization. To this end, the Department's line staff person for the CDC program, James Fox, who is a planner employed by the Department, reviews applications, gives technical assistance workshops on rules and gives statewide speeches to CDC programs and at their annual meetings. Fox is familiar with the community development corporations statewide and the activities of each CDC program. He has been instrumental in assisting local entities prepare applications to become CDCs to include filing their non-profit corporate status with the Secretary of State. He has authored a pamphlet for the Department which has been distributed to entities desirous of achieving CDC status entitled "How to become a CDC". (Respondent's Exhibit 1). This pamphlet is widely utilized by entities seeking CDC status and provides all of the basic information needed to become a CDC. The act empowers the Department to administer the CDCSAP and authorizes issuance of one and three year administrative grants, planning grants and loans to fund the activities of eligible CDCs. The act requires the Department to monitor expenditures of CDC funds and to provide technical assistance to CDCs. In addition to CDCSAP grants and loans, CDC has also received funding from private foundations and local governments. The Department has adopted Chapter 9B-14, Florida Administrative Code. That chapter implements the act and establishes regulations and procedures governing the CDCSAP. CDCs fiercely compete annually for administrative grants when filing their applications with the Department. These grant applications are reviewed by Fox. There are approximately fifty CDCs statewide and they annually submit applications for grants. Once these applications are received, Fox reviews and scores them pursuant to Rule 9B-14, Florida Administrative Code. In so doing, the Department uses three reviewers and the reviews are individually conducted. In reviewing the grant applications, a funding matrix is used. Using the matrix, a score and rank is made for each application. Next, the division director goes over each application and the matter is discussed with the Department's Secretary. Later a letter of intent is given (to either grant or deny the application). The score lists the rank and order and is not an entitlement to funding. After the applications are reviewed, the Department's senior management lists a "pre-appeal" score and ranking for each applicant. Once the CDCs are notified in writing of the score and ranking in the pre-appeal scoring matrix, they are also advised that the number and amount of administrative grants awarded will be contingent upon passage of a state budget and appropriation for the fiscal year. Applicants are also advised of rights to pursue an appeal regarding the correctness of the scores pursuant to Section 120.57, Florida Statutes. (Respondent's Exhibit 3). If an appeal is initiated, an administrative proceeding is conducted usually under the informal provisions of Section 120.57(2), Florida Statutes. A hearing officer assigned by the Department conducts a hearing and issues a recommended order. A final order is then entered by the Department's Secretary. Thereafter, each applicant is assigned a final score and ranking in the matrix which determines funding order priority. The final scores are usually determined prior to adoption of an appropriations act by the legislature. As noted, the final score does not establish whether a particular CDC will be funded. Section 290.036(3), Florida Statutes and Rule 9B-14.007(3) and 9B- 14.009(11)(a)-(c) provide the parameters within which the Department determines the number, type and amount of administrative grants it will award. When grant applications are submitted and evaluated, the Department is, at the time, unaware of the amount of money available for upcoming grants because the legislature has not passed an appropriations bill for the fiscal year. Final decision with respect to the number and amount of administrative grants is made after the final appropriation bills and summary statement of intent is transmitted to the Department. "Proviso language" is passed by the legislature as part of the appropriations bill. It is signed by the governor, has the force of law and is binding on the Department. Legislative statement of intent language is transmitted to the governor at a date after passage of the appropriations act by chairpersons of the House and Senate committees on appropriations. The intent language is the statement of how the legislature, in its considered opinion, thinks the appropriated funds should be spent. It guides the Department regarding use of appropriated funds. The Department considers and relies on applicable legislative proviso or intent language in deciding its final determination as to number and amount of administrative grants. Absent extraordinary circumstances, the Department follows the statement of intent language in reaching its final funding decision. Over the years, a pattern has emerged which evidences that the Department carefully considers applicable proviso or statement of intent language. Specifically, from a historical perspective, for the 1983-84 funding cycle, the legislature appropriated $1,175,000 for the CDCSAP but did not include either proviso or legislative statement of intent language. The governor vetoed $200,000.00 of that sum leaving $975,000 to fund the program. The Department awarded administrative grants in varying amounts to 23 CDCs. Subsequently, the legislature amended the statute to allow the Department to fund no more than 18 CDCs. (Respondent's Exhibit 7 and Chapter 84-240, Laws of Florida). For the 1984-85 funding cycle, the legislature appropriated $1,600,000 for the CDCSAP and included proviso language directing that no more than 16 CDCs be funded. In accordance with that proviso language, the Department awarded administrative grants of $100,000 each to 16 CDCs. For the 1985-86 funding cycle, the legislature appropriated $1,600,000 for the CDCSAP but included neither proviso nor statement of intent language. The Department awarded grants of $100,000 to 16 CDCs. For the 1986-87 funding cycle, the legislature appropriated $1,600,000 for the CDCSAP and included proviso language directing that no more than 16 CDCs be awarded administrative grants and that a specific CDC be awarded a training grant. Pursuant to that proviso language, the Department awarded administrative grants of $85,000 each to 16 CDCs, and a $40,000 training grant to the specified CDC. For the 1987-88 funding cycle, the legislature appropriated $1,337,156 for the CDCSAP and included proviso language directing that no more than 16 CDCs be funded. Pursuant to that proviso language, the Department awarded grants of $83,338 each to 15 CDCs. Another $83,338 was divided to provide grants of $41,669 each to two eligible CDCs which received identical scores for the last funding slot. For the 1988-89 funding cycle, the legislature appropriated $1,337,156 for the CDCSAP and included proviso language directing that no more than 16 CDCs be funded. Pursuant to that proviso language, the Department awarded grants of $72,380 each to 16 CDCs. For the 1989-90 funding cycle, the legislature appropriated $1,337,156 for the CDCSAP and included statement of intent language directing that no more than 16 CDCs be funded. The Department awarded grants of $83,572 each to 16 CDCs. For the 1990-91 funding cycle, the legislature appropriated $1,699,600 for the CDCSAP and included statement of intent language directing that no more than 18 CDCs be funded. The Department followed the statement of intent and awarded grants of $90,564 each to 17 CDCs which scored above the minimum point threshold as set forth in the matrix. For the 1991-92 funding cycle, the legislature appropriated $1,600,000 for the CDCSAP but included neither proviso nor statement of intent language. The Department awarded grants of $88,888 each to 18 CDCs. Final scores and ranking does not establish entitlement to funding under the program. The final score establishes whether a CDC is eligible to receive either a one or three year administrative grant depending on the total number of points received. The score also results in ranking of each CDC so that depending upon legislative appropriations and expressions of intent regarding funding, a funding priority is established. Prior to 1991, the act provided only for the award of one year administrative grants. In 1991, the Florida legislature amended the act to permit the award of multi-year administrative grants and planning grants. (Chapter 91-263, Laws of Florida). The provisions of the act relative to funding provides: The amount of any administrative grant to a community development corporation in one year shall be any amount up to $100,000. The Department may fund up to 18 Community Development Corporations this year as provided for in the general appropriations act. The Department shall develop a diminishing scale of funding each year based on the annual appropriation to ensure compliance with this section and Section 290.0365. See Section 290.036(3), Florida Statutes (1991). To incorporate the 1991 statutory changes into Rule 9B-14, Florida Administrative Code, the Department initiated rulemaking pursuant to Section 120.54 in September 1991. Several workshops were held to gain input from CDCs regarding proposed changes to the rule. In addition, a public hearing was held in January 1992 at which the Department received oral and written comments from CDCs regarding the proposed rule challenges. Amendments were adopted and took effect on March 22, 1992. During the rulemaking process, no comment was submitted regarding the proposed changes to Rule 9B-14.009(11). No party initiated a rule challenge to the proposed amendments pursuant to Section 120.54(4), Florida Statutes. Rule 9B-14.007(3), which was not affected by the 1992 amendments, states in relevant part that "[n]o grant will be awarded for funds exceeding $100.000." Respondent's Exhibit 2 at Rule 9B-14.007(3). Rule 9B-14.009(11), as amended in 1992, now authorizes the award of two types of administrative grants of one and three years duration in addition to planning grants. The pertinent portion of this rule provides: A maximum of 18 administrative grants may be awarded in any fiscal year pursuant to Section 290.036(3), Florida Statutes. Applicants which receive a score of 150 or more points will be awarded a three year administrative grant. Applicants which receive a score of at least 100 points but less than 150 points will be awarded a one year administrative grant. For the 1992-93 funding cycle, prior to the application deadline and after the amendments to Rule 9B-14 were adopted, public application workshops were held in Tallahassee and Miami. At the workshops, representatives of the Department discussed the recent statutory and rule changes to the CDCSAP as well as the proper way to complete applications. The application deadline for administrative grants for the 1992-93 grant cycle was April 1, 1992. The Department received 29 timely applications. When the 1992-93 grant applications were received, evaluated and given tentative scores and rankings, the Department was unaware of the amount of legislative appropriations for the CDCSAP and whether any proviso or statement of intent language would accompany the appropriation. After the applications were evaluated, the preappeal scores and rankings derived and the applicants were notified of the results, several CDCs including Petitioners appealed their scores. Informal hearings were held during late May 1992. The hearing officer's recommended orders were issued June 25, 1992 followed by the Department's final orders on July 8, 1992. Thereafter, each applicant was assigned a final score and ranking. For the 1992-93 funding cycle, 21 CDCs scored above the 100 point minimum threshold. Of these 21, 12 CDCs scored above 150 points and 9 CDCs scored above 100 points but less than 150 points. Each of the Petitioners scored above 100 points but less than 150 points. In late June 1992, the legislature passed an appropriations act which was signed into law on July 2, 1992. On July 14, the Department received a copy of the appropriations act and the accompanying statement of intent regarding the disbursements of appropriated funds of the CDCSAP. The Department requested funding of $1,800,000 for the CDCSAP grant and loan program for fiscal year 1992-93. However, the legislature reduced that funding request to $800,000 for the CDCSAP grants and included a statement of intent language directing that those CDCs which received sufficient point scores under Rule 9B-14 to qualify for a three year administrative grant be funded. The intent language states: It is the intent of the legislature that funds provided in specific appropriation 293A shall be used to award administrative grants in accordance with the provisions of Section 290.036, Florida Statutes, of equal amounts, to those Community Development Corporations that receive a sufficient point score under the Department of Community Affairs evaluation of FY 1992-93 grant applicants to qualify for a three year administrative grant pursuant to criteria established in Chapter 9B-14.009(11) (b), F.A.C. In reaching its decision respecting funding, the Department considered whether to follow the statement of intent language and award 12 grants of $66,666 each, or instead to award 18 grants at $44,444 each. The Department's Secretary ultimately decided to follow the statement of intent language and award grants of $66,666 each to the 12 CDCs which qualified for three year grants under Rule 9B-14. The action of the Secretary was within the discretion accorded by Section 290.036(3), Florida Statutes and Rule 9B-14.009(11)(a) to award "up to" 18 grants. The Department has not issued any type of statement which indicates that, in future funding cycles, it will award only three year administrative grants. The Secretary's decision relates only to the 1992-93 fiscal year. Section 290.036(3), Florida Statutes and Rules 9B-14.007(3) and 9B- 14.009(11)(a), Florida Administrative Code commands the Department to award between 0 and 18 administrative grants each year, provided no single award exceeds $100,000. Flexibility is given to the Department based on the uncertainties each year surrounding the legislative appropriations process. Due to the vagaries of the appropriations process, it is not practical or feasible for the Department to adopt a rule which requires it to award a specific number of administrative grants annually. Nor is it feasible or practicable for the Department to wait for the appropriations bill to be passed before initiating an order on the number of grants it will award. The Department strives to get the administrative funds to the CDCs expeditiously. At a minimum, rulemaking takes several months and would accordingly substantially delay transferring grant monies to the CDCs.
The Issue The issue in this case is whether Respondent, the Department of Revenue, should grant Petitioner's application for a consumer's certificate of exemption from sales and use tax.
Findings Of Fact Petitioner is a nonprofit organization incorporated under the laws of the State of Florida on or about August 27, 1997. Petitioner applied to Respondent for a consumer's certificate of exemption from sales and use tax. While the application indicates that it is based on exemption status as an "enterprise zone," Petitioner clarified at final hearing that it actually was basing its application on exemption status as a "charitable institution." ("Enterprise zone" is not an exemption category under the applicable statutes. See Conclusions of Law, infra.) The IRS has determined that Petitioner is exempt from federal income tax under IRC Section 501(a) as an organization described in IRC Section 501(c)(3). A letter dated February 2, 1999, stated that Petitioner: was formed in 1997 to plan and implement redevelopment efforts in the Greater Newtown Community which lead to overall improvement in the quality of life of its residents. In the short time since our inception, we have responded to community needs by implementing a broad range of programs that will have a positive impact on our community. But from the evidence presented (which included no testimony from either party), it is difficult to ascertain factual detail about Petitioner, its activities, or its finances. In addition to grant application and fund-raising activities, it appears that Petitioner has been involved in informational and participation-recruitment meetings and information-gathering surveys for planning purposes (called the Business Retention and Expansion Survey). Petitioner also appears to have been involved in a Storefront Renovation Program and several community celebrations. Petitioner has plans for other economic and community redevelopment activities. But it cannot be ascertained from the evidence which of the other economic development activities have taken place and which are still in grant application or planning stages. For example, documentation regarding Petitioner's involvement in one activity refers to the activity as the "proposed WAGES Employment Challenge." Petitioner obtained $128,000 of funding from the City of Sarasota for seed money for its economic redevelopment and other activities. Petitioner budgeted to spend the $128,000 in 1998. The entire budget consists of salaries, fringe benefits, and overhead expenses. According to a "Profit and Loss" statement for January through October 1998, Petitioner spent $30,581.49 during that time period. All of those expenditures were in the category of payroll and overhead expenses. One activity referenced in Petitioner's documentation is Petitioner's "partnering" with financial institutions and mortgage brokers to process mortgage loans for affordable housing. In that case, the expenditures would be by the other institutions, not by Petitioner. There is no information as to any other expenditures made by Petitioner.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying Petitioner's application for a consumer's certificate of exemption from sales and use tax. DONE AND ENTERED this 5th day of November, 1999, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON 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 5th day of November, 1999. COPIES FURNISHED: Bill Nickell, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Cynthia E. Porter, Executive Director Greater Newtown Community Redevelopment Corporation 1751 Dr. Martin Luther King, Jr., Way Sarasota, Florida 34234 Joseph C. Mellichamp, III, Esquire Office of Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue for determination is whether Petitioner is eligible for a consumer certificate of exemption pursuant to Subsection 212.08(7)(o), Florida Statutes.
Findings Of Fact On January 31, 1994, the National Council of La Raza (Petitioner) filed an application with the Department of Revenue (Respondent) for a consumer certificate of exemption as a charitable organization. Petitioner indicated, among other things, on its application that it was a social welfare organization. Petitioner filed the application in anticipation of bringing its annual conference to Miami Beach, Florida in July 1994. 1/ Petitioner is a private, nonprofit organization which was incorporated in 1968 in Arizona. Petitioner's national headquarters is in Washington, D.C. and it has offices in Arizona, California, Illinois, and Texas. Article III of Petitioner's second amended articles of incorporation provides in pertinent part that one of its purposes is to "operate exclusively for charitable and educational purposes, including, but not limited to improvement of the condition of the Mexican American poor, and the under privileged." Article III of the amended articles of incorporation further provides in pertinent part that in carrying-out its purpose it would "conduct research and inquiry of the problems and issues that confront, with local variations and particular effects, the Chicano communities"; "promote meetings, conferences, seminars, discussions and other forms of group communication and analysis of the same among those engaged in organizational activity"; "provide technical assistance to affiliated barrio/community development organizations and to encourage, promote and facilitate mutual aid and assistance among them in order to strengthen each of them through the moral, technical and material resources of all"; "encourage and assist the development of the moral, technical and material resources of the barrios and colonias"; and "organize, exist and function as a charitable, non-profit, non-political 501(c)(3) tax-exempt organization." Also, Article III of the amended articles of incorporation provides in pertinent part that its priorities are to "serve as the national advocate and mobilizer of resources and support for barrio/community development programs"; and "deliver program support and technical assistance services to barrio/community development programs in [named] priority areas." Consistent with the purposes in Petitioner's amended articles of incorporation, Petitioner provides in its publicly disseminated literature that it provides its services through four major types of initiatives: (a) "capacity-building assistance to support and strengthen Hispanic community-based organizations"; (b) "applied research, public policy analysis, and advocacy on behalf of the entire Hispanic community, designed to influence public policies and programs"; (c) "public information efforts to provide accurate information and positive images of Hispanics in the mainstream and Hispanic media"; and (d) "special catalytic efforts which use the [Petitioner] structure and reputation to create other entities or projects important to the Hispanic community". On or about May 1, 1968, Petitioner received a federal income tax exemption from the Internal Revenue Service as an organization described in Section 501(c)(3) of the Internal Revenue Code. Petitioner's organizational classifications under Section 501(c)(3) were charitable, educational and scientific. Petitioner's Section 501(c)(3) federal income tax exemption was effective at the time of its application with Respondent for a consumer certificate of exemption. Petitioner has been granted sales tax exemption by Washington, D.C., Michigan, Texas, and the city of Los Angeles, California. Petitioner's organizational structure consists of a Board of Directors, Office of the President, Office of Finance, Office of Administration, Office of Research Advocacy and Legislation, Office of Technical Assistance and Constituency Support, Office of Institutional Development, and Office of Development and Special Events. As to the Office of Research Advocacy and Legislation (ORAL), it is responsible for conducting research and analysis of issues which have been identified by Petitioner's Board of Directors and affiliates as having a primary importance to the Hispanic community. ORAL, through its Policy Analysis Center, conducts studies and research on immigration, education, housing, poverty, welfare, census, and national farm workers issues. Also, ORAL engages in a limited amount of lobbying on behalf of the Hispanic community. ORAL's services are mainly educational. The services include providing information and pamphlets on immigration and civil rights and producing a national radio program on immigration issues. The services are delivered primarily through brochures and pamphlets which are distributed without charge to Petitioner's affiliates and certain groups and organizations. Other groups and organizations are charged a fee depending upon what the group or organization is. ORAL's services are provided to a disadvantaged Hispanic population. As to the Office of Technical Assistance and Constituency Support (TACS), it is responsible for interfacing with both Petitioner's affiliates and its branch offices to directly provide services to the disadvantaged Hispanic community. Most of TACS' assistance focuses on resource development, program operations, and management or governance needs, in addition to addressing critical community needs through national emphasis programs operated in cooperation with Petitioner's affiliates. Also, TACS provides capacity-building assistance to the staff and board members of Hispanic community-based organizations through staff and board training and on-site assistance. As to the Office of Institutional Development (OID), it is responsible for conducting research on issues new to Petitioner and directing Petitioner's services to the Hispanic community. OID coordinates, on the national level, Petitioner's new programs (program models) in education, health education, the elderly and leadership development, as well as projects involving Europe. OID implements the new programs through Petitioner's affiliates. For example, in the 1980's AIDS became a new concern for the Hispanic community and was assigned to OID. A national toll-free AIDS hot line was established by OID and maintained in its office. The hot line is advertised through various media communications, Petitioner's affiliates, and community- based organizations. Additionally, funding has been provided through OID to two (2) Florida affiliates, Centro Campesino Farmworkers Center, Inc., and the Hispanic Alliance. The funding was provided through OID's leadership initiatives to a coordinating council for the purpose of distributing post-hurricane relief to farmworkers in Florida. The offices of ORAL, TACS, and OID have under their responsibility mission activities and core activities. Core activities involve issues which are identified by Petitioner's board and its affiliate organizations as being at the core of Petitioner's existence, such as civil rights enforcement and immigration issues. These activities are not necessarily funded by a particular government contract or grant from a private foundation or corporation. Mission activities consist of activities which are important in supporting the mission of Petitioner, but are not currently funded by a particular government contract or grant from a private foundation or corporation. These activities relate to administrative functions engaged in by ORAL, TACS, and OID to support Petitioner's operations and are funded with internal funds. The offices of ORAL, TACS and OID work interdependently. A problem is identified in the Hispanic community by Petitioner and/or its affiliates and assigned to ORAL or OID; ORAL or OID conducts research and develops programs to address the problem; and TACS delivers the program services to the disadvantaged Hispanic community, working with affiliates and community-based organizations to implement the programs. A program called Project EXCEL (Excellence in Community Educational Leadership) is an educational program developed by Petitioner. The problem of illiteracy and low graduation rates was identified. Research was conducted on the problem and the program, Project EXCEL, was developed. Petitioner implemented the program through its on-site staff who had oversight responsibility and who evaluated the program and actually worked with the clients to assist in the program's evaluation; whereas, the actual direct educational services were delivered to the clients by persons working for the organizations. Project EXCEL was implemented at public schools, day care centers, and churches. Petitioner secured and provided the funding for the community-based organizations to run demonstration sites for Project EXCEL. Two Florida organizations received assistance from Petitioner regarding Project EXCEL. Centro Campesino Farmworkers Center, Inc., which holds a sales tax exemption from Respondent, utilized the Project EXCEL curriculum developed by Petitioner in providing after-school services to children of migrant farmworkers. Also, the Coalition of Florida Farmworkers Organizations, Inc., which holds a sales tax exemption from Respondent, received a grant to implement Project EXCEL and Petitioner provided a curriculum and some of its staff to assist the Coalition of Florida Farmworkers in working with the children. Both the Centro Campesino Farmworkers and the Coalition of Florida Farmworkers pay annual dues to Petitioner as affiliates. They have received from Petitioner pass-through funds as subgrants. Petitioner does not engage in direct fund raising to support the organizations. Pass-through funding is funding distributed through Petitioner to its affiliates or other outside organizations through subgrants. The funds are received by Petitioner from grants for which Petitioner applies. For both the Centro Campesino Farmworkers and the Coalition of Florida Farmworkers, Petitioner has not provided volunteers to run any of the organizations' programs or provide the organizations' services at the local level. Furthermore, Petitioner does not control, govern, or administer any of the Centro Compesino Farmworkers' or the Coalition of Florida Farmworkers' services or activities at the local level. In another instance, Petitioner identified housing problems for the Hispanic community regarding ownership, quality and availability. Research showed that, for Hispanics, there existed a low rate of home ownership, substandard housing, and discrimination. Petitioner secured funding to build low income housing and commercial developments in low income neighborhoods; at times, providing pre-development costs or professional services such as engineers and architects. As with Centro Campensino Farmworkers and the Coalition of Florida Farmworkers, Petitioner does not provide volunteers to work for its affiliate organizations at the local level (Petitioner's staff are paid employees), Petitioner does not engage in direct fund raising to support its affiliate organizations, and Petitioner does not control, govern, or administer any of the services at the local level. Also, ORAL, TACS, and OID have worked interdependently in developing programs in the health field. AIDS public service announcements have been produced by Petitioner. An AIDS national toll-free hot line is operated by Petitioner, with professional staff manning the phones to provide information to AIDS patients and others and with the costs being borne by Petitioner. As to the Office of Development and Special Effects (ODSE), it is responsible for fund raising, proposal writing, receipt of grants, Petitioner's future endowment or capital campaign. ODSE's primary responsibility is the operation of Petitioner's annual conference and Congressional awards dinner. The annual conference is held in different locations and the awards dinner is held in Washington, D.C. The annual conference is attended by thousands of participants from across the United States to discuss topics and issues relevant to the Hispanic community. Affiliates which attend pay a registration fee. Usually offered at the conference are workshops, seminars, an art show, job fair, silent auction, and an exhibit hall where corporations and governmental agencies can promote themselves. Except for the meal events, all the other activities are open to the public at no charge. As part of the conference, Petitioner sponsors a Youth Leadership Program in which the expenses are paid for 25 to 30 youths (tenth to twelfth graders), who are disadvantaged and at-risk and from various parts of the country, to attend the conference. A similar program is sponsored by Petitioner for college students. Additionally, Petitioner sponsors a one day event for area disadvantaged district school students. Petitioner's 1994 annual conference was held at Miami Beach, Florida on July 17 - 20, 1994. Petitioner provided or sponsored all of its usual activities or programs, except for a job fair. In addition, Petitioner sponsored a senior citizens day for the disadvantaged elderly. The registration fee for affiliates was $150. Petitioner's Office of Finance is responsible for the fiscal management of all internal matters and the financial practices of Petitioner. Petitioner reflects its fiscal financial picture on two documents. As a Section 501(c)(3) organization, Petitioner files federal tax returns, known as Forms 990, on a yearly basis. Additionally, Petitioner has audited financial statements prepared annually. Among other things, Form 990 reflects Petitioner's expenses found on its audited financial statements, but in greater detail. Petitioner's fiscal year is from October 1st to September 30th of each year. Expenditures associated with Petitioner's Board of Directors, Office of the President, Office of Finance, and Office of Administration are general administrative expenses. These expenditures fall within the category of supporting activities on Petitioner's audited financial statements. For the fiscal year October 1, 1992 to September 30, 1993, Petitioner's total expenditures were $5,581,316. Of this total of expenditures, $4,407,194 represented expenses for program services, per the category on Form 990, of which $126,250 represented pass-through funds to subgrantees; of which over $2.6 million represented compensation of officers and directors, etc., other salaries and wages, pension plan contributions, other employee benefits, payroll taxes, and conferences, conventions and meetings 2/ ; and of which $57,421 represented legislative advocacy. Also, of the total expenditures, $1,174,122 represented expenses for supporting activities, of which $976,044 represented general administration; and of which $198,078 represented fund raising which is money expended in writing proposals to fund Petitioner's programs. For the fiscal year October 1, 1991, through September 30, 1992, Petitioner's total expenditures were $5,150,084.00. Of this total of expenditures, $3,982,552 represented expenses for program services, including $172,620 for pass-through funds to subgrantees, over $2.3 million for compensation of officers and directors, other salaries and wages, pension plan contributions, other employee benefits, payroll taxes, and conferences, conventions and meetings, and $54,410 for legislative advocacy. Also, of the total expenditures, $1,167,532 represented expenses for supporting services, including $978,557 for general administration, and $188,975 for fund raising. Even though Petitioner claims to have 182 affiliates, only 162 affiliates were identified. Petitioner actively works with 120 of the 162 identified affiliates. Nine of the affiliates hold certificates of exemption issued by Respondent. Because of the minimal descriptions provided by Petitioner of the affiliates, only a small minority could be determined to provide services for free or at a substantially reduced cost.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order DENYING the National Council of La Raza a consumer certificate of exemption. DONE AND ENTERED this 8th day of February, 1996, in Tallahassee, Leon County, Florida. ERROL H. POWELL, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of February, 1996.
