The Issue The issue is whether Section 11B(3) of the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2004 Second Edition, is an invalid exercise of delegated legislative authority.
Findings Of Fact The petitions filed by FFVA and TIC challenge the validity of Section 11B(3) of the 2004 Manual,4/ which prior to October 1, 2007, was adopted by reference as part of Florida Administrative Code Rule 69L-7.501(1). Florida Administrative Code Rule 69L-7.501(1) was amended effective October 1, 2007, to adopt by reference the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2006 Edition ("the 2006 Manual"). Florida Administrative Code Rule 69L-7.501(1), as it existed when the petitions were filed and as it currently exists, adopts by reference the 2006 Manual, not the 2004 Manual. The 2004 Manual is no longer adopted by reference as part of Florida Administrative Code Rule 69L-7.501, or any other rule. AHCA applied the 2004 Manual in the reimbursement dispute initiated by HRMC against FFVA under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on October 24, 2007, which was attached to FFVA's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 07-5414. AHCA applied the 2004 Manual in a reimbursement dispute involving TIC under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on January 9, 2008, which was attached to TIC's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 08-0703.
The Issue The issue to be determined is the amount of reasonable attorney's fees and costs incurred by Citrus Mining and Timber, Inc. ("CMT") in Robert A. Schweickert, Jr. v. Department of Community Affairs and Citrus Mining and Timber, Inc., Case. No. 1D10-3882 (Fla. 1st DCA 2011).
Findings Of Fact Appellate Attorney's Fees Sarah Lahlou-Amine of the law firm of Fowler White Boggs, P.A. ("Fowler") was the attorney with primary responsibility for research and drafting documents for the appeal on behalf of CMT. She prepared and filed a notice of appearance, a motion to dismiss, a motion for attorney's fees, an amended motion for attorney's fees, the answer brief, a notice of supplemental authority, a second motion for attorney's fees, and a motion for clarification. Ms. Lahlou-Amine was assisted and supervised by more senior lawyers at Fowler. The total number of hours charged by Fowler was 134.8. The total attorney's fees charged by Fowler was $39,010. Lawyers from two other law firms were employed by CMT and charged attorney's fees and costs for the appeal. The Law Office of Clark Stillwell, P.A., charged 18 hours for a total attorney's fees of $6,030. Edward de la Parte and other lawyers of the law firm of de la Parte & Gilbert, P.A., charged 24.9 hours for total attorney's fees of $5,382.50. The grand total of all the attorney hours expended for the appeal is 177.7 hours and the grand total of all fees charged to CMT for the appeal is $50,422.50. It was the opinion of CMT's expert witness, Daniel Stengle, that all of these hours and fees are reasonable. Schweickert's expert witness, Howard Heims, believes that 25 or 30 hours was all the effort that was reasonable for this appeal. The hourly rates of $225.00 to $435.00 an hour that were used by CMT's attorneys are not contested by Schweickert. The evidence established that the rates are reasonable. The dispute focused on the number of hours expended for the appeal. Heims contends that it was unreasonable for CMT to file a motion to dismiss for lack of standing, because appellate courts rarely grant such a motion and the standing issue could have been saved for CMT's answer brief. The court did not summarily deny CMT's motion to dismiss but, instead, ordered Schweickert to show cause why the motion should not be granted. The issuance of the order to show cause indicates that it is not the court's practice to deny all motions to dismiss that are filed before the briefs. Following Schweickert's response, the court still did not deny the motion to dismiss, but deferred ruling to the panel of judges that would determine the merits of the appeal. It was not unreasonable to file a motion to dismiss in this case because Schweickert's lack of standing was unusually clear. The controlling factual issue was simple--whether Schweickert made timely comments to Citrus County about the proposed comprehensive plan amendment. Furthermore, the argument made in the motion eventually prevailed. Heims also believes that it was unreasonable for CMT to file three motions for attorney's fees and costs. The motions were not identical, but filing three such motions is unusual and was not shown to be necessary or important. It was not persuasively shown that 177.7 attorney hours was reasonable for this appeal. The evidence does not establish that the attorney's fees charged by the law firms of Clark Stillwell and de la Parte & Gilbert should be included as part of the reasonable fees for the appeal. These fees were not shown to be necessary or to contribute materially to the appeal. Rule 4-1.5 of the Rules Regulating the Florida Bar, Code of Professional Conduct, sets forth factors to be considered in determining a reasonable attorney's fee. The factors listed in rule 4-1.5(b)(1) are addressed below, in sequence: the time and labor required, the novelty, complexity, and difficulty of the questions involved, and the skill requisite to perform the legal service properly; The time and labor expended on the appeal was not shown to be reasonable. The questions involved were not difficult. The case was not complex. No unusual skills and expertise were required to perform the legal services. the likelihood that the acceptance of the particular employment would preclude other employment by the lawyer; CMT did not contend that this factor was applicable. the fee, or rate of fee, customarily charged in the locality for legal services of a comparable or similar nature; Reasonable hourly rates were charged, but persuasive evidence was not presented to show that the total amount of the fees charged to CMT are customary for the services that were performed. the significance of, or amount involved in, the subject matter of the representation, the responsibility involved in the representation, and the results obtained; Although a reversal of the Department's Final Order would have had adverse consequences for CMT, it was not shown that the situation was of an unusual nature. Furthermore, a reversal on the merits (to find the comprehensive plan amendment not in compliance) was almost impossible because no factual findings were made that supported Schweickert's claims. CMT points to the unusual result--attorney's fees awarded against a pro se litigant--as justifying the attorney's fee, but this unusual result is due to Schweickert's unusually weak case. The issues and the law applied were not unusual. the time limitations imposed by the client or by the circumstances and, as between attorney and client, any additional or special time demands or requests of the attorney by the client; CMT's argument that time limitations of an usual nature existed in this matter was not persuasive. the nature and length of the professional relationship with the client; The applicability of this factor was not argued by CMT and was not demonstrated by the evidence. the experience, reputation, diligence, and ability of the lawyer or lawyers performing the service and the skill, expertise, or efficiency of effort reflected in the actual providing of such services; and The lawyers involved have good reputations and experience, but those attributes were not likely to have materially affected the outcome. Performing the legal services did not require unusual skills. The services were not efficiently provided. whether the fee is fixed or contingent, and if fixed as to amount and rate, then whether the client's ability to pay rested to any significant degree on the outcome of the representation. This factor was not shown to be a basis to support a larger fee. It was Heims' opinion that 25 to 30 hours was a reasonable number of attorney hours to prepare the answer brief and one motion for attorney's fees. Thirty hours was a sufficient number of hours for the research and drafting work done by Ms. Lahlou-Anime. However, because it has been determined that the filing of the motion to dismiss was reasonable, some additional time should be added. CMT Exhibit 1 indicates that Ms. Lahlou-Anime charged about 23 hours for her work on the motion to dismiss. However, in determining a reasonable number of hours for the work on the motion to dismiss, consideration must be given to the fact that the standing arguments made in the motion were repeated in CMT's answer brief, which has already been accounted for in the 30 hours. The parties did not address this specific issue. However, the evidence supports the addition of 10 hours for Ms. Lahlou-Anime, for a total of 40 hours. Forty hours for Ms. Lahlou-Anime at her rate of $260 per hour equals $10,400. Heims also failed to fairly account for the reasonableness of the attorney hours expended by Karen Brodeen, a senior attorney at Fowler who represented CMT in the lower administrative proceedings and who assisted Ms. Lahlou-Anime in the preparation of the motion to dismiss and answer brief. CMT Exhibit 1 shows that Ms. Brodeen charged 0.9 hours at $375 per hour and 16.9 hours at $385 per hour, for a total fee of $6,844. The grand total of reasonable attorney time is 57.8 hours and the total reasonable attorney's fee is $17,244. Appellate Costs CMT is seeking $3,250.95 in costs for the appellate proceeding, comprised of $3,156.41 in costs charged by Fowler and $94.54 charged by de la Parte & Gilbert. However, as discussed in the Conclusions of Law, the costs which CMT seeks to recover --routine office expenses--are not recoverable legal costs under the applicable statutes. Prejudgment Interest CMT seeks daily prejudgment interest at the rate of 0.01644 percent. Requested Sanctions in the DOAH Remand Proceeding CMT also seeks to recover its attorney's fees and costs incurred following the remand from the Court of Appeal to DOAH to determine the amount of appellate attorney's fees and costs, as a sanction for alleged misconduct by Schweickert. CMT seeks a sanction against Schweickert for his failure to appear at a scheduled deposition for which Schweickert had been subpoenaed. Schweickert was not represented by an attorney at the time. Schweickert told CMT's attorneys that he was not going to appear at the deposition, but CMT's attorneys went forward as planned. Schweickert did not appear for his deposition. CMT seeks to recover its attorney's fees charged by de la Parte & Gilbert that are related to Schweickert's failure to appear for his deposition, which are $17,975.00, and costs of $818.63. CMT also sought a sanction against Schweickert for having to respond to Schweickert's Motion for Cause of Contempt for Citrus Mining and Timber’s Violation of Court Order, which demanded sanctions against CMT for CMT's scheduling of Schweickert's deposition without attempting to contact him to arrange a mutually agreeable date and time. The motion was denied. Schweickert was not represented by an attorney at the time. CMT seeks to recover its attorney's fees charged by de la Parte & Gilbert to respond to the motion, which are $2,357.50, and costs of $21.52. The day before the final hearing, CMT filed a motion for sanctions for Schweickert's failure to provide complete answers to some of CMT's discovery requests. At the time of the final hearing on September 7, 2011, CMT showed a total of $35,570 in attorney's fees associated with the DOAH remand proceeding, and costs of $1,693.73. CMT seeks recovery of those fees and costs as well as subsequent fees and costs through issuance of the Final Order in this remand proceeding, which are estimated to be $22,000 and $10,870, respectively. In summary, CMT seeks to recover $70,133.73 in fees and costs that it was charged by its attorneys for their effort to show that CMT's appellate fees and costs of $53,673.45 were reasonable.
The Issue The primary issue in this case is whether Respondent misrepresented or failed to disclose material terms and conditions pertaining to annuities that he sold to several senior citizens. If Respondent were found guilty of any disciplinable offense, then the next issue would be whether Petitioner should impose discipline for such violations as Respondent may be found to have committed.
Findings Of Fact At all times relevant to this case, Respondent Peter S. Tust ("Tust") held a valid license to transact business in Florida as a life insurance agent, which authorized him to sell products such as life and health insurance policies and fixed and variable annuities. This case arises from two separate transactions in which Tust sold an insurance product known as an equity index annuity to (a) Dora Indiviglia and (b) Abraham and Elaine Gelch. Petitioner Department of Financial Services ("DFS" or the "Department") is the state agency charged with administering the provisions of the Florida Insurance Code, among other responsibilities. The Department alleges that Tust fraudulently induced Ms. Indiviglia and the Gelchs to purchase annuities that were not suited to their respective financial needs. Because Tust is a licensed insurance agent, he falls within the Department's regulatory and disciplinary jurisdiction. Broadly speaking, an annuity is a contractual arrangement pursuant to which an insurance company, in exchange for a premium (or purchase price), agrees to pay the owner or his beneficiary a specified income for a period of time. Annuities are generally classified as "fixed" or "variable." Under a fixed annuity, the benefit is paid according to a predetermined interest rate. With a variable annuity, the premium is invested on the owner's behalf in, for example, stocks or bonds, and the amount of the benefit, when paid, reflects the performance of that investment, be it positive or negative. Fixed annuities can be either "immediate" or "deferred." An immediate fixed annuity is one under which the insurer begins paying the benefit upon purchase of the annuity. Under a deferred annuity, in contrast, the premium is allowed to grow over time, until the contract "matures" or is "annuitized" and the insurer begins paying the benefit. The equity index annuities which Tust sold to Ms. Indiviglia and the Gelchs are considered fixed deferred annuities. An equity index annuity is a contract under which the insurer agrees to pay a benefit based on a premium that earns interest at a rate determined by the performance of a designated market index such as the S&P 500. The premium is not invested in the market for the owner's account (as would be the case with a variable annuity). Rather, to explain the concept in the simplest terms, the interest rate rises (or falls) in relation to the index's performance, within predetermined limits. (None of the annuities involved in this case permitted the interest to fall below zero; that is, an owner's principal was never at risk of being lost due to the market's performance.) It is undisputed that the equity index annuities which Tust sold to Ms. Indiviglia and the Gelchs were approved for sale to senior investors by the Department. Equity index annuities are typically long-term investments. Owners of such annuities have limited access to the funds invested and accumulating in their accounts, although some equity index annuities permit yearly penalty-free withdrawals at set percentages. The accrued interest is generally not taxed until the funds are withdrawn or the benefit is paid under annuity. Besides taxes, the purchaser may incur substantial surrender penalties for canceling the contract and receiving his funds ahead of a specified date. Some equity index annuities identify a date——often many years in the future——on which the insurer will "annuitize" the contract if it has not done so already at the purchaser's request. This date is sometimes called the "maturity date." The benefit payable under the annuity is determined based on the account's value as of the maturity date, and the payments to the owner or beneficiary of the annuity begin at that time. Under the annuities in question here, the purchaser was not required to keep his or her funds invested until the maturity date. Rather, subject to certain limitations not at issue, the purchaser could elect to "annuitize" his or her contract practically at any time and thereby begin receiving the annuity payments. Therefore, in this case at least, the fact that the maturity date was beyond a purchaser's expected lifespan is not, of itself, compelling proof that the annuity was an unsuitable investment for him or her. The Indiviglia Transaction. In February 2005, Ms. Indiviglia attended one of the luncheon seminars that Tust routinely conducted in restaurants near his place of business in Boca Raton, Florida. At these seminars, Tust provided a meal and a sales presentation to his invitees. Tust made clear to those in attendance that he was selling equity index annuities and would recommend the purchase of this sort of annuity to anyone interested for whom such an investment would be suitable. Ms. Indiviglia was interested and made an appointment to meet with Tust. She was 65 years old at the time. As she told Tust when they met on February 25, 2005, Ms. Indiviglia's annual income was about $41,000, which she received from pensions and Social Security. She had recently sold some property and wanted to invest the proceeds, which amounted to about $150,000. Ms. Indiviglia had made financial investments before meeting Tust. She had invested in the stock market beginning in the late 1970s. Additionally, she had invested in a 401k account when she worked for the investment bank J.P. Morgan, had purchased mutual funds outside of the 401k, and had bought a variable annuity through another broker in 2003 or 2004. Ms. Indiviglia told Tust her goals were safety, growth, and future income. Upon meeting with Tust, Ms. Indiviglia agreed to purchase an equity index annuity from Fidelity and Guaranty Life Insurance Company ("F&G") for a premium of approximately $149,000. By purchasing this particular product, Ms. Indiviglia was eligible for, and received, a bonus of approximately $15,000, which was added to her account. If she surrendered (or canceled) this annuity during the first 14 years, however, Ms. Indiviglia would pay a penalty, starting at 18% for a cancellation during the first year and declining each year thereafter until the fourteenth year, when the surrender penalty would be 1%. The maturity (or annuity) date on Ms. Indiviglia's annuity was April 22, 2030. (Because she would be 90 years old by that time, the chances were good that Ms. Indiviglia would surrender or annuitize the contract before the maturity date.) In applying for the F&G annuity, Ms. Indiviglia executed an Annuity Application, a Confirmation Statement, and a Senior Annuity Suitability Acknowledgement. On page one of the Senior Annuity Suitability Acknowledgement, Ms. Indiviglia declined to answer certain questions related to her financial needs and objectives by placing a check mark beside the following statement: "No, I decline to answer the questions below, but I believe a Fidelity and Guaranty Life or Americom Life and Annuity annuity contract meets my needs for my financial situation." Ms. Indiviglia placed her signature and the date (3/8/2005) beneath this statement. On the second page of the Senior Suitability Acknowledgement, Ms. Indiviglia manifested her understanding of several statements, including the following, which she checked: ? This is not a short-term investment. ? Cash withdrawals from or a complete surrender of the contract are subject to certain limitations and charges as described in the contract. ? Surrender charges/fees may be incurred as a result of liquidating certain existing accounts; however, I believe this transaction to be in my best interest. Ms. Indiviglia placed her signature and the date (3/8/2005) below these statements. Tust delivered the F&G annuity contract to Ms. Indiviglia on May 16, 2005. Ms. Indiviglia executed a Delivery Receipt acknowledging that she had received not only the annuity contract, but also a contract summary. On the "Policy Information" page of the contract, which is Page 1, in boldfaced type, were the following provisions: RIGHT TO CANCEL. If you decide not to keep this policy, return it within 10 days after you receive it. It may be returned to any of our agents or it may be mailed to us.The return of this policy will void it from the beginning. Any premium paid will be refunded within 10 days of our receipt of this policy. YOU HAVE PURCHASED AN ANNUITY POLICY. CAREFULLY REVIEW THIS POLICY FOR LIMITATIONS. CANCELLATION MAY RESULT IN A SUBSTANTIAL PENALTY KNOWN AS A SURRENDER CHARGE. On Page 2 of the contract, the Annuity Date of April 22, 2030, was plainly disclosed, as was the "Surrender Factor" for each policy year from first (18%) to the fourteenth (1%). Three pages later, on Page 5, under the boldfaced heading, "SURRENDERS," appeared the following: Surrender Charge A surrender charge may be imposed on withdrawals and at death. The surrender charge equals the surrender factor for the appropriate policy year, as shown on the policy information page, multiplied by the amount of the account value withdrawn. The account value withdrawn consists of the amount paid upon a surrender request, or applied to an annuity option, and the surrender charge thereon. Waiver of Surrender Charges The surrender charge will not apply to the account value if payments are made under an annuity option. The Policy Information page clearly identified the Riders and Endorsements to the contract, one of which was entitled, "Partial Withdrawals Without Surrender Charges Rider." That Rider, which was attached to the contract, provided as follows: After the first policy anniversary, a portion of the account value withdrawn will not be subject to a surrender charge. The amount, which can be surrendered without a surrender charge, is up to 10% of the premiums paid, less any amounts previously surrendered in the current policy year which were not subject to the surrender charges. Maximum Benefit: the total maximum amount, which can be surrendered without a charge, is 25% of the premiums paid. Once the maximum amount has been surrendered without charges, any additional surrenders will incur a charge, unless additional premium is paid. Ms. Indiviglia held the F&G annuity into the third policy year. In or around July 2007, she made a penalty-free withdrawal of $12,000. Then, about a month later, she elected to surrender the contract, incurring a 16% penalty for the early withdrawal of her account balance. Although the evidence is not clear as to precisely how Ms. Indiviglia fared, financially, in this transaction, it is undisputed that, notwithstanding the surrender penalty, she actually made money on the investment——at least about $2,000 and perhaps as much as $14,000 or so. The provisions of the F&G annuity which DFS alleges Tust misrepresented or failed to disclose to Ms. Indiviglia were clearly stated, unambiguously, in the contract itself. The evidence fails to convince the undersigned to find, without hesitancy, that Tust misrepresented or failed truthfully to disclose to Ms. Indiviglia any of the F&G annuity contract's material terms and conditions, knowingly made other false representations of material fact about the product, or otherwise made any false promises in connection with the investment. Likewise, the evidence is insufficient to convince the undersigned that the F&G annuity was an inappropriate investment for Ms. Indiviglia, taking into account her stated financial needs and goals, age, wealth, and relative sophistication as an investor. To the contrary, viewing the evidence as a whole, the undersigned determines that the F&G annuity fell squarely within the range of reasonable investments for a person having Ms. Indiviglia's investment profile. The Gelch Transaction. In September 2006, Abraham Gelch, 73, and his wife Elaine, 68, attended one of Tust's luncheon seminars. Mr. Gelch was a retired accountant; to that time he had been primarily responsible for his family's financial decisions. Although Mrs. Gelch denied being knowledgeable regarding investments when she testified in this proceeding, she is well-educated, holding a bachelor's degree and a master's degree, and was sufficiently conversant at hearing regarding the subject annuities to persuade the undersigned that she was and is able to comprehend the particulars of the transaction in issue. After the seminar, the Gelchs met with Tust to discuss purchasing equity index annuities. At the time, they were living on Social Security plus the returns on their investments. The Gelchs had, in 2006, financial investments totaling nearly $2 million, most of which wealth was held in a brokerage account at Morgan Stanley. According to their U.S. income tax return, which they gave to Tust, the Gelchs' adjusted gross income for 2005 was approximately $100,000, about $35,000 of which was derived from investments, according to other information the Gelchs provided Tust. At the meeting with Tust, Mr. Gelch completed a "financial goals and needs" form on which he ranked his investment objectives in order of importance. He ranked the items from 1 to 6, with "1" being the most important, as follows: Protecting my assets from losses 1 Growing my assets 2 Generating more income 3 Leaving money to my children/heirs 6 Replacing my pension income for my spouse if I pass first 4 Protecting my assets from taxes at death 5 Mr. Gelch placed his signature and the date (09/27/06) below this enumeration of his priorities as an investor. On the same form, Mr. Gelch expressed his agreement with the statement, "It is important that my investments are 100% safe from this point forward," and he expressed disagreement with the statement, "I am willing to take some risk (and possible losses) with my investments." Mr. Gelch disclosed on the form that he and his wife had suffered investment losses of $300,000 between 2000 and 2002. In completing the statement, "My greatest financial concern is ," Mr. Gelch wrote: "OUTLIVING MY INCOME." Ultimately, Mr. and Mrs. Gelch agreed to purchase six equity index annuities, two issued by Allianz Life Insurance Company of North America ("Allianz"), and four by Midland National Life Insurance Company ("Midland"), for premiums totaling, in the aggregate, approximately $1.4 million. These annuities were similar in concept to the F&G annuity that Ms. Indiviglia had purchased, having interest rates pegged to market indices, surrender charges for early termination, limitations on penalty-free withdrawals, annuity dates some years in the future, and strong protection against loss of principal.1 With the Allianz annuities, surrender penalties declined over ten years, from 15% in the first year down to 2.14% in the tenth policy year. After one year, the Gelchs could withdraw up to 10% of the premium annually without penalty, to a maximum (over the first 10 policy years) of 50% of the premium paid. Under the Allianz annuities, the Gelchs could begin making systematic withdrawals of credits——that is, they could take distributions of interest earned on their accounts—— without penalty after the fifth policy year. The maturity dates for the Allianz annuities were in 2016. The Midland annuities, like the others, provided for surrender penalties, which declined from 18% to 2% over fourteen years. After the first year, the Gelchs could withdraw up to 10% of the "accumulation value" (premiums paid plus interest earned) of each policy annually without penalty, up to the entire value of the respective annuity. The maturity dates for the Midland annuities fell in 2048 and 2053. In connection with the applications for the Allianz annuities, Mr. and Mrs. Gelch each completed the following forms: Application for Annuity, Product Suitability Form, and Statement of Understanding. In the Product Suitability Form, the Gelchs identified a net worth of more than $1 million and confirmed prior investments in certificates of deposit, fixed annuities, variable annuities, and stocks/bonds/mutual funds. In a section entitled, "Accessing your money," the Gelchs indicated that they intended to access the funds in "10 or more years" as a lump sum. Each Allianz Statement of Understanding is a five page document that identifies the terms of the annuities, including the surrender charges and the methods of calculating interest. The Statements of Understanding do not guarantee a 6-9% return, which is what Mrs. Gelch testified Tust had promised the annuities afforded. Instead, for an indexed investment, each document states, "At the end of each contract year, the capped monthly returns are added together to calculate your indexed interest for that year. If this sum is negative, the indexed interest for that year will be zero." In connection with the applications for the Midland annuities, the Gelchs were provided Annuity Disclosure Statements, which identified the liquidity provisions and contained the following declaration: I understand that [this] annuity is a long- term contract with substantial penalties for early surrenders. A surrender charge is assessed, as listed below on any amount withdrawn, whether as a partial withdrawal or full surrender, that is in excess of the penalty-free amount applicable. The surrender charges vary by product option and decline as [shown in the table.] (Emphasis in original; table in original not reproduced here.) Mr. And Mrs. Gelch each signed and dated this declaration, manifesting their understanding of the surrender charges, which charges, as the disclosure form further explained, "allow the company to invest long-term, and in turn, generally credit higher yields." In addition, on the respective disclosure forms that the Gelchs signed, each of them specifically refused (by signing or placing initials next to the word "Decline"), a 7-year surrender charge option offering no bonus; and a 10-year surrender charge option offering a 5% bonus. Instead, Mr. And Mrs. Gelch each separately requested (by signing or placing initials next to the word "Elect"), the 14-year surrender charge option offering a 10% bonus. Mr. Gelch also completed a Deferred Annuity Suitability Form for Midland, which among other things included the following: 4. An annuity is a long-term contract with substantial penalties for early surrenders and/or distributions. In answering the following question, do not include the funds used to purchase this annuity contract, or any funds from annuities already owned. Do you have sufficient available cash, liquid assets or other sources of income for monthly living expenses and emergencies? Yes ? No (Emphasis in original; check mark handwritten on original.) Mr. Gelch affixed his signature to the suitability form, immediately below a declaration stating: I acknowledge that I have read this Deferred Annuity Suitability Form and believe this annuity meets my needs and is suitable. To the best of my knowledge and belief, the information above is true and complete. Mr. and Mrs. Gelch owned the Allianz and Midland annuities for a little more than a year before surrendering them in January of 2008. The surrender penalties for such early terminations, which charges had been fully disclosed to the Gelchs, were steep: 18% on the Midland annuities and 15% on the Allianz annuities. Despite the surrender penalties, which totaled approximately $200,000, the Gelchs' net loss on the investments (owing to their decision to surrender the annuities so soon after purchasing them) was only about $23,000, due to the investment gains and the bonuses. The provisions of the Allianz and Midland annuities which DFS alleges Tust misrepresented or failed to disclose to the Gelchs were clearly stated, unambiguously, in the written disclosures provided to the Gelchs, not to mention in the contracts themselves. The Gelchs, in turn, gave Tust (and through him the issuing insurers) numerous objective manifestations, in writing, of their understanding of these material terms and conditions. The evidence fails, ultimately, to convince the undersigned to find, without hesitancy, that Tust misrepresented or failed truthfully to disclose to the Gelchs any of the annuity contracts' material terms and conditions, knowingly made other false representations of material fact about the products, or otherwise made any false promises in connection with the Gelchs' investments. Likewise, the evidence is insufficient to convince the undersigned that the Allianz and Midland annuities were inappropriate investments for the Gelchs, taking into account their stated financial needs and goals, respective ages, health, wealth, and relative sophistication as investors. To the contrary, viewing the evidence as a whole, the undersigned determines that the annuities fell squarely within the range of reasonable investments for persons having the Gelchs' investment profile. Ultimate Factual Determinations. In view of the historical facts found above, the undersigned has determined, based the appropriate standard of proof (discussed below) as applied to the evidence adduced at hearing, that Tust is not guilty of any of the following offenses with which he was charged: (a) willfully misrepresenting the terms of any annuity contract as proscribed in Section 626.611(5), Florida Statutes; (b) demonstrating a lack of fitness or trustworthiness to engage in the business of insurance, which is punishable under Section 626.611(7), Florida Statutes; (c) engaging in fraudulent or dishonest practices, a disciplinable offense pursuant to Section 626.611(9), Florida Statutes; (d) willfully failing to comply with, or of violating, a provision of law, which is punishable under Section 626.611(13), Florida Statutes; violating any applicable provision of law, which may subject the violator to discipline under Section 626.621(2), Florida Statutes; (e) engaging in unfair methods of competition or deceptive acts, as prohibited in Section 626.9541, Florida Statutes; and (f) failing to present accurately and completely every fact essential to a client's decision, as required under Florida Administrative Code Rule 69B-215.210. Moreover, although Tust did not have the burden to prove his innocence in any respect, the greater weight of the evidence nevertheless persuades the undersigned to determine that he did, in fact, fulfill the obligations he owed to Ms. Indiviglia and the Gelchs under Section 627.4554, Florida Statutes, which governs transactions involving sales of annuities to senior consumers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a Final Order finding Peter S. Tust not guilty of the charges that were brought against him in this proceeding. DONE AND ENTERED this 3rd day of November, 2009, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of November, 2009.
The Issue The issue is the amount of attorney's fees and costs to which Petitioner is entitled by Order of the appellate court pursuant to Subsection 120.595(5), Florida Statutes (2007).1
Findings Of Fact On February 9, 2005, the Commissioner of Education (the Commissioner) filed an Administrative Complaint against Ms. Stacy Stinson, now Ms. Stacy Lewis. Ms. Stinson requested an administrative hearing pursuant to Subsection 120.57(1) (a 120.57 proceeding). The Commissioner referred the matter to DOAH to conduct the 120.57 proceeding. DOAH opened the 120.57 proceeding as Jim Horne, as Commissioner of Education v. Stacy Stinson, Case No. 05-0504PL (DOAH August 11, 2005) (the underlying proceeding). The Recommended Order in the underlying proceeding recommended the entry of a final order finding the respondent in the underlying proceeding not guilty of the charges against her and imposing no penalty against her teaching certificate. On January 5, 2006, the Educational Practices Commission (EPC) entered a Final Order rejecting or modifying some findings of fact in the Recommended Order, reprimanding the respondent, imposing a two-week suspension of her teaching certificate, and placing her on probation for three years. On January 5, 2006, the respondent in the underlying proceeding filed a notice of administrative appeal to the First District Court of Appeal. The initial brief was filed on March 16, 2006. The answer was filed on May 1, 2006. On May 15, 2006, the respondent filed a reply brief, motion for attorney's fees, and request for oral argument. On August 22, 2006, the appellate court issued its order in Stinson v. Winn, 938 So. 2d 554 (Fla. 1st DCA 2006). The appellate court concluded that the EPC improperly rejected or modified factual findings and legal conclusions of the ALJ and remanded the matter for entry of a final order dismissing the Administrative Complaint and finding the respondent in the underlying proceeding not guilty of the allegations, consistent with the Recommended Order. The appellate court also granted the motion for attorney's fees, pursuant to Subsection 120.595(5), and remanded the case to DOAH to determine the amount of fees. The instant proceeding ensued. Respondent does not contest the reasonableness of costs in the amount of $3,484.95. Petitioner seeks an award of costs in the amount of $3,954.95. Petitioner is entitled to costs in the amount of $3,484.95. Petitioner seeks attorney's fees for the underlying proceeding and the appellate proceeding in the amount of $94,104.45, plus interest. The amount of fees is based on 360.6 hours at an hourly rate of $250.00. Respondent claims the correct amount of attorney's fees is $22,680.00. The amount of fees is based on 252 hours at an hourly rate of $90.00. An hourly rate of $90.00 is reasonable. The $90.00- rate is the rate established in the fee agreement reached between Petitioner and her attorney. Judicial decisions discussed in the Conclusions of Law hold that in no case should the court-awarded fee exceed the fee agreement reached by the attorney and her client. The number of hours reasonably expended is 283.15 hours. The hours claimed by Petitioner in the amount of 360.6 should be reduced by 62.8 hours based on credible and persuasive testimony of Respondent's expert. The subtotal of 297.8 hours includes 34.9 hours billed, from June 6 through July 5, 2005, to prepare the PRO in the underlying proceeding. The total time billed for preparing the PRO includes 19.2 hours for what is labeled, in part, as research undertaken to prepare the PRO. The 2.7 hours for research pertaining to penalties, bearing an entry date of June 27, 2005, is reasonable because the research is reflected in the PRO. The remaining legal research undertaken to prepare the PRO is not reflected in the PRO. The amount billed for preparation of the PRO is reduced from 34.9 hours to 20.25 hours, a reduction of 14.65 hours. The Conclusions of Law in the PRO consist of 33 paragraphs numbered 17 through 49. Apart from administrative proceedings pertaining to penalties, the 33 paragraphs cite three appellate decisions, one of which may be fairly characterized as a "boiler-plate" citation for the burden of proof. The remainder of the 33 paragraphs consists of naked argument. A principal purpose of a PRO is to inform the ALJ of relevant judicial decisions, to distinguish between supporting and contradicting decisions, and to explain why, in the context of the facts at issue, the supporting decisions seize the day for the client. That is the proper role of an attorney in the adversarial process at the trial level. The PRO does not reflect that effort.3 Economic reality is not lost on the fact-finder. It may be that the fee-sensitivity of a client in a particular case precludes an attorney from fully researching and discussing a relevant legal issue. In the instant case, however, the attorney billed 34.9 hours for a PRO with two citations to appellate decisions beyond the burden of proof. Novel and difficult questions of fact and law were present in the underlying proceeding. The factual issues involved a so-called trial by deposition in a penal proceeding. The legal issues involved a literal conflict between a so-called adopted rule and a statute in a 120.57 proceeding. However, the PRO filed in the underlying proceeding provided no legal research concerning either novel question. Judicial decisions discussed in the Conclusions of Law hold that reasonable attorney's fees are determined by multiplying the number of hours reasonably expended by a reasonable hourly rate. The mathematical product is the lodestar. The lodestar in this proceeding is $25,483.50, determined by multiplying 283.15 hours by an hourly rate of $90.00. The lodestar is not increased or decreased by the results obtained or risk factor. There is no evidence of a "risk factor" attributable to contingency or other factors. There is no increase for the results obtained. Although the results were favorable, the favorable results turned principally on issues of fact and law for which relevant judicial decisions exist and were found through independent research by the ALJ without any assistance from legal research evidenced in the PRO.
Conclusions For Petitioner: Anthony D. Demma, Esquire Meyer and Brooks, P.A. Post Office Box 1547 Tallahassee, Florida 32302 For Respondent: Todd Resavage, Esquire Brooks, LeBoef, Bennett, Foster & Gwartney, P.A. 909 East Park Avenue Tallahassee, Florida 32301
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original Notice of Appeal with the agency clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
Findings Of Fact Petitioner was represented by in this case by Michael Linsky, Esquire, beginning in April 1988. Two complaints of discrimination had been brought against the Department of Corrections by Petitioner. Linsky is an experienced trial lawyer having been admitted to the Florida Bar in 1970. However, he had no experience with discrimination cases prior to these proceedings. The Florida Commission on Human Relations found the Department had committed an unlawful employment practice when it assigned Petitioner to perimeter post duty and transferred him to Polk Correctional Institution in retaliation for having filed a discrimination complaint. Linsky originally took Petitioner's case on a contingency fee basis, but later it was decided between Linsky and Petitioner that the fee would be whatever was awarded by the Commission. Petitioner was only to be responsible for costs. Linsky submitted into evidence as Exhibit 1 a list of dates and hours expended on this case. However, this exhibit was prepared by Linsky's secretary some months after the events depicted and appear grossly exaggerated in some instances. Linsky claims a total of 159.35 hours expended. Linsky testified that his billing rate from April 1988 to December 1988 was $175 per hour, and thereafter it was raised to $190 per hour. Petitioner's expert witnesses contend the average billing rate in the Tampa area for this type of case ranges from $125 to $175 per hour. Respondent's expert witnesses contend the fees awarded run from $100 to $150 per hour. I find the appropriate fee in this case to be $135 per hour. Although Linsky claims to have spent 159.35 hour on this case, including the attorney's fees portion, 1 find that only 100 hours are reasonable. Costs of $423.60 is not disputed.
Recommendation It is recommended that the Department of Corrections be directed to pay Sefsick's attorney $13,500 attorney's fees and $423.60 costs in these proceedings. DONE AND ENTERED this 28th day of September, 1990, in Tallahassee, Florida. K. N. AYERS 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 28th day of September, 1990. APPENDIX Petitioner's proposed findings are accepted, except: 3. This proposed finding is accepted as a recital of the testimony presented, but rejected insofar as inconsistent with H.O. #8. 5. Rejected insofar as inconsistent with H.O. #7. 6 and 7. Accepted as legal argument, but rejected as a finding of fact. Respondent's proposed findings are accepted. COPIES FURNISHED: Michael A. Linsky, Esquire 600 North Florida Avenue Suite 1610 Tampa, FL 33602 Lynne T. Winston, Esquire Department of Corrections 2601 Blair Stone Road Tallahassee, FL 32399-2500 Louis A. Vargas General Counsel Department of Corrections 1313 Winewood Boulevard Tallahassee, FL 32399-2500 Richard L. Dugger Secretary Department of Corrections 1313 Winewood Boulevard Tallahassee, FL 32399-2500 =================================================================
The Issue The issue for determination is whether Intervenors are entitled to reasonable attorney fees and costs pursuant to Section 120.595, Florida Statutes (2003).1
Findings Of Fact Petitioner is an insurer and carrier within the meaning of Subsections 440.02(4) and 440.02(38), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(w).2 Petitioner is licensed in the state as a workers' compensation insurance carrier (carrier).3 Respondent is a state agency within the meaning of Subsection 440.02(3), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(b). In relevant part, Respondent is responsible for resolving reimbursement disputes between a carrier and a health care provider. Intervenors are health care providers within the meaning of Subsection 440.13(1)(h), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(u). Each Intervenor is a health care facility within the meaning of Subsection 440.13(1)(g), Florida Statutes (2005). Intervenors seek an award of attorney fees and costs against Petitioner pursuant to Sections 57.105 and 120.595, Florida Statutes (2003). The proceeding involving Section 57.105, Florida Statutes (2003), is the subject of a separate Final Order entered on the same date as this Recommended Order. The scope of this Recommended Order is limited to Section 120.595, Florida Statutes (2003). Intervenors allege that Petitioner is the "non- prevailing adverse party" in an underlying proceeding and participated in the underlying proceeding for an "improper purpose" as the quoted terms are defined, respectively, in Subsections 120.595(1)(e)3. and 120.595(1)(e)1., Florida Statutes (2003). The underlying proceeding involves eight consolidated Petitions for Administrative Hearing. Petitioner filed each Petition for Administrative Hearing after Respondent determined Petitioner had improperly discounted the amount of reimbursement Petitioner paid for hospital services that Intervenors provided to eight patients from March 13, 2004, through February 11, 2005. From April 13 through May 23, 2005, Respondent issued separate orders directing Petitioner to pay the disputed amounts pursuant to Subsection 440.13(7), Florida Statutes (2005). From June 1 through June 21, 2005, Petitioner filed eight separate Petitions for Administrative Hearing. The eight petitions were subsequently consolidated into one underlying proceeding. Petitioner is the non-prevailing adverse party in the underlying proceeding. On December 8, 2005, Petitioner filed a Notice of Voluntary Dismissal in the underlying proceeding. On December 9, 2005, Intervenors filed their motion for attorney fees based on Section 120.595, Florida Statutes (2003). The formal hearing in the underlying proceeding was set for January 18, 2006. The ALJ amended the issue for the formal hearing to exclude the original reimbursement dispute and to limit the scope of the formal hearing to the fee dispute. The ALJ did so to avoid delay in the resolution of the proceeding. The fee dispute at issue in this proceeding includes only six of the original eight reimbursement disputes because Intervenors were not the medical providers in two of the original eight disputes.4 In the six reimbursement disputes involving Intervenors, Respondent ordered Petitioner to pay additional reimbursements in the aggregate amount of $54,178.52. Approximately $51,489.27 of the $54,178.52 in additional reimbursement involved inpatient hospital services provided to one patient.5 The remaining $2,689.25 in additional reimbursement involved outpatient hospital services in the emergency room.6 Subsection 440.13(12), Florida Statutes (2005), mandates that a three-member panel must determine statewide schedules for reimbursement allowances for inpatient hospital care. The statute requires hospital outpatient care to be reimbursed at 75 percent of "usual and customary" charges with certain exceptions not relevant to this proceeding. Notwithstanding the statutory mandate to schedule reimbursement rates for hospital inpatient services, the inpatient services at issue in the underlying proceeding were apparently unscheduled inpatient services. By letter dated April 13, 2005, Respondent ordered Petitioner to pay Intervenor, Holmes Regional Medical Center, Inc. (Holmes), an additional reimbursement in the amount of $51,489.27. The total reimbursement to Holmes was 75 percent of the charges that Holmes submitted to Petitioner for reimbursement.7 Respondent interprets Subsection 440.13(12), Florida Statutes (2005), to authorize reimbursement of both unscheduled inpatient hospital services and outpatient hospital services at the same rate. There is no dispute that Respondent reimburses unscheduled inpatient hospital services and outpatient hospital services at 75 percent of the "usual and customary" charges. The dispute in the underlying proceeding was over the meaning of the phrase "usual and customary" charges. Petitioner challenged the interpretation asserted by Respondent and Intervenors. Respondent and Intervenors contended that the quoted statutory phrase means Intervenors' usual and customary charges evidenced in a proprietary document identified in the record as the "charge master." Each Intervenor maintains its own charge master, and the information in each charge master is proprietary and confidential to each Intervenor. Petitioner asserted that the statutory phrase "usual and customary" charges means the usual and customary charges imposed by other hospitals in the community in which Intervenors are located. Petitioner maintains a data base that contains information sufficient to determine the usual and customary charges in each community. Petitioner did not participate in the underlying proceeding for an improper purpose within the meaning of Subsection 120.595(1)(e)1., Florida Statutes (2003). Rather, Petitioner presented a good faith claim or defense to modify or reverse the then-existing interpretation of Subsection 440.13(12), Florida Statutes (2005). Petitioner had a reasonable expectation of success. The statutory phrase "usual and customary" charges is not defined by statute. Nor has the phrase been judicially defined. Respondent bases its interpretation of the disputed phrase on two agency final orders and relevant language in the Florida Workers' Compensation Reimbursement Manual for Hospitals (2004 Second Edition) (the Manual). The Manual is developed by the Florida Department of Financial Services (DFS).8 The Manual interprets the quoted statutory phrase to mean the "hospital's charges." However, after the effective date of the Manual in 2004, DFS developed a proposed change to the Manual that, in relevant part, interprets "usual and customary" charges to mean the lesser of the charges billed by the hospital or the median charge of hospitals located within the same Medicare geographic locality.9 The trier of fact does not consider the new interpretation of the disputed statutory phrase as evidence relevant to a disputed issue of fact. As Respondent determined in an Order to Show Cause issued on February 16, 2006, and attached to Intervenors' PRO, "what constitutes 'usual and customary' charges is a question of law, not fact." The ALJ considers the new interpretation proposed by DFS for the purpose of determining the reasonableness of the interpretation asserted by Petitioner in the underlying proceeding. The ALJ also considers the new DFS interpretation to determine whether the interpretation asserted by Petitioner presented a justiciable issue of law. Intervenors assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to initially explain its reduced reimbursement to Intervenors with one of the codes authorized in Florida Administrative Code Rule 69L-7.602(5)(n) as an explanation of bill review (EOBR). None of the EOBR codes, however, contemplates a new interpretation of the statutory phrase "usual and customary" charges. Intervenors further assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to respond to discovery. However, responses to discovery would not have further elucidated Petitioner's rule-challenge. Petitioner stated eight times in each Petition for Administrative Hearing that Florida Administrative Code Rule 69L-7.501, the DFS rule incorporating the Manual by reference: [S]hould be read to allow recovery of 75% of the usual and customary fee prevailing in the community, and not 75% of whatever fee an individual provider elects to charge. Respondent and Intervenors were fully aware of the absence of statutory and judicial authority to resolve the issue. Petitioner did raise at least one factual issue in each Petition for Administrative Hearing. Petitioner alleged that Respondent's decision letters ordering Petitioner to pay additional reimbursement amounts had no legal effect because Respondent acted before each provider requested and received the carrier's reconsidered reimbursement decision. The absence of a formal hearing in the underlying proceeding foreclosed an evidential basis for a determination of whether each provider in fact requested and received a reconsidered reimbursement decision before the date Respondent ordered Petitioner to pay additional reimbursements. In this fee dispute, Petitioner presented some evidence to support the factual allegation and thereby established the presence of a justiciable issue of fact. It is not necessary for Petitioner to present enough evidence to show that Petitioner would have prevailed on that factual issue in the underlying proceeding. If the letters of determination issued by Respondent were without legal effect, Petitioner would not have waived its objections to further reimbursement within the meaning of Subsection 440.13(7)(b), Florida Statutes (2005). A determination that Petitioner did, or did not, submit the required information is unnecessary in this proceeding. During the formal hearing in this proceeding, Petitioner called an expert employed by a company identified in the record as Qmedtrix. The testimony showed a factual basis for the initial reimbursement paid by Petitioner. It is not necessary for Petitioner to show that this evidence was sufficient to prevail on the merits in the underlying case. The evidence is sufficient to establish justiciable issues of fact in the underlying case. In this proceeding, Petitioner submitted some evidence of justiciable issues of fact in the underlying proceeding. Petitioner need not submit enough evidence in this fee dispute to show Petitioner would have prevailed on these factual issues in the underlying proceeding. Intervenors are not entitled to a presumption that Petitioner participated in this proceeding for an improper purpose in accordance with Subsection 120.595(1)(c), Florida Statutes (2003). Although Petitioner was the non-prevailing party in two previous administrative hearings involving the same legal issue, the two proceedings were not against the same prevailing hospital provider and did not involve the same "project" as required in the relevant statute. Intervenors seek attorney fees in the amount of $36,960 and costs in the amount of $2,335.37 through the date that Petitioner voluntarily dismissed the underlying proceeding. Absent a finding that Petitioner participated in the underlying proceeding for an improper purpose, it is unnecessary to address the amount and reasonableness of the attorney fees and costs sought by Intervenors. If it were determined that Petitioner participated in the underlying proceeding for an improper purpose, the trier of fact cannot make a finding that the proposed attorney fees and costs are reasonable. Such a finding is not supported by competent and substantial evidence. The total attorney fees and costs billed in the underlying proceeding were charged by six or seven attorneys or paralegals employed by the billing law firm. However, the fees and costs at issue in this proceeding exclude any time and costs charged by paralegals and include only a portion of the total fees and costs charged by the attorneys. The total amount of time billed and costs incurred in the underlying proceeding is evidenced in business records identified in the record as Intervenors' Exhibits 20-23. However, those exhibits do not evidence the reasonableness of the fees and costs billed by the attorneys.10 Either the testimony of the billing attorneys or the actual time slips may have been sufficient to support a finding that the attorney fees and costs are reasonable. However, Intervenors pretermitted both means of proof. Intervenors asserted that the time slips contain information protected by the attorney-client privilege. However, Intervenors neither submitted redacted time slips nor offered the actual time slips for in-camera review. Nor did Intervenors allow the attorneys to testify concerning unprivileged matters. The absence of both the testimony of the attorneys and the time slips is fatal. The fact-finder has insufficient evidence to assess the reasonableness of the fees and costs, based on the novelty and difficulty of the questions involved. Intervenors' expert opined that the attorney fees and costs are reasonable. The expert based her opinion, in relevant part, on her review of the actual time slips maintained by each attorney. However, Petitioner was unable to review the time slips before cross-examining the expert. In lieu of the actual time slips, Intervenors submitted a summary of the nature of the time spent by each attorney. The summary is identified in the record as Intervenors' Exhibit 2. Petitioner objected to Intervenors' Exhibit 2, in relevant part, on the ground that it is hearsay. The ALJ reserved ruling on the objection and invited each side to brief the issue in its respective PRO. The paucity of relevant citations in the PROs demonstrates that neither side vigorously embraced the ALJ's invitation. Intervenors' Exhibit 2 is hearsay within the meaning of Subsection 90.801(1)(c), Florida Statutes (2005).11 The author of Intervenors' Exhibit 2 summarized the unsworn statements of attorneys from their time slips and submitted those statements to prove the truth of the assertion that the time billed was reasonable. Intervenors made neither the attorneys nor their time slips available for cross examination.12 Even if the summary were admissible, the summary and the testimony of its author are insufficient to show the attorney fees and costs were reasonable. The insufficiency of the summary emerged during cross-examination of its author. The author is the lone attorney from the billing law firm who testified at the hearing. Q. What other information did you look at to decide what time to actually bill . . .? A. The information I used was the information from the actual bill. Q. If we look at the first entry . . . were you the person that conducted that telephone conference? A. No, I wasn't. Transcript (TR) at 510-511. Q. In other words, [the entries] go with the date as opposed to the event [such as a motion to relinquish]? A. That's correct. Q. So if I wanted to know how much time it took you to actually work on the motion to relinquish, I would have to look at each entry and add up all the hours to find out how long it took you to do one motion. Is that how I would do that? A. It would be difficult to isolate that information from this record, we bill and explain in the narrative what work is performed each day, and unless that was the single thing worked on for several days, there would be no way to isolate the time, because we don't bill sort of by motion or topic. . . . Q. Well, if I'm trying to decide whether the time billed is reasonable, wouldn't I need to know how much time was spent on each task? A. I'm not sure how you would want to approach that. . . . Looking at this document, it does not give you that detail. It doesn't provide that breakout of information. Q. Is there a way for us to know who you spoke with on those entries? A. The entry . . . doesn't specify who participated in the conference. I don't recall what the conference entailed . . . . And many of these entries are from months ago, and I can't specifically recall on that date if I was involved in a conference and who else might have been there. . . . And so my guess is where the conference is listed on a day when lots of activity was performed on behalf of the client, most of it in this case was research. TR at 516-521.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order denying the motion for attorney fees and costs. DONE AND ENTERED this 27th day of April, 2006, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 27th day of April, 2006.
The Issue The issue is whether the claimant overutilized the services of Dr. Pamela J. Windham, a provider, in connection with services rendered on July 23 and August 10, 1999, in violation of Section 440.13(6) and (7), Florida Statutes.
Findings Of Fact Warren Stovall (Claimant) was born on January 9, 1948. On October 3, 1989, Claimant suffered head injuries-- mainly, in all likelihood, a concussion--in a work-related motor vehicle accident in the course of his employment with Petitioner Wyatt Brothers Construction (Wyatt Brothers). Petitioner CNA Insurance Company (CNA), which was the workers’ compensation carrier for Wyatt Brothers at the time of the accident, accepted the injury as compensable. A few days after the accident, Claimant complained of headaches and problems with his vision, memory, and processing of information. Within one month after the accident, physicians confirmed the presence of a right posterior parietal cyst measuring 5 x 6 x 8 cm to 5 x 7 x 5 cm. Although chronic and likely congenital, the cyst may have been adversely affected by the motor vehicle accident. On October 30, 1989, a surgeon performed a craniotomy, a cystoventriculostomy, and cyst wall biopsies for treatment of a right parietal occipital ependymal cyst. Post- surgical recovery was complicated by subarachnoid and intraventricular air causing severe headaches. CNA has reimbursed various providers for the treatment of the cyst, as well as for the diagnosis and treatment of post-surgical cognitive deficits. CNA has paid for all medically necessary treatment, without regard to whether it was necessitated by injuries associated with the motor-vehicle accident or the brain surgery. One of the providers is Intervenor Pamela J. Windham, Ph.D. (Dr. Windham), a licensed clinical psychologist who works in Louisiana, where Claimant now lives. Dr. Windham began counseling Claimant on February 2, 1990, and has counseled him on more than 200 occasions in the ensuing 10 years. In August 1999, CNA commenced a utilization review of the treatment provided Claimant by Dr. Windham. Certain peer review reports determined that several years of Dr. Windham's counseling had not been medically necessary or reasonable. In reliance upon these reports, CNA determined that Claimant had overutilized the services of Dr. Windham on July 23 and August 10, 1999. The charge for each of these two-and-one- half-hour counseling sessions was $462.50. On February 29, 2000, Dr. Windham filed with the Division of Workers’ Compensation (Division) a Petition to Division of Workers’ Compensation to Resolve the Dispute Regarding a Disallowance and Adjustment of Payments by CNA Insurance Companies to Pamela J. Windham, Ph.D. Identifying the two service dates (and a third, since paid in full) as the reimbursements in dispute, the petition requests the Division to issue an order requiring CNA to reimburse Dr. Windham for the total charges of $925 and to pay Dr. Windham’s reasonable attorneys’ fees. By letter to CNA dated April 27, 2000, the Division acknowledged receipt of Dr. Windham’s petition for reimbursement. The letter states that the Division examined the dispute pursuant to Rules 38F-7.020 and 38F-7.602, Florida Administrative Code, and the 1997 Florida Workers’ Compensation Health Care Provider Fee for Service Reimbursement Manual (Manual). Noting that CNA had claimed that it was conducting a utilization review, the letter states: “While the Division supports the importance of utilization review by the carrier, there is no provision for holding bills during a utilization review investigation. Rule [38F-7.602(3)(b)1] requires carriers to pay or deny medical bills within 45 days.” The letter recommends that CNA pay the remaining $1288.25 due within 30 days of the date of the letter, denies Dr. Windham’s request for attorneys’ fees, and informs any substantially affected person of its right to an administrative hearing. On May 18, 2000, CNA and Wyatt Brothers (Petitioners) served the Employer/Carrier’s Petition to the Division of Workers’ Compensation Regarding a Reimbursement Dispute and Disallowance of Payment by CNA Insurance Company to Pamela J. Windham, Ph.D. In their petition, Petitioners requested an order from the Division rejecting Dr. Windham’s claim for reimbursement and awarding attorneys’ fees and costs to Petitioners. Dr. Windham has pre- and post-doctoral training in neuropsychology. She completed a one-year fellowship at the Tulane Medical Center/Children’s Hospital in neuropsychology in September 1989. She worked as the sole employee of the neuropsychology department at the Touro Rehabilitation Center in New Orleans from November 1989 until mid-1997, at which time she entered private practice in nearby Metairie, Louisiana. Just a couple of months after Dr. Windham began working at the Touro Rehabilitation Center, the center’s neurologist, Dr. Diane Mayer, referred Claimant for a neuropsychological evaluation to document Claimant’s current level of neuropsychological functioning and make appropriate recommendations for further treatment. The neuropsychological evaluation took place over three days from February 2-7, 1990. Claimant’s wife reported to Dr. Windham that, following the brain surgery, Claimant continued to experience memory problems, restlessness, fatigue, and slowed accomplishment of formerly simple tasks, such as replacing door hinges. Claimant reported that his primary areas of residual deficits were in memory and slowed cognitive processing, as well as occasional difficulties in word-finding. Both Claimant and his wife reported that Claimant had experienced increased levels of irritability and frustration over his inability to complete tasks that, prior to the injury, he had been able to comply without difficulty. After administering appropriate tests, Dr. Windham determined that Claimant was within the average range of intellectual functioning, but suffered deficits in memory and higher-level abstract reasoning. She found that he was experiencing anxiety, depression, and self-doubt. Dr. Windham’s evaluation contains five recommendations. First, Claimant should participate in a rehabilitation program to address his memory and reasoning deficits; Dr. Windham expected him to “demonstrate progress throughout the coming months” because he was then only four months post-injury. Second, Claimant should undergo supportive therapy to alleviate his anxiety and frustration. Third, Claimant should use associative cues to strengthen his memory functions. Fourth, Claimant should generate possible solutions to imagined and actual problems in daily life to remediate his deficits in reasoning and problem-solving. Fifth, Claimant should undergo a complete neuropsychological reevaluation in eight months to determine his progress. In a letter dated June 22, 1990, evidently from Dr. Windham to a registered nurse/rehabilitation specialist, Dr. Windham states: It quickly became evident that these adjustment issues [originally identified in the above-described neuropsychological evaluation] encompassed Mr. Stovall’s primary support system, namely his wife, Vickie. The emotional/behavioral factors which have surfaced subsequent to the head injury have significantly impacted the couple’s relationship. In particular, those intrusive factors include: Mr. Stovall’s emotional dependence, reduced drive/motivation, reduced empathy, reduced insight, lowered tolerance for frustration, and problematic communication, in general. On October 29-31, 1990, Dr. Windham performed another neuropsychological evaluation of Claimant. Summarizing Claimant’s current level of functioning, Dr. Windham found: Currently, Mr. Stovall continues to report cognitive difficulties primarily related to planning, organizing, and carrying out novel tasks. Occasional difficulties in word finding are still present also. Mr. Stovall’s wife continues to report some periodic difficulty in her husband’s social judgment. Both Mr. Stovall and his wife continue to report his increased irritability, in general, and an inability of Mr. Stovall to self-monitor . . .. There are current staff reports also of impulsivity, inability to self-correct, inability to perform basic mathematical calculations, and anxiety/depression. Decreased endurance level with concomitant decreased cognitive efficiency also continues to be problematic for Mr. Stovall. The reevaluation continues to find that Claimant was of average intelligence, and he continued to experience some problems with abstract reasoning. However, he had improved “on many measures” of memory. Dr. Windham’s reevaluation contains four recommendations. First, Claimant should continue to undergo rehabilitative therapy for deficits in reasoning and impulse- control. Second, Claimant should continue to receive supportive counseling for his anxiety and depression. Third, Claimant should undergo vocational rehabilitation to determine his ability to return to his prior construction work; noting that Claimant had probably already attained his pre-injury level of functioning and would continue to suffer significant deficits in reasoning and problem-solving, Dr. Windham warned that she expected that this effort would be “extremely difficult and ultimately disappointing.” Fourth, Claimant should undergo another neuropsychological evaluation in one year. On January 16, 1992, Dr. Richard Cicinelli, a psychiatrist, saw Claimant for a psychiatric evaluation. Dr. Cicinelli’s impression was as follows: Organic affective and organic personality disorder, due to a slowly resolving organic brain syndrome due to CNS injury, especially as stated to the posterior parietal area, the location of the removal of the cyst. The patient’s depression seems to be resolving well and responding to psychotherapy to the point that there is no need for a trial of antidepressants now. There does seem to be a residual brain syndrome, however, as in other similar cases of brain injury, in which there has been a slow, gradual improvement, but only to a certain extent, with the probability that there will be only a certain percentage of complete return to premorbid CNS functioning, such as 80 or 90 per cent. Elaborating on his findings, Dr. Cicinelli stated in a letter dated March 17, 1993: I felt that the patient’s depressive reaction to his injuries and some of the cognitive losses could improve with time, or with new training and continued psychotherapy. However, there is a certain degree of impairment, which will be certainly PERMANENT and IRREVERSIBLE. Medications, cognitive restructuring, and supportive individual psychotherapy can be palliative, but never fully cure such conditions. There is a need for continued supportive individual psychotherapy and continued evaluations by psychiatry, until the patient dies. On March 23, 1995, Dr. Mark K. Rosenbloom, a physician certified in physical medicine and rehabilitation, examined Claimant as part of a follow-up visit. Dr. Rosenbloom found that Claimant’s short-term memory and memory after ten minutes were good, but his concentration and speed of processing were mildly slowed and his insight and judgment were only fair. Dr. Rosenbloom concluded that Claimant would continue to benefit from Dr. Windham’s neuropsychological intervention and that his need for this treatment would be “indefinite.” Failing to follow the fourth recommendation of her October 1990 reevaluation, Dr. Windham never performed another comprehensive reevaluation of Claimant after the October 1990 reevaluation. On April 6, 1995, Dr. Windham noted that she “[a]chieved what appears to be maximum closure/resolution possible [with Mr. and Mrs. Stovall] in this session.” Dr. Windham admitted that, since 1993, she did not have “any objective evidence in the form of testing that would support the need for ongoing psychological counseling,” as she provided it. [Intervenor Exhibit A, p. 65.] For several years, Dr. Windham’s counseling has been more palliative or supportive than curative or remedial. As she explains, her treatment plan, for many years, has been to provide supportive counseling, on an as-needed, indefinite basis, as befits Claimant’s deficits, which will never disappear. [Intervenor Exhibit A, pp. 57-58.] Dr. Windham describes her work as “consistently . . . to address Mr. Stovall’s ability, with the support and involvement of his wife, to address his ability to deal with and address and cope with the consequences of the neurological insult of trauma that he sustained.” [Intervenor Exhibit A, p. 22.] Dr. Windham explains that Claimant’s condition requires repeated interventions: Because Mr. Stovall has significant memory difficulties, he has significant short-term and long-term [memory problems]. He has judgment, higher level, executive cognitive function deficits which relate to judgment, decision making. His ability to integrate information is not what it was previously nor will it be again. Therefore, when [Mr. and Mrs. Stovall] come in, it takes repetition. It takes supportive repetition. It has been challenging but I think we successfully established the kind of therapeutic relationship with Mr. Stovall and with his wife, such that he trusts me, he trusts my judgment. I can--I can address issues that are uncomfortable to him, issues of safety, issues of financial management, issues wherein he and his wife disagree vehemently with regard to, say, family issues too. I’ve managed to establish and maintain that sort of trusting relationship with Mr. Stovall and with his wife. And I think that’s been the reason for the success that we have had with regard to dealing with these issues as they’ve arisen. [Intervenor Exhibit A, pp. 23-24.] Dr. Windham links Claimant’s need for ongoing supportive therapy to counseling concerning such matters as marital problems, the purchase of a new car, problems with a daughter’s decision to enlist in the military, and Claimant’s concerns about his sister and nephew. [Intervenor Exhibit A, p. 46.] Dr. Windham explains that Claimant’s perceptions, his cognitive functioning is impaired. . . . He is easily overwhelmed cognitively. And it affects not only the situation that’s being addressed but it significantly affects his relationship with his wife and his family. An important part of neuropsychological intervention or treatment . . . has been adjustment in daily functioning to issues as they arise. . . . Mr. Stovall has and will continue to have difficulties with regard to . . . those cognitive deficits. He will continue to have difficulty with memory, long-term and short-term, especially short-term. When he takes in information that’s new, he cannot process it, encode it, and store it in order that he can retrieve it as you and I do or as he did previously. He cannot attend to that information, therefore, in order to evaluate and judge it and make a sound decision about it. So all the issues that [Mr. and Mrs. Stovall] bring up and, you know, sometimes I think in my notes I’m sitting there and I’m trying to jot a line maybe when we get started on something, talking about something, and then being pushed for time, I probably don’t go back and do the kind of comprehensive notes that I need to do or to tie it together. But, I can assure you that the treatment that I have provided has been to the best of my ability, it has been needed, and I think it’s been beneficial. Intervenor Exhibit A, pp. 60-64. Dr. Windham has treated Claimant and/or his wife over 200 times from 1990 to 2000: 51 times in 1990, 23 times in 1991, 3 times in 1992, 27 times in 1993, 1 time in 1994, 18 times in 1995, 25 times in 1996, 15 times in 1997, 26 times, in 1998, 13 times in 1999, and 6 times in 2000. Over the years, much of Dr. Windham’s work with Claimant and his wife involved marital and family issues, including financial issues. Frequent issues involved the impact of Claimant’s consumer transactions upon the couple’s domestic life. Sometimes the issues seemed trivial, such as Claimant’s insistence upon driving the whole way on a trip with his wife. Other times, the issues were more substantial, involving tasks that Claimant could no longer do or could no longer do efficiently. Dr. Windham’s notes for the July 23, 1999, session reveal that Claimant was persisting in his intention to purchase an automobile over the Internet, despite adverse experiences of long-distance business transactions reportedly of a similar nature. The notes state that Dr. Windham linked these undescribed past experiences to Claimant’s decreased level of cognitive functioning with its attendant impact upon his ability to manage finances. Dr. Windham’s notes for the August 10, 1999, session reveal that Claimant was alert and oriented to time, person, place, and situation. The notes state that he expressed confusion regarding his long-term memory and its impact on his ability to plan for the future. The notes state that Dr. Windham discussed “previous issues of conflict” and relate the higher-level cognitive deficits to the brain trauma suffered by Claimant. As part of its utilization review, CNA obtained the opinions of three experts, based on a review of records, but not an examination of Claimant. By report dated September 3, 1999, David M. Bortnick, a clinical psychologist and neuropsychologist, stated that he found that, after 1994, the focus of Dr. Windham’s treatment was less on the industrial injuries suffered in 1989 and more on domestic issues. Dr. Bortnick concluded that Dr. Windham’s treatment was excessive in duration and frequency, as her evaluation and treatment should have been completed by December 1994. Dr. Bortnick added that years of psychological treatment often produces strong feelings of dependency in the patient and therapist and reinforces an unhealthy disability identity. By report dated September 27, 1999, Leslie L. Mate, a psychiatrist, Alan J. Raphael, a psychologist, Charles J. Golden, a clinical psychologist and neuropsychologist, and Kenneth C. Fischer, a neurologist, opined that Dr. Windham’s treatment was medically unnecessary after February 17, 1992, by which time Claimant was functioning within normal limits. By report dated September 11, 2000, Jeffery A. Danziger, a psychiatrist, opined that, in response to Claimant’s cognitive and personality issues emerging as a result of the neurosurgery, a neuropsychological evaluation and “short course of cognitive retraining and [family] assistance” were reasonable. Dr. Danziger found that Dr. Windham’s therapy sessions “apparently focused more on marital therapy, family conflict and financial issues and had little to do with the original problems relating to the cognitive and intellectual deficits and personality changes.” Dr. Danziger warned that Claimant may have developed a “dependence on the therapist and an unhealthy fostering of a sick and dependent role.” Respondent subsequently obtained medical reports from three persons: Lee H. Bukstel, a clinical neuropsychologist, Conrad P. Weller, a psychiatrist, and David A. Gross, a psychiatrist. By an undated report, Dr. Bukstel noted that Dr. Windham had not completely reacted to the data showing, between her two major evaluations of Claimant, that his memory and attention/concentration had improved at least to the normal range. Dr. Bukstel also noted that often he could not judge the level and quality of care due to the lack of specificity in Dr. Windham’s notes. He questions whether Dr. Windham was sufficiently oriented toward a back-to-work set of issues, given the Workers’ Compensation setting. Although Dr. Bukstel did not seriously question the frequency of treatment, he questioned its duration, noting that its earlier focus on work-related issues shifted to marital- therapy issues with the emergence of Mrs. Stovall’s marital issues possibly driving the duration of the treatment. Dr. Bukstel concluded that none of Dr. Windham’s treatment was medically necessary after 1992. By report dated February 19, 2001, Dr. Weller, agreeing with Dr. Cicinelli’s conclusion that Claimant may require “indefinite psychiatric or psychological follow-up as a result of his head injury,” opined that a provider could reasonably provide Claimant with “low-intensity psychiatric or psychological follow-up,” consisting of “periodic reassessment and occasional treatment intervention or psychotropic medication management on a quarterly to annual basis.” Dr. Weller concluded that, after 1991, it would have been reasonable for Dr. Windham to see Claimant up to quarterly, absent documented neuropsychiatric complications, such as depression. Finding that Dr. Windham’s notes fail to address diagnostic issues and fail to document symptoms, such as anxiety, compulsions, or depression that may have required intensive treatment, Dr. Weller could not justify more than monthly sessions during 1990 and 1991, especially in light of the multimodal treatment that Claimant was then receiving at the Touro Rehabilitation Center from other providers. By report dated January 26, 2001, Dr. Gross opined that all of Dr. Windham’s services were medically necessary and reasonable in frequency and duration. He found that she appropriately focused on “coping strategies, cognitive techniques,” and “The Good, The Bad, and The Ugly” of daily living. Dr. Gross opined that it was reasonable to conclude that the cognitive deficits from which Claimant suffered would interfere with all aspects of his daily life. The greater weight of the evidence establishes the medical necessity of low-intensity neuropsychological treatment, given the permanency of Claimant’s cognitive deficits. Of course, the frequency of this treatment is driven by the intensity of the symptoms, but, in recent years, quarterly or semi-annual counseling sessions with Dr. Windham would have been sufficient to treat Claimant's documented problems. Medically necessary sessions at appropriate intervals will feature the identification of specific, relevant symptoms; workable compensating strategies; and--if warranted--more intensive therapeutic alternatives, such as an evaluation for psychotropic medications. Obviously, the participants will, from time to time, discuss the consequences of specific symptoms, and these discussions will involve various aspects of domestic life, but sessions at appropriate intervals would no longer highlight consumer credit counseling, Claimant’s insistence on doing all of the driving on family trips, or family issues at most tangentially involved with Claimant’s cognitive deficits. As for the July 23 and August 10, 1999, service dates, the record fails to establish their medical necessity. As for the July session, many persons purchase cars on the Internet--presumably, some of them unwisely. If Claimant’s cognitive deficit were surfacing in his investigation of the possibility of buying a car by this means, Dr. Windham’s notes, which do not specify how this proposed behavior is linked to other “similar” behaviors, do a remarkably poor job of linking these elements or even establishing the imprudence of this particular behavior. As for the August session, Dr. Windham’s notes again do a poor job of detailing the nature of Claimant’s problem in planning for the future. Perhaps Claimant's problem was an inability to conceptualize the multiple contingencies necessary for effective planning. Perhaps Claimant's problem was, again, financial in nature, possibly encompassing apprehension concerning future financial security. Dr. Windham’s notes leave the reader only with speculation and conjecture as to any link that may exist between the treatment provided during this session and Claimant’s cognitive deficits. In general, any connection between the July 23 and August 10, 1999, counseling sessions and the brain surgery that followed the motor vehicle accident is undermined not only by Dr. Windham's poor note-keeping, but by her failure to document the extent to which Claimant recovered memory functions in the year following her initial evaluation of him and the effect of this improvement on his overall level of functioning. These omissions are exacerbated by Dr. Windham's failure to follow her own recommendation and conduct another neuropsychological reevaluation of Claimant after the October 1990 reevaluation. These deficiencies are crucial in assessing the August 10 session, in which reported memory problems are explicit, and the July 23 session, in which memory problems are evident and likely joined with cognitive problems. These deficiencies are also crucial in assessing Dr. Windham's justification of the frequency of sessions, as necessitated partly by Claimant's reported memory problems (Intervenor Exhibit A, pp.23-24), and the duration of sessions, also as necessitated partly by Claimant's reported memory problems (Intervenor Exhibit A, pp. 60-64). Except as altered above, the remaining findings of fact from the Partial Recommended Order, as adopted by the Partial Final Order, are incorporated by reference in this Recommended Order.
Recommendation It is RECOMMENDED that the Division of Workers’ Compensation enter a final order determining that the services rendered Claimant by Dr. Windham on July 23 and August 10, 1999, constitute overutilization, for which Petitioners are not liable in reimbursement, and denying all requests for attorneys' fees and costs. DONE AND ENTERED this 10th day of May, 2001, in Tallahassee, Leon County, Florida. ___________________________________ ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of May, 2001. COPIES FURNISHED: Mary B. Hooks, Secretary Department of Labor and Employment Security The Hartman Building, Suite 303 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Elizabeth Teegen, General Counsel Department of Labor and Employment Security The Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Mark S. Spangler Law Offices of Mark S. Spangler, P.A. 1061 North Maitland Center Commons Orlando, Florida 32751 Timothy G. Schoenwalder Hopping Green Sams & Smith, P.A. 123 South Calhoun Street Tallahassee, Florida 32301 Nancy Staff Terrel Senior Attorney Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189 Michael B. Murphy The Stanley Wines Law Firm, P.A. Post Office Box 860 Winter Haven, Florida 33882-0860
The Issue Is the practice of the Respondent, Agency for Health Care Administration (Agency), to decline Medicaid-funded compensation for emergency medical services provided to undocumented aliens once the patients have reached a point of stabilization an unpromulgated rule? The Petitioners' Proposed Final Order identifies the Agency's use of limited InterQual criteria to determine medical necessity as an issue in this proceeding. But the Petition for Determination of Invalidity of Non-Rule Policy does not raise this issue. Neither party's pre-hearing statement identifies it as an issue. Consequently, this Order does not consider or determine whether the Agency's limitation on the use of InterQual criteria is an "unpromulgated rule."
Findings Of Fact Proceedings Before the Division of Administrative Hearings and the First District Court of Appeal In the beginning this was an action by the Hospitals aimed at stopping Agency efforts to recoup reimbursement of Medicaid payments to the Hospitals for emergency services provided to undocumented aliens once the patients have reached a point of “stabilization.” The issue of whether the Agency could apply the “stabilization” standard to the Hospital claims for Medicaid payment for services provided indigent aliens recurred in Agency claims against hospitals throughout the state to recoup Medicaid payments. Hospitals challenged Agency claims in individual proceedings under section 120.569, which the Agency referred to the Division for disputed fact hearings. Duane Morris, LLP (Duane Morris), led by Joanne Erde, represented the hospitals in the individual proceedings. The Hospitals collectively engaged Duane Morris to represent them in this proceeding challenging the Agency’s stabilization standard as an unpromulgated rule. Joanne B. Erde, Donna Stinson, and Harry Silver were the Hospital’s lawyers in this proceeding. Ms. Erde is an experienced lawyer who has focused her practice in health care. Ms. Stinson is an experienced lawyer who concentrated her practice in health care and administrative law litigation before the Division. The Agency does not question their expertise. Mr. Silver is an experienced lawyer with no Florida administrative law experience. His role in the case was minimal. Depositions taken in one of the individual reimbursement cases were significant evidence in this proceeding. Those depositions make it clear that the Hospitals’ counsel was tuned into the unpromulgated rule issue and using discovery in that case to gather and identify the evidence that they would need in this case. Representation of the Hospitals in individual reimbursement actions provided Hospitals’ counsel the advantage of preparing with level of detail before filing the petition. The engagement letters recognize this stating: “We have an understanding of the facts underlying this matter and have substantial knowledge concerning the law governing the issues in this case.” This well-developed understanding of the facts should have minimized the need for discovery and preparation in this proceeding. Counsel were well positioned to prosecute this matter efficiently. Likewise, counsel’s “substantial knowledge concerning the law governing the issues in this case” should have minimized the need for time spent in research. This is not what happened. The pre-existing representation in the reimbursement cases provided another obvious and significant benefit to the Hospitals and their counsel. Since counsel represented the individual hospital in the separate reimbursement matters, the Hospitals could band together to jointly finance one case that would resolve the troublesome point of “stabilization” issue more consistently and more cheaply than if they litigated it in each and every case. As the basically identical engagement agreements between each hospital and counsel state: “Because many hospitals’ interests in [sic] are similar or identical as it relates to the Alien Issue and in order to keep legal costs to a minimum, each of the participants in the [hospital] Group will [sic] have agreed that it wishes this firm to represent them in a Group.” Because of counsel’s pre-existing relationships with the Hospitals, litigating this matter should have continued or enhanced the client relationships. The time required for this matter could not result in lost business opportunities. In fact, by consolidating the issues common to all the clients and their cases, counsel freed up time to work on other matters. Presentation of the issue for resolution in a single case also saved the Hospitals the greater cost of disputing the issue in each case where the Agency sought reimbursement. The Hospitals and counsel dealt with the only possible downside of the representation by including disclosures about joint representation and a waiver of conflict claims in the engagement letters. This was not a contingent fee case. The agreement provided for monthly billing and payment from counsel’s trust account. Each group member made an initial payment of $10,000 to the trust account. Any time the trust account balance dipped below $15,000, each group member agreed to contribute another $10,000 to the trust account. For counsel, this representation was about as risk free as a legal engagement can be. The Hospitals and their counsel knew from the outset that they would have to prove their reasonableness of their fees and costs if they prevailed and wanted to recover fees. The Petition for Determination of Invalidity of Non-Rule Policy seeks an award of fees and costs. They could have adjusted their billing practices to provide more detail in preparation for a fees dispute. An "unpromulgated rule challenge" presents a narrow and limited issue. That issue is whether an agency has by declaration or action established a statement of general applicability that is a "rule," as defined in section 120.52(16), without going through the required public rulemaking process required by section 120.54. The validity of the agency's statement is not an issue decided in an "unpromulgated rule challenge." Courts have articulated the legal standards for unpromulgated rule challenges frequently. See, e.g., Coventry First, LLC v. Off. of Ins. Reg., 38 So. 3d 200, 203 (Fla. 1st DCA 2010); Dep’t of Rev. v. Vanjaria Enters., 675 So. 2d 252 (Fla. 5th DCA 1996); and the cases those opinions cite. The facts proving the “stabilization” standard were easy to establish. Many Agency documents stated the shift to the “stabilization” standard. Documents of Agency contractors did also. Two examples of how clear it was that the Agency was applying a new standard were the Agency’s statements in its 2009-2010 and 2010-2011 reports to the Governor on efforts to control Medicaid fraud and abuse. The reports describe the “stabilization” standard as “more stringent” and certain to recover millions of dollars for the Agency. As the Agency’s reports to the Governor indicate, the stakes were high in this matter. For the Hospitals and other hospitals collectively affected by the Agency’s effort to recoup past payments by applying the “stabilization” standard, $400,000,000 was at stake. This matter did not present complex or difficult issues, legally or factually. The Order of Pre-Hearing Instructions requiring parties to disclose documents and witnesses and update the disclosures alleviated the discovery demands present in other litigation. The Agency’s failure to fully comply with the pre- hearing instructions and unfounded Motion in Limine added some additional time demands for the Hospital’s counsel. Nonetheless the issues were narrow, and the facts were essentially undisputed, if not undisputable. This matter did not require extraordinary amounts of time for discovery or preparation. Ordinarily challenges to rules or unpromulgated rules impose time pressures on the attorneys because of the requirement in section 120.56 that the hearing commence within 30 days of assignment to the Administrative Law Judge. The time constraint was not a factor in this case. The Hospitals requested waiver of the time requirement to permit more time for discovery. The Agency agreed, and the undersigned granted the request. Thus the Hospitals had the time their counsel said they needed to prepare for the hearing. The appeal imposed no time constraints. Both parties received extensions of time for their filings. Seventeen months passed between filing the notice of appeal and oral argument. Time for the Administrative Proceeding The total number of hours claimed for the services of the three lawyers, their claimed hourly rate, and the total fees claimed appear below. Joanne B. Erde 458.20 hours $550.00 rate $252,010.00 Donna Stinson 136.20 hours $455.00 rate $61,971.00 Harry Silver 93.40 hours $550.00 rate $51,370.00 Total 687.80 hours $365,351.00 The Hospitals’ counsel’s billing records are voluminous. For the proceeding before the Division, the Hospitals’ counsel’s invoices list 180 billing entries for the work of three lawyers. A substantial number of the entries are block billing. In block billing, all of a lawyer’s activities for a period of time, usually a day, are clumped together with one time total for the entire day’s service. It is an acceptable form of billing. But block billing presents difficulties determining the reasonableness of fees because a single block of time accounts for several different activities and the invoice does not establish which activity took how much time. Here are representative examples of the block billing entries from the Division level invoices: August 20, 2012 (Erde) – Conference call with ALJ; telephone conference with AHCA attorney; telephone conference with newspaper reporters – 2.0 hours September 16, 2012 (Erde) – Review depositions; prepare opening remarks; develop impeachment testimony – 5.50 September 27, 2012 (Erde) – Intra-office conference; finalize interrogatories; work on direct – 8.50 October 2, 2012 (Stinson) – Review and revise Motion in Limine; Telephone conferences with Joanne Erde and Harry Silver; review emails regarding discovery issues - `2.60 October 19, 2012 (Erde) – Intra-office conference to discuss proposed order; Research Re: other OIG audits; research on validity of agency rules – 2.10 hours November 9, 2012 (Erde) – Conference with ALJ; Intra-Office conference to discuss status; further drafting of proposed order – 7.70 hours. November 19, 2012 (Stinson) – Final Review and Revisions to Proposed Final order; Telephone conferences with Joanne Erde to Review final Changes and comments; Review AHCA’s proposed order and revised proposed order – 3.20 hours. Many of the entries, block or individual, do not provide sufficient detail to judge the reasonableness of the time reported. “Prepare for deposition and hearing,” “review depositions,” “review new documents,” “review draft documents,” “intra-office conference” and “attention to discovery” are recurrent examples. Senior lawyers with more expertise and higher billing rates are expected to be more efficient. This, the fact that the matter was not complicated, the relative simplicity of the issue, and the fact that the Hospitals’ counsel already had a great deal of familiarity with the facts and law involved, all require reducing the number of hours compensated in order for them to be reasonable. For this matter, in these circumstances, the claimed number of hours is quite high. The claimed 687.80 hours amounts to working eight hours a day for 86 days, two of which were the hearing. This is not reasonable. A reasonable number of hours for the proceedings before the Division is 180. That is the equivalent of 22.5 eight-hour days. That is sufficient to handle the matter before the Division from start to finish. The number includes consideration of the worked caused by the needless difficulties presented by the Agency in discovery and with its Motion in Limine. Time for the Appellate Proceeding The fees that the Hospitals seek for the appeal are broken down by hours and rates as follows: Joanne B. Erde 255.10 hours $560.00 $142,856.00 Joanne B. Erde 202.80 hours $580.00 $117,624.00 Donna Stinson 88.50 hours $460.00 $40,710.00 Donna Stinson 67.10 hours $500.00 $33,550.00 W.D. Zaffuto 48.30 hours $435.00 $21,010.50 Rob Peccola 10.90 hours $275.00 $2,997.50 Rob Peccola 17.50 hours $300.00 $5,250.00 L. Rodriguez- Taseff 6.20 hours $520.00 $3,224.00 L. Rodriguez- Taseff 19.50 hours $545.00 $10,627.50 Rachel Pontikes 38.20 hours $515.00 $19,673.00 Total 754.10 hours $397,522.50 For the appellate proceeding, the invoices present 341 entries, a substantial number of which are block billing for work by six lawyers. Here are representative examples from the appellate level invoices: May 16, 2013 (Erde) – Reviewed AHCA’s initial brief; intra- office conference to discuss; preliminary review of record – 2.90 May 24, 2013 (Erde) – Intra-office conference to discuss response to brief; preparation to respond to brief – 2.50 May 30, 2013 (Erde) – Attention to Appeal issues; finalize request for extension; brief research re jurisdictional issues – 1.60 June 18, 2013 (Peccola) – Strategy with J. Erde regarding research needs; review/analyze case law cited in answer brief; conduct legal research regarding documentary evidence and exhibits on appellate review; write email memo to J. Erde regarding same – 2.00 July 19, 2013 (Zaffuto) – Revise/draft Answer Brief; discuss extension of time with H. Gurland; research appellate rules regarding extension of time and staying proceedings pending ruling on motion; review appendix to answer brief; instructions to assistant regarding edits and filing of answer brief and appendix prepare answer brief for filing; call to clerk regarding extension of time review initial brief by AHCA and final order by ALJ – 5.50 August 14, 2013 (Erde) – Intra-office conference to discuss brief; further revised brief – 5.80 August 15, 2013 (Stinson) Reviewed appellees' answer brief; discussed language in answer brief with Joanne Erde – 2.50 October 9, 2013 (Stinson) – Review draft motion to relinquish regarding admission of exhibit; exchange e-mails with Joanne Erde; telephone conference with Joanne Erde – 1.60 October 10, 2013 (Erde) – Attention to new motion re relinquishing jurisdiction; review of revisions; further revisions – 6.00 October 30, 2013 (Erde) – Research re: AHCA’s current behavior; intra-office conference to discuss status of action at DOAH - .70 November 7, 2013 (Peccola) – Strategy with J. Erde regarding Appellees’ response in opposition to Appellant’s motion for supplemental briefing; conduct research regarding same; draft same; look up 1st DCA local rule on appellate motions and email same to J. Erde – 3.60 December 5, 2013 (Erde) – Research Re: supplemental briefing issues; research to find old emails from AHCA re: inability to produce witnesses -.90 January 21, 2014 (Rodriguez-Taseff) – Working on Supplemental Answer Brief – legal argument re authentication and cases distinguishing marchines [sic]; editing facts – 6.70 February 3, 2014 (Erde) – Review and revise response to motion for further briefing; intra-office conference to discuss same – 2.20 May 2, 2014 (Pontikes) – Continue to review relevant case law regarding the definition of an unpromulgated rule; continue to analyze the briefs and the arguments; continue to draft an outline of the argument discussed – 5.00 June 5, 2014 (Erde) – draft email to group regarding AHCA’s settlement offer; reviewed supplemental settlement offer from AHCA; draft email to group re same – 1.70 June 11, 2014 (Erde) – Attention to finalizing response to AHCA’s notice of dismissal and filing of fee petition; memo to members of group – 8.00 July 21, 2014 (Erde) – completed motion for rehearing re: fees as sanctions; drafted status report for DOAH regarding status of DCA opinion; drafted status report in companion case; emails with AHCA re: withdrawing pending audits – 6.90 July 21, 2014 (Peccola) – Strategy with D. Stinson and J. Erde regarding motion for rehearing; revise/edit same; review/revise edit notices in trial court 1.20. The descriptive entries in the invoices for the appellate representation also lack sufficient detail. Examples are: “begin preparation to respond to AHCA”s brief,” “attention to appeal issues,” “preparation to draft answer brief,” and “research and draft answer brief.” For the appellate proceedings, Duane Morris added four lawyers, none with experience in Florida administrative or appellate matters. W.D. Zaffuto, L. Rodriguez-Taseff, and Rachel Pontikes are senior level lawyers in Duane Morris offices outside of Florida. Rob Peccola is a junior level lawyer from a Duane Morris office outside of Florida. The apparent result is those lawyers spending more time on issues than the more experienced Ms. Erde and Ms. Stinson would. One example of this is a July 19, 2013, billing entry where a lawyer spent time researching “appellate rules regarding extension of time and staying proceedings pending ruling on motion.” The two lawyers primarily responsible for this matter, both laying claim to Florida appellate expertise, would only need to quickly check the Florida Rules of Appellate Procedure to confirm their recollection of the rules, something that would probably take less time than it took to make the time entry and review the draft bill. Hospitals’ also filed a puzzling motion that presents a discreet example of needless attorney time billed in this matter. The Hospitals expended 21.8 hours on a Motion for Rehearing of the court’s order awarding them fees and costs. The court’s opinion and the Final Order stated that fees and costs were awarded under section 120.595(4)(a), Florida Statutes. Yet the Hospitals’ motion fretted that fees might be assessed under section 120.595(4)(b), which caps fees at $50,000. The court denied the motion. Two things stand out when reviewing the invoices for the appellate proceeding. The first is that the appeal took more hours than the trial proceeding. A trial proceeding is generally more time-consuming because of discovery, a hearing much longer than an oral argument, witness preparation, document review, and preparing a proposed order. The second is the sheer number of hours. Hospitals’ counsel seeks payment for 754.10 hours in the appellate proceeding. This is 66.3 more than for the Division proceeding. It included a two day hearing, trial preparation, research, and preparing a 37 page proposed final order. In eight-hour days the claimed hours amount to a staggering 94.26 days. That amounts to one lawyer working on the appeal for eight hours a day for three months. Of this time, 613.5 hours were spent by Ms. Erde and Ms. Stinson, lawyers with expertise in the subject area, who had prepared the case for hearing, who participated in the hearing, who closely reviewed the entire record for preparation of their proposed final order, who researched the issues before the hearing and for the proposed final order, and who wrote the proposed final order. With all this knowledge and experience with the record and the law, handling the appeal should have taken less time than the proceeding before the Division.2/ One factor supports the appellate proceeding taking as many hours, or a few more hours, than the administrative proceeding. It is the Agency’s disputatious conduct over a scrivener’s error in the Final Order which erroneously stated that the Agency’s Exhibit 1 had been admitted. The Agency’s conduct increased the time needed to represent the Hospitals in the appeal. The Agency relied upon the exhibit in its initial brief, although it twice cited page 359 of the transcript where the objection to the exhibit was sustained. Also the Agency’s and the Hospitals’ proposed final orders correctly stated that Agency Exhibit 1 had not been admitted. The Hospitals’ Answer Brief noted that Agency Exhibit 1 had not been admitted. The transcript of the final hearing and both parties’ proposed final orders were clear that the exhibit had not been admitted. Yet the Agency argued in its Reply Brief that it had been. This required the Hospitals to move to remand the case for correction of the error. The Agency opposed the motion. The court granted the motion. The Final Order was corrected and jurisdiction relinquished back to the court. The Agency used this as an opportunity to trigger a new round of briefing about whether Exhibit 1 should have been admitted. This has been considered in determining the reasonable number of hours for handling the appeal. A reasonable number of hours for handling the appeal is 225. Converted to eight-hour days, this would be 28.13 days. For the appeal, Duane Morris attributes 28.4 hours of the work to a junior lawyer. This is 3.8 percent of the total time claimed. Applying that percentage to 225 hours, results in 8.6 hours attributed to the junior lawyer with the remaining 216.45 hours attributed to senior lawyers. Attorneys and Fees Each party presented expert testimony on the issues of reasonable hours and reasonable fees. The Agency presented the testimony of M. Christopher Bryant, Esquire. The Hospitals presented the testimony of David Ashburn, Esquire. As is so often the case with warring experts, the testimony of the witnesses conflicts dramatically. Mr. Bryant opined that a reasonable rate for senior lawyers, such as Ms. Erde and Ms. Stinson, ranged between $350 and $450 per hour. The reasonable rate for junior lawyers was $200 per hour. Mr. Ashburn opined that the reasonable hourly rate for senior lawyers ranged between $595 and $700 and the reasonable rate for junior lawyers was between $275 and $300. The contrast was the same for the opinions on the reasonable number of hours needed to handle the two stages of this litigation. Mr. Bryant testified that the administrative proceeding should have taken 150 to 170 hours and that the appeal should have taken 175 to 195 hours. Mr. Ashburn testified that the Hospitals’ claimed 687 hours for the proceeding before the Division and 754.10 hour for the appellate proceeding were reasonable. The Hospitals argue that somehow practicing in a large national law firm, like Duane Morris justifies a higher rate. The theory is unpersuasive. A national law firm is nothing special. There is no convincing, credible evidence to support a conclusion that lawyers from a national firm in comparison to smaller state or local firms provide better representation or more skilled and efficient lawyering that justifies a higher rate. Based upon the evidence presented in this record, a reasonable rate for the senior lawyers participating in this matter is $425 per hour. A reasonable rate for the junior lawyer participating in this matter is $200.00. Fee Amounts A reasonable fee amount for representation in the proceeding before the Division of Administrative Hearings is $76,500. A reasonable fee amount for the proceeding before the First District Court of Appeal is $93,701.25. Costs Hospitals seek $6,333.63 in costs. The evidence proves these costs are reasonable. The Agency does not dispute them.
Findings Of Fact Respondent is and at all material times has been licensed as a real estate broker, Florida license number 0388729. Respondent was licensed with United Farm Agency of Florida, Inc. United Farm Agency of Florida operated two offices relevant to this proceeding, one office in Live Oak, the other in Lake City. Both offices were headed by William Goff, another licensed broker. During the summer of 1985, Goff, desiring to retire, made arrangements with United Farm Agency, through his supervisor, Steve Goddard, to withdraw from the operations of the offices. Goff left the Lake City office in July, 1985, and left the Live Oak office in October, 1985. Respondent was employed by United Farm Agency, through supervisor Steve Goddard, in July, 1985, when he took over operation of the Lake City office, which Goff had already vacated. Prior to Goff's retirement, Goff and Goddard verbally agreed that Goff would receive a portion of the commission paid to the seller of existing property listings Goff had obtained. This agreement was relayed by Goddard to Respondent, who verbally agreed to pay the fee on listings which were given to Hofmann. The agreed sum, referred to as a "listing fee," was to be 30% of the Respondent's 60% share of the total commission. The fee was to be paid to Goff, if and when Respondent sold property which remained under a valid Goff-executed listing contract. Goff and the Respondent did not directly discuss the arrangement, but relied on Goddard to act as the mediator. On or about June 26, 1985, Goff listed for sale, property owned by the Lewandowski family. The listing contract stated that the listing contract was to remain effective for a period of one year; however the expiration date was mistakenly entered on the contract as June 26, 1985. The contract expiration date should have been stated as June 26, 1986. The evidence did not indicate that the contract was intended to have been effective for only one day. While the Goff listing remained effective, the Lewandowskis allegedly entered into a second listing contract, this time with the Respondent. Respondent stated that he did not believe the Goff listing contract to be valid due to the mistaken expiration date. The Lewandowskis did not sign a cancellation of the Goff listing contract. Goff, not yet fully retired, continued to show the property to prospective purchasers, but did not inform Respondent that he continued to show the property. During the time the original Goff listing was effective, the Respondent found a buyer for the Lewandowski property. The agreed sales price was $240,000. The Respondent's share of the commission was about $8,640. The Respondent retained the full commission, and refused to pay the "listing fee" to Goff. Goff contacted Goddard, who reminded the Respondent of the agreement to pay the fee. Respondent refused to pay the listing fee, claiming that he had not been given the listing when he became employed by United Farm Agency. Goff proceeded to file suit to collect the fee. In May 1987, a Final Judgement was entered in Columbia County Court, Case No 86-845-CC, finding Respondent liable for payment of the listing fee and directing Respondent to pay to Goat the sum of $4,320.00, plus $604.92 interest, and $50.00 costs. Respondent has failed and refuses to pay the judgement.
Recommendation Based upon the foregoing Findings of fact and Conclusions of Law, it is RECOMMENDED: that the Department of Professional Regulation, Division of Real Estate, enter a Final Order suspending the licensure of Peter K. Hofmann for a period of two years. DONE and ENTERED this 22nd day of March, 1989, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM 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 22nd day of March, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-5541 The following constitute rulings on proposed findings of facts submitted by the parties. Petitioner The Petitioner's proposed findings of fact are accepted as modified in the Recommended Order except as follows: 1-5. Accepted. 6-7. Accepted, as modified in the Findings of Fact. Rejected, irrelevant. Accepted. Respondent The Respondent's proposed findings of fact are accepted as modified in the Recommended Order except as follows: 1-3. Accepted. 4. Rejected, not supported by the weight of the evidence. 5-6. Rejected insofar as mere restatement of testimony, otherwise accepted, as modified in the Findings of Fact. COPIES FURNISHED: Steven W. Johnson, Esquire Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Peter K. Hofmann 73 Quinlan Drive, #1 Greenville, South Carolina 29611 Darlene F. Keller, Executive Director Department of Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Kenneth E. Easley, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750
