Findings Of Fact The Respondent, Leo Y. Lewis, from 1969 to date had been employed by the State of Florida as Internal Audit Coordinator for the Department of Health and Rehabilitative Services. Respondent applied for and was issued a reciprocal certificate by the State Board of Accountancy on January 28, 1972. The reciprocal certificate was issued under the provisions of Florida Statutes, Section 473.201. 473.201 Certificates granted to holders from other states Upon application, the board shall issue a reciprocal certificate to the holder of a valid, unrevoked certificate issued by, or under the authority of, another state or political subdivision of the United States only if: The original certificate was secured as the result of a written examination which in the judgment of the board was the equivalent of the examination given by the board at the time the applicant passed such written examination; provided, however, that if such written exami- nation did not include the subject of ethics the application shall not be denied for that reason. In any event, the board shall require all applicants to take and pass the same current open book examination in ethics given to applicants for the written examination in the state before issuance of a reciprocal certificate; The applicant meets all the requirements in effect, at the time of the application, for applicants to take the Florida examination; The applicant is a resident of and domiciled in the state; The applicant intends to enter into the full-time, year-round practice of public accounting in the state; and The board is otherwise fully satisifed as to the moral and technical fitness of applicant." The Board now seeks to revoke the reciprocal certificate issued to Respondent for failure to comply with Section 473.201(2), Florida Statutes, "(2) Failure of the holder of a certificate issued under this section to be domiciled in and practice public accounting on a substantially full-time basis in the state for a continuous period of three years immediately after issuance of much certificate shall be prima facie evidence of the lack of the requisite intent and sufficient grounds for revocation of the reciprocal certificate issued by the board.", contending that Respondent has not been practicing public accounting for the three years immediately subsequent to the issuance of his certificate. There was no contention by the Board in its original revocation procedures that the Respondent has failed to meet all of the requirements of Section 473.201(1) and (2), Florida Statute, with the exception of the contention that Respondent has not practiced "public accountancy". At the hearing and in the Memorandum of Law there is an argument by the Petitioner that the Respondent did not actually intend to practice public accounting at the time that he received a reciprocal certificate. There is no showing that any fraud was involved and the grounds upon which the motion for revocation of Respondent's license is on the ground that Mr. Lewis did not engage in the practice of public accounting on substantially full-time basis for a period of three years after issuance of his reciprocal certificate. His intent at the time he received his reciprocal certificate is not necessary to the determination of the issue at hand. Petitioner contends: That Respondent is not in the practice of public accounting; That Section 473.08(2)(c) applies only to the Auditor General and tlie Chief Auditor of the Public Service Commission and that Section 473.08(2)(c), infra, is an exception to the general requirement that persons who have taken and passed an examination and become CPA's must have one year of public accounting experience or equivalent education in order to obtain their CPA certificates; and That the exception is not a recognition that either the Auditor General or the Chief Auditor of the Public Service Cotmission is engaged in the practice of public accounting. Respondent contends: That he is in fact a Florida practitioner engaged in the practice of public accounting; That the legislature and the Board have recognized that works similar to that which the Respondent performs constitutes the practice of public accounting. Said statute as passed by the legislature is Section 473.08, Florida Statutes. "473.08 Qualifications of applicant for examination; certificates to successful examinees; standards A person who qualifies to take such examination pursuant to provisions of subsection (1) and who takes and passes such examination shall receive a certificate as a certified public accountant issued by the board and shall be permitted to practice public accounting in this state if he:... Shall have completed one year of employment in the office of a Florida practitioner or an out-of-state practitioner or shall have successfully completed an additional one year accounting course at an accredited college or university. However: Any person employed as an accountant in the accounting department of the Florida public service commission who is qualified to take an examination for the purpose of determining whether or not such person shall be permitted to practice in this state as a certified public accountant, and who takes and passes such examination, shall be entitled to receive a certificate under the provisions of authorizing practice in this state as a certified public accountant upon completion of one year of accounting work for said commission under the supervision and direction of a certified public accountant serving as director of commission's accounting department. Any person employed as an accountant or post auditor on the staff of the auditor general who is qualified to take an examination for the purpose of determining whether or not such person shall be permitted to practice in this state as a certified public accountant, and who takes and passes such examination, shall be entitled to receive a certificate, under the provisions of this authorizing such person to practice in this state as a certified public accountant upon the completion of one year of experience as an accountant or post auditor under the supervision and direction of a certified public accountant serving as auditor general. Proof of compliance with the provisions of this introductory paragraph of this subsection shall be established in such form as is prescribed by the board;. The Florida Statutes do not clearly define the term "public accounting", but the definitions in Section 473.011 are helpful. "473.011 Definitions of terms used in chapter whenever the terms `certified public or public accountant are used in this chapter, except as used in subsection (3), they shall be deemed and construed to mean a person holding a certificate to practice as such, issued by the state under this chapter, or any law of the state heretofore in force and effect. [(3) not applicable] whenever the term `Florida practitioner' is used in this chapter it shall be deemed and construed to mean a certified public accountant or public accountant, as defined in subsection (1), engaged in the practice of public accounting in Florida, whether as an individual, a partner or employee of a partner- ship, or a stockholder, officer, or employee of a professional corporation. It shall also be deemed and construed to mean a partnership or professional corporation of Florida practitioners. (5) Thenever the term `public accounting is used in this chapter, it shall be deemed and construed to mean: All services offered to or performed for the public by a Florida practitioner or an out of state practitioner involving the use of accounting skills, specifically including, but not limited to, management services, and All services offered to or performed for the public by any other person, acting as an individual, as a partner or employee of a partnership, as a stockholder, officer or employee of a professional corporation, or as an officer or employee of any other corporation, involving the use of accounting skills, except as follows: (not applicable) Under the definition section of Rule 21A-1.10 of the Florida Administrative Code, practice of or practicing public accounting is defined as: "Practice of, or practicing public accounting. 'Practice of, or practicing public accounting' shall be deemed and construed to mean offering to perform, performing, or holding oneself out as being qualified to perform, those services described in Section 473.011(5), F.S." [supra] as: Rule 21A-1.11 of the Florida Administrative Code defines practitioner "'Practitioner' shall be defined as either a Florida practitioner (as defined in Section 473.011(2), F.S.), or an out of-state practitioner (as defined in Section 473.011(3), F.S.), engaged in the practice of public accounting in Florida under a special permit." Black's Law Dictionary, Revised Fourth Edition, defines public as: "PUBLIC, adj. Pertaining to a state, nation, or community; proceeding from, relating to, or affecting the whole body of people or an entire community. Open to all; notorious. Common to all or many; general; open to common use. Morgan v. Cree, 46 Vt. 786, 14 Am.Rep. 640; Crane v. Waters, C.C.Mass., 10 F. 621. Belonging to the people at large; relating to or affecting the whole people of a state, nation, or community; not limited or restricted to any particular class of the community. People v. Powell, 280 Mich. 699, 274 N.W. 372, 373, 111 A.L.R. 721." Black's Law Dictionary, Revised Fourth Edition, defines accounting as: "ACCOUNTING. An act or system of making up or settling accounts; a statement of account, or a debit and credit in financial transactions. Kansas City v. Burns, 137 Kan. 905, 22 P.2d 444." The Hearing Officer finds: That the work the Respondent does in his position as Internal Audit Coordinator for the Department of Health and Rehabilitative Services involves the use of accounting skills and includes management services and that he is a Florida practitioner as defined in Chapter 473, Florida Statutes, and in Chapter 21A-I, Florida Administrative Code. Petitioner contends that the Respondent is a state employee and therefore cannot be independent of his client However, the evidence shows that much of the work performed by Respondent and his staff are for agencies and organizations outside the Department of Health and Rehabilitative Services which employs Respondent. There is no employee-employer relationship between Respondent and these organizations. Further, no showing has been made that the employer, the Department of Health and Rehabilitative Services, attempts to or has ever directed the work of Respondent or in any way exercised control over the audits of Respondent. Respondent is in the practice of public accounting in his capacity as Internal Audit Coordinator.
Recommendation Dismiss the petition of the State Board of Accountancy. DONE and ORDERED this 24th day of May, 1976. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings The Carlton Building, Room 530 Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of May, 1976.
The Issue The issue is whether Rules 21H-21.002(1) and 21H-21.004(1) are an invalid exercise of delegated legislative authority.
Findings Of Fact Ronnie F. Taylor, of Post Office Box 697, Cedar Key, Florida, is employed by the engineering firm of Ingley, Campbell, Moses and Associates of Gainesville, Florida, which engages in mechanical, electrical and plumbing engineering. Taylor has been with this engineering firm for four years and is currently a vice president in charge of production of electrical engineering documents. Prior to this employment, Taylor spent 14 years as an electrical engineer with the engineering firm of Reynolds, Smith and Hill of Jacksonville, Florida. When Taylor left Reynolds, Smith and Hill, he was the senior design engineer. Taylor served in the military as an electrician. Upon completing military service in 1967, Taylor entered Florida Junior College. He received an Associate of Science degree in Electrical Engineering Technology in 1970 from that institution. Following that degree, Taylor began employment with Reynolds, Smith and Hill, where his responsibilities included the design of electrical projects for commercial buildings, including writing specifications, making cost estimates and producing a finished product. Taylor has spent his entire career in electrical engineering and has no experience with other specialties of engineering. He has extensive experience in electrical engineering having designed and completed numerous large commercial projects. However, because Taylor is not a licensed professional engineer, a licensed professional engineer must oversee all projects during the course of design and completion and must sign and seal all completed work. Taylor is not a licensed professional engineer because he has failed to pass the Fundamentals of Engineering (FE) portion of the engineering examination. He has failed in fourteen attempts to pass the FE exam. Taylor did pass the Principles and Practices (P & P) portion of the exam in 1982. Licensure requirements specify that both sections must be passed prior to licensure. Taylor became qualified to take the engineering exam in 1977 pursuant to Section 471.21(1)(c), Florida Statutes (1977), which permitted an applicant to take the exam with "a specific record of 10 years or more of active practice in engineering work of a character indicating that the applicant is competent to be placed in responsible charge of such work." This so-called 10 year cycle permitted an applicant to qualify for the exam without the otherwise required 4- year college degree and 4 additional years of experience. In 1979, Section 471.013, Florida Statutes, was enacted, allowing persons in the final year of engineering school to take the FE exam to qualify as an engineer intern. This provision has been in effect since 1979. The FE exam, as required by Rule 21H-21.002(1), which is challenged here, includes questions on the subjects of mathematics, mathematical modeling of engineering systems, nucleonics and wave phenomena, chemistry, statistics, dynamics, mechanics of materials, fluid mechanics, thermodynamics/heat transfer, computer programming, electrical circuits, statics, structure of matter, engineering mechanics, electronics and electrical machinery. While Taylor scored highly on the subjects relating to electrical engineering, he had difficulty with other areas of the exam. The course work completed by Taylor in 1970 did not include some of these areas with which Taylor had difficulty. Taylor has had no course work in computer programming, thermodynamics, statistics, nucleonics and wave phenomena. The subjects tested in the FE exam are updated in order to test applicants on the most current information and knowledge of engineering fundamentals. Herbert A. Ingley is a licensed professional engineer and holds a Bachelors degree in Chemical Engineering, a Masters degree in Mechanical Engineering, and a Ph.D. in Mechanical Engineering with a minor in Environmental-Mathematics. He taught full time on the faculty of the University of Florida in Mechanical Engineering for 11 years. In his opinion, it is more difficult for applicants to pass the FE exam the further they are from their formal education and, therefore, applicants in the 10 year cycle have more difficulty passing the exam. According to Ingley, the requirement that persons such as Taylor wait 10 years before taking the FE exam is not logical. However, Ingley also opined that it is important for a professional engineer to have a fundamental knowledge of engineering and that there is a need to test the fundamental basics of engineering for each person who is going to become a licensed professional engineer. George Edward Rabb is a licensed professional engineer, having been licensed in 1965. He was grandfathered and therefore only had to pass the P & P exam. The FE exam was waived based on specific portions of statute and rule which waived the FE exam for persons with fifteen years experience. The waiver was only available to persons qualifying prior to November, 1970. According to Rabb, an engineer needs to have a working knowledge of fundamentals and to understand the general concepts of engineering. Robert D. Kersten, who has been the Dean of the Department of Engineering at the University of Florida for 20 years, has a Bachelors degree in Mathematics and Chemistry, a Masters degree in Civil Engineering, and a Ph.D. in Civil Engineering, Water Resource/Hydrologic Engineering. Dean Kersten has served in numerous capacities with both state and national professional associations involved in accreditation of engineers and served on the Board of Professional Engineers in Florida and on the National Council of Engineering Examiners. The FE exam is prepared by the National Council of Engineering Examiners and is designed to cover the fundamental areas essential to the basic practice of engineering. The FE exam tests both the common body of knowledge that is essential to practice in the profession and the ability to apply that knowledge. According to Dean Kersten the FE exam tests items which should be within an engineer's basic knowledge and which are necessary to communication between engineers in a design team approach to project design. Dean Kersten acknowledges that the FE exam is more difficult for applicants who lack a degree or who have been out of the academic area for a period of time, but opines that those factors do not excuse an applicant from mastering and retaining the basic fundamentals important to the practice. In fact, the FE exam is designed so that 70 percent of the applicants with-the 4- year college educational background pass the exam. Only 40 percent of the applicants in the 10 year cycle pass the exam.
The Issue At issue in this proceeding is whether proposed Florida Administrative Code Rule 69O-125.005 is an invalid exercise of delegated legislative authority.
Findings Of Fact Petitioners AIA is a trade association made up of 40 groups of insurance companies. AIA member companies annually write $6 billion in property, casualty, and automobile insurance in Florida. AIA's primary purpose is to represent the interests of its member insurance groups in regulatory and legislative matters throughout the United States, including Florida. NAMIC is a trade association consisting of 1,430 members, mostly mutual insurance companies. NAMIC member companies annually write $10 billion in property, casualty, and automobile insurance in Florida. NAMIC represents the interests of its member insurance companies in regulatory and legislative matters throughout the United States, including Florida. PCI is a national trade association of property and casualty insurance companies consisting of 1,055 members. PCI members include mutual insurance companies, stock insurance companies, and reciprocal insurers that write property and casualty insurance in Florida. PCI members annually write approximately $15 billion in premiums in Florida. PCI participated in the OIR's workshops on the Proposed Rule. PCI's assistant vice president and regional manager, William Stander, testified that if the Proposed Rule is adopted, PCI's member companies would be required either to withdraw from the Florida market or drastically reorganize their business model. FIC is an insurance trade association made up of 39 insurance groups that represent approximately 250 insurance companies writing all lines of insurance. All of FIC's members are licensed in Florida and write approximately $27 billion in premiums in Florida. FIC has participated in rule challenges in the past, and participated in the workshop and public hearing process conducted by OIR for this Proposed Rule. FIC President Guy Marvin testified that FIC's property and casualty members use credit scoring and would be affected by the Proposed Rule. A substantial number of Petitioners' members are insurers writing property and casualty insurance and/or motor vehicle insurance coverage in Florida. These members use credit-based insurance scoring in their underwriting and rating processes. They would be directly regulated by the Proposed Rule in their underwriting and rating methods and in the rate filing processes set forth in Sections 627.062 and 627.0651, Florida Statutes. Fair Isaac originated credit-based insurance scoring and is a leading provider of credit-based insurance scoring information in the United States and Canada. Fair Isaac has invested millions of dollars in the development and maintenance of its credit-based insurance models. Fair Isaac concedes that it is not an insurer and, thus, would not be directly regulated by the Proposed Rule. However, Fair Isaac would be directly affected by any negative impact that the Proposed Rule would have in setting limits on the use of credit-based insurance score models in Florida. Lamont Boyd, a manager in Fair Isaac's global scoring division, testified that if the Proposed Rule goes into effect Fair Isaac would, at a minimum, lose all of the revenue it currently generates from insurance companies that use its scores in the State of Florida, because Fair Isaac's credit-based insurance scoring model cannot meet the requirements of the Proposed Rule regarding racial, ethnic, and religious categorization. Mr. Boyd also testified that enactment of the Proposed Rule could cause a "ripple effect" of similar regulations in other states, further impairing Fair Isaac's business. The Statute and Proposed Rule During the 1990s, insurance companies' use of consumer credit information for underwriting and rating automobile and residential property insurance policies greatly increased. Insurance regulators expressed concern that the use of consumer credit reports, credit histories and credit-based insurance scoring models could have a negative effect on consumers' ability to obtain and keep insurance at appropriate rates. Of particular concern was the possibility that the use of credit scoring would particularly hurt minorities, people with low incomes, and young people, because those persons would be more likely to have poor credit scores. On September 19, 2001, Insurance Commissioner Tom Gallagher appointed a task force to examine the use of credit reports and develop recommendations for the Legislature or for the promulgation of rules regarding the use of credit scoring by the insurance industry. The task force met on four separate occasions throughout the state in 2001, and issued its report on January 23, 2002. The task force report conceded that the evidence supporting the negative impact of the use of credit reports on specific groups is "primarily anecdotal," and that the insurance industry had submitted anecdotal evidence to the contrary. Among its nine recommendations, the task force recommended the following: A comprehensive and independent investigation of the relationship between insurers' use of consumer credit information and risk of loss including the impact by race, income, geographic location and age. A prohibition against the use of credit reports as the sole basis for making underwriting or rating decisions. That insurers using credit as an underwriting or rating factor be required to provide regulators with sufficient information to independently verify that use. That insurers be required to send a copy of the credit report to those consumers whose adverse insurance decision is a result of their consumer credit information and a simple explanation of the specific credit characteristics that caused the adverse decision. That insurers not be permitted to draw a negative inference from a bad credit score that is due to medical bills, little or no credit information, or other special circumstances that are clearly not related to an applicant's or policyholder's insurability. That the impact of credit reports be mitigated by imposing limits on the weight that insurers can give to them in the decision to write a policy and limits on the amount the premium can be increased due to credit information. No evidence was presented that the "comprehensive and independent investigation" of insurers' use of credit information was undertaken by the Legislature. However, the other recommendations of the task force were addressed in Senate Bills 40A and 42A, enacted by the Legislature and signed by the governor on June 26, 2003. These companion bills, each with an effective date of January 1, 2004, were codified as Sections 626.9741 and 626.97411, Florida Statutes, respectively. Chapters 2003-407 and 2003-408, Laws of Florida. Section 626.9741, Florida Statutes, provides: The purpose of this section is to regulate and limit the use of credit reports and credit scores by insurers for underwriting and rating purposes. This section applies only to personal lines motor vehicle insurance and personal lines residential insurance, which includes homeowners, mobile home owners' dwelling, tenants, condominium unit owners, cooperative unit owners, and similar types of insurance. As used in this section, the term: "Adverse decision" means a decision to refuse to issue or renew a policy of insurance; to issue a policy with exclusions or restrictions; to increase the rates or premium charged for a policy of insurance; to place an insured or applicant in a rating tier that does not have the lowest available rates for which that insured or applicant is otherwise eligible; or to place an applicant or insured with a company operating under common management, control, or ownership which does not offer the lowest rates available, within the affiliate group of insurance companies, for which that insured or applicant is otherwise eligible. "Credit report" means any written, oral, or other communication of any information by a consumer reporting agency, as defined in the federal Fair Credit Reporting Act, 15 U.S.C. ss. 1681 et seq., bearing on a consumer's credit worthiness, credit standing, or credit capacity, which is used or expected to be used or collected as a factor to establish a person's eligibility for credit or insurance, or any other purpose authorized pursuant to the applicable provision of such federal act. A credit score alone, as calculated by a credit reporting agency or by or for the insurer, may not be considered a credit report. "Credit score" means a score, grade, or value that is derived by using any or all data from a credit report in any type of model, method, or program, whether electronically, in an algorithm, computer software or program, or any other process, for the purpose of grading or ranking credit report data. "Tier" means a category within a single insurer into which insureds with substantially similar risk, exposure, or expense factors are placed for purposes of determining rate or premium. An insurer must inform an applicant or insured, in the same medium as the application is taken, that a credit report or score is being requested for underwriting or rating purposes. An insurer that makes an adverse decision based, in whole or in part, upon a credit report must provide at no charge, a copy of the credit report to the applicant or insured or provide the applicant or insured with the name, address, and telephone number of the consumer reporting agency from which the insured or applicant may obtain the credit report. The insurer must provide notification to the consumer explaining the reasons for the adverse decision. The reasons must be provided in sufficiently clear and specific language so that a person can identify the basis for the insurer's adverse decision. Such notification shall include a description of the four primary reasons, or such fewer number as existed, which were the primary influences of the adverse decision. The use of generalized terms such as "poor credit history," "poor credit rating," or "poor insurance score" does not meet the explanation requirements of this subsection. A credit score may not be used in underwriting or rating insurance unless the scoring process produces information in sufficient detail to permit compliance with the requirements of this subsection. It shall not be deemed an adverse decision if, due to the insured's credit report or credit score, the insured continues to receive a less favorable rate or placement in a less favorable tier or company at the time of renewal except for renewals or reunderwriting required by this section. (4)(a) An insurer may not request a credit report or score based upon the race, color, religion, marital status, age, gender, income, national origin, or place of residence of the applicant or insured. An insurer may not make an adverse decision solely because of information contained in a credit report or score without consideration of any other underwriting or rating factor. An insurer may not make an adverse decision or use a credit score that could lead to such a decision if based, in whole or in part, on: The absence of, or an insufficient, credit history, in which instance the insurer shall: Treat the consumer as otherwise approved by the Office of Insurance Regulation if the insurer presents information that such an absence or inability is related to the risk for the insurer; Treat the consumer as if the applicant or insured had neutral credit information, as defined by the insurer; Exclude the use of credit information as a factor and use only other underwriting criteria; Collection accounts with a medical industry code, if so identified on the consumer's credit report; Place of residence; or Any other circumstance that the Financial Services Commission determines, by rule, lacks sufficient statistical correlation and actuarial justification as a predictor of insurance risk. An insurer may use the number of credit inquiries requested or made regarding the applicant or insured except for: Credit inquiries not initiated by the consumer or inquiries requested by the consumer for his or her own credit information. Inquiries relating to insurance coverage, if so identified on a consumer's credit report. Collection accounts with a medical industry code, if so identified on the consumer's credit report Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the home mortgage industry and made within 30 days of one another, unless only one inquiry is considered. Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry and made within 30 days of one another, unless only one inquiry is considered. An insurer must, upon the request of an applicant or insured, provide a means of appeal for an applicant or insured whose credit report or credit score is unduly influenced by a dissolution of marriage, the death of a spouse, or temporary loss of employment. The insurer must complete its review within 10 business days after the request by the applicant or insured and receipt of reasonable documentation requested by the insurer, and, if the insurer determines that the credit report or credit score was unduly influenced by any of such factors, the insurer shall treat the applicant or insured as if the applicant or insured had neutral credit information or shall exclude the credit information, as defined by the insurer, whichever is more favorable to the applicant or insured. An insurer shall not be considered out of compliance with its underwriting rules or rates or forms filed with the Office of Insurance Regulation or out of compliance with any other state law or rule as a result of granting any exceptions pursuant to this subsection. A rate filing that uses credit reports or credit scores must comply with the requirements of s. 627.062 or s. 627.0651 to ensure that rates are not excessive, inadequate, or unfairly discriminatory. An insurer that requests or uses credit reports and credit scoring in its underwriting and rating methods shall maintain and adhere to established written procedures that reflect the restrictions set forth in the federal Fair Credit Reporting Act, this section, and all rules related thereto. (7)(a) An insurer shall establish procedures to review the credit history of an insured who was adversely affected by the use of the insured's credit history at the initial rating of the policy, or at a subsequent renewal thereof. This review must be performed at a minimum of once every 2 years or at the request of the insured, whichever is sooner, and the insurer shall adjust the premium of the insured to reflect any improvement in the credit history. The procedures must provide that, with respect to existing policyholders, the review of a credit report will not be used by the insurer to cancel, refuse to renew, or require a change in the method of payment or payment plan. (b) However, as an alternative to the requirements of paragraph (a), an insurer that used a credit report or credit score for an insured upon inception of a policy, who will not use a credit report or score for reunderwriting, shall reevaluate the insured within the first 3 years after inception, based on other allowable underwriting or rating factors, excluding credit information if the insurer does not increase the rates or premium charged to the insured based on the exclusion of credit reports or credit scores. The commission may adopt rules to administer this section. The rules may include, but need not be limited to: Information that must be included in filings to demonstrate compliance with subsection (3). Statistical detail that insurers using credit reports or scores under subsection (5) must retain and report annually to the Office of Insurance Regulation. Standards that ensure that rates or premiums associated with the use of a credit report or score are not unfairly discriminatory, based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence. Standards for review of models, methods, programs, or any other process by which to grade or rank credit report data and which may produce credit scores in order to ensure that the insurer demonstrates that such grading, ranking, or scoring is valid in predicting insurance risk of an applicant or insured. Section 626.97411, Florida Statutes, provides: Credit scoring methodologies and related data and information that are trade secrets as defined in s. 688.002 and that are filed with the Office of Insurance Regulation pursuant to a rate filing or other filing required by law are confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution.3 Following extensive rule development workshops and industry comment, proposed Florida Administrative Code Rule 69O-125.005 was initially published in the Florida Administrative Weekly, on February 11, 2005.4 The Proposed Rule states, as follows: 69O-125.005 Use of Credit Reports and Credit Scores by Insurers. For the purpose of this rule, the following definitions apply: "Applicant", for purposes of Section 626.9741, F.S., means an individual whose credit report or score is requested for underwriting or rating purposes relating to personal lines motor vehicle or personal lines residential insurance and shall not include individuals who have merely requested a quote. "Credit scoring methodology" means any methodology that uses credit reports or credit scores, in whole or in part, for underwriting or rating purposes. "Data cleansing" means the correction or enhancement of presumed incomplete, incorrect, missing, or improperly formatted information. "Personal lines motor vehicle" insurance means insurance against loss or damage to any motorized land vehicle or any loss, liability, or expense resulting from or incidental to ownership, maintenance or use of such vehicle if the contract of insurance shows one or more natural persons as named insureds. The following are not included in this definition: Vehicles used as public livery or conveyance; Vehicles rented to others; Vehicles with more than four wheels; Vehicles used primarily for commercial purposes; and Vehicles with a net vehicle weight of more than 5,000 pounds designed or used for the carriage of goods (other than the personal effects of passengers) or drawing a trailer designed or used for the carriage of such goods. The following are specifically included, inter alia, in this definition: Motorcycles; Motor homes; Antique or classic automobiles; and Recreational vehicles. "Unfairly discriminatory" means that adverse decisions resulting from the use of a credit scoring methodology disproportionately affects persons belonging to any of the classes set forth in Section 626.9741(8)(c), F.S. Insurers may not use any credit scoring methodology that is unfairly discriminatory. The burden of demonstrating that the credit scoring methodology is not unfairly discriminatory is upon the insurer. An insurer may not request or use a credit report or credit score in its underwriting or rating method unless it maintains and adheres to established written procedures that reflect the restrictions set forth in the federal Fair Credit Reporting Act, Section 626.9741, F.S., and these rules. Upon initial use or any change in that use, insurers using credit reports or credit scores for underwriting or rating personal lines residential or personal lines motor vehicle insurance shall include the following information in filings submitted pursuant to Section 627.062 or 627.0651, F.S. A listing of the types of individuals whose credit reports or scores the company will use or attempt to use to underwrite or rate a given policy. For example: Person signing application; Named insured or spouse; and All listed operators. How those individual reports or scores will be combined if more than one is used. For example: Average score used; Highest score used. The name(s) of the consumer reporting agencies or any other third party vendors from which the company will obtain or attempt to obtain credit reports or scores. Precise identifying information specifying or describing the credit scoring methodology, if any, the company will use including: Common or trade name; Version, subtype, or intended segment of business the system was designed for; and Any other information needed to distinguish a particular credit scoring methodology from other similar ones, whether developed by the company or by a third party vendor. The effect of particular scores or ranges of scores (or, for companies not using scores, the effect of particular items appearing on a credit report) on any of the following as applicable: Rate or premium charged for a policy of insurance; Placement of an insured or applicant in a rating tier; Placement of an applicant or insured in a company within an affiliated group of insurance companies; Decision to refuse to issue or renew a policy of insurance or to issue a policy with exclusions or restrictions or limitations in payment plans. The effect of the absence or insufficiency of credit history (as referenced in Section 626.9741(4)(c)1., F.S.) on any items listed in paragraph (e) above. The manner in which collection accounts identified with a medical industry code (as referenced in Section 626.9741(4)(c)2., F.S.) on a consumer's credit report will be treated in the underwriting or rating process or within any credit scoring methodology used. The manner in which collection accounts that are not identified with a medical industry code, but which an applicant or insured demonstrates are the direct result of significant and extraordinary medical expenses, will be treated in the underwriting or rating process or within any credit scoring methodology used. The manner in which the following will be treated in the underwriting or rating process, or within any credit scoring methodology used: Credit inquiries not initiated by the consumer; Requests by the consumer for the consumer's own credit information; Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry or the home mortgage industry and made within 30 days of one another; Multiple lender inquiries that are not coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry or the home mortgage industry and made within 30 days of one another, but that an applicant or insured demonstrates are the direct result of such inquiries; Inquiries relating to insurance coverage, if so identified on a consumer's credit report; and Inquiries relating to insurance coverage that are not so identified on a consumer's credit report, but which an applicant or insured demonstrates are the direct result of such inquiries. The list of all clear and specific primary reasons that may be cited to the consumer as the basis or explanation for an adverse decision under Section 626.9741(3), F.S. and the criteria determining when each of those reasons will be so cited. A description of the process that the insurer will use to correct any error in premium charged the insured, or in underwriting decision made concerning the insured, if the basis of the premium charged or the decision made is a disputed item that is later removed from the credit report or corrected, provided that the insured first notifies the insurer that the item has been removed or corrected. A certification that no use of credit reports or scores in rating insurance will apply to any component of a rate or premium attributed to hurricane coverage for residential properties as separately identified in accordance with Section 627.0629, F.S. Insurers desiring to make adverse decisions for personal lines motor vehicle policies or personal lines residential policies based on the absence or insufficiency of credit history shall either: Treat such consumers or applicants as otherwise approved by the Office of Insurance Regulation if the insurer presents information that such an absence or inability is related to the risk for the insurer and does not result in a disparate impact on persons belonging to any of the classes set forth in Section 626.9741(8)(c), This information will be held as confidential if properly so identified by the insurer and eligible under Section 626.9711, F.S. The information shall include: Data comparing experience for each category of those with absent or insufficient credit history to each category of insureds separately treated with respect to credit and having sufficient credit history; A statistically credible method of analysis that concludes that the relationship between absence or insufficiency and the risk assumed is not due to chance; A statistically credible method of analysis that concludes that absence or insufficiency of credit history does not disparately impact persons belonging to any of the classes set forth in Section 626.9741(8)(c), F.S.; A statistically credible method of analysis that confirms that the treatment proposed by the insurer is quantitatively appropriate; and Statistical tests establishing that the treatment proposed by the insurer is warranted for the total of all consumers with absence or insufficiency of credit history and for at least two subsets of such consumers. Treat such consumers as if the applicant or insured had neutral credit information, as defined by the insurer. Should an insurer fail to specify a definition, neutral is defined as the average score that a stratified random sample of consumers or applicants having sufficient credit history would attain using the insurer's credit scoring methodology; or Exclude credit as a factor and use other criteria. These other criteria must be specified by the insurer and must not result in average treatment for the totality of consumers with an absence of or insufficiency of credit history any less favorable than the treatment of average consumers or applicants having sufficient credit history. Insurers desiring to make adverse decisions for personal lines motor vehicle or personal lines residential insurance based on information contained in a credit report or score shall file with the Office information establishing that the results of such decisions do not correlate so closely with the zip code of residence of the insured as to constitute a decision based on place of residence of the insured in violation of Section 626.9741(4)(c)(3), F.S. (7)(a) Insurers using credit reports or credit scores for underwriting or rating personal lines residential or personal lines motor vehicle insurance shall develop, maintain, and adhere to written procedures consistent with Section 626.9741(4)(e), F.S. providing appeals for applicants or insureds whose credit reports or scores are unduly influenced by dissolution of marriage, death of a spouse, or temporary loss of employment. (b) These procedures shall be subject to examination by the Office at any time. (8)(a)1. Insurers using credit reports or credit scoring in rating personal lines motor vehicle or personal lines residential insurance shall develop, maintain, and adhere to written procedures to review the credit history of an insured who was adversely affected by such use at initial rating of the policy or subsequent renewal thereof. These procedures shall be subject to examination by the Office at any time. The procedures shall comply with the following: A review shall be conducted: No later than 2 years following the date of any adverse decision, or Any time, at the request of the insured, but no more than once per policy period without insurer assent. The insurer shall notify the named insureds annually of their right to request the review in (II) above. Renewal notices issued 120 days or less after the effective date of this rule are not included in this requirement. The insurer shall adjust the premium to reflect any improvement in credit history no later than the first renewal date that follows a review of credit history. The renewal premium shall be subject to other rating factors lawfully used by the insurer. The review shall not be used by the insurer to cancel, refuse to renew, or require a change in the method of payment or payment plan based on credit history. (b)1. As an alternative to the requirements in paragraph (8)(a), insurers using credit reports or scores at the inception of a policy but not for re-underwriting shall develop, maintain, and adhere to written procedures. These procedures shall be subject to examination by the Office at any time. The procedures shall comply with the following: Insureds shall be reevaluated no later than 3 years following policy inception based on allowable underwriting or rating factors, excluding credit information. The rate or premium charged to an insured shall not be greater, solely as a result of the reevaluation, than the rate or premium charged for the immediately preceding policy term. This shall not be construed to prohibit an insurer from applying regular underwriting criteria (which may result in a greater premium) or general rate increases to the premium charged. For insureds that received an adverse decision notification at policy inception, no residual effects of that adverse decision shall survive the reevaluation. This means that the reevaluation must be complete enough to make it possible for insureds adversely impacted at inception to attain the lowest available rate for which comparable insureds are eligible, considering only allowable underwriting or rating factors (excluding credit information) at the time of the reevaluation. No credit scoring methodology shall be used for personal lines motor vehicle or personal lines residential property insurance unless that methodology has been demonstrated to be a valid predictor of the insurance risk to be assumed by an insurer for the applicable type of insurance. The demonstration of validity detailed below need only be provided with the first rate, rule, or underwriting guidelines filing following the effective date of this rule and at any time a change is made in the credit scoring methodology. Other such filings may instead refer to the most recent prior filing containing a demonstration. Information supplied in the context of a demonstration of validity will be held as confidential if properly so identified by the insurer and eligible under Section 626.9711, F.S. A demonstration of validity shall include: A listing of the persons that contributed substantially to the development of the most current version of the method, including resumes of the persons, if obtainable, indicating their qualifications and experience in similar endeavors. An enumeration of all data cleansing techniques that have been used in the development of the method, which shall include: The nature of each technique; Any biases the technique might introduce; and The prevalence of each type of invalid information prior to correction or enhancement. All data that was used by the model developers in the derivation and calibration of the model parameters. Data shall be in sufficient detail to permit the Office to conduct multiple regression testing for validation of the credit scoring methodology. Data, including field definitions, shall be supplied in electronic format compatible with the software used by the Office. Statistical results showing that the model and parameters are predictive and not overlapping or duplicative of any other variables used to rate an applicant to such a degree as to render their combined use actuarially unsound. Such results shall include the period of time for which each element from a credit report is used. A precise listing of all elements from a credit report that are used in scoring, and the formula used to compute the score, including the time period during which each element is used. Such listing is confidential if properly so identified by the insurer. An assessment by a qualified actuary, economist, or statistician (whether or not employed by the insurer) other than persons who contributed substantially to the development of the credit scoring methodology, concluding that there is a significant statistical correlation between the scores and frequency or severity of claims. The assessment shall: Identify the person performing the assessment and show his or her educational and professional experience qualifications; and Include a test of robustness of the model, showing that it performs well on a credible validation data set. The validation data set may not be the one from which the model was developed. Documentation consisting of statistical testing of the application of the credit scoring model to determine whether it results in a disproportionate impact on the classes set forth in Section 626.9741(8)(c), A model that disproportionately affects any such class of persons is presumed to have a disparate impact and is presumed to be unfairly discriminatory. Statistical analysis shall be performed on the current insureds of the insurer using the proposed credit scoring model, and shall include the raw data and detailed results on each classification set forth in Section 626.9741(8)(c), F.S. In lieu of such analysis insurers may use the alternative in 2. below. Alternatively, insurers may submit statistical studies and analyses that have been performed by educational institutions, independent professional associations, or other reputable entities recognized in the field, that indicate that there is no disproportionate impact on any of the classes set forth in Section 626.9741(8)(c), F.S. attributable to the use of credit reports or scores. Any such studies or analyses shall have been done concerning the specific credit scoring model proposed by the insurer. The Office will utilize generally accepted statistical analysis principles in reviewing studies submitted which support the insurer's analysis that the credit scoring model does not disproportionately impact any class based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence. The Office will permit reliance on such studies only to the extent that they permit independent verification of the results. The testing or validation results obtained in the course of the assessment in paragraphs (d) and (f) above. Internal Insurer data that validates the premium differentials proposed based on the scores or ranges of scores. Industry or countrywide data may be used to the extent that the Florida insurer data lacks credibility based upon generally accepted actuarial standards. Insurers using industry or countrywide data for validation shall supply Florida insurer data and demonstrate that generally accepted actuarial standards would allow reliance on each set of data to the extent the insurer has done so. Validation data including claims on personal lines residential insurance policies that are the result of acts of God shall not be used unless such acts occurred prior to January 1, 2004. The mere copying of another company's system will not fulfill the requirement to validate proposed premium differentials unless the filer has used a method or system for less than 3 years and demonstrates that it is not cost effective to retrospectively analyze its own data. Companies under common ownership, management, and control may copy to fulfill the requirement to validate proposed premium differentials if they demonstrate that the characteristics of the business to be written by the affiliate doing the copying are sufficiently similar to the affiliate being copied to presume common differentials will be accurate. The credibility standards and any judgmental adjustments, including limitations on effects, that have been used in the process of deriving premium differentials proposed and validated in paragraph (i) above. An explanation of how the credit scoring methodology treats discrepancies in the information that could have been obtained from different consumer reporting agencies: Equifax, Experian, or TransUnion. This shall not be construed to require insurers to obtain multiple reports for each insured or applicant. 1. The date that each of the analyses, tests, and validations required in paragraphs (d) through (j) above was most recently performed, and a certification that the results continue to be applicable. 2. Any item not reviewed in the previous 5 years is unacceptable. Specific Authority 624.308(1), 626.9741(8) FS. Law Implemented 624.307(1), 626.9741 FS. History-- New . The Petition 1. Statutory Definitions of "Unfairly Discriminatory" The main issue raised by Petitioners is that the Proposed Rule's definition of "unfairly discriminatory," and those portions of the Proposed Rule that rely on this definition, are invalid because they are vague, and enlarge, modify, and contravene the provisions of the law implemented and other provisions of the insurance code. Section 626.9741, Florida Statutes, does not define "unfairly discriminatory." Subsection 626.9741(5), Florida Statutes, provides that a rate filing using credit reports or scores "must comply with the requirements of s. 627.062 or s. 627.0651 to ensure that rates are not excessive, inadequate, or unfairly discriminatory." Subsection 626.9741(8)(c), Florida Statutes, provides that the FSC may adopt rules, including standards to ensure that rates or premiums "associated with the use of a credit report or score are not unfairly discriminatory, based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence." Chapter 627, Part I, Florida Statutes, is referred to as the "Rating Law." § 627.011, Fla. Stat. The purpose of the Rating Law is to "promote the public welfare by regulating insurance rates . . . to the end that they shall not be excessive, inadequate, or unfairly discriminatory." § 627.031(1)(a), Fla. Stat. The Rating Law provisions referenced by Subsection 626.9741(5), Florida Statutes, in relation to ensuring that rates are not "unfairly discriminatory" are Sections 627.062 and 627.0651, Florida Statutes. Section 627.062, Florida Statutes, titled "Rate standards," provides that "[t]he rates for all classes of insurance to which the provisions of this part are applicable shall not be excessive, inadequate, or unfairly discriminatory." § 627.062(1), Fla. Stat. Subsection 627.062(2)(e)6., Florida Statutes, provides: A rate shall be deemed unfairly discriminatory as to a risk or group of risks if the application of premium discounts, credits, or surcharges among such risks does not bear a reasonable relationship to the expected loss and expense experience among the various risks. Section 627.0651, Florida Statutes, titled "Making and use of rates for motor vehicle insurance," provides, in relevant part: One rate shall be deemed unfairly discriminatory in relation to another in the same class if it clearly fails to reflect equitably the difference in expected losses and expenses. Rates are not unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors, or like expense factors but different loss exposures, so long as rates reflect the differences with reasonable accuracy. Rates are not unfairly discriminatory if averaged broadly among members of a group; nor are rates unfairly discriminatory even though they are lower than rates for nonmembers of the group. However, such rates are unfairly discriminatory if they are not actuarially measurable and credible and sufficiently related to actual or expected loss and expense experience of the group so as to assure that nonmembers of the group are not unfairly discriminated against. Use of a single United States Postal Service zip code as a rating territory shall be deemed unfairly discriminatory. Petitioners point out that each of these statutory examples describing "unfairly discriminatory" rates has an actuarial basis, i.e., rates must be related to the actual or expected loss and expense factors for a given group or class, rather than any extraneous factors. If two risks have the same expected losses and expenses, the insurer must charge them the same rate. If the risks have different expected losses and expenses, the insurer must charge them different rates. Michael Miller, Petitioners' expert actuary, testified that the term "unfairly discriminatory" has been used in the insurance industry for well over 100 years and has always had this cost-based definition. Mr. Miller is a fellow of the Casualty Actuarial Society ("CAS"), a professional organization whose purpose is the advancement of the body of knowledge of actuarial science, including the promulgation of industry standards and a code of professional conduct. Mr. Miller was chair of the CAS ratemaking committee when it developed the CAS "Statement of Principles Regarding Property and Casualty Insurance Ratemaking," a guide for actuaries to follow when establishing rates.5 Principle 4 of the Statement of Principles provides: "A rate is reasonable and not excessive, inadequate, or unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk." In layman's terms, Mr. Miller explained that different types of risks are reflected in a rate calculation. To calculate the expected cost of a given risk, and thus the rate to be charged, the insurer must determine the expected losses for that risk during the policy period. The loss portion reflects the risk associated with an occurrence and the severity of a claim. While the loss portion does not account for the entirety of the rate charged, it is the most important in terms of magnitude. Mr. Miller cautioned that the calculation of risk is a quantification of expected loss, but not an attempt to predict who is going to have an accident or make a claim. There is some likelihood that every insured will make a claim, though most never do, and this uncertainty is built into the incurred loss portion of the rate. No single risk factor is a complete measure of a person's likelihood of having an accident or of the severity of the ensuing claim. The prediction of losses is determined through a risk classification plan that take into consideration many risk factors (also called rating factors) to determine the likelihood of an accident and the extent of the claim. As to automobile insurance, Mr. Miller listed such risk factors as the age, gender, and marital status of the driver, the type, model and age of the car, the liability limits of the coverage, and the geographical location where the car is garaged. As to homeowners insurance, Mr. Miller listed such risk factors as the location of the home, its value and type of construction, the age of the utilities and electrical wiring, and the amount of insurance to be carried. 2. Credit Scoring as a Rating Factor In the current market, the credit score of the applicant or insured is a rating factor common to automobile and homeowners insurance. Subsection 626.9741(2)(c), Florida Statutes, defines "credit score" as follows: a score, grade, or value that is derived by using any or all data from a credit report in any type of model, method, or program, whether electronically, in an algorithm, computer software or program, or any other process, for the purpose of grading or ranking credit report data. "Credit scores" (more accurately termed "credit-based insurance scores") are derived from credit data that have been found to be predictive of a loss. Lamont Boyd, Fair Isaac's insurance market manager, explained the manner in which Fair Isaac produced its credit scoring model. The company obtained information from various insurance companies on millions of customers. This information included the customers' names, addresses, and the premiums earned by the companies on those policies as well as the losses incurred. Fair Isaac next requested the credit reporting agencies to review their archived files for the credit information on those insurance company customers. The credit agencies matched the credit files with the insurance customers, then "depersonalized" the files so that there was no way for Fair Isaac to know the identity of any particular customer. According to Mr. Lamont, the data were "color blind" and "income blind." Fair Isaac's analysts took these files from the credit reporting agencies and studied the data in an effort to find the most predictive characteristics of future loss propensity. The model was developed to account for all the predictive characteristics identified by Fair Isaac's analysts, and to give weight to those characteristics in accordance to their relative accuracy as predictors of loss. Fair Isaac does not directly sell its credit scores to insurance companies. Rather, Fair Isaac's models are implemented by the credit reporting agencies. When an insurance company wants Fair Isaac's credit score, it purchases access to the model's results from the credit reporting agency. Other vendors offer similar credit scoring models to insurance companies, and in recent years, some insurance companies have developed their own scoring models. Several academic studies of credit scoring were admitted and discussed at the final hearing in these cases. There appears to be no serious debate that credit scoring is a valid and important predictor of losses. The controversy over the use of credit scoring arises over its possible "unfairly discriminatory" impact "based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence." § 626.9741(8)(c), Fla. Stat. Mr. Miller was one of two principal authors of a June 2003 study titled, "The Relationship of Credit-Based Insurance Scores to Private Passenger Automobile Insurance Loss Propensity." This study was commissioned by several insurance industry trade organizations, including AIA and NAMIC. The study addressed three questions: whether credit-based insurance scores are related to the propensity for loss; whether credit- based insurance scores measure risk that is already measured by other risk factors; and what is the relative importance to accurate risk assessment of the use of credit-based insurance scores. The study was based on a nationwide random sample of private passenger automobile policy and claim records. Records from all 50 states were included in roughly the same proportion as each state's registered motor vehicles bear to total registered vehicles in the United States. The data samples were provided by seven insurers, and represented approximately 2.7 million automobiles, each insured for 12 months.6 The study examined all major automobile coverages: bodily injury liability, property damage liability, medical payments coverage, personal injury protection coverage, comprehensive coverage, and collision coverage. The study concluded that credit-based insurance scores were correlated with loss propensity. The study found that insurance scores overlap to some degree with other risk factors, but that after fully accounting for the overlaps, insurance scores significantly increase the accuracy of the risk assessment process. The study found that, for each of the six automobile coverages examined, insurance scores are among the three most important risk factors.7 Mr. Miller's study did not examine the question of causality, i.e., why credit-based insurance scores are predictive of loss propensity. Dr. Patrick Brockett testified for Petitioners as an expert in actuarial science, risk management and insurance, and statistics. Dr. Brockett is a professor in the departments of management science and information systems, finance, and mathematics at the University of Texas at Austin. He occupies the Gus S. Wortham Memorial Chair in Risk Management and Insurance, and is the director of the university's risk management and insurance program. Dr. Brockett is the former director of the University of Texas' actuarial science program and continues to direct the study of students seeking their doctoral degrees in actuarial science. His areas of academic research are actuarial science, risk management and insurance, statistics, and general quantitative methods in business. Dr. Brockett has written more than 130 publications, most of which relate to actuarial science and insurance. He has spent his entire career in academia, and has never been employed by an insurance company. In 2002, Lieutenant Governor Bill Ratliff of Texas asked the Bureau of Business Research ("BBR") of the University of Texas' McCombs School of Business to provide an independent, nonpartisan study to examine the relationship between credit history and insurance losses in automobile insurance. Dr. Brockett was one of four named authors of this BBR study, issued in March 2003 and titled, "A Statistical Analysis of the Relationship between Credit History and Insurance Losses." The BBR research team solicited data from insurance companies representing the top 70 percent of the automobile insurers in Texas, and compiled a database of more than 173,000 automobile insurance policies from the first quarter of 1998 that included the following 12 months' premium and loss history. ChoicePoint was then retained to match the named insureds with their credit histories and to supply a credit score for each insured person. The BBR research team then examined the credit score and its relationship with prospective losses for the insurance policy. The results were summarized in the study as follows: Using logistic and multiple regression analyses, the research team tested whether the credit score for the named insured on a policy was significantly related to incurred losses for that policy. It was determined that there was a significant relationship. In general, lower credit scores were associated with larger incurred losses. Next, logistic and multiple regression analyses examined whether the revealed relationship between credit score and incurred losses was explainable by existing underwriting variables, or whether the credit score added new information about losses not contained in the existing underwriting variables. It was determined that credit score did yield new information not contained in the existing underwriting variables. What the study does not attempt to explain is why credit scoring adds significantly to the insurer's ability to predict insurance losses. In other words, causality was not investigated. In addition, the research team did not examine such variables as race, ethnicity, and income in the study, and therefore this report does not speculate about the possible effects that credit scoring may have in raising or lowering premiums for specific groups of people. Such an assessment would require a different study and different data. At the hearing, Dr. Brockett testified that the BBR study demonstrated a "strong and significant relationship between credit scoring and incurred losses," and that credit scoring retained its predictive power even after the other risk variables were accounted for. Dr. Brockett further testified that credit scoring has a disproportionate effect on the classifications of age and marital status, because the very young tend to have credit scores that are lower than those of older people. If the question is simply whether the use of credit scores will have a greater impact on the young and the single, the answer would be in the affirmative. However, Dr. Brockett also noted that young, single people will also have higher losses than older, married people, and, thus, the use of credit scores is not "unfairly discriminatory" in the sense that term is employed in the insurance industry.8 Mr. Miller testified that nothing in the actuarial standards of practice requires that a risk factor be causally related to a loss. The Actuarial Standards Board's Standard of Practice 12,9 dealing with risk classification, states that a risk factor is appropriate for use if there is a demonstrated relationship between the risk factor and the insurance losses, and that this relationship may be established by statistical or other mathematical analysis of data. If the risk characteristic is shown to be related to an expected outcome, the actuary need not establish a cause-and-effect relationship between the risk characteristic and the expected outcome. As an example, Mr. Miller offered the fact that past automobile accidents do not cause future accidents, although past accidents are predictive of future risk. Past traffic violations, the age of the driver, the gender of the driver, and the geographical location are all risk factors in automobile insurance, though none of these factors can be said to cause future accidents. They help insurers predict the probability of a loss, but do not predict who will have an accident or why the accident will occur. Mr. Miller opined that credit scoring is a similar risk factor. It is demonstrably significant as a predictor of risk, though there is no causal relationship between credit scores and losses and only an incomplete understanding of why credit scoring works as a predictor of loss. At the hearing, Dr. Brockett discussed a study that he has co-authored with Linda Golden, a business professor at the University of Texas at Austin. Titled "Biological and Psychobehavioral Correlates of Risk Taking, Credit Scores, and Automobile Insurance Losses: Toward an Explication of Why Credit Scoring Works," the study has been peer-reviewed and at the time of the hearing had been accepted for publication in the Journal of Risk and Insurance. In this study, the authors conducted a detailed review of existing scientific literature concerning the biological, psychological, and behavioral attributes of risky automobile drivers and insured losses, and a similar review of literature concerning the biological, psychological, and behavioral attributes of financial risk takers. The study found that basic chemical and psychobehavioral characteristics, such as a sensation-seeking personality type, are common to individuals exhibiting both higher insured automobile losses and poorer credit scores. Dr. Brockett testified that this study provides a direction for future research into the reasons why credit scoring works as an insurance risk characteristic. 3. The Proposed Rule's Definition of "Unfairly Discriminatory" Petitioners contend that the Proposed Rule's definition of the term "unfairly discriminatory" expands upon and is contrary to the statutory definition of the term discussed in section C.1. supra, and that this expanded definition operates to impose a ban on the use of credit scoring by insurance companies. As noted above, Section 626.9741, Florida Statutes, does not define the term "unfairly discriminatory." The provisions of the Rating Law10 define the term as it is generally understood by the insurance industry: a rate is deemed "unfairly discriminatory" if the premium charged does not equitably reflect the differences in expected losses and expenses between policyholders. Two provisions of Section 626.9741, Florida Statutes, employ the term "unfairly discriminatory": (5) A rate filing that uses credit reports or credit scores must comply with the requirements of s. 627.062 or s. 627.0651 to ensure that rates are not excessive, inadequate, or unfairly discriminatory. * * * (8) The commission may adopt rules to administer this section. The rules may include, but need not be limited to: * * * (c) Standards that ensure that rates or premiums associated with the use of a credit report or score are not unfairly discriminatory, based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence. Petitioners contend that the statute's use of the term "unfairly discriminatory" is unexceptionable, that the Legislature simply intended the term to be used and understood in the traditional sense of actuarial soundness alone. Respondents agree that Subsection 626.9741(5), Florida Statutes, calls for the agency to apply the traditional definition of "unfairly discriminatory" as that term is employed in the statutes directly referenced, Sections 627.062 and 627.0651, Florida Statutes, the relevant texts of which are set forth in Findings of Fact 18 and 19 above. However, Respondents contend that Subsection 626.9741(8)(c), Florida Statutes, calls for more than the application of the Rating Law's definition of the term. Respondents assert that in the context of this provision, "unfairly discriminatory" contemplates not only the predictive function, but also "discrimination" in its more common sense, as the term is employed in state and federal civil rights law regarding race, color, religion, marital status, age, gender, income, national origin, or place of residence. At the hearing, OIR General Counsel Steven Parton testified as to the reasons why the agency chose the federal body of law using the term "disparate impact" as the test for unfair discrimination in the Proposed Rule: Well, first of all, what we were looking for is a workable definition that people would have some understanding as to what it meant when we talked about unfair discrimination. We were also looking for a test that did not require any willfulness, because it was not our concern that, in fact, insurance companies were engaging willfully in unfair discrimination. What we believed is going on, and we think all of the studies that are out there suggest, is that credit scoring is having a disparate impact upon various people, whether it be income, whether it be race. . . . Respondents' position is that Subsection 626.9741(8)(c), Florida Statutes, requires that a proposed rate or premium be rejected if it has a "disproportionately" negative effect on one of the named classes of persons, even though the rate or premium equitably reflects the differences in expected losses and expenses between policyholders. In the words of Mr. Parton, "This is not an actuarial rule." Mr. Parton explained the agency's rationale for employing a definition of "unfairly discriminatory" that is different from the actuarial usage employed in the Rating Law. Subsection 626.9741(5), Florida Statutes, already provides that an insurer's rate filings may not be "excessive, inadequate, or unfairly discriminatory" in the actuarial sense. To read Subsection 626.9741(8)(c), Florida Statutes, as simply a reiteration of the actuarial "unfair discrimination" rule would render the provision, "a nullity. There would be no force and effect with regards to that." Thus, the Proposed Rule defines "unfairly discriminatory" to mean "that adverse decisions resulting from the use of a credit scoring methodology disproportionately affects persons belonging to any of the classes set forth in Section 626.9741(8)(c), F.S." Proposed Florida Administrative Code Rule 69O-125.005(1)(e). OIR's actuary, Howard Eagelfeld, explained that "disproportionate effect" means "having a different effect on one group . . . causing it to pay more or less premium than its proportionate share in the general population or than it would have to pay based upon all other known considerations." Mr. Eagelfeld's explanation is not incorporated into the language of the Proposed Rule. Consistent with the actuarial definition of "unfairly discriminatory," the Proposed Rule requires that any credit scoring methodology must be "demonstrated to be a valid predictor of the insurance risk to be assumed by an insurer for the applicable type of insurance," and sets forth detailed criteria through which the insurer can make the required demonstration. Proposed Florida Administrative Code Rule 69O-125.005(9)(a)-(f) and (h)-(l). Proposed Florida Administrative Code Rule 69O-125.005(9)(g) sets forth Respondents' "civil rights" usage of the term "unfairly discriminatory." The insurer's demonstration of the validity of its credit scoring methodology must include: [d]ocumentation consisting of statistical testing of the application of the credit scoring model to determine whether it results in a disproportionate impact on the classes set forth in Section 626.9741(8)(c), F.S. A model that disproportionately affects any such class of persons is presumed to have a disparate impact and is presumed to be unfairly discriminatory.11 Mr. Parton, who testified in defense of the Proposed Rule as one of its chief draftsmen, stated that the agency was concerned that the use of credit scoring may be having a disproportionate effect on minorities. Respondents believe that credit scoring may simply be a surrogate measure for income, and that using income as a basis for setting rates would have an obviously disparate impact on lower-income persons, including the young and the elderly. Mr. Parton testified that "neither the insurance industry nor anyone else" has researched the theory that credit scoring may be a surrogate for income. Mr. Miller referenced a 1998 analysis performed by AIA indicating that the average credit scores do not vary significantly according to the income group. In fact, the lowest income group (persons making less than $15,000 per year) had the highest average credit score, and the average credit scores actually dropped as income levels rose until the income range reached $50,000 to $74,000 per year, when the credit scores began to rise. Mr. Miller testified that a credit score is no more predictive of income level than a coin flip. However, Respondents introduced a January 2003 report to the Washington State Legislature prepared by the Social & Economic Sciences Research Center of Washington State University, titled "Effect of Credit Scoring on Auto Insurance Underwriting and Pricing." The purpose of the study was to determine whether credit scoring has unequal impacts on specific demographic groups. For this study, the researchers received data from three insurance companies on several thousand randomly chosen customers, including the customers' age, gender, residential zip code, and their credit scores and/or rate classifications. The researchers contacted about 1,000 of each insurance company's customers and obtained information about their ethnicity, marital status, and income levels. The study's findings were summarized as follows: The demographic patterns discerned by the study are: Age is the most significant factor. In almost every analysis, older drivers have, on average, higher credit scores, lower credit-based rate assignments, and less likelihood of lacking a valid credit score. Income is also a significant factor. Credit scores and premium costs improve as income rises. People in the lowest income categories-- less than $20,000 per year and between $20,000 and $35,000 per year-- often experienced higher premiums and lower credit scores. More people in lower income categories also lacked sufficient credit history to have a credit score. Ethnicity was found to be significant in some cases, but because of differences among the three firms studied and the small number of ethnic minorities in the samples, the data are not broadly conclusive. In general, Asian/Pacific Islanders had credit scores more similar to whites than to other minorities. When other minority groups had significant differences from whites, the differences were in the direction of higher premiums. In the sample of cases where insurance was cancelled based on credit score, minorities who were not Asian/Pacific Islanders had greater difficulty finding replacement insurance, and were more likely to experience a lapse in insurance while they searched for a new policy. The analysis also considered gender, marital status and location, but for these factors, significant unequal effects were far less frequent. (emphasis added) The evidence appears equivocal on the question of whether credit scoring is a surrogate for income. The Washington study seems to indicate that ethnicity may be a significant factor in credit scoring, but that significant unequal effects are infrequent regarding gender and marital status. The evidence demonstrates that the use of credit scores by insurers would tend to have a negative impact on young people. Mr. Miller testified that persons between ages 25 and 30 have lower credit scores than older people. Petitioners argue that by defining "unfairly discriminatory" to mean "disproportionate effect," the Proposed Rule effectively prohibits insurers from using credit scores, if only because all the parties recognize that credit scores have a "disproportionate effect" on young people. Petitioners contend that this prohibition is in contravention of Section 626.9741(1), Florida Statutes, which states that the purpose of the statute is to "regulate and limit" the use of credit scores, not to ban them outright. Respondents counter that if the use of credit scores is "unfairly discriminatory" toward one of the listed classes of persons in contravention of Subsection 626.9741(8)(c), Florida Statutes, then the "limitation" allowed by the statute must include prohibition. This point is obviously true but sidesteps the real issues: whether the statute's undefined prohibition on "unfair discrimination" authorizes the agency to employ a "disparate impact" or "disproportionate effect" definition in the Proposed Rule, and, if so, whether the Proposed Rule sufficiently defines any of those terms to permit an insurer to comply with the rule's requirements. Proposed Florida Administrative Code Rule 69O-125.005(2) provides that the insurer bears the burden of demonstrating that its credit scoring methodology does not disproportionately affect persons based upon their race, color, religion, marital status, age, gender, income, national origin, or place of residence. Petitioners state that no insurer can demonstrate, consistent with the Proposed Rule, that its credit scoring methodology does not have a disproportionate effect on persons based upon their age. Therefore, no insurer will ever be permitted to use credit scores under the terms of the Proposed Rule. As discussed more fully in Findings of Fact 73 through 76 below, Petitioners also contend that the Proposed Rule provides no guidance as to what "disproportionate effect" and "disparate impact" mean, and that this lack of definitional guidance will permit the agency to reject any rate filing that uses credit scoring, based upon an arbitrary determination that it has a "disproportionate effect" on one of the classes named in Subsection 626.9741(8)(c), Florida Statutes. Petitioners also presented evidence that no insurer collects data on race, color, religion, or national origin from applicants or insureds. Mr. Miller testified that there is no reliable independent source for race, color, religious affiliation, or national origin data. Mr. Eagelfeld agreed that there is no independent source from which insurers can obtain credible data on race or religious affiliation. Mr. Parton testified that this lack of data can be remedied by the insurance companies commencing to request race, color, religion, and national origin information from their customers, because there is no legal impediment to their doing so. Mr. Miller testified that he would question the reliability of the method suggested by Mr. Parton because many persons will refuse to answer such sensitive questions or may not answer them correctly. Mr. Miller stated that, as an actuary, he would not certify the results of a study based on demographic data obtained in this manner and would qualify any resulting actuarial opinion due to the unreliability of the database. Petitioners also object to the vagueness of the broad categories of "race, color, religion and national origin." Mr. Miller testified that the Proposed Rule lacks "operational definitions" for those terms that would enable insurers to perform the required calculations. The Proposed Rule places the burden on the insurer to demonstrate no disproportionate effect on persons based on these categories, but offers no guidance as to how these demographic classes should be categorized by an insurer seeking to make such a demonstration. Petitioners point out that even if the insurer is able to ascertain the categories sought by the regulators, the Proposed Rule gives no guidance as to whether the "disproportionate effect" criterion mandates perfect proportionality among all races, colors, religions, and national origins, or whether some degree of difference is tolerable. Petitioners contend that this lack of guidance provides unbridled discretion to the regulator to reject any disproportionate effect study submitted by an insurer. At his deposition, Mr. Parton was asked how an insurer should break down racial classifications in order to show that there is no disproportionate effect on race. His answer was as follows: There is African-American, Cuban-American, Spanish-American, African-American, Haitian- American. Are you-- you know, whatever the make-up of your book of business is-- you're the one in control of it. You can ask these folks what their ethnic background is. At his deposition, Mr. Parton frankly admitted that he had no idea what "color" classifications an insurer should use, yet he also stated that an insurer must demonstrate no disproportionate effect on each and every listed category, including "color." At the final hearing, when asked to list the categories of "color," Mr. Parton responded, "I suppose Indian, African-American, Chinese, Japanese, all of those."12 At the final hearing, Mr. Parton was asked whether the Proposed Rule contemplates requiring insurers to demonstrate distinctions between such groups as "Latvian-Americans" and "Czech-Americans." Mr. Parton's reply was as follows: No. And I don't think it was contemplated by the Legislature. . . . The question is race by any other name, whether it be national origin, ethnicity, color, is something that they're concerned about in terms of an impact. What we would anticipate, and what we have always anticipated, is the industry would demonstrate whether or not there is an adverse effect against those folks who have traditionally in Florida been discriminated against, and that would be African-Americans and certain Hispanic groups. In our opinion, at least, if you could demonstrate that the credit scoring was not adversely impacting it, it may very well answer the questions to any other subgroup that you may want to name. At the hearing, Mr. Parton was also questioned as to distinctions between religions and testified as follows: The impact of credit scoring on religion is going to be in the area of what we call thin files, or no files. That is to say people who do not have enough credit history from which credit scores can be done, or they're going to be treated somehow differently because of that lack of history. A simple question that needs to be asked by the insurance company is: "Do you, as a result of your religious belief or whatever [sect] you are in, are you forbidden as a precept of your religious belief from engaging in the use of credit?" When cross-examined on the subject, Mr. Parton could not confidently identify any religious group that forbids the use of credit. He thought that Muslims and Quakers may be such groups. Mr. Parton concluded by stating, "I don't think it is necessary to identify those groups. The question is whether or not you have a religious group that you prescribe to that forbids it." Petitioners contend that, in addition to failing to define the statutory terms of race, color, religion, and national origin in a manner that permits insurer compliance, the Proposed Rule fails to provide an operational definition of "disproportionate effect." The following is a hypothetical question put to Mr. Parton at his deposition, and Mr. Parton's answer: Q: Let's assume that African-Americans make up 10 percent of the population. Let's just use two groups for the sake of clarity. Caucasians make up 90 percent. If the application of credit scoring in underwriting results in African-Americans paying 11 percent of the premium and Caucasians paying 89 percent of the premium, is that, in your mind, a disproportionate affect [sic]? A: It may be. I think it would give rise under this rule that perhaps there is a presumption that it is, but that presumption is not [an irrebuttable] one.[13] For instance, if you then had testimony that a 1 percent difference between the two was statistically insignificant, then I would suggest that that presumption would be overridden. This answer led to a lengthy discussion regarding a second hypothetical in which African-Americans made up 29 percent of the population, and also made up 35 percent of the lowest, or most unfavorable, tier of an insurance company's risk classifications. Mr. Parton ultimately opined that if the difference in the two numbers was found to be "statistically significant" and attributable only to the credit score, then he would conclude that the use of credit scoring unfairly discriminated against African-Americans. As to whether his answer would be the same if the hypothetical were adjusted to state that African-Americans made up 33 percent of the lowest tier, Mr. Parton responded: "That would be up to expert testimony to be provided on it. That's what trials are all about."14 Aside from expert testimony to demonstrate that the difference was "statistically insignificant," Mr. Parton could think of no way that an insurer could rebut the presumption that the difference was unfairly discriminatory under the "disproportionate effect" definition set forth in the proposed rule. He stated that, "I can't anticipate, nor does the rule propose to anticipate, doing the job of the insurer of demonstrating that its rates are not unfairly discriminatory." Mr. Parton testified that an insurer's showing that the credit score was a valid and important predictor of risk would not be sufficient to rebut the presumption of disproportionate effect. Summary Findings Credit-based insurance scoring is a valid and important predictor of risk, significantly increasing the accuracy of the risk assessment process. The evidence is still inconclusive as to why credit scoring is an effective predictor of risk, though a study co-authored by Dr. Brockett has found that basic chemical and psychobehavioral characteristics, such as a sensation-seeking personality type, are common to individuals exhibiting both higher insured automobile losses and poorer credit scores. Though the evidence was equivocal on the question of whether credit scoring is simply a surrogate for income, the evidence clearly demonstrated that the use of credit scores by insurance companies has a greater negative overall effect on young people, who tend to have lower credit scores than older people. Petitioners and Fair Isaac emphasized their contention that compliance with the Proposed Rule would be impossible, and thus the Proposed Rule in fact would operate as a prohibition on the use of credit scoring by insurance companies. At best, Petitioners demonstrated that compliance with the Proposed Rule would be impracticable at first, given the current business practices in the industry regarding the collection of customer data regarding race and religion. The evidence indicated no legal barriers to the collection of such data by the insurance companies. Questions as to the reliability of the data are speculative until a methodology for the collection of the data is devised. Subsection 626.9741(8)(c), Florida Statutes, authorizes the FSC to adopt rules that may include: Standards that ensure that rates or premiums associated with the use of a credit report or score are not unfairly discriminatory, based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence. Petitioners' contention that the statute's use of "unfairly discriminatory" contemplates nothing more than the actuarial definition of the term as employed by the Rating Law is rejected. As Respondents pointed out, Subsection 626.9741(5), Florida Statutes, provides that a rate filing using credit scores must comply with the Rating Law's requirements that the rates not be "unfairly discriminatory" in the actuarial sense. If Subsection 626.9741(8)(c), Florida Statutes, merely reiterates the actuarial requirement, then it is, in Mr. Parton's words, "a nullity."15 Thus, it is found that the Legislature contemplated some level of scrutiny beyond actuarial soundness to determine whether the use of credit scores "unfairly discriminates" in the case of the classes listed in Subsection 626.9741(8)(c), Florida Statutes. It is found that the Legislature empowered FSC to adopt rules establishing standards to ensure that an insurer's rates or premiums associated with the use of credit scores meet this added level of scrutiny. However, it must be found that the term "unfairly discriminatory" as employed in the Proposed Rule is essentially undefined. FSC has not adopted a "standard" by which insurers can measure their rates and premiums, and the statutory term "unfairly discriminatory" is thus subject to arbitrary enforcement by the regulating agency. Proposed Florida Administrative Code Rule 69O-125.005(1)(e) defines "unfairly discriminatory" in terms of adverse decisions that "disproportionately affect" persons in the classes set forth in Subsection 626.9741(8)(c), Florida Statutes, but does not define what is a "disproportionate effect." At Subsection (9)(g), the Proposed Rule requires "statistical testing" of the credit scoring model to determine whether it results in a "disproportionate impact" on the listed classes. This subsection attempts to define its terms as follows: A model that disproportionately affects any such class of persons is presumed to have a disparate impact and is presumed to be unfairly discriminatory. Thus, the Proposed Rule provides that a "disproportionate effect" equals a "disparate impact" equals "unfairly discriminatory," without defining any of these terms in such a way that an insurer could have any clear notion, prior to the regulator's pronouncement on its rate filing, whether its credit scoring methodology was in compliance with the rule. Indeed, Mr. Parton's testimony evinced a disinclination on the part of the agency to offer guidance to insurers who attempt to understand this circular definition. The tenor of his testimony indicated that the agency itself is unsure of exactly what an insurer could submit to satisfy the "disproportionate effect" test, aside from perfect proportionality, which all parties concede is not possible at least as to young people, or a showing that any lack of perfect proportionality is "statistically insignificant," whatever that means. Mr. Parton seemed to say that OIR will know a valid use of credit scoring when it sees one, though it cannot describe such a use beforehand. Mr. Eagelfeld offered what might be a workable definition of "disproportionate effect," but his definition is not incorporated into the Proposed Rule. Mr. Parton attempted to assure the Petitioners that OIR would take a reasonable view of the endless racial and ethnic categories that could be subsumed under the literal language of the Proposed Rule, but again, Mr. Parton's assurances are not part of the Proposed Rule. Mr. Parton's testimony referenced federal and state civil rights laws as the source for the term "disparate impact." Federal case law under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2, has defined a "disparate impact" claim as "one that 'involves employment practices that are facially neutral in their treatment of different groups, but that in fact fall more harshly on one group than another and cannot be justified by business necessity.'" Adams v. Florida Power Corporation, 255 F.3d 1322, 1324 n.4 (11th Cir. 2001), quoting Hazen Paper Co. v. Biggins, 507 U.S. 604, 609, 113 S. Ct. 1701, 1705, 123 L. Ed. 2d 338 (1993). The Proposed Rule does not reference this definition, nor did Mr. Parton detail how OIR proposes to apply or modify this definition in enforcing the Proposed Rule. Without further definition, all three of the terms employed in this circular definition are conclusions, not "standards" that the insurer and the regulator can agree upon at the outset of the statistical and analytical process leading to approval or rejection of the insurer's rates. Absent some definitional guidance, a conclusory term such as "disparate impact" can mean anything the regulator wishes it to mean in a specific case. The confusion is compounded by the Proposed Rule's failure to refine the broad terms "race," "color," and "religion" in a manner that would allow an insurer to prepare a meaningful rate submission utilizing credit scoring. In his testimony, Mr. Parton attempted to limit the Proposed Rule's impact to those groups "who have traditionally in Florida been discriminated against," but the actual language of the Proposed Rule makes no such distinction. Mr. Parton also attempted to limit the reach of "religion" to groups whose beliefs forbid them from engaging in the use of credit, but the language of the Proposed Rule does not support Mr. Parton's distinction.
Findings Of Fact Petitioner is licensed by the State of Florida as a laboratory technologist. Petitioner applied to the Respondent for licensure as a supervisor. On February 2, 1982, Respondent denied Petitioner's application to take the supervisory examination for the stated reason that Petitioner did not have ten years of experience. Petitioner holds a Bachelor's degree in Fine Arts from Florida International University. Petitioner has supplemented his education by taking additional science courses. The science courses taken before and after Petitioner received his Bachelor's degree total 26 semester credits. The courses taken after receipt of his degree have been specifically related to his field. Petitioner has been employed by the Miami Heart Institute since July 11, 1976, except for the period between September, 1976, and August, 1977. Dr. Jerome Benson is a pathologist and is the Director of Laboratories at the Miami Heart Institute. He is also Vice Chairman of the National Accreditation for Clinical Laboratory Sciences, the organization which accredits approximately 1,000 programs in the medical technology field and which is responsible for the Committee on Higher Education and Accreditation of the United States Office of Education, which accredits laboratories. He is familiar with accreditation of medical technology programs throughout the country and locally. He serves on the Advisory Committee at Miami-Dade Community College, and he planned the curriculum for the medical technology programs at both Miami- Dade Community College and at Florida International University. He was recognized as an expert by both parties. Dr. Benson believes that Petitioner is qualified to sit for the supervisory examination in terms of education, in terms of experience time, in terms of intent of the law, and in terms of protecting the public safety. He further believes that the science courses Petitioner has taken, both pre-baccalaureate and post-baccalaureate, qualify Petitioner for a Bachelor's degree in medical technology. Norman Bass was formerly Petitioner's immediate supervisor. He evaluates Petitioner's performance in the laboratory as excellent and believes that Petitioner is qualified through experience and academic courses to sit for the supervisory examination. At the time of the formal hearing in this cause, Petitioner had a total of 12,935 hours of work time at the Miami Heart Institute. Respondent considers 37.5 hours as constituting a full work week. George S. Taylor, Jr., reviewed Petitioner's application on behalf of Respondent. The application was received on January 18, 1982, and was denied on February 2, 1982, for the reason that Petitioner did not have ten years' experience. At the time, Respondent did not have current transcripts reflecting courses taken by Petitioner. Respondent did not request any, but simply used transcripts on file with Respondent which had been filed when Petitioner applied for his technologist's license, even though Petitioner's application for licensure as a supervisor reflected that he had taken various science courses at Miami-Dade Community College. Taylor is of the opinion that an applicant with 120 college credits must have between 25 and 30 of those credits in science courses in order to have a major in science; an applicant with 90 semester hours in college is required to have 17 to 24 credits in science in order to have a science major.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Petitioner's application to take the examination for a supervisor's license. DONE and RECOMMENDED this 14th day of January, 1983, in Tallahassee, Leon County, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 1983. COPIES FURNISHED: Samuel S. Forman, Esquire The Counsel Building 2016 Harrison Street Hollywood, Florida 33020 Morton Laitner, Esquire Dade County Health Department 1350 North West 14th Street Miami, Florida 33125 David H. Pingree, Secretary Department of HRS 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue Whether respondent's teaching certificate should be suspended or revoked on grounds that he violated Sections 231.09 and 231.28, Florida Statutes (1979), by knowingly obtaining and filing a fraudulent university transcript with the Florida Department of Education for the purpose of being certified in the additional field of elementary education.
Findings Of Fact I. The Respondent: Background l. Respondent, a 44-year-old school teacher, has taught at Dade County elementary schools since 1966. He obtained a bachelor of science degree at Southern University in 1962. Later, he completed several postgraduate elementary education courses at Miami-Dade Community College and the University of Miami; in 1977, he earned a master's degree from Nova University. In his postgraduate courses, he earned almost straight "A's," with an occasional "B." (Testimony of Parker; P-6.) From 1966-1977, Respondent held a rank III (graduate) teaching certificate issued by the Florida Department of Education. After obtaining his master's degree in 1977, he was issued a rank II (post graduate) teaching certificate; however, although qualified in other areas, he was not certified to teach in the field of elementary education. (Testimony of Parker; P-6.) From 1974-1979, Respondent taught at Biscayne Elementary School in Dade County; since he was not certified in elementary education, he taught "out of his field." Teachers, such as Respondent, who taught out of their certified fields were required to complete at least six credit hours per year toward obtaining certification in the field in which they were teaching. Between 1977 and 1979, the Dade County School Board ("School Board") reminded its teachers of this requirement, that if they did not take the necessary ongoing course work, they would be required to return to their certified field of instruction. (Testimony of Gray.) Earlier, Respondent had hoped that, by obtaining his master's degree, he would complete enough courses to qualify for certification in the field of elementary education. However, his 1977 postgraduate teaching certificate did not certify him in elementary education. Sometime in early 1978, he calculated that 18 additional postgraduate credit hours would entitle him to be certified in elementary education, the area in which he preferred to teach. (Testimony of Parker.) II. Sutton Helps Respondent Enroll and Take Courses at Florida A & M University At all times material to this case, Eugene Sutton was employed by Florida A & M University ("Florida A & M") in Tallahassee, Florida, as its supervisor of intern teachers. In this capacity, Sutton would travel around the State, visiting interns and talking to supervising teachers. If problems were encountered, he would offer assistance. (P-4.) Sutton had been introduced to Respondent by Rosalyn Bethel, another faculty member at Biscayne Elementary School. In early 1978, Sutton--who had visited the school numerous times--walked into Respondent's classroom and asked him where he had attended school. When the conversation turned to various universities, Sutton stated that Florida A & M offered courses that could be taken by working people; he volunteered to help Respondent take such courses: [H]e [Sutton] said that he was able to reg- ister me, give me my work, and take it back to the instructors or the University, and I would get credit. (Tr. 76.) (Testimony of Parker; P-3.) Respondent accepted Sutton's offer. Shortly thereafter, he gave Sutton the registration fees (required by the university catalog) for nine credit hours. As promised, Sutton registered Respondent for elementary education courses at Florida A & M for the Spring Quarter of 1978. Respondent received a receipt from the university indicating his enrollment. During the ensuing months, Sutton would frequently exchange course materials with Respondent: Sutton would give course assignments to Respondent; Respondent would give Sutton completed course work for delivery to the various university instructors. (Testimony of Parker.) Respondent reasonably believed that he was properly completing course work assigned by his university instructors. The course work bore course titles and names of various instructors. Sutton was a faculty member at the university, a person in authority with important responsibilities. Respondent had no reason to distrust him or suspect him of wrongdoing. (Testimony of Parker, Gaines.) After finishing the Spring Quarter, Respondent enrolled at Florida A & M again, (through Sutton) for nine more credit hours (three courses) in elementary education during the Summer Quarter of 1978. The procedure was the same: He paid Sutton the required registration fees and received a receipt from the university. Sutton then brought course assignments (with textbooks) to Respondent, who, after completing them, gave them to Sutton for delivery to the various university instructors. Respondent never attended the university's Tallahassee campus or spoke directly with his instructors. (Testimony of Parker.) The elementary education courses which Respondent took at Florida A & M during 1978 were not directed individual study courses--courses which can be completed without attendance at the university's campus. However, Respondent-- at the time he selected these courses--did not know that they required attendance at the university. Sutton helped him select the courses from the university's course catalog, and he relied on Sutton as a university faculty member. (Testimony of Parker.) Respondent was unable to produce tuition receipts or work assignments associated with his course work because his house had been vandalized (and his records damaged) when he was hospitalized in September, 1979. 3/ (Testimony of Parker.) III. Respondent Receives a University Transcript At the conclusion of the Spring and Summer Quarters of 1978, Respondent received a copy of a course transcript from Florida A & M. The transcript--the original of which is part of the official records of the university--indicated that Respondent took six courses (18 credit hours) during the two quarters but successfully completed only three of them; that he earned only nine credit hours because of two "I's" (incompletes) and one "F" (failure). His grade-point average for the two quarters was 2.25. (Testimony of Parker; P- 3, P-4, P-8.) Although the transcript appeared to be valid and authentic, Respondent was surprised at the two "I's" and the "F." He had completed all his course assignments and had given them to Sutton; he did not expect an "F" when he was accustomed to earning A's and B's in postgraduate courses. 4/ Respondent then confronted Sutton. (Testimony of Parker.) Sutton explained that he (Sutton) had been late in delivering Respondent's course work to the university, and that Respondent would receive the correct grades. Shortly thereafter, Respondent received a corrected transcript indicating that he successfully completed (with B's) the three courses which had earlier been "I's" and an "F." He believed the corrected transcript was valid and authentic; however, he did not understand how the "F" could be corrected to a "B" when Sutton's explanation attributed the incorrect grades to the late submittal of course work. 5/ (Testimony of Parker.) Shortly thereafter--on May 31, 1979--Respondent completed an application for extension of his teaching certificate (to extend his area of certification to include elementary education) and gave it to Sutton, with the $5 application fee, for delivery to the Florida Department of Education. Subsequently, the Department granted him the requested extension of his teaching certificate. (Testimony of Parker, Gray; P-6.) The corrected transcript was, in fact, false. Upon discovery of that fact, the School Board suspended Respondent from his employment and conducted an investigation. On November 19, 1980, the School Board reinstated Respondent to his position after learning that Respondent was not the subject of criminal prosecution. (Testimony of Gray.) IV. Findings of Fact Proposed by Parties The findings of fact proposed by the parties have been considered. Those proposed findings which are not incorporated above are rejected as irrelevant to the issue presented or unsupported by the preponderance of evidence.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the charges against Respondent be dismissed. DONE AND RECOMMENDED this 22nd day of October, 1981, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 Telephone: (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 22nd day of October, 1981.
The Issue This case addresses the issues of whether the school board had good cause for rejecting the nominations of persons to fill administrative employment positions in the school system. Petitioner as superintendent had recommended the appointments. In particular, the superintendent asked the school board to employ the nominees for a period of three years. The school board rejected that recommendation in favor of a one year appointment because it did not wish to obligate itself to a three year contract period believing that such an arrangement would be imprudent given what it believed to be a troubled economic climate for the school system. It also did not wish to obligate a future superintendent to work with the nominees for three years being convinced that the present superintendent who made the nominations would not seek reelection. Additionally, this case concerns itself with the appropriate outcome beyond this point should good cause be shown for rejecting the nominations. See Section 230.23(5)(a), Florida Statutes.
Findings Of Fact On May 12, 1992, Petitioner, superintendent for the Union County Public School System nominated twelve employees for consideration for reemployment by the Respondent, School Board of Union County. Those nominees were and would be administrative employees. They were nominated for positions falling into two broad categories. The first category was that of professional administrative assistant to the superintendent in the positions of Deputy Superintendent, Assistant Superintendent for Finance, Assistant Superintendent for Instruction, Assistant Superintendent for Operations, Director of Student Services, Supervisor of Instruction and Director of Maintenance and Construction. The second category was that of Principals and Assistant Principals including the nomination of three principals and two assistant principals. Unlike the circumstance in previous years the superintendent recommended that the administrative employees be given a three year contract which would be subject to annual review and renewal as addressed in Section 231.36(1)(b), Florida Statutes. The contrast is that the superintendent has traditionally nominated administrative employees for annual contracts. The sole exception to his practice during the 24 years of service as superintendent in the previous 28 years was provision of a three year contract for Billy Foister in 1975 as a principal. In the history of the school system described at the final hearing there was only one other occasion in which three year contracts were provided to administrative personnel. This was in 1978 under the administration of Superintendent McGill when Mr. Foister and a Ms. Riherd received three year contracts. The recommendation for a three year contract for the administrative employees was unexpected. After discussion at its regular meeting of May 12, 1992 the school board tabled the nominations and requested its legal counsel to research the definition of "good cause" for rejecting the nominations found within Section 230.23(5)(a), Florida Statutes, before deciding its response to the nominations made by the superintendent. On May 21, 1992, a special meeting was held by the school board at which time it rejected the nominations for appointment made by the superintendent. The reasons for rejecting the nominations concern the unanimous belief by the school board members that the decision to obligate school funds for an expanded period related to the administrative employees was an inappropriate choice in difficult economic times. Moreover, the school board was of the unanimous opinion that it would be an unwise decision in a circumstance in which the school board believed that the superintendent would not seek reelection in 1992 and the three year contract would unduly hinder the next school superintendent in choosing administrative employees to serve his or her administration. In making its decision to reject the nominations the school board took no issue with the moral and professional standing of the nominees. Each nominee was offered as a candidate for the same duty functions as those nominees had previously performed in the school year 1991-92. In essence those functions would not change in the school years 1992-93, 1993-94 and 1994-95 under the nominations made by the superintendent. The school board was prepared to offer contracts to the nominees for the up coming school year 1992-93. As David Thomas Dose, the Director of Finance for the school system described, the school board has been able to meet the salary schedule for its employees in the school year 1991-92. Likewise, he believes that the school board will be able to meet the salary schedule for the school year 1992-93. That salary schedule for 1992-93 has been passed by the board. Dose does not believe that the budget which he has prepared for the school year 1992-93 is in any jeopardy concerning the ability to honor the obligations set out in that budget. However, the budget for the school year 1992-93 does not contain salary increases based upon a decision made by the school board on May 12, 1992. That decision was recommended by the superintendent on information provided by the Director of Finance. It is not to be unexpected that the Director of Finance had not met with the school board concerning the upcoming 1992-93 budget before it voted on the nominations. The budget was not due until mid-July, 1992. The Director of Finance would have made information available to the school board about the budget for 1992-93 had the school board requested such information in aid of its determination on the three year contract proposal by the superintendent for the administrative personnel described here. The school board did not seek the assistance of the director of finance in any manner in determining that it would be inappropriate to offer three year contracts for the administrative personnel given the uncertain economic environment. Nonetheless, the school board had reason to be concerned about the fiscal propriety of three year contracts for the administrative personnel. As the school board's chief negotiator on their collective bargaining team describes it, financial circumstances for the school board were "tight" coming into the school year 1992-93 and the financial situation for the school year 1993-94 was described as "not good", referring to the economic climate for the school system in Union County. Even the superintendent acknowledges that there is a "tightening up process". In particular the school year 1991-92 saw three state cutbacks in revenues resulting in a reduction of the budget for the Union County School System and the superintendent was and is aware of that fact. In view of the economic problems some employees who worked for the school system in 1991-92 were not reappointed for the school year 1992-93. The school board had in February, 1992 of the school year 1991-92 voted an annualized raise of 5% for non-instructional personnel. That raise was not retroactive such that the non-instructional personnel would have received the benefit of a 5% raise for the full school year 1991-92; however, the raise carries forward at a 5% rate for the upcoming school year 1992-93. The school board also appointed 15 teachers to professional service contracts in May, 1992, which is tantamount to a tenured or lifetime contractual arrangement. The school board had a $400,000 working surplus at the time the Director of Finance completed the draft budget for the upcoming school year 1992-93. Some adjustment to the benefit of the school board concerning fiscal policy occurred as a result of a mistake in the FTE count in the school year 1991-92 which will make more money available for the same number of students for the school year 1992-93. The Financial Director also made mention of the 6% increase in projected revenues for the state by the Estimating Conference in its most recent projection. The financial situation in the school years 1993-94 and 1994-95 is less clear than for the school year 1992-93. The revenue estimate for the school year 1993-94 will not be made until January, 1993, ergo the revenue estimate for the school year 1994-95 will not be made until January, 1994. The school board members and the Director of Finance are aware that other school systems throughout Florida have been less fortunate than Union County concerning fiscal matters and this influenced the school board in its thinking when rejecting the three year contract proposals by the superintendent. On balance there is sufficient certainty in the school year 1992-93 to support a contract with the 12 administrative employees in question. That certainty is lacking in the school years 1993-94 and 1994-95 concerning the fiscal position for the school system. Concerning the latter two years, although the school board has the right to transfer the administrative employees in the second and third year of the recommended contract period, the contract is subject to annual review and renewal based upon satisfactory performance by those employees, there is a commitment to reduce the budget without dismissing employees and there is the ability to abolish positions should the need arise, it is not unreasonable for the school board to avoid those complications by contracting on an annual basis with the administrative employees. This avoids the awkwardness in operating the school system in an potentially less favorable economic climate in the school years 1993-94 and 1994-95 where it might become necessary to affect employee transfers associated with administrative personnel in to other positions to honor the contracts with those administrative employee, other budget adjustments or the abolition of employment positions that were filled. This is as contrasted with the flexibility to make decisions going into the school years 1993-94 and 1994-95 concerning the appointment of administrative personnel. Such an arrangement for annual contract with administrative employees is in keeping with the traditions by the school system to contract with administrative employees on an annual basis, a system which the present superintendent has found acceptable until this occasion. The twelve administrative personnel are the close advisors to the superintendent in directing his or her administration. Consequently, there must be a comfortable working relationship with these persons. The present superintendent had recognized this necessity when he took office from former Superintendent McGill and requested the resignations of similar administrative personnel to allow him to put in place his own management team. Nonetheless the present superintendent is attempting to bind a possible successor to the present superintendent's choice in administrative personnel. This is done in a setting in which as many as seven candidates have sought the superintendent's position in the upcoming election for the year 1992. In that election the new superintendent comes into office in November, 1992. The present superintendent, concerning his own intentions to seek reelection has been at least elusive if not evasive in a setting in which his position on reelection is crucial to resolving the issue of the propriety of his three year recommendation for the contract term. He has led the board to believe that he is not seeking reelection. On occasion he has even told one board member that he would not seek reelection. In discussion at the May 12, 1992 school board meeting the present superintendent referred to the possibility of a new superintendent but did not discuss his candidacy. At that time he should have made clear that he intended to run for reelection if he expected to have his recommendation for a three year contract for administrative employees to have legitimacy. When asked the question at hearing whether he had made the decision to run or not the present superintendent responded: "You'll know on July 17." While it is true that a majority of board members are leaving their positions this year, they have the right to be concerned about the preservation of needed flexibility on the part of an incoming superintendent to choose his or her close administrative personnel, those positions at issue here. The present superintendent's equivocation concerning his intentions to run for reelection does not serve the legitimate interests of the school system on this subject. Nor does this unwillingness to confirm his position to seek reelection or decline that opportunity offer rationale support for his decision to break with his long standing policy to recommend annual contracts for administrative personnel. The present superintendent was no more compelling in his attempt to describe why the annual contract for administrative personnel had seemed advisable in the past but an unwise arrangement for the future. The present superintendent speaks of the need to treat the administrative personnel as professionals and to afford them job security and to remove them from the whims of political process. When questioned on the meaning of those reasons or explanations his responses were vague. He was unable to explain the inconsistency in having believed that the superintendent needed to have immediate control concerning the administrative personnel and use of an annual contract to maintain that power in carrying out his duties with the close assistance of the administrative personnel and the sudden commitment to a three year contract at a point in time when he might not be the superintendent by choice. When asked why he had not made this decision last year, why it was not important last year to have three year contracts for the administrative personnel he responded "maybe I should have, you know". Moreover, when asked the question had it only become more of a problem now that he might not be the superintendent, he stated "I don't have no idea". When asked why on the May 21, 1992, when the decision was being made about the three year contracts proposed that he did not advise the school board of a decision to remain as superintendent, the present superintendent acknowledged that he did not say anything on that occasion to allow the school board to know his position concerning his future involvement with the school system beyond the 1992 election. The present superintendent alluded to his perceived motivation of the school board in rejecting his contract period for the administrative personnel. He called the motivation political, having nothing to do with the budget or fiscal concerns. On the other hand, the superintendent explained that he was interested in rectifying his approaches in the past by giving multi-year contracts to administrative personnel as he should have done years ago and that he finds it important to have continuity in the system through the administrative personnel in a setting in which the superintendent may change and as many as four board members may change in the upcoming election. When questioned about the influence of such an arrangement on an incoming superintendent, that is a three year contract for administrative personnel, the present superintendent responded that the new superintendent should have appointment powers for those administrative personnel and that all the new superintendent would have to do was wait two years and get all the appointment powers that the new superintendent might need. This points out that the present superintendent would set aside a workable and flexible approach to the appointment of administrative personnel to annual contracts which he had fostered to his benefit as the serving superintendent in favor of restrictions on the control exercised by an incoming superintendent, an unreasonable legacy of patronage beyond the present superintendent's tenure. It is the present superintendent who seeks to restrict and hinder the orderly process in managing close subordinates to the superintendent, not the outgoing school board which by vying for a one year contract for administrative personnel protects an incoming superintendent from being hamstrung by administrative appointments that will exist for much of his or her term, without tangible benefit to the present board beyond the time which it will serve. Where the present superintendent testified about this belief that in the past administrative personnel were political pawns, he would now make them his political pawns by seeking to control the administrative appointments of an incoming superintendent for years following the election of that new superintendent. The present superintendent makes mention that the three year contract proposal benefits the present administrative personnel. It would. It might help recruitment. It might redress complaints by administrative personnel that the board does not appreciate them when it denies the three year recommendation. Those concerns are overshadowed by the need of an incoming superintendent to be able to choose administrative personnel that he or she would be comfortable with and not be bound by the decision of the present superintendent to deviate from his prior course of annual contract recommendations. Finally, the present superintendent says that if he does not have the authority and the power over his administrative employees to appoint them, then he can not control them. Nothing that he has said in his testimony nor revealed in this record leads to the conclusion that his control is any less effective in asking for a one year contract as opposed to a three year contract in a setting in which it is not clear whether he will seek reelection or be successful in that endeavor should he choose to stand for another term. If he runs and is successful he may on the next occasion of proposing a contract set out his preference for a three year contract beginning with the school year 1993-94. If he does not run or is unsuccessful in his candidacy it is no longer his responsibility nor right to decide the direction the school system shall follow. In the event that he is reelected the control which he may exert in the school year 1992-93 on an annual contract is no less effective than a three year contract for administrative personnel. Under the circumstances the board had good cause for rejecting a three year contract for administrative personnel as it might interfere with the authority and control exerted by an incoming superintendent in the school years 1993-94 and 1994-95.
Recommendation Upon consideration, it is, RECOMMENDED: That a Final Order be entered which rejects the superintendent's recommendation for a three year contract period for the twelve administrative employees while upholding their nomination and that the final order grant reasonable attorneys fees to the superintendent's counsel. DONE and ENTERED this 22nd day of July, 1992, in Tallahassee, Florida. CHARLES C. ADAMS, 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 July, 1992. APPENDIX TO RECOMMENDED ORDER The following discussion is given concerning the proposed fact-finding of the parties. Petitioner's Facts Paragraphs 1-9 are subordinate to facts found. Paragraph 10 is rejected in any suggestion that the budget circumstance favors three year contract for the nominees, similarly Paragraph 11 is rejected. Paragraphs 12 and 13 are subordinate to facts found with the exception of the latter sentence of Paragraph 13 which is rejected. Paragraph 14 is subordinate to facts found. Paragraphs 15 and 16 are rejected. Paragraph 17 to the extent that it suggests unacceptable process in the decision to reject the three year contract period is rejected. Paragraph 18 is accepted as discussed in the Conclusions of Law. Respondent's Facts Paragraphs 1 through 18 are subordinate to facts found. Paragraph 19 is not necessary to the resolution of the dispute. Paragraph 20 for purposes of this case is not accepted as the basis for rejecting the three year contract period. Paragraphs 21 through 29 are subordinate to facts found. COPIES FURNISHED: John D. Carlson, Esquire Gatlin, Woods, Carlson and Cowdery 1709-D Mahan Drive Tallahassee, FL 32308 Ronald G. Meyer, Esquire Meyer and Brooks, P.A. 2522 Blair Stone Pines Drive Post Office Box 1547 Tallahassee, FL 32302 Bobby Lex Kirby, Esquire Route 2 Box 219 Lake Butler, FL 32054 Regina Parrish, Chairperson Union County School Board 55 SW 6th Street Lake Butler, FL 32054
Findings Of Fact Amita A. Patil submitted her application for licensure as a medical technologist pursuant to Rule 10D-41.25, F.A.C. The Department of Health and Rehabilitative Services denied her application for licensure as a medical technologist asserting that Patil failed to demonstrate that she had the necessary educational and experience requirements to be licensed. Patil requested a hearing on the Department's denial asserting that she possessed the necessary qualifications for licensure. Patil presented evidence at the hearing that she graduated with a BS in microbiology from the University of Poona, Poona, India and had had one year experience with a pharmaceutical firm after her graduation. The Department of Health and Rehabilitative Services presented evidence that the International Educational Research Foundation, Inc. (IERFI) had evaluated Patil's educational credentials and had determined that Patil had less than 60 semester hours of equivalent credit. Patil presented her transcripts from the University of Poona and a letter from one of her professors who was experienced with American universities. Her former professor stated that Patil had the equivalent of a 4 year college degree from an American university. Patil subsequently introduced as a late-filed exhibit an outline of the hours she spent in class while at the University of Poona. Department of Health and Rehabilitative Services presented as a late- filed exhibit a reevaluation by IERFI of the transcripts presented by Patil at the hearing. The IERFI determined that Patil had "at least 60 semester hours of credit with at least 57 hours credit in microbiology, chemistry, and botany." The evaluation by IERFI did not state the exact number of equivalent semester hours Patil had. The Department of Health and Rehabilitative Services reevaluated Patil's application based upon the second evaluation by IERFI, and based upon Patil's having at least 60 semester hours and one year's experience at Karhpha Pharmaceuticals India and denied Patil's application because she did not meet the requirements of Rule 10D-41.25 F.A.C.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law the hearing officer recommends that the application of Amita A. Patil be denied. DONE and ORDERED this 7th day of February, 1978, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Leonard Helfand, Esquire Department of Health and Rehabilitative Services 1320 South Dixie Highway Coral Gables, Florida 33146 Mrs. Amita A. Patil 3565 Northwest 36th Street D 420 Miami, Florida 33142
Findings Of Fact Mrs. Yoder made a statement regarding her qualifications for licensure, and identified and introduced Exhibits 1-7. The Hearing Officer, upon her request, held the record open to allow her the opportunity to file a late filed exhibit, which has been received as Exhibit 8. It was stipulated that Mrs. Yoder had 17 years of experience and two (2) years of training in the field of cytology. This background placed her generally within the provisions of Subsections (5) and (6) of Rule 100-41.03, Florida Administrative Code. However, the issue became whether Mrs. Yoder had the required hours of college credit. Subsections (5) and (6) of Rule 100-41.03, F.A.C., requires an applicant: to have a minimum of 60 semester hours or equivalent in an accredited college or university with a chemical, physical, or biological science as a major subject. It was stipulated that Mrs. Yoder had successfully completed ten (10) hours of credit in an accredited college. The Hearing Officer finds from the evidence submitted that she has 75 hours of instruction from the Academy of Health Science, U.S. Army, Ft. Sea Houston, Texas. Mrs. Elizabeth Carter testified that she had evaluated Mrs. Yoder's application, and had determined that Mrs. Yoder lacked the required hours of college credit. It was proven by unrebutted testimony that the Academy of Health Science, U.S. Army, Ft. Sam Houston, Texas, is not an accredited college or university. Having reviewed the other matters presented to include Exhibits 1-5, the Hearing Officer finds that Mrs. Yoder is eminently qualified except for the lack of the 50 semester hours or its equivalent required by Rule 10D-41.05(5) and (6), F.A.C.
Recommendation The Hearing Officer therefore recommends that the Respondent agency deny the application. DONE and ORDERED this 16th day of February, 1976. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Barbara Dell McPherson, Esquire Staff Attorney Division of Health Post Office Box 210 Jacksonville, Flora Geraldine K. Yoder 3101 N.W.. 4th Avenue, Apt. 1 Pompano Beach, Florida 33064
The Issue Whether Respondent committed an unlawful employment practice against Petitioner in violation of chapter 760, Florida Statutes (2012),1/ and Title VII of the Civil Rights Act.
Findings Of Fact Mr. Sims is an African-American man who worked as an adjunct professor for Valencia College from August 31, 2009, until August 6, 2011. During his employment with Valencia College, Mr. Sims taught pre-algebra and introduction to algebra. Valencia College is a two-year community college located in Central Florida, and is comprised of several different campuses. Mr. Sims was an adjunct professor of mathematics for the Osceola campus. Mr. Sims' Charge of Discrimination, initially filed with the Commission, alleged that he was terminated from his employment as an adjunct professor based on his race. After the Commission's determination that there was no cause to believe that a discriminatory practice had occurred, Mr. Sims filed his Petition for Relief. In the Petition for Relief, Mr. Sims alleged that Valencia College had discriminated against him based on race by: 1) not renewing his employment as an adjunct professor; 2) scheduling him fewer class assignments; and 3) paying him less than other adjunct professors. According to Ms. Washington, the math coordinator for Valencia College, an adjunct professor is one that enters into a contract to teach a specific class for a semester. Usually, an adjunct professor teaches between one and two classes a semester. Adjunct professors are paid by the hour for the number of classes. All adjunct professors in the mathematics department were paid pursuant to a scale based on the individual's educational background and number of hours taught. For example, as shown by Respondent's Exhibit 5, all adjunct professors, who had a bachelor's degree in mathematics, were paid $525.00 for one contract hour course. An adjunct professor does not receive any payment if he or she is not on the teaching schedule. Further, as Dr. Perdone, the head of Valencia College's math and science department at the Osceola campus explained, Valencia College uses adjunct professors as a means of controlling costs, and providing flexibility for meeting its students' needs. Mr. Sims did not bring forward any evidence showing that Valencia College engaged in a discriminatory employment practice. Part of Ms. Washington's responsibilities is collecting data concerning the adjunct professor's effectiveness at the end of each semester. In evaluating an adjunct professor's performance, Valencia College's math department examines the "test-taker pass rate," "overall retention," and "overall pass rate." Ms. Washington and Dr. Perdone explained the definitions of each of these terms as follows: "test-taker pass rate" means percentage of students that passed the exam out of those who took the final exam; "overall retention rate" means percentage of students that sat through the entire course and attempted the final out of the total number of students that began the class; and "overall pass rate" is the successful completion rate, the percentage of students who actually passed the class at the end from of the number of students that begin the class. Ms. Washington explained that the "overall retention rate" is important because it indicates that students remained in the classroom for the entire semester, and that the students, if they initially failed, are more likely to pass the class the following semester. Dr. Perdone explained that in reviewing an adjunct professor, she was most interested in the "overall pass rate" which showed the student's successful completion of the course. In a developmental math class, such as pre-algebra or introduction to algebra, the students must successfully complete the class before being enrolled in a college credit math class. The data compiled by Ms. Washington showed that Mr. Sims' teaching performance in his pre-algebra and introduction to algebra classes for the spring and summer semesters 2011 was substandard. Specifically, the evidence showed that the "overall retention rate" for Mr. Sims' developmental math classes for the Spring Semester 2011 were at 50 percent and 35 percent. Further, the percentage of students successfully completing the two classes taught by Mr. Sims had an "overall pass rate" of 35 percent. These numbers represented the lowest for all adjunct math professors on the Osceola campus. Further, Mr. Sims' teaching performance for the Summer 2011 semester also showed a 41 percent "overall retention rate" and a 36 percent “overall pass rate.” Again, Mr. Sims had the lowest percentage of students successfully completing his class out of all the adjunct professors for the math department. The data compiled by Ms. Washington was provided to Dr. Perdone, and Ms. Washington recommended that Valencia College not continue hiring Mr. Sims as an adjunct professor. Dr. Perdone credibly testified in relation to reviewing the data concerning Mr. Sims' teaching that "when we're not seeing enough students getting through the course, sitting for the exam, and passing the exam was my primary concern." Further, Dr. Perdone credibly testified that she had received student complaints about Mr. Sims? teaching not being a "positive experience," and him being condescending to students. In June 2011, Dr. Perdone provided Mr. Sims with an evaluation for the Spring Semester 2011. The evaluation states that Mr. Sims was satisfactory in the areas of "Effectiveness of Teaching/Learning Process," "Scope and Content" of material presented, "Departmental Communication and Support," and in "Testing and Evaluation." However, Dr. Perdone rated Mr. Sims as unsatisfactory in the area of "Review Prior Session Student Assessment Data." Specifically, Dr. Perdone's comments on the evaluation state: Prof. Sims had a challenging year in the math department. He had prior improvements but his successful completion rates and student feedback have taken a negative turn. The rate of students making it successfully through the entire course has dropped to 35 percent. Also, students have visited the office to express their concerns that Prof. Sims does not show a caring and supportive demeanor with students in class. These issues cannot continue if Prof. Sims would like to continue to teach in the math department. On receiving this evaluation, Mr. Sims became upset and spoke with Dr. Perdone. Mr. Sims was upset and questioned why he was being held accountable for students withdrawing from his class. Dr. Perdone explained that Valencia College kept track of the data, and that she was concerned about the number of students successfully completing the class. She found the conversation with Mr. Sims argumentative about Valencia College's keeping track of the data on student withdrawals. It was Mr. Sims' contention that he should not be held responsible for students withdrawing from his class. Dr. Perdone credibly testified that her discussion with Mr. Sims did not progress past his displeasure with Valencia College keeping track of student withdrawals. At the heat of the discussion, and during the presentation of the evidence in this case, Mr. Sims claimed he never understood how the "retention rate" and "overall pass rate" were calculated. Further, Dr. Perdone credibly testified that at no point in their discussion did Mr. Sims ask or seek guidance on how to improve his teaching. Finally, Dr. Perdone credibly testified that her conversation with Mr. Sims confirmed the student complaints about his teaching being condescending. For example, Dr. Perdone took exception to Mr. Sims? negative characterization of the students in the "remedial" math classes.” There is no direct evidence of discrimination. Further, there is no evidence showing that similarly situated adjunct professors, who were not African American, were treated differently than Mr. Sims in scheduling classes, pay, or renewing the adjunct professor contract. Mr. Sims' testimony was often confusing and did not support his contention that he was the victim of racial discrimination. For example, in one instance, in attempting to prove that he was discriminated against in class scheduling, Mr. Sims testified that he believed in the Spring 2011 semester, Ms. Washington and Dr. Perdone discriminated against him by not scheduling him to teach. Then, according to Mr. Sims' testimony, at the "eleventh hour" he was asked to teach a developmental class when an adjunct professor was not available. Mr. Sims contended that in scheduling him to teach this particular class, Dr. Perdone knew before assigning him to the class that students would either withdraw or not successfully complete the class. Therefore, under Mr. Sims? theory, Valencia College discriminated against him both by not scheduling him to teach, and then by scheduling him to teach. Contrary to Mr. Sims' assertions, Ms. Washington credibly testified that Mr. Sims, as well as other adjunct professors, was sent an e-mail in the fall of 2010 asking if the professors would be available to teach in the Spring. Further, Ms. Washington and Dr. Perdone credibly testified that because Mr. Sims did not respond to the e-mail, he was not placed on the schedule. Mr. Sims did not bring forward any evidence showing that Dr. Perdone's explanation that she decided not to contract with him as an adjunct professor, based on his poor classroom performance was pretextual.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order finding that Petitioner failed to show that Respondent engaged in an unlawful practice in violation of the Florida Civil Rights Act, and dismissing the Petition for Relief. DONE AND ENTERED this 21st day of September, 2012, in Tallahassee, Leon County, Florida. S THOMAS P. CRAPPS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of September, 2012.
The Issue The primary issue is whether the process used by the Department of Education (Department) for evaluating and ranking the proposals submitted in response to Request For Proposal (RFP) 99-03 for the Florida Comprehensive Assessment Test (FCAT) administration contract was contrary to the provisions of the RFP in a way that was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact The RFP for the FCAT describes a five stage process for evaluating proposals. In Stage I, the Department’s Purchasing Office determined whether a proposal contained certain mandatory documents and statements and was sufficiently responsive to the requirements of the RFP to permit a complete evaluation. Stage II involved the Department’s evaluation of a bidder’s corporate qualifications to determine whether the bidder has the experience and capability to do the type of work that will be required in administering the FCAT. Stage III was the Department’s evaluation of a bidder’s management plan and production proposal. In Stage IV, the Department evaluated a bidder’s cost proposal. Stage V involved the ranking of proposals based on points awarded in Stages II-IV. If a proposal did not meet the requirements at any one stage of the evaluation process, it was not to be evaluated in the following stage. Instead, it was to be disqualified from further consideration. Stages II and III of the evaluation process were conducted by an evaluation team comprised of six Department employees: Dr. Debby Houston, Ms. Lynn Joszefczyk, Dr. Peggy Stillwell, Dr. Cornelia Orr, Dr. Laura Melvin, and Ms. Karen Bennett. Dr. Thomas Fisher, head of the Department’s Assessment and Evaluation Services Section, and Dr. Mark Heidorn, Administrator for K-12 Assessment Programs within the Department’s Assessment and Evaluation Services Section, served as non-voting co-chairs of the evaluation team. The focus of this proceeding is Stage II of the evaluation process addressing a bidder’s corporate qualifications. RFP Provisions Regarding Corporate Qualification The FCAT administration contractor will be required to administer tests to approximately one and a half million students each year in a variety of subject areas at numerous grade levels. The FCAT program involves a complex set of interrelated work activities requiring specialized human resources, technological systems and procedures. The FCAT must be implemented annually within limited time periods. The FCAT administration contractor must meet critical deadlines for the delivery of test materials to school districts and the delivery of student scores prior to the end of the school year. In developing the RFP, the Department deliberately established a set of minimum requirements for corporate qualifications that a bidder was to demonstrate in order for its proposal to be eligible for further evaluation. The purpose of the RFP’s minimum corporate qualifications requirements was to limit bidding to qualified vendors who have demonstrated prior experience in successfully administering large-scale assessment projects like the FCAT, thereby providing the Department with some degree of assurance that the winning bidder could successfully administer the FCAT. The instructions to bidders regarding the minimum requirements for corporate qualifications are contained in RFP Section 10, which gives directions on proposal preparation. Section 10.1, which lists certain mandatory documents and statements to be included in the bidder’s proposal, requires that a transmittal letter contain "[a] statement certifying that the bidder has met the minimum corporate qualifications as specified in the RFP." These "minimum corporate qualifications" are set forth in RFP Appendix J. RFP Section 10.2 identifies what a bidder is required to include in its proposal with respect to corporate qualifications. The first paragraph of Section 10.2 directs a bidder generally to describe its qualifications and experience performing tasks similar to those that it would perform in administering the FCAT, in order to demonstrate that the bidder is qualified where it states: Part II of a bidder’s proposal shall be entitled Corporate Qualifications. It shall provide a description of the bidder’s qualifications and prior experience in performing tasks similar to those required in this RFP. The discussion shall include a description of the bidder’s background and relevant experience that qualifies it to provide the products and services required by the RFP. RFP Section 10.2, however, is not limited to a directive that qualifications and past experience be described generally. Instead, Section 10.2, also communicates, in plain and unambiguous terms, that there are specific minimum corporate qualifications a bidder must demonstrate: The minimum expectations for corporate qualifications and experience are shown in Appendix J. There are two separate sets of factors, one set of eight for the developmental contractor and another set of nine for the administration contractor. Bidders must demonstrate their Corporate Qualifications in terms of the factors that are applicable to the activities for which a bid is being submitted -- development or administration. For each criterion, the bidder must demonstrate that the minimum threshold of experience has been achieved with prior completed projects. (Emphasis added.) Moreover, Section 10.2 singles out for emphasis, in relation to the administration component of the RFP, the importance placed on a bidder’s ability to demonstrate experience processing a large volume of tests: The [bidder’s prior completed] projects must have included work tasks similar to those described herein, particularly in test development or processing a comparable number of tests. The bidder will provide a description of the contracted services; the contract period; and the name, address, and telephone number of a contact person for each of the contracting agencies. This description shall (1) document how long the organization has been providing similar services; (2) provide details of the bidder’s experience relevant to the services required by this RFP; and (3) describe the bidder’s other testing projects, products, and services that are similar to those required by this RFP. (Emphasis added.) The Department thus made clear its concern that bidders demonstrate experience with large-scale projects. RFP Appendix J sets forth nine different criteria (C1 through C9) for the administration contractor. As stated in RFP Section 10.2, "[f]or each criterion, the bidder must demonstrate that the minimum threshold of experience has been achieved with prior completed projects . . . ." (emphasis added). Appendix J contains a chart which lists for each criterion: (1) a summary of the related FCAT work task, (2) the detailed criteria for the bidder’s experience related to that work task, and (3) the necessary documentation a bidder must provide. Criterion C4 and Criterion C6 include work tasks that involve the use of image-based scoring technology. C4 and C6 are the only corporate qualifications criteria at issue in this proceeding. RFP Provisions Involving Corporate Qualifications for Image-Based Scoring "Handscoring" is the test administration activity in which open-ended or performance-based student responses are assessed. This practice involves a person reading something the student has written as part of the test, as distinguished from machine scoring multiple choice responses (i.e., the filled-in "bubbles" on an answer sheet). There are two types of handscoring: (1) paper-based handscoring, and (2) image-based handscoring. Paper-based handscoring requires that a student response paper be sent to a reader, who then reviews the student’s response as written on the paper and enters a score on a separate score sheet. Image-based handscoring involves a scanned image of the student’s response being transmitted to a reader electronically. The student’s response is then projected on a computer screen, where the reader reviews it and assigns a score using the computer. The RFP requires that the reading and math portions of the FCAT be handscored on-line using imaging technology beginning with the February 2000 FCAT administration. The RFP provides that the writing portion of the FCAT may be handscored using either the paper-based method or on-line imaging technology during the February 2000 and 2001 FCAT administrations. However, on-line image-based scoring of the writing portion of the FCAT is required for all FCAT administrations after February 2001. An image-based scoring system involves complex computer technology. William Bramlett, an expert in designing and implementing large-scale imaging computer systems and networks, presented unrefuted testimony that an image-based scoring system will be faced with special challenges when processing large volumes of tests. These challenges involve the need to automate image quality control, to manage the local and wide area network load, to assure adequate server performance and storage requirements, and to manage the work flow in a distributed environment. In particular, having an image-based scoring system process an increasing volume of tests is not simply a matter of adding more components. Rather, the system’s basic software architecture must be able to understand and manage the added elements and volume involved in a larger operation. According to Bramlett, there are two ways that the Department could assess the ability of a bidder to perform a large- scale, image-based scoring project such as the FCAT from a technological perspective: (1) have the bidder provide enough technological information about its system to be able to model or simulate the system and predict its performance for the volumes involved, or (2) require demonstrated ability through completion of prior similar projects. Dr. Mark Heidorn, Administrator for Florida’s K-12 Statewide Assessment Programs, was the primary author of RFP Sections 1-8, which describe the work tasks for the FCAT -- the goods and services vendors are to provide and respond to in their technical proposals. Dr. Heidorn testified that in the Department’s testing procurements involving complex technology, the Department has never required specific descriptions of the technology to be used. Instead, the Department has relied on the bidder’s experience in performing similar projects. Thus, the RFP does not specifically require that bidders describe in detail the particular strategies and approaches they intend to employ when designing and implementing an image-based scoring system for FCAT. Instead, the Department relied on the RFP requirements calling for demonstrated experience as a basis to understand that the bidder could implement such an image-based scoring system. Approximately 717,000 to 828,000 student tests will be scored annually by the FCAT administration contractor using imaging technology. The RFP, however, does not require that bidders demonstrate image-based scoring experience at that magnitude. Instead, the RFP requires bidders to demonstrate only a far less demanding minimum level of experience using image-based scoring technology. Criterion C4 and Criterion C6 in Appendix J of the RFP each require that a bidder demonstrate prior experience administering "a minimum of two" assessment programs using imaged- based scoring that involved "at least 200,000 students annually." The requirements for documenting a "minimum of two" programs or projects for C4 and C6 involving "at least 200,000 students annually" are material because they are intended to provide the Department with assurance that the FCAT administration contractor can perform the large-scale, image-based scoring requirements of the contract from a technological perspective. Such experience would indicate that the bidder would have been required to address the sort of system issues described by Bramlett. Dr. Heidorn testified that the number 200,000 was used in C4 and C6 "to indicate the level of magnitude of experience which represented for us a comfortable level to show that a contractor had enough experience to ultimately do the project that we were interested in completing." Dr. Fisher, who authored Appendix J, testified that the 200,000 figure was included in C4 and C6 because it was a number judged sufficiently characteristic of large-scale programs to be relevant for C4 and C6. Dr. Fisher further testified that the Department was interested in having information that a bidder’s experience included projects of a sufficient magnitude so that the bidder would have experienced the kinds of processing issues and concerns that arise in a large-scale testing program. The Department emphasized this specific quantitative minimum requirement in response to a question raised at the Bidder’s Conference held on November 13, 1998: Q9: In Appendix J, the criteria for evaluating corporate quality for the administration operations C4, indicates that the bidder must have experience imaging as indicated. Does this mean that the bid [sic] must bid for using [sic] imaging technology for reading and mathematics tests? A: Yes. The writing assessment may be handscored for two years, and then it will be scored using imaging technology. To be responsive, a bid must be for imaging. The corporate experience required (200,000 students annually for which reports were produced in three months) could be the combined experience of the primary contractor and the subcontractors. (Emphasis added.) Criterion C4 addresses the RFP work tasks relating to handscoring, including both the image-based handscoring of the reading and math portions of the FCAT for all administrations and the writing portions of the FCAT for later administrations. The "Work Task" column for C4 in Appendix J of the RFP states: Design and implement efficient and effective procedures for handscoring student responses to performance tasks within the limited time constraints of the assessment schedule. Handscoring involves image-based scoring of reading and mathematics tasks for all administrations and writing tasks for later administrations at secure scoring sites. Retrieve and score student responses from early district sample schools and deliver required data to the test development contractor within critical time periods for calibration and scaling. The "Necessary Documentation" column for C4 in Appendix J states: Bidder must document successful completion of a minimum of two performance item scoring projects for statewide assessment programs during the last four years for which the bidder was required to perform as described in the Criteria column. (Emphasis added.) The "Criteria" column for C4 in Appendix J, like the related work tasks in the RFP, addresses both image-based handscoring of reading and math, as well as paper-based or image- based handscoring of writing. In connection with all handscoring work tasks, "[t]he bidder must demonstrate completion of test administration projects for a statewide program for which performance items were scored using scoring rubrics and associated scoring protocols." With respect to the work tasks for handscoring the reading and math portions of the FCAT, "[t]he bidder must demonstrate completion of statewide assessment programs involving scoring multiple-choice and performance items for at least 200,000 students annually for which reports were produced in three months." In addition, for the reading and math work tasks, "[e]xperience must been shown in the use of imaging technology and hand-scoring student written responses with completion of scoring within limited time restrictions." This provision dealing with "imaging technology" experience self-evidently addresses the reading and math components, because separate language addresses imaging experience in connection with the writing component. The relevant handscoring experience for the reading and math aspects of the program is experience using image-based technology. By contrast, with respect to the work tasks for scoring the writing portions of the FCAT, "the bidder must also demonstrate completion of statewide assessment programs involving paper-based or imaged scoring student responses to writing assessment prompts for at least 200,000 students annually for which reports were produced in three months." (Emphasis added.) Criterion C6 addresses work tasks relating to designing and implementing systems for processing, scanning, imaging and scoring student responses to mixed-format tests within limited time constraints. The "Work Task" column for C6 in RFP Appendix J states: Design and implement systems for the processing, scanning, imaging, and scoring of student responses to test forms incorporating both multiple-choice and constructed response items (mixed-format) within the limited time constraints of the assessment schedule. Scoring of student responses involves implementation of IRT scoring tables and software provided by the development contractor within critical time periods. The "Necessary Documentation" column for C6 in Appendix J states: Bidder must document successful completion of a minimum of two test administration projects for statewide assessment programs during the last four years in which the bidder was required to perform as described in the Criteria column. (Emphasis added.) The Criteria column for C6 in Appendix J states: The bidder must demonstrate completion of test administration projects for statewide assessment programs or other large-scale assessment programs that required the bidder to design and implement systems for processing, scanning, imaging, and scoring responses to mixed-format tests for at least 200,000 students annually for which reports were produced in three months. Experience must be shown in use of imaging student responses for online presentation to readers during handscoring. (Emphasis added.) RFP Provisions Per Corporate Qualifications The procedure for evaluating a bidder’s corporate qualifications is described in RFP Section 11.3: The Department will evaluate how well the resources and experience described in each bidder’s proposal qualify the bidder to provide the services required by the provisions of this RFP. Consideration will be given to the length of time and the extent to which the bidder and any proposed subcontractors have been providing services similar or identical to those requested in this RFP. The bidder’s personnel resources as well as the bidder’s computer, financial, and other technological resources will be considered in evaluating a bidder’s qualifications to meet the requirements of this RFP. Client references will be contacted and such reference checks will be used in judging a bidder’s qualifications. The criteria to be used to rate a bidder’s corporate qualifications to meet the requirements of this RFP are shown in Appendix J and will be applied as follows: * * * Administrative Activities. Each of the nine administration activities criteria in Appendix J will be individually rated by members of the evaluation team. The team members will use the rating scale shown in Figure 1 below. Individual team members will review the bidder’s corporate qualifications and rate the response with a rating of one to five. The ratings across all evaluators for each factor will be averaged, rounded to the nearest tenth, and summed across all criteria. If each evaluator assigns the maximum number of points for each criterion, the total number of points will be 45. To meet the requirements of Stage II, the proposal must achieve a minimum rating of 27 points and have no individual criterion for which the number of points averaged across evaluators and then rounded is less than 3.0. Each proposal that receives a qualifying score based on the evaluation of the bidder’s qualifications will be further evaluated in Stage III. Figure 1 Evaluation Scale for Corporate Qualifications 5 Excellent 4 3 Satisfactory 2 1 Unsatisfactory The bidder has demonstrated exceptional experience and capability to perform the required tasks. The bidder has demonstrated that it meets an acceptable level of experience and capability to perform the required tasks. The bidder either has not established its corporate qualifications or does not have adequate qualifications. RFP Section 11.3 provides that each of the nine corporate qualifications criteria for administration operations in Appendix J (C1 through C9) will be individually rated by the six members of the evaluation team using a scale of one to five. A rating of three is designated as "satisfactory" which means that "[t]he bidder has demonstrated that it meets an acceptable level of experience and capability to perform the required tasks." In order to be further evaluated, Section 11.3 provides that there must be no individual corporate qualifications criterion for which the bidder’s proposal receives a score less than 3.0 (average points across evaluators). Dr. Fisher, the primary author of Section 11.3 of the RFP, referred to the 3.0 rating as the "cut score." (Emphasis added.) The RFP’s clear and unambiguous terms thus establish the "minimum threshold" of experience that a bidder "must demonstrate" in its proposal for Criterion C1 through Criterion C9. The "minimum threshold" of experience that a bidder must demonstrate for each criterion is described in Appendix J of the RFP. If a proposal failed to demonstrate that the bidder meets the minimum threshold of experience for a particular criterion in Appendix J, the bidder obviously would not have demonstrated "that it meets an acceptable level of experience and capability to perform the required tasks." Thus, in that setting, an evaluator was to have assigned the proposal a rating of less than "satisfactory," or less than three, for that criterion. (Emphasis added.) The fact that a score less than "3" was expected for -- and would eliminate -- proposals that did not demonstrate the "minimum threshold" of experience does not render meaningless the potential scores of "1" and "2." Those scores may reflect the degree to which a bidder’s demonstrated experience was judged to fall below the threshold. Although some corporate capability minimums were stated quantitatively (i.e., "minimum of two," or "at least 200,000"), others were open to a more qualitative assessment (i.e., "large-scale," "systems," or "reports"). Moreover, a proposal that included demonstrated experience in some manner responsive to each aspect of Appendix J might nevertheless be assigned a score of less than "3," based on how an evaluator assessed the quality of the experience described in the proposal. By the terms of the RFP, however, an average score across evaluators of less than 3 represented essentially a decision that the minimum threshold of experience was not demonstrated. Had the Department truly intended Appendix J to reflect only general targets or guidelines, there were many alternative ways to communicate such an intent without giving mandatory direction about what bidders "must demonstrate" or without establishing quantitative minimums (i.e. "a minimum of two," or "at least 200,000"). RFP Appendix K, for instance, sets forth the evaluation criteria for technical proposals in broad terms that do not require the bidder to provide anything in particular. Even within Appendix J, other than in Criterion C4 and Criterion C6, bidders were to show experience with "large-scale" projects rather than experience at a quantified level. Pursuant to the RFP’s plain language, in order to meet the "minimum threshold" of experience for Criterion C4 and Criterion C6, a bidder "must demonstrate," among other things, successful completion of a "minimum of two" projects, each involving the use of image-based scoring technology in administering tests to "at least 200,000 students annually." Department’s Evaluation of Corporate Qualifications In evaluating Harcourt’s proposal, the Department failed to give effect to the plain RFP language stating that a bidder "must document" successful completion of a "minimum of two" testing projects involving "at least 200,000 students annually" in order to meet the "minimum threshold" of experience for C4 and C6. Dr. Fisher was the primary author of Sections 10, 11 and Appendix J of the RFP. He testified that during the Stage II evaluation of corporate qualifications, the evaluation team applied a "holistic" approach, like that used in grading open-ended written responses in student test assessments. Under the holistic approach that Dr. Fisher described, each member of the evaluation team was to study the proposals, compare the information in the proposals to everything contained in Appendix J, and then assign a rating for each criterion in Appendix J based on "how well" the evaluator felt the proposal meets the needs of the agency. Notwithstanding Dr. Fisher’s present position, the RFP’s terms and their context demonstrate that the minimum requirements for corporate qualifications are in RFP Appendix J. During the hearing, Dr. Fisher was twice asked to identify language in the RFP indicating that the Department would apply a "holistic" approach when evaluating corporate qualifications. Both times, Dr. Fisher was unable to point to any explicit RFP language putting bidders on notice that the Department would be using a "holistic" approach to evaluating proposals and treating the Appendix J thresholds merely as targets. In addition, Dr. Fisher testified that the Department did not engage in any discussion at the bidders’ conference about the evaluation method that was going to be used other than drawing the bidders’ attention to the language in the RFP. As written, the RFP establishes minimum thresholds of experience to be demonstrated. Where, as in the RFP, certain of those minimum thresholds are spelled out in quantitative terms that are not open to interpretation or judgment, it is neither reasonable nor logical to rate a proposal as having demonstrated "an acceptable level of experience" when it has not demonstrated the specified minimum levels, even if other requirements with which it was grouped were satisfied. The plain RFP language unambiguously indicates that an analytic method, not a "holistic" method, will be applied in evaluating corporate qualifications. Dr. Fisher acknowledged that, in an assessment using an analytic method, there is considerable effort placed up front in deciding the specific factors that will be analyzed and those factors are listed and explained. Dr. Fisher admitted that the Department went into considerable detail in Appendix J of the RFP to explain to the bidders the minimums they had to demonstrate and the documentation that was required. In addition, Dr. Orr, who served as a member of the evaluation team and who herself develops student assessment tests, stated that in assessments using the "holistic" method there is a scoring rubric applied, but that rubric does not contain minimum criteria like those found in the RFP for FCAT. The holistic method applied by the Department ignores very specific RFP language which spells out minimum requirements for corporate qualifications. Harcourt’s Corporate Qualifications for C4 and C6 Harcourt’s proposal lists the same three projects administered by Harcourt for both Criterion C4 and Criterion C6: the Connecticut Mastery Test ("CMT"), the Connecticut Academic Performance Test ("CAPT") and the Delaware Student Testing Program ("DSTP"). Harcourt’s proposal also lists for Criterion C4 projects administered by its proposed scoring subcontractors, Measurement Incorporated ("MI") and Data Recognition Corporation ("DRC"). However, none of the projects listed for MI or DRC involve image- based scoring. Thus, the MI and DRC projects do not demonstrate any volume of image-based scoring as required by C6 and by the portion of C4 which relates to the work task for the imaged-based scoring of the math and reading portions of the FCAT. Harcourt’s proposal states that "[a]pproximately 35,000 students per year in grade 10 are tested with the CAPT." Harcourt’s proposal states that "[a]pproximately 120,000 students per year in grades 4, 6 and 8 are tested with the CMT." Harcourt’s proposal states that "[a]pproximately 40,000 students in grades 3, 5, 8, and 10" are tested with the DSTP. Although the descriptions of the CMT and the CAPT in Harcourt’s proposal discuss image-based scoring, there is nothing in the description of the DSTP that addresses image-based scoring. There is no evidence that the evaluators were ever made aware that the DSTP involved image-based scoring. Moreover, although the Department called the Delaware Department of Education ("DDOE") as a reference for Harcourt’s development proposal, the Department did not discuss Harcourt’s administration of the DSTP (including whether the DSTP involves image-based scoring) with the DDOE. Harcourt overstated the number of students tested in the projects it referenced to demonstrate experience with image-based scoring. Harcourt admitted at hearing that, prior to submitting its proposal, Harcourt had never tested 120,000 students with the CMT. In fact, the total number of students tested by Harcourt on an annual basis under the CMT has ranged from 110,273 in the 1996- 97 school year to 116,679 in the 1998-99 school year. Harcourt also admitted at hearing that, prior to submitting its proposal, Harcourt had never tested 35,000 students in grade 10 with the CAPT. Instead, the total number of grade 10 students tested by Harcourt on an annual basis with the CAPT ranged from 30,243 in 1997 to 31,390 in 1998. In addition, Harcourt admitted at hearing that, prior to submitting its proposal, it had conducted only one "live" administration of the DSTP (as distinguished from field testing). That administration of the DSTP involved only 33,051, not 40,000, students in grades 3, 5, 8 and 10. Harcourt itself recognized that "field tests" of the DSTP are not responsive to C4 and C6, as evidenced by Harcourt’s own decision not to include in its proposal the number of students field tested under the DSTP. Even assuming that the numbers in Harcourt’s proposal are accurate, and that the description of the DSTP in Harcourt’s proposal reflected image-based scoring, Harcourt’s proposal on its face does not document any single project administered by Harcourt for C4 or C6 involving image-based testing of more than 120,000 students annually. When the projects are aggregated, the total number of students claimed as tested annually still does not reach the level of "at least 200,000;" it comes to only 195,000, and it reaches that level only once due to the single administration of the DSTP. Moreover, even if that 195,000 were considered "close enough" to the 200,000 level required, it was achieved only one time, while Appendix J plainly directs that there be a minimum of two times that testing at that level has been performed. The situation worsens for Harcourt when using the true numbers of students tested under the CMT, CAPT, and DSTP, because Harcourt cannot document any single image-based scoring project it has administered involving testing more than 116,679 students annually. Moreover, when the true numbers of students tested are aggregated, the total rises only to 181,120 students tested annually on one occasion, and no more than 141,663 tested annually on any other occasion. Despite this shortfall from the minimum threshold of experience, under the Department’s holistic approach the evaluators assigned Harcourt’s proposal four ratings of 3.0 and two ratings of 4.0 for C4, for an average of 3.3 on C4; and five ratings of 3.0 and one rating of 4.0 for C6, for an average of 3.2 on C6. Applying the plain language of the RFP in Sections 10 and 11 and Appendix J, Harcourt did not demonstrate that it meets an acceptable level of experience and capability for C4 or C6, because Harcourt did not satisfy the minimum threshold for each criterion by demonstrating a minimum of two prior completed projects involving image-based scoring requiring testing of at least 200,000 students annually. Harcourt’s proposal should not have received any rating of 3.0 or higher on C4 or C6 and should have been disqualified from further evaluation due to failure to demonstrate the minimum experience that the Department required in order to be assured that Harcourt can successfully administer the FCAT program. NCS’s Compliance With RFP Requirements Even though the NCS proposal did not meet all of the mandatory requirements, and despite the requirement of Section 11.2 that the proposal be automatically disqualified under such circumstances, the Department waived NCS’s noncompliance as a minor irregularity. The factors in C4 and C6 were set, minimal requirements with which NCS did not comply. For example, one of the two programs NCS submitted in response to Criteria C4 and C6 was the National Assessment of Educational Progress program ("NAEP"). NAEP, however, is not a "statewide assessment program" within the meaning of that term as used in Criteria C4 and C6. Indeed, NCS admitted that NAEP is not a statewide assessment program and that, without consideration of that program, NCS’s proposal is not responsive to Criteria C4 and C6 because NCS has not have submitted the required proof of having administered two statewide assessment programs. This error cannot be cured by relying on the additional experience of NCS’s subcontractor because that experience does not show that its subcontractor produced reports within three months, and so such experience does not demonstrate compliance with Criteria C4. The Department deliberately limited the competition for the FCAT contract to firms with specified minimum levels of experience. As opined at final hearing, if the Department in the RFP had announced to potential bidders that the type of experience it asked vendors to describe were only targets, goals and guidelines, and that a failure to demonstrate target levels of experience would not be disqualifying, then the competitive environment for this procurement would have differed since only 2.06 evaluation points (out of a possible 150) separated the NCS and Harcourt scores. Dr. Heidorn conceded that multiple companies with experience in different aspects of the FCAT program -- a computer/imaging company and a firm experienced in educational testing -- might combine to perform a contract like the FCAT. Yet, that combination of firms would be discouraged from bidding because they could not demonstrate the minimum experience spelled out in the RFP. Language in the RFP, indicating the "holistic" evaluation that was to be applied, could have resulted in a different field of potential and actual bidders.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that Respondent, State of Florida, Department of Education, enter a Final Order rejecting the bids submitted by Harcourt and NCS for the administration component of the RFP. The Department should then seek new proposals. DONE AND ENTERED this 25th day of May, 1999, in Tallahassee, Leon County, Florida. DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of May, 1999. COPIES FURNISHED: Karen D. Walker, Esquire Holland and Knight, LLP Post Office Drawer 810 Tallahassee, Florida 32302 Mark D. Colley, Esquire Holland and Knight, LLP Suite 400 2100 Pennsylvania Avenue, Northwest Washington, D.C. 20037 Charles S. Ruberg, Esquire Department of Education The Capitol, Suite 1701 Tallahassee, Florida 32399-0400 Paul R. Ezatoff, Jr., Esquire Christopher B. Lunny, Esquire Katz, Kutter, Haigler, Alderman, Bryant and Yon, P.A. 106 East College Avenue, Suite 1200 Tallahassee, Florida 32302-7741 Tom Gallagher Commissioner of Education Department of Education The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400 Michael H. Olenick, General Counsel Department of Education The Capitol, Suite 1701 Tallahassee, Florida 32399-0400
