The Issue The issue in this case is whether Petitioner is entitled to an exemption from sales and use tax as a religious or charitable organization.
Findings Of Fact By Application for Consumer Certificate of Exemption dated March 17, 1992, Petitioner requested a sales tax exemption as a religious organization. The application indicates that Petitioner was incorporated on February 18, 1992. At all times, the president of Petitioner has been Reverend Robert M. Rinaldi. By letter dated April 16, 1992, Respondent requested that Petitioner supply information concerning its primary purpose, including a list of all activities or services and to whom they are generally offered. The letter also requested, among other things, statements of receipts and expenditures and a copy of the letter determining that Petitioner is exempt from federal income tax. Petitioner submitted to Respondent evidence of 12 expenditures during the quarter ending March 31, 1992. The expenditures and their descriptions are as follows: Morrisons-- dinner business; Holiday Inn in Tampa--lodging for quarterly convention; Maas Brother in Naples--attire; Marshalls-- personal; Martha's Health Food Shop--personal; Things Remembered--card case/business cards; RJ Cafe Tropical--lunch interview; Beach Works Marco Island--attire; annual membership fee for vice president's American Express card; Las Vegas Discount golf and tennis in Naples--personal; Eckerd's Vision Works--medical eyeglasses; Quality Inn Golf Country Club in Naples--lodging during business travel; Avon Fashions/Hampton-- personal; Del Wright in Sarasota--automobile expenses and travel; JC Penney--personal; Amador's Restaurant in Naples-- dinner/lunch; Avon Fashions/Hampton--personal; annual membership fee for treasurer's American Express card; and Mobil Oil--business travel. Petitioner produced other evidence of similar types of expenditures, such as for fitness center fees, car insurance, car service, car payments, utilities, and rent. Nothing in the record links these expenditures to religious or charitable activities. There were expenditures for printing religious tracts and self- improvement educational materials, but they do not appear to be a substantial part of the total expenditures of Petitioner during the time in question. After receiving these materials, a representative of Respondent telephoned Reverend Rinaldi and stated that Petitioner would have to submit additional documentation of its income and expenses and formal affiliation with prison chapels where Petitioner reportedly conducted outreach programs. Respondent's representative also asked for evidence of Reverend Rinaldi's counselling credentials. Petitioner next submitted a copy of a letter from the Department of Treasury determining that Petitioner was exempt from federal income tax. Petitioner also submitted a budget for the year ending 1992 and a proposed budget for the year ending 1993. However, the budgets did not document a charitable purpose. The budget reveals that the largest disbursement was $4200, which was rent for an office and living quarters. The largest single receipt was $1764.27, which was a contribution from the incorporator, who was Rev. Rinaldi. There were no charitable receipts, such as from contributions from members, the public, or anonymous sources. On November 10, 1992, Respondent sent a letter to Petitioner requesting additional information, including statements of the primary purpose of the organization and of receipts and expenditures. The request asked for a description or explanation for each charity-related program expenditure. On November 18, 1992, Petitioner submitted a second Application for Consumer's Certificate of Exemption. The information was essentially unchanged from the first application. Rev. Rinaldi also sent Respondent a religious flyer. On February 10, 1993, Petitioner submitted a third Application for Consumer's Certificate of Exemption. The material was essentially unchanged from the preceding two applications. On March 30, 1993, one of Respondent's representatives sent a letter to Petitioner stating that Petitioner does not meet the criteria for exemption from sales tax. In response, Petitioner sent a letter to Respondent received April 8, 1993, requesting reconsideration of the denial. On May 4, 1993, Respondent sent Petitioner a letter stating that, as indicated during an earlier telephone conversation, Respondent had not yet received sufficient documentation to justify a sales tax exemption. Following up on Rev. Rinaldi's opinion that Petitioner qualified as a charitable organization, the letter suggests that he submit materials describing each charitable service or activity, the types of persons receiving such services, the frequency that the services are offered, the demonstrated benefit provided by Petitioner to disadvantaged persons, the fees charged by Petitioner, and the availability of Petitioner's services at the same or less cost elsewhere. The letter also asks for a statement of income and expenses. In response, Petitioner filed a fourth Application for Consumer's Certificate of Exemption on November 10, 1993. Rev. Rinaldi explained Petitioner's activities as informing people of the truth and the second coming of Jesus Christ and stopping addictions to drugs and alcohol. The enclosed materials included a church telephone number. The materials state that services are available 24 hours a day for no fees and are provided solely for the spiritual preparation of humanity. The materials also indicate several addresses at which religious activities are conducted. Upon investigation, Respondent learned that Petitioner's telephone number had been disconnected, the street address is Rev. Rinaldi's apartment, and the addresses at which religious activities are conducted are locations of Alcoholic Anonymous, from which Rev. Rinaldi and his church had been barred as public disturbances. Checking with the post office, the investigator learned that all mail for Rev. Rinaldi and Petitioner is being forwarded to an address in New York. Respondent asked for more information, and Petitioner supplied information no different than that previously supplied. By letter dated April 26, 1994, Respondent informed Petitioner that its application was denied. Following another exchange of correspondence, Respondent sent Petitioner a Notice of Intent to Deny dated June 17, 1994. The Notice of Intent to Deny states that Respondent determined that: [Petitioner] travels from church to church and does not assemble regularly at a particular established location. [Petitioner] conducts services for short periods of time at numerous temporary locations. [Respondent] has reviewed your application and supporting documents and has determined that the primary purpose of your organization fails to meet the qualifications for sales tax exemption authorized by Section 212.08(7), Florida Statutes. By letter dated June 24, 1994, Petitioner requested a formal hearing on its application for sales tax exemption. Petitioner does not regularly conduct services. Petitioner does not engage in other religious activities nor does Petitioner provide services typically associated with a church. Petitioner has no established physical place for worship. Petitioner has generalized plans to construct one or more places for worship. However, these plans are post-apocalyptic in nature and thus do not assure the commencement of construction in the immediate future.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Revenue enter a final order denying Petitioner's application for an exemption certificate from sales and use tax. ENTERED on December 20, 1994, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings on December 20, 1994. COPIES FURNISHED: Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Rev. Robert Rinaldi P.O. Box 1081 167 N. Collier Blvd. J-3 Marco Island, FL 33937-1081 Attorney Lisa M. Raleigh Office of the Attorney General The Capitol--Tax Section Tallahassee, FL 32399-1050
The Issue The ultimate issues in this case are: 1) whether certain agency statements made by the Respondent, DIVISION OF RETIREMENT, regarding the application of the provisions of Chapters 175 and 185, Florida Statutes, to pension plans for municipal fire fighters and police officers are "rules" as defined by Section 120.52(16), Florida Statutes; 2) if so, whether the agency is required to promulgate such "rules" in accordance with Section 120. 535, Florida Statutes; and 3) whether such "rules" constitute an invalid exercise of delegated legislative authority in violation of Section 120.56, Florida Statutes Specifically, the issues in this case relate to the criteria required of municipal pension plans to qualify for state funds. Chapters 175 and 185, Florida Statutes, provide for pension plans for fire fighters and police officers, and authorize two types of pension plans. "Chapter plans" are created by state law, and "local law plans" are created either by special act of the Legislature or by municipal ordinance. The gist of the CITY OF ST. PETERSBURG's Section 120.535 Petition is that the DIVISION is attempting by non-rule policy to impose the same requirements relating to terms, conditions, and benefits on local law plans that the DIVISION requires of chapter plans. Specifically, the alleged non-rule policies of the DIVISION of which the CITY complains are: 1) the definition of "credited service"; 2) the definition of "average final compensation"; 3) the disallowance of a Social Security offset; 4) the interpretation of "disability retirement"; 5) the requirement that all of the CITY's pension plans be in compliance in order to receive state funds; 6) the release of funds to other municipalities not found in compliance; 7) the failure to enforce Rule 60Z-1.004, Florida Administrative Code, which defines "credited service;" and, 8) the application of a declaratory statement issued to the City of Boca Raton to other municipalities. As set forth below, the requirements for local law plans have been the subject of extensive prior litigation. In rejecting a challenge to the constitutionality of these statutes, the Court in City of Orlando v. State Department of Insurance, 528 So.2d 468 (Fla. 1st DCA 1988) stated: Chapters 175 and 185 create a purely voluntary program whereby municipalities may receive state-collected taxes, imposed on property and casualty insurance premiums, with which to fund retirement programs for local police and fire fighters. In exchange for receipt of these funds, the legislature has established certain criteria under which the funds must be operated and managed. Id. at 469. The dispute in this case again focuses on determining what criteria the legislature has established for the operation and management of such local pension plans in order to establish whether a local plan complies with the statute for purposes of receiving state-collected tax funds. Petitioner, CITY OF ST. PETERSBURG, and Intervenors, FLORIDA LEAGUE OF CITIES and CITY OF LARGO, take the position that Respondent, DIVISION OF RETIREMENT, has made non-rule policy statements, and required compliance therewith, which go beyond the criteria established by the legislature for participation in the program. Petitioner contends that such statements violate Section 120.535, Florida Statutes, because the statements constitute unpromulgated rules, and further that such statements violate Section 120.56, Florida Statutes, because the statements constitute invalid exercises of delegated legislative authority. Respondent, DIVISION OF RETIREMENT, takes the position that the statements are not "rules" as defined in Section 120.56(12), Florida Statutes, that even if the statements are "rules" it is not practicable or feasible for the agency to promulgate the statements as rules, and that the statements merely apply the provisions of Chapters 175 and 185, Florida Statutes, as intended by the legislature, and therefore do not violate Section 120.56, Florida Statutes.
Findings Of Fact Parties Petitioner, the CITY OF ST. PETERSBURG (CITY), is a municipality of the State of Florida which participates in the voluntary program to receive state- collected taxes imposed on property and casualty insurance with which to fund retirement programs for its municipal fire fighters and police under Chapters 175 and 185, Florida Statutes, respectively. Intervenor, CITY OF LARGO (LARGO), also is a State of Florida municipality participating in such local plans for fire fighters and police. LARGO has standing to intervene in this proceeding. Intervenor, FLORIDA LEAGUE OF CITIES (LEAGUE), represents municipalities participating in such local plans for fire fighters and police. The LEAGUE has standing to intervene in this proceeding. Respondent, DIVISION OF RETIREMENT (DIVISION), is the agency of the State of Florida charged with the statutory duty to administer the voluntary program by which municipalities receive state-collected taxes imposed on property and casualty insurance with which to fund local plans under Chapters 175 and 185, Florida Statutes. Prior to 1993, the Florida Department of Insurance was the responsible state agency to administer Chapters 175 and 185, Florida Statutes. Intervenors, MICHAEL MOORE and RICHARD FEINBERG are municipal fire fighters with the CITY and have standing to intervene in this proceeding. (Russell M. Rizzo, a municipal police officer and an intervenor in case No. 95- 2637, did not request to intervene in the Section 120.535 action, case No. 95- 5089.) History Chapters 175 and 185, Florida Statutes, relating to pension plans for fire fighters and police, authorize two types of retirement or pension plans. One type is called "chapter plans" and the other is known as "local law plans." Chapter plans are created under state law, and the provisions of Chapters 175 and 185, Florida Statutes, control the plans' terms, conditions and benefits. Local law plans are purely voluntary and are created either by special act of the Legislature, or by municipal ordinance. The special act or municipal ordinance contain the provisions relating to the terms, conditions, and benefits of the local law retirement plan. Both chapter plans and local law plans receive funds from the state-collected premium tax on property and casualty insurance. The CITY has operated local law retirement plans for fire fighters and police since 1951. The CITY's police and fire fighter plans were first chartered by special act of the Legislature. The fire fighter charter plan has been closed to new members since approximately 1970. The CITY in 1970 established a supplemental retirement plan for fire fighters which was enacted by CITY ordinance. The CITY's police and fire fighter pension plans are subject to union negotiation, and cannot be unilaterally amended. City of Tallahassee v. Public Employee Relations Commission, 393 So.2d 1147 (Fla. 1st DCA 1981). In this respect, the CITY may not have the authority to make unilateral changes to its local law plans in order to comply with directives of the DIVISION. The CITY has voluntarily participated on a continuing basis in the program created under Chapters 175 and 185, Florida Statutes, whereby the CITY has received state-collected taxes imposed on property and casualty insurance premiums with which to fund its local plans for fire fighters and police. The CITY has received such funds until calendar year 1994. In 1986 the Legislature significantly amended Chapters 175 and 185, Florida Statutes. See Chapters 86-41 and 86-42, Laws of Florida. Chapter 86-41 pertained to municipal fire fighters; Chapter 86-42 pertained to municipal police officers. As indicated above, the constitutionality of these statutes was upheld in City of Orlando v. State Department of Insurance, supra. In section 1. of each act, the Legislature added substantially the same legislative intent language: Therefore, the Legislature declares that it is a proper and legitimate state purpose to provide a uniform retirement system for the benefit of fire fighters as hereinafter defined, and intends, in implementing the provisions of s. 14, Art. X of the State Constitution as they relate to municipal fire fighters' pension trust fund systems and plans, that such retire- ment systems or plans to be managed, administered, operated, and funded in such manner as to maximize the protection of the fire fighters' pension trust funds. This chapter hereby establishes minimum standards for the operation and funding of municipal fire fighters' pension trust fund systems and plans. After the enactment of Chapters 86-41 and 86-42, Laws of Florida, the Department of Insurance undertook rulemaking to implement the provisions of the acts. The CITY and the LEAGUE challenged the proposed rules under Section 120.54, Florida Statutes. The Department's proposed rules were upheld by a DOAH Hearing Officer. On appeal, the First District Court of Appeal reversed the order of the Hearing Officer, and held that the majority of the department's proposed rules were invalid because statutory provisions governing chapter pension plans, which were not made expressly applicable by the Legislature to local fire fighter and police plans, did not preempt municipal power with respect to pension plans. Florida League of Cities, Inc. v. Department of Insurance, 540 So.2d 850 (Fla. 1st DCA 1989) review denied 545 So.2d 1367 (Fla. 1989), [hereinafter referred to as the "Rules Case"]. In 1988 the CITY and the Department of Insurance engaged in litigation regarding the compliance of the CITY's local law plans with the Department's construction of the statute. This litigation was ultimately settled by the Department's agreement not to withhold the CITY's premium tax funds. During 1990 and 1991, the Department of Insurance also engaged in litigation with numerous other municipalities regarding compliance of local law plans with the provisions of Chapters 175 and 185, Florida Statutes. The Department settled these cases and continued to distribute premium tax funds to these local law plans with the understanding that the disputed issues would be better resolved through rulemaking. The Department of Insurance conducted staff workshops to discuss rulemaking; however, the Department did not thereafter initiate formal rulemaking under Chapter 120, Florida Statutes, with regard to promulgation by rule of compliance requirements for local law plans under Chapters 175 and 185, Florida Statutes. In 1993 the Legislature transferred statutory responsibility for the administration of Chapters 175 and 185, Florida Statutes, from the Department of Insurance to the DIVISION. The legislative transfer effected a transfer of all programs as well as personnel. Since the legislative transfer in 1993, the DIVISION has made a continuous and good faith effort to present these issues to the Legislature for resolution. During the 1996 Session, HB 1951 and SB 2484 have been introduced. These bills specifically address the issues presented in this case. Stipulated Facts The following facts verbatim were set forth by the parties in the Prehearing Stipulation: The DIVISION admits to the authenticity of all documents contained within its files, including, but not limited to, interoffice memoranda, correspondence to and from the DIVISION and/or the Department of Insurance which are contained in the files of the Division, and any correspondence copied to the DIVISION and/or the Department of Insurance which are contained in the files of the DIVISION. The DIVISION takes the position that Sections 175.032 and 185.02, Florida Statutes, (Definitions), apply to local law plans. (The) Position of (the agency in) Declaratory Statement DMS-DR-94-18 was issued to the City of Boca Raton pursuant to Section 120.565, Florida Statutes. It is the position of the DIVISION that a plan containing a mandatory retirement age violates the Older Worker Benefits Protection Act; and that pension plans which violate this federal law are not eligible for distribution of premium tax funds under Sections 175.351 and 185.35, Florida Statutes. It is the position of the DIVISION that fire fighters disabled from duties of a fireman as defined in Section 175.032, Florida Statutes, are eligible for disability benefits. The CITY admits that the Social Security offset contained in its supplemental fire pension plans could possibly reduce a fire fighter's pension below two (2) percent for each year of credited service; however, the CITY specifically has no knowledge that this has or will occur. The CITY admits that Sergeant Rizzo has accrued in excess of thirty- two (32) years of service. The CITY admits that the police pension plan contains a maximum pension plan benefit of 60 percent of the highest pay step of the lowest rank held during the previous three years, which benefit Sgt. Rizzo became eligible for after twenty-five (25) years of active service. The CITY admits after thirty (30) years of service Sgt. Rizzo will retire with a pension benefit equal to less than two (2) percent for each year of active service. The CITY admits that Sgt. Rizzo was permitted to cease all employee contributions to his pension plan after twenty-five (25) years of service. The 1994 premium taxes are withheld from the CITY by the DIVISION. Prior to 1994 the DIVISION, or its predecessor agency, the Department of Insurance, have never withheld Chapter 175 or 185 insurance tax premium moneys from the CITY. The DIVISION has not initiated the rulemaking process with regard to definition of the term "average final compensation" in Section 175.351, Florida Statutes, and there are currently no existing promulgated rules that apply to local law plan definitions for "average final compensation" for the DIVISION. The DIVISION has not initiated the rulemaking process with regard to definition of the term "average final compensation" in Section 185.35, Florida Statutes, and there are currently no existing promulgated rules that apply to local law plan definitions for "average final compensation" for the DIVISION. It is the position of the DIVISION that Rule 60Z-1.004, Florida Administrative Code, defining "credited service" contradicts Chapter 185, Florida Statutes, and is not enforced. It is the position of the DIVISION that all municipal pension plans submitted for review must comply with the non-rule policy at issue in the present case in order to receive Chapter moneys pursuant to Sections 175.351 and 185.35, Florida Statutes. It is the position of the DIVISION that the pension plans of the City of St. Petersburg do not fulfill the requirements of Section 175.351, Florida Statutes, to qualify for release of state premium tax moneys. It is the position of the DIVISION that the pension plans of the City of St. Petersburg do not fulfill the requirements of Section 185.35, Florida Statutes, to qualify for release of state premium tax moneys. It is the position of the DIVISION that the term "credited years of service" as used in Section 175.351(4) and 185.35(1)(d), Florida Statutes, is to be defined in accordance with the term "aggregate number of years of service" and "aggregate number of years of service with the municipality" under Sections 175.032(1)(a) and 185(1)(b), Florida Statutes, respectively. It is the position of the DIVISION that it has the authority under Chapters 175 and 185, Florida Statutes, and Chapter 60Z, Florida Administrative Code, to withhold Chapter 175 and 185 premium tax money to plans not in compliance with Sections 175.351 and 185.35. It is the position of the DIVISION that it has the authority to release payment of Chapter 175 and 185 premium tax moneys to plans not in compliance with Sections 175.351 and 185.35, Florida Statutes, provided the municipality is making good faith efforts to bring the violations into compliance.
Findings Of Fact Peace River Center for Personal Development (herein Petitioner) is a community service center that offer services to clients who are victims of crimes. Petitioner has been awarded VOCA funds in the past by Respondent. Pursuant to the contract with Respondent, Petitioner was advised that VOCA funds were awarded specifically and that renewal was not automatic but would be considered each funding year. The contract and the VOCA guidelines grant Respondent the discretion to renew or not renew funding requests By letter dated March 23, 1994, Respondent advised Petitioner that its VOCA contract was expiring on June 30, 1994. Petitioner was also advised that its contract may or may not be renewed for an additional year depending on the outcome of a program evaluation and the availability of VOCA funds. In the March 23, 1994 letter to Petitioner, Respondent advised Petitioner that federal VOCA funding to Florida for the 1994/95 fiscal year had been reduced and the reduction would be passed on to applicants. The issuance of renewal funds for the 1994/95 VOCA contracts were based on three criteria, (1) the grant renewal requests, goals and objectives, and budget; (2) an evaluation of the VOCA program's effectiveness in serving victims of crime; and (3) the availability of funds. For fiscal year 1993/94, Petitioner received $55,000 in VOCA funds. Those funds were to assist with the provision of services to adult sexual abuse and domestic violence victims. Petitioner submitted documentation in support of its initial VOCA funding request and indicated that part of its funding would be used to hire a coordinator therapist and a child care advocate. However, during the course of the 1993/94 fiscal year, Petitioner did not fill those positions until the second half of the year based on delays that it experienced in building a new facility. As a result, a portion of the VOCA funds lapsed. Because of those delays, a contract amendment was executed by the parties allowing the lapsed money, which would have been spent for those professional positions, to be used for furniture and supplies. Based on the modification, revised goals were established. Thus, Petitioner set out to serve only 20 children in the child care unit instead of the 60 as noted in the funding request and to provide only 300 hours of child care to children of domestic violence victims instead of the 1000 hours as requested. The modification was an effort to maximize funding in the interest of the community for the 1993/94 fiscal year. Respondent established a procedure for evaluating all applicants for VOCA funding grants in 1994/95. This procedure included forwarding a packet of information which was sent to all applicants. The packet included a cover letter, instructions, a check list and various forms to be completed. As noted, the federal VOCA grant to Respondent was reduced by 5 percent for fiscal year 1994/95. Although Respondent's staff initially recommended to the Attorney General that all VOCA grants be reduced by 5 percent, Respondent reconsidered and decided that it would be more appropriate to evaluate each program to determine which programs were more efficient and were providing the most needed services to the communities. Respondent also reviewed those programs which provided services that were offered by VOCA monies and were achieving the goals and objectives that were originally stated in the funding request. The Respondent implemented this procedure and in doing so, set up a competitive process to rate each of the 48 existing VOCA grantees. To be awarded VOCA funds, the applicants were initially requested to submit renewal applications. Secondly, Respondent solicited comments from community representatives concerning the performance of the grantee over the preceding fiscal year and evaluated those comments. Next, Respondent reviewed and analyzed the funding by the internal monitoring system that was in place at the time. Utilizing this procedure, the grant managers within Respondent's office reviewed their internal reviews, evaluated the monitoring report of the agency that they had prepared including monthly reimbursement requests and any communication or correspondence that had been entered into between the agencies. Respondent's input from the community centered around the performance of the grantees. In measuring their performance, Respondent attempted to get at least three certifiers from persons in the community who worked with, or were familiar with, the grantees. Respondent selected three of the certifiers that had originally certified the grantee program prior to the award of the first VOCA grant and sent forms to those entities. In addition, Respondent attempted to get two additional certifiers, the state attorney's office or local law enforcement, to participate in the certification process. This second group of certifiers was contacted by telephone. In Petitioner's case, only three certifications were submitted. Respondent reviewed those written certifications and rated Petitioner. One certifier observed that Petitioner had insufficient staffing, that waiting periods were too long for victims to get in and that rape crisis volunteers needed to be matched in age with rape victims. That certifier did not intend for her review to impact adversely upon Petitioner's VOCA grant request although she stood by the representations made in the certification. The next certifier related that Petitioner displayed a program weakness in that victims of domestic violence were required to attend the same domestic violence treatment program class as the abuser or pay an additional $200 to attend a different treatment program. She also noted that certain child care victims were not assisted during court appearances, which was an area that Petitioner specifically noted that it would provide services under the VOCA grant. The next certifier related that Petitioner had a number of weaknesses in its program, albeit unspecific, and that she was familiar with the quality of services that Petitioner rendered with VOCA funds since February of 1994. Upon receiving all of the certification information, Respondent compiled a report and ranked each applicant by assigning a numerical value to each applicant. The ranking was based on the totality of the responses received by Respondent. All of the applicants were rated and based on those ratings, their VOCA grant applications were either renewed or not renewed. Of the 48 applicants evaluated, 45 were funded in whole or in part based on their numerical ranking and 3 requests were not funded, including Petitioner's request. Of all the applicants, Petitioner was ranked 48th or last. Specifically, Petitioner was advised of the non-renewal by Respondent in a June 10, 1994 letter that: This decision was based on an internal performance evaluation and upon performance evaluations of your program by agencies and organizations within your community. A major factor in the non-renewal determination was the administration of the VOCA funds, resul- ting in hiring delays, causing a de-obligation of funds and unnecessary waiting lists for crime victims. The effectiveness of services to your community was also a major factor in not offering your agency a renewal contract. Finally, Respondent's chief of advocacy and grants management of the Attorney General's office, Marcie Davis, was formerly employed in a position where she answered a toll-free information line to assist victims of crimes. Ms. Davis recalled an attempt, by her, to get counselling for a child who was a victim of domestic violence in Petitioner's service area (his mother was murdered by her boyfriend) during the 1993/94 fiscal year. Ms. Davis was unable to get services from Petitioner for that child due to its waiting list - a period of eight to thirteen weeks. Respondent's denial of Petitioner's application for VOCA funds was a non-renewal and was not a termination for cause. Respondent utilized sound discretion in awarding the VOCA funding to the various grantees. There was no evidence that the ranking of any grantee, including Petitioner, was either arbitrary or capricious.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Respondent enter a final order denying Petitioner's request to reverse the discretionary decision made to deny Petitioner's request for VOCA funding for the 1994/95 fiscal year. DONE AND ENTERED this 26th day of January, 1995, in Tallahassee, Florida. JAMES E. BRADWELL 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 26th day of January, 1995. APPENDIX TO RECOMMENDED ORDER Rulings on Petitioner's proposed findings of fact: Paragraph 4, rejected, not probative, paragraph 5 rejected, contrary to the greater weight of evidence, paragraphs 11-13, Recommended Order. Paragraph 7, rejected, speculative and not probative. Paragraph 9, rejected, contrary to the greater weight of evidence, Paragraphs 9 and 10, rejected contrary to the greater weight of evidence, paragraphs 12 and 17, Recommended Order. Rulings on Respondent's proposed findings of fact Paragraph 11, rejected, irrelevant and not probative. COPIES FURNISHED: Dennis Eshman, Esquire 1745 Highway 17 South Bartow, Florida 33830 M. Catherine Lannon, Esquire Gregory A. Chaires, Esquire Office of the Attorney General PL-01, The Capitol Tallahassee, Florida 32399-1050 Honorable Robert Butterworth Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32399-1050
Findings Of Fact At all times material hereto, Respondent held a class "H" certificate of registration numbered GH-8500083 issued by Petitioner pursuant to Chapter 496, F.S. According to Respondent's application for registration which was submitted on or about January 23, 1984, Respondent is the President of an organization known as, "Citizens Benevolent Association - Displaced Inmate Dependent Mission." The purpose of that organization is to give housing, employment, food, clothing and toys to the dependents of inmates in central Florida. It was further indicated that the organization would raise less than $4000 each year, and contributions it received would be used to carry out the purpose of the organization. In February, 1986, Willie Rister, regional office supervisor and investigator for Petitioner, attempted to meet with Respondent concerning his charitable organization, and particularly its financial records. After two unsuccessful attempts to meet with Respondent, Rister contacted Respondent on March 12, 1986, and was told that all financial records of the organization had already been turned over to him. Respondent's financial records fail to reveal or inaccurately reveal the income and expenses of the organization. Specifically, they fail to account for all contributed funds and in-kind contributions, as well as disbursements. It appears that the organization's funds and Respondent's personal funds have been comingled, and no distinct records have been kept. It is not possible to determine which expenditures are personal and which are to carry out the purpose of the organization. The financial records are simply a listing of receipts without any explanation of the source or method of raising these funds, which appear to total approximately $9000 for 1985. Rister testified that he was unable to find any people who had been helped by Respondent or his organization. Contributed funds were used primarily for the personal expenses of Respondent or his family, or here not fully accounted for and were not used for any charitable purpose associated with the organization. Respondent advertised his organization in the Sebring News, indicating that his organization finds jobs and housing for the dependents of inmates. There is no evidence that his organization ever performed these services, and in fact the evidence presented indicates it did not.
Recommendation Based upon the foregoing, it is recommended that Petitioner issue a Final Order revoking Respondents certificate of registration numbered GH-8500083. DONE AND ENTERED this 1st day of December, 1986 in Tallahassee, Florida. DONALD D. CONN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 Filed with the Clerk of the Division of Administrative Hearings this 1st day of December, 1986. COPIES FURNISHED: Honorable George Firestone Secretary of State The Capitol Tallahassee, Florida 32399 James V. Antista, Esquire Department of State The Capitol Tallahassee, Florida 32399 John Joseph Heinrich 109 North Self Avenue Avon Park, Florida 33825
The Issue The issues to be resolved in this proceeding concern whether the Petitioner, Community Health Charities of Florida (CHC), is entitled to an award of attorney's fees and costs as a "prevailing small business party" pursuant to Section 57.111, Florida Statutes (2008), by being a prevailing small business party in the underlying case of Community Health Charities of Florida, et. al v. Florida Department of Management Services, DOAH Case No. 07-3547, Recommended Order February 29, 2008; Final Order May 29, 2008. Also, at issue is whether the Respondent Agency's actions, with regard to the underlying case, were substantially justified or whether special circumstances exist which would render an award of attorney's fees and costs unjust.
Findings Of Fact This cause arose upon the filing of a motion or petition for attorney's fees and costs on July 22, 2008, by the Petitioners, CHC and the Charities (the American Liver Foundation, Cystic Fibrosis Foundation, Crohn's and Colitis Foundation, Prevent Blindness Florida, Children's Tumor Foundation, March of Dimes, Lupus Foundation of America, Florida Chapter, Florida Hospices and Palliative Care, Hemophilia Foundation of Greater Florida, National Parkinson Foundation, American Diabetes Association, Leukemia and Lymphoma Society, American Lung Association, ALS Association, Alzheimer's Association, Juvenile Diabetes Research Foundation, Arthritis Foundation, Florida SIDS Alliance, Sickle Cell Disease Association of Florida, Easter Seals Florida, St. Jude Children's Research Hospital, Muscular Dystrophy Association, Nami Florida, National Kidney Foundation, National Multiple Sclerosis Foundation, Huntington's Disease Society of America, and Association for Retarded Citizens). This attorney fee and cost motion was filed in connection with the above Charities having received distribution of undesignated contributions from the 2006 Florida State Employees' Charitable Campaign (FSECC). The Charities made application for the funds and then contested the initial decision of the Steering Committee charged with determining distribution of undesignated contributions (by fiscal agent area). Ultimately, after obtaining a Writ of Mandamus from the First District Court of Appeal, requiring an administrative proceeding and hearing before the Division of Administrative Hearings on the contested claims, the Charities received additional distribution of undesignated contributions. Those additional distributions represent an additional benefit the Charities received upon the entry of the Recommended Order and the Final Order in the underlying proceeding. Therefore, one Petitioner, CHC, in the motion for attorney's fees and costs asserts that it is thus a prevailing party and a small business for purposes of Section 57.111, Florida Statutes, and is entitled to an award of attorney's fees and costs. The Respondent is an Agency of the State of Florida with authority to establish an maintain the FSECC.1/ It administers the decision-making process involving distribution of undesignated funds and issued the Final Order in the original proceeding. The attorney fee and cost proceeding was initially assigned to Administrative Law Judge Charles Adams. Thereafter the case was re-assigned to Administrative Law Judge T. Kent Wetherell, II. He issued an Order, sua sponte, on July 29, 2008, instructing the Petitioners to show cause why the case should not be held in abeyance pending disposition of the appeal of the Final Order in Community Health Charities of Florida v. State of Florida, Department of Management Services, 1D08-3126, the appeal before the First District Court of Appeal. The Petitioners filed a response to the Order to Show Cause stating, in essence, that the issues preserved for appeal involved discreet claims under Section 120.56(4), Florida Statutes. The parties agreed that the portions of the Final Order in the underlying proceeding which granted undesignated fund distributions to the Charities were separable, and not the subject of the appeal to the First District Court of Appeal in the above-cited case. The parties thus stipulated that the case could proceed on the matter of fees and costs, notwithstanding the pending appeal. An Order was entered by Judge Wetherell on August 11, 2008, based upon the responses to the Order to Show Cause. The Order references the parties' agreement that the case could go forward notwithstanding the pending appeal of the Final Order in the underlying case and then, significantly, Judge Wetherell made the following finding: "a closer review of the motion [the motion seeking the award of attorney's fees and costs] reflects that the only Petitioner alleged to be a prevailing small business party entitled to an award of fees under that statute [Section 57.111, Florida Statutes] is Community Health Charities of Florida." Judge Wetherell thereupon proceeded to order that the case style be amended to identify Community Health Charities of Florida (CHC), as the "only Petitioner in this fee case." The Petitioner, CHC, is a Florida non-profit corporation that employs less than 25 full-time employees and has a net worth of less than two million dollars. It is a "federation" under the FSECC Act. A "federation" is defined as an umbrella agency that supplies "common fund raising, administrative and management services to . . . charitable constituent member organizations. . . ." Fla. Admin. Code R. 60L-39.0015(1)(j). Federations were required to file with the Committee (the Steering Committee) a Direct Local Certification Form, describing the direct services that each member charity provided in the various fiscal agent areas. In this capacity, the Petitioner CHC represented 27 member charities in the 2006 charitable campaign. Charitable organizations that provide "direct services in a local fiscal agent's area" are entitled to receive "the same percentage of undesignated funds as the percentage of designated funds they receive." § 110.181(2)(e), Fla. Stat. (2006). CHC is not a provider of services or direct services. Therefore, it, itself, did not receive any undesignated funds. The charitable organizations named above, are the entities which received undesignated funds related to direct services they provided in local fiscal agents' areas. Some received them through the initial decision of the subject Steering Committee, and some after the underlying administrative proceeding was litigated through Final Order. On February 28, 2007, the Steering Committee, under the Respondent's auspices, conducted a public meeting in which it found the charities named above provided direct services in 18 percent of the fiscal agent areas in which they had applied. The Committee therefore denied Charities their share of undesignated funds in the remaining fiscal agent areas. That Committee decision was announced by memorandum of March 12, 2007, which provided the Petitioners with a point of entry to dispute the initial decision in an administrative proceeding. On March 30, 2007, the Petitioners filed an Amended Petition which alleged that they had provided direct services in all the fiscal agent areas in which they applied for undesignated funds, and identified alleged deficiencies in the Committee's decision-making process. That Amended Petition was ultimately referred to the Division of Administrative Hearings for conduct of a formal proceeding, by Order of the First District Court of Appeal, requiring the Agency to refer the Amended Petition to the Division of Administrative Hearings. With the Amended Petition pending before the Division of Administrative Hearings, the Steering Committee called an unscheduled meeting on September 10, 2007, to further address the Petitioners' claims and re-visit the earlier decision denying some applications for undesignated funds. Thereafter, the Respondent changed its initial decision by increasing the percentages of fiscal agent areas where direct services were provided and undesignated funds awarded to the Petitioners, the Charities, as a result of the September 10, 2007, meeting. This percentage thus increased from 18 percent to 77 percent as a result of "additional review of material provided by Petitioners." The Respondent Agency ultimately rendered a Final Order that adopted the decision of the Statewide Steering Committee, approving 77 percent of the Petitioners' previous submittals, as well as the finding of the Administrative Law Judge with regard to the three additional member charities. The Respondent had maintained in the original proceeding that the Committee must limit its consideration to the Direct Local Certification Form. The Petitioners, on the other hand, argued that they were entitled to a de novo review of the Agency action before the Division of Administrative Hearings. Reserving ruling on that matter, Judge Adams permitted the Petitioners, at the Final Hearing, to introduce additional evidence of direct services provided in those fiscal agent areas in which their applications had been denied by the Committee. The issue of direct services was considered de novo before the Division. The judge considered not only the direct local services certification form, but also supporting evidence of direct services introduced by the Petitioners at the Final Hearing. On considering that evidence, the Administrative Law Judge found that three additional member charities, not previously approved by the Committee, had provided direct services, which entitled them to receive undesignated funds. The Final Order entered by the Respondent Agency adopted the Administrative Law Judge's ruling. No exceptions were filed to that Recommended Order, thus the Agency waived its appellate rights with respect to any issue it might have raised, and the Charities prevailed as to the relief they sought in the Amended Petition. In their affidavits filed with the Motion for Attorney's Fees and Costs on July 22, 2008, the attorneys Byrne and Hawkins, for the above-named Petitioners, stated that they were "retained" by those Petitioners, meaning all the above- named charities and also the Petitioner CHC. In the affidavits they stated that those Petitioners "incurred" the attorney's fees and costs to which the affidavits relate. As stated above, the attorney's fee Motion was filed and joined-in by all the above-named charities and CHC. The Petitioners in the underlying case, which was appealed to the First District Court of Appeal, were all the above-named charities and CHC. Nonetheless, the Petitioner CHC took the position at the hearing in this proceeding that an agreement or understanding existed with the affiliate charities, whereby CHC would bear the attorney's fees and costs on behalf of all the affiliate charities. CHC has an agreement concerning how revenue it receives is shared with its national office and member charities. CHC pays its national office a percentage of revenue. It sends money to the national office and the national office also sends an allocation of funds to CHC. CHC is a member of the Arlington, Virginia-based Community Health Charities of America. For the fiscal year beginning July 1, 2006, CHC withheld 25 percent of charitable donations from Florida employees to its affiliated charities as its fee. This is the maximum amount authorized by Florida law in order for it to participate in the FSECC. § 110.181(1)(h)1., Fla. Stat. (2006). In the 2006 campaign at issue, CHC did not file an application in its own name to the Steering Committee for receipt of undesignated funds. As Ms. Cooper testified "we did not apply." CHC received no allocation or award of undesignated funds either in the initial Steering Committee consideration process or as a result of the underlying proceeding through the Agency's Final Order. All the undesignated fund distributions were made to the charities themselves, who were the entities who filed applications to the Steering Committee seeking receipt of undesignated funds. The Steering Committee, which made the initial decisions about distribution of undesignated funds is composed of appointed volunteers. The members of the committee are not compensated and do not have support staff to assist them in their fact-finding review of applications concerning receipt of undesignated funds. The committee members personally review all applications. Review of the applications takes many hours by each member of the committee, much more time than is spent in actual committee meetings. The combined net worth and number of employees of some or all of the Charities, was not established. It was not established that the net worth of one or more of the charities filing this Motion for Attorney's Fees and participating as Petitioners in the underlying case, is less than two million dollars, nor that one or more of them have less than 25 employees. The legislature appropriated $17,000.00 dollars to DMS to administer the FSECC for 2006. Substantially more than that appropriated sum has been expended by DMS to administer the campaign. DMS has no insurance coverage which would pay attorney's fees and costs if they were awarded. DMS is also subject to at least a four percent budget "hold back" for the current fiscal year and is contemplating laying off employees in January 2009, due to budget reductions. If DMS is ordered to pay attorney's fees and costs to CHC, DMS will bill the fiscal agent, United Way, for payment of those amounts from the FSECC charitable contributions. Contrary to the situation with the Petitioner Charities, who made the original filing of the Amended Petition in the underlying case and were named as parties in the filing of the Motion for Attorney's Fees at issue in this case, CHC did offer evidence that its net worth was less than two million dollars and that it had less than 25 employees. Thus, it established this threshold for being considered a small business party. It is also true, however, that the Recommended Order from the Administrative Law Judge and the Final Order from the Agency in the underlying proceeding specifically make no mention of CHC as a prevailing party and award nothing of benefit to CHC, as opposed to the other actual charities, who filed the subject applications.
The Issue The issue for determination is whether Petitioner is eligible for a consumer certificate of exemption pursuant to Subsection 212.08(7)(o), Florida Statutes.
Findings Of Fact On January 31, 1994, the National Council of La Raza (Petitioner) filed an application with the Department of Revenue (Respondent) for a consumer certificate of exemption as a charitable organization. Petitioner indicated, among other things, on its application that it was a social welfare organization. Petitioner filed the application in anticipation of bringing its annual conference to Miami Beach, Florida in July 1994. 1/ Petitioner is a private, nonprofit organization which was incorporated in 1968 in Arizona. Petitioner's national headquarters is in Washington, D.C. and it has offices in Arizona, California, Illinois, and Texas. Article III of Petitioner's second amended articles of incorporation provides in pertinent part that one of its purposes is to "operate exclusively for charitable and educational purposes, including, but not limited to improvement of the condition of the Mexican American poor, and the under privileged." Article III of the amended articles of incorporation further provides in pertinent part that in carrying-out its purpose it would "conduct research and inquiry of the problems and issues that confront, with local variations and particular effects, the Chicano communities"; "promote meetings, conferences, seminars, discussions and other forms of group communication and analysis of the same among those engaged in organizational activity"; "provide technical assistance to affiliated barrio/community development organizations and to encourage, promote and facilitate mutual aid and assistance among them in order to strengthen each of them through the moral, technical and material resources of all"; "encourage and assist the development of the moral, technical and material resources of the barrios and colonias"; and "organize, exist and function as a charitable, non-profit, non-political 501(c)(3) tax-exempt organization." Also, Article III of the amended articles of incorporation provides in pertinent part that its priorities are to "serve as the national advocate and mobilizer of resources and support for barrio/community development programs"; and "deliver program support and technical assistance services to barrio/community development programs in [named] priority areas." Consistent with the purposes in Petitioner's amended articles of incorporation, Petitioner provides in its publicly disseminated literature that it provides its services through four major types of initiatives: (a) "capacity-building assistance to support and strengthen Hispanic community-based organizations"; (b) "applied research, public policy analysis, and advocacy on behalf of the entire Hispanic community, designed to influence public policies and programs"; (c) "public information efforts to provide accurate information and positive images of Hispanics in the mainstream and Hispanic media"; and (d) "special catalytic efforts which use the [Petitioner] structure and reputation to create other entities or projects important to the Hispanic community". On or about May 1, 1968, Petitioner received a federal income tax exemption from the Internal Revenue Service as an organization described in Section 501(c)(3) of the Internal Revenue Code. Petitioner's organizational classifications under Section 501(c)(3) were charitable, educational and scientific. Petitioner's Section 501(c)(3) federal income tax exemption was effective at the time of its application with Respondent for a consumer certificate of exemption. Petitioner has been granted sales tax exemption by Washington, D.C., Michigan, Texas, and the city of Los Angeles, California. Petitioner's organizational structure consists of a Board of Directors, Office of the President, Office of Finance, Office of Administration, Office of Research Advocacy and Legislation, Office of Technical Assistance and Constituency Support, Office of Institutional Development, and Office of Development and Special Events. As to the Office of Research Advocacy and Legislation (ORAL), it is responsible for conducting research and analysis of issues which have been identified by Petitioner's Board of Directors and affiliates as having a primary importance to the Hispanic community. ORAL, through its Policy Analysis Center, conducts studies and research on immigration, education, housing, poverty, welfare, census, and national farm workers issues. Also, ORAL engages in a limited amount of lobbying on behalf of the Hispanic community. ORAL's services are mainly educational. The services include providing information and pamphlets on immigration and civil rights and producing a national radio program on immigration issues. The services are delivered primarily through brochures and pamphlets which are distributed without charge to Petitioner's affiliates and certain groups and organizations. Other groups and organizations are charged a fee depending upon what the group or organization is. ORAL's services are provided to a disadvantaged Hispanic population. As to the Office of Technical Assistance and Constituency Support (TACS), it is responsible for interfacing with both Petitioner's affiliates and its branch offices to directly provide services to the disadvantaged Hispanic community. Most of TACS' assistance focuses on resource development, program operations, and management or governance needs, in addition to addressing critical community needs through national emphasis programs operated in cooperation with Petitioner's affiliates. Also, TACS provides capacity-building assistance to the staff and board members of Hispanic community-based organizations through staff and board training and on-site assistance. As to the Office of Institutional Development (OID), it is responsible for conducting research on issues new to Petitioner and directing Petitioner's services to the Hispanic community. OID coordinates, on the national level, Petitioner's new programs (program models) in education, health education, the elderly and leadership development, as well as projects involving Europe. OID implements the new programs through Petitioner's affiliates. For example, in the 1980's AIDS became a new concern for the Hispanic community and was assigned to OID. A national toll-free AIDS hot line was established by OID and maintained in its office. The hot line is advertised through various media communications, Petitioner's affiliates, and community- based organizations. Additionally, funding has been provided through OID to two (2) Florida affiliates, Centro Campesino Farmworkers Center, Inc., and the Hispanic Alliance. The funding was provided through OID's leadership initiatives to a coordinating council for the purpose of distributing post-hurricane relief to farmworkers in Florida. The offices of ORAL, TACS, and OID have under their responsibility mission activities and core activities. Core activities involve issues which are identified by Petitioner's board and its affiliate organizations as being at the core of Petitioner's existence, such as civil rights enforcement and immigration issues. These activities are not necessarily funded by a particular government contract or grant from a private foundation or corporation. Mission activities consist of activities which are important in supporting the mission of Petitioner, but are not currently funded by a particular government contract or grant from a private foundation or corporation. These activities relate to administrative functions engaged in by ORAL, TACS, and OID to support Petitioner's operations and are funded with internal funds. The offices of ORAL, TACS and OID work interdependently. A problem is identified in the Hispanic community by Petitioner and/or its affiliates and assigned to ORAL or OID; ORAL or OID conducts research and develops programs to address the problem; and TACS delivers the program services to the disadvantaged Hispanic community, working with affiliates and community-based organizations to implement the programs. A program called Project EXCEL (Excellence in Community Educational Leadership) is an educational program developed by Petitioner. The problem of illiteracy and low graduation rates was identified. Research was conducted on the problem and the program, Project EXCEL, was developed. Petitioner implemented the program through its on-site staff who had oversight responsibility and who evaluated the program and actually worked with the clients to assist in the program's evaluation; whereas, the actual direct educational services were delivered to the clients by persons working for the organizations. Project EXCEL was implemented at public schools, day care centers, and churches. Petitioner secured and provided the funding for the community-based organizations to run demonstration sites for Project EXCEL. Two Florida organizations received assistance from Petitioner regarding Project EXCEL. Centro Campesino Farmworkers Center, Inc., which holds a sales tax exemption from Respondent, utilized the Project EXCEL curriculum developed by Petitioner in providing after-school services to children of migrant farmworkers. Also, the Coalition of Florida Farmworkers Organizations, Inc., which holds a sales tax exemption from Respondent, received a grant to implement Project EXCEL and Petitioner provided a curriculum and some of its staff to assist the Coalition of Florida Farmworkers in working with the children. Both the Centro Campesino Farmworkers and the Coalition of Florida Farmworkers pay annual dues to Petitioner as affiliates. They have received from Petitioner pass-through funds as subgrants. Petitioner does not engage in direct fund raising to support the organizations. Pass-through funding is funding distributed through Petitioner to its affiliates or other outside organizations through subgrants. The funds are received by Petitioner from grants for which Petitioner applies. For both the Centro Campesino Farmworkers and the Coalition of Florida Farmworkers, Petitioner has not provided volunteers to run any of the organizations' programs or provide the organizations' services at the local level. Furthermore, Petitioner does not control, govern, or administer any of the Centro Compesino Farmworkers' or the Coalition of Florida Farmworkers' services or activities at the local level. In another instance, Petitioner identified housing problems for the Hispanic community regarding ownership, quality and availability. Research showed that, for Hispanics, there existed a low rate of home ownership, substandard housing, and discrimination. Petitioner secured funding to build low income housing and commercial developments in low income neighborhoods; at times, providing pre-development costs or professional services such as engineers and architects. As with Centro Campensino Farmworkers and the Coalition of Florida Farmworkers, Petitioner does not provide volunteers to work for its affiliate organizations at the local level (Petitioner's staff are paid employees), Petitioner does not engage in direct fund raising to support its affiliate organizations, and Petitioner does not control, govern, or administer any of the services at the local level. Also, ORAL, TACS, and OID have worked interdependently in developing programs in the health field. AIDS public service announcements have been produced by Petitioner. An AIDS national toll-free hot line is operated by Petitioner, with professional staff manning the phones to provide information to AIDS patients and others and with the costs being borne by Petitioner. As to the Office of Development and Special Effects (ODSE), it is responsible for fund raising, proposal writing, receipt of grants, Petitioner's future endowment or capital campaign. ODSE's primary responsibility is the operation of Petitioner's annual conference and Congressional awards dinner. The annual conference is held in different locations and the awards dinner is held in Washington, D.C. The annual conference is attended by thousands of participants from across the United States to discuss topics and issues relevant to the Hispanic community. Affiliates which attend pay a registration fee. Usually offered at the conference are workshops, seminars, an art show, job fair, silent auction, and an exhibit hall where corporations and governmental agencies can promote themselves. Except for the meal events, all the other activities are open to the public at no charge. As part of the conference, Petitioner sponsors a Youth Leadership Program in which the expenses are paid for 25 to 30 youths (tenth to twelfth graders), who are disadvantaged and at-risk and from various parts of the country, to attend the conference. A similar program is sponsored by Petitioner for college students. Additionally, Petitioner sponsors a one day event for area disadvantaged district school students. Petitioner's 1994 annual conference was held at Miami Beach, Florida on July 17 - 20, 1994. Petitioner provided or sponsored all of its usual activities or programs, except for a job fair. In addition, Petitioner sponsored a senior citizens day for the disadvantaged elderly. The registration fee for affiliates was $150. Petitioner's Office of Finance is responsible for the fiscal management of all internal matters and the financial practices of Petitioner. Petitioner reflects its fiscal financial picture on two documents. As a Section 501(c)(3) organization, Petitioner files federal tax returns, known as Forms 990, on a yearly basis. Additionally, Petitioner has audited financial statements prepared annually. Among other things, Form 990 reflects Petitioner's expenses found on its audited financial statements, but in greater detail. Petitioner's fiscal year is from October 1st to September 30th of each year. Expenditures associated with Petitioner's Board of Directors, Office of the President, Office of Finance, and Office of Administration are general administrative expenses. These expenditures fall within the category of supporting activities on Petitioner's audited financial statements. For the fiscal year October 1, 1992 to September 30, 1993, Petitioner's total expenditures were $5,581,316. Of this total of expenditures, $4,407,194 represented expenses for program services, per the category on Form 990, of which $126,250 represented pass-through funds to subgrantees; of which over $2.6 million represented compensation of officers and directors, etc., other salaries and wages, pension plan contributions, other employee benefits, payroll taxes, and conferences, conventions and meetings 2/ ; and of which $57,421 represented legislative advocacy. Also, of the total expenditures, $1,174,122 represented expenses for supporting activities, of which $976,044 represented general administration; and of which $198,078 represented fund raising which is money expended in writing proposals to fund Petitioner's programs. For the fiscal year October 1, 1991, through September 30, 1992, Petitioner's total expenditures were $5,150,084.00. Of this total of expenditures, $3,982,552 represented expenses for program services, including $172,620 for pass-through funds to subgrantees, over $2.3 million for compensation of officers and directors, other salaries and wages, pension plan contributions, other employee benefits, payroll taxes, and conferences, conventions and meetings, and $54,410 for legislative advocacy. Also, of the total expenditures, $1,167,532 represented expenses for supporting services, including $978,557 for general administration, and $188,975 for fund raising. Even though Petitioner claims to have 182 affiliates, only 162 affiliates were identified. Petitioner actively works with 120 of the 162 identified affiliates. Nine of the affiliates hold certificates of exemption issued by Respondent. Because of the minimal descriptions provided by Petitioner of the affiliates, only a small minority could be determined to provide services for free or at a substantially reduced cost.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order DENYING the National Council of La Raza a consumer certificate of exemption. DONE AND ENTERED this 8th day of February, 1996, in Tallahassee, Leon County, Florida. ERROL H. POWELL, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of February, 1996.
The Issue The issue in this case is whether Petitioner is entitled to a consumer certificate of exemption as a religious or charitable institution.
Findings Of Fact Petitioner has submitted seven (7) exceptions to the Hearing Officer's Findings of Fact in the Recommended Order. Exceptions 1, and 3 through 6 filed by Petitioner are rejected. Exception 2 is accepted to the extent it states that Petitioner does not hold worship services. The remainder of this exception is rejected. Exception 7 is rejected, except for the first sentence which indicates that the date of purchase of the vehicle was 1995, not 1993. Petitioner's First Exception-- Finding of Fact No. 1: Petitioner's statements as to how Petitioner was advertised are not relevant and, therefore, are rejected. Petitioner's Second Exception-- Finding of Fact No. 2: Accepted that Petitioner does not have worship services. This determination has been made by the Hearing Officer's Findings of Fact. See Findings of Fact No. 2 and 3. The remainder of this exception is rejected as being irrelevant. Petitioner's Third Exceptions-- Finding of Fact No. 3: The Hearing Officer's Finding of Fact, Paragraph 3 of the Proposed Recommended Order, that Christian-Muslim Church of God (ALLAH) is not part of any established religion is supported by substantial competent evidence. Thus, Petitioner's exception to this finding is rejected. The statement that Petitioner's founder will write a "Consolidated Moral Bible" is not relevant, and is therefore rejected. The Hearing Officer's finding that Petitioner has generalized plans to establish regular religious services, but has not yet done so, is supported by substantial competent evidence. Therefore, Petitioner's exception to this finding is rejected. The statement as to how assemblies of the church will be organized by Petitioner in the future is not relevant, and is therefore rejected. Petitioner's Fourth Exceptions- Finding of Fact No. 4: Petitioner's statements as to where Petitioner's funds are deposited is not relevant, and therefore is rejected. Petitioner's statements as to the type of donations its founder, Mr. Savas, personally makes are not relevant and, therefore, are rejected. The Hearing Officer found that Petitioner does not qualify as a "religious institution" under s212.08(7)(o) 2.a., Florida Statutes. The Hearing Officer's finding is supported by substantial competent evidence. Thus, Petitioner's exception to this finding is rejected. Petitioner's statement as to why Petitioner needs the sales tax exemption is not relevant and, therefore, is rejected. Petitioner's Fifth Exceptions-- Finding of Fact No. 5: The Hearing Officer found that Petitioner is not registered as, or classified as, any type of legal entity. The Hearing Officer also found that the Petitioner is not a church or charitable institution as those terms are defined under s212.08(7), Florida Statutes for purposes of sales tax exemption. The Hearing Officer's findings are supported by the record and by substantial competent evidence. The remainder of Petitioner's exceptions are not material. Therefore, all of Petitioner's exceptions to Paragraph 5 are hereby rejected. Petitioner's Sixth Exception-- Finding of Fact No. 6: The Hearing Officer found that Petitioner is not registered as, or classified as, any type of legal entity and that Petitioner does not qualify as a "charitable institution" pursuant to s 212.08(7)(o)2.b., Florida Statutes. These findings are supported by substantial competent evidence. Therefore, Petitioner's exception to this paragraph is rejected. Petitioner's Seventh Exceptions-- Finding of Fact No. 7: Accepted that Petitioner's founder purchased his car in 1995, and applied for a consumer's certificate of exemption at that time. The statements as to the beliefs of Petitioner's founder are irrelevant or immaterial, and are rejected accordingly.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a final order denying a consumer certificate of tax exemption to Petitioner, the Christian-Muslim Church of God (Allah). DONE and ENTERED this 18th day of March, 1996, in Tallahassee, Florida. CAROLYN S. HOLIFIELD 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 18th day of March, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-4076 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Respondent's Proposed Findings of Fact. 1. - 11. Accepted and incorporated to the extent not subordinate or unnecessary. COPIES FURNISHED: Ruth Ann Smith, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 John Savas 1416 Hill Drive Largo, Florida 34640 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue Whether Petitioner willfully violated Section 106.021(3), Florida Statutes, which prohibits a candidate from making an expenditure except through the campaign treasurer on 66 separate occasions, and, if so, what is the appropriate penalty.
Findings Of Fact Based on the testimony, documentary evidence, entire record of the proceedings, and facts admitted to in the Joint Pre-Hearing Stipulation, the following Findings of Fact are made: Petitioner, Alan Schreiber, was the incumbent candidate for Public Defender, 17th Judicial Circuit, in the 2000 election. Petitioner was unopposed for reelection when qualifying ended on July 21, 2000. Petitioner is an experienced politician serving his seventh term as Public Defender. During the 2000 campaign qualifying period, Petitioner made sixty-six expenditures for which he submitted receipts and received reimbursement from his campaign account. The expenditures for which Petitioner was reimbursed are as follows: Date Merchant Amount 05-01-00 Andrew's Tallahassee $261.00 04-04-00 Andrew's Tallahassee $225.61 12-13-99 Bar Amici/ Cathode Ray $50.40 10-29-99 Bar at Embassy Suite $51.41 06-30-00 Big Louie's $265.01 06-20-00 Big Louie's $145.72 06-27-00 Bimini Boatyard $64.82 05-31-00 Bimini Boatyard $316.49 05-21-00 Bimini Boatyard $70.08 05-18-00 Bimini Boatyard $43.26 12-08-99 Bimini Boatyard $71.66 10-20-99 Bimini Boatyard $47.92 05-04-00 Bravo Italiano $63.86 02-24-00 Bravo Italiano $232.43 02-15-00 Bravo Italiano $52.79 01-31-00 Bravo Italiano $62.86 01-27-00 Bravo Italiano $86.83 06-19-00 Café de Paris $113.34 05-24-00 Café de Paris $70.04 05-16-00 Café de Paris $154.99 05-12-00 Café de Paris $160.94 05-06-00 Café de Paris $136.11 04-13-00 Café de Paris $146.65 03-18-00 Café de Paris $113.09 03-04-00 Café de Paris $144.47 02-23-00 Café de Paris $280.10 02-07-00 Café de Paris $73.27 01-17-00 Café de Paris $193.51 12-27-99 Café de Paris $66.47 11-29-99 Café de Paris $145.60 11-26-99 Café de Paris $230.51 11-24-99 Café de Paris $133.57 11-15-99 Café de Paris $183.97 10-31-99 Café de Paris $105.68 10-22-99 Café de Paris $99.43 10-19-99 Café de Paris $130.76 03-31-00 Café de Paris $182.64 03-15-00 Costco Wholesale $140.96 12-14-99 Costco Wholesale $267.61 10-27-99 Costco Wholesale $231.02 Costco Wholesale $256.87 05-23-00 French Quarter $499.24 11-09-99 French Quarter $81.25 11-09-99 French Quarter $85.02 06-08-00 Georgio's Food and Spirits $193.14 05-11-00 Greek Islands $89.73 06-03-00 Greek Islands $75.25 01-04-00 Greek Islands $70.49 10-29-99 Heavenly Ham $349.66 03-22-00 Houston's $75.54 10-28-99 Mayhue's Liquors $70.02 06-14-00 Mezzanot $102.02 12-01-99 Padrino's Restaurant $61.21 03-17-00 Publix $235.32 12-16-99 Publix $235.32 10-29-99 Publix $212.00 Publix $149.41 05-07-00 Restaurante Botin $146.39 01-04-00 Sage $79.85 12-28-99 Sage $107.89 10-29-99 Salute-Embassy Suites $211.26 03-01-00 TGI Fridays $47.08 05-25-00 Things Remembered $79.49 05-24-00 Things Remembered $296.69 05-21-00 Things Remembered $386.22 01-03-00 Wolfgang Puck Café $138.87 While Petitioner's personal decision to "wine and dine potential donors, supporters and campaign volunteers" at upscale restaurants may have been the genesis of the complaint that caused the Commission's investigation, no evidence was offered that suggested this to be an inappropriate expenditure of campaign funds. Sixteen checks were written by the campaign treasurer from the campaign account to Petitioner to reimburse him for the above expenditures. The campaign treasurer acknowledged that he had misdated one of the sixteen checks. Each check was written on the campaign accounts, was dated, was made payable to Petitioner, and each check listed that the purpose of the expenditure was to reimburse for non- specific campaign expense(s) as follows: Date Check No. Purpose Amount 10-29-99 1003 Reimb.-Campaign party expenses 11-02-99 1004 Reimb.-misc. campaign lunches 11-16-99 1005 Reimb.-misc. campaign lunches $968.38 $536.68 $350.24 11-30-99 1006 Reimb.-misc. campaign dinners 01-06-00 1008 Reimb.-camp. party expenses $509.68 $502.93 01-07-00 1009 Reimb.-misc. camp. dinners $496.50 03-03-00 1015 Reimb.-misc. camp. dinners $566.81 04-04-00 1019 Reimb.-camp. meeting expenses $565.32 04-11-00 1020 Reimb.-camp. party exp. $376.28 04-27-00 1021 Reimb.-misc. camp. dinners $799.23 5-16-00 1023 Reimb.-misc. camp. dinners $679.69 5-18-00 1024 Reimb.- misc. camp. lunches $462.58 5-22-00 1025 Reimb.-novelty items $368.22 5-24-00 1051 Reimb.-misc. camp. lunches $612.58 5-26-16 1054 Reimb.-camp. novelty items $376.16 06-09-00 1055 Reimb.-camp. meals/lunches $386.53 Each of the above-noted reimbursements to Petitioner was listed as an expenditure on Petitioner's campaign treasurer's reports filed with the Division of Elections as follows: Date Name and Address of Purpose Amount Person Receiving Reimbursement 10-29-99 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement for campaign party expenses $968.38 11-02-99 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign lunches $536.68 11-16-99 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign lunches $320.24 11-30-99 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign dinners $509.68 01-06-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement for campaign party expenses $502.93 01-07-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign dinners $496.50 03-03-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign dinners $566.81 04-04-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement campaign meeting expenses $565.32 04-11-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement for campaign party expenses $376.28 04-27-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign dinners $799.23 05-16-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign dinners $697.69 05-18-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign lunches $462.58 05-22-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement campaign novelty items $386.22 05-24-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign lunches $612.58 05-26-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign novelty dinners $376.16 06-09-00 Alan H. Schreiber 855 Orchid Drive Plantation, FL 33317 Reimbursement misc. campaign lunches $386.53 While the campaign treasurer's report accurately reports reimbursements to Petitioner, because the reimbursements are non-specific and aggregated, it is impossible to determine the actual expense for which reimbursement is made. Stephen Michaelson served as the campaign treasurer for Petitioner's 2000 reelection campaign and had served as deputy treasurer of Petitioner's 1996 campaign. Mr. Michaelson has served a number of candidates in a similar fashion. Prior to filing papers to open the 2000 reelection campaign account, Mr. Michaelson and Petitioner discussed whether it was permissible under Florida law for a candidate to be reimbursed from his campaign account for legitimate, campaign-related expenditures made by him personally in the course of the campaign. Petitioner had experienced difficulty writing campaign checks at restaurants during the 1996 campaign. After the 1996 campaign, Mr. Michaelson had researched the issue and informed Petitioner that he had discovered a "reimbursement statute." Mr. Michaelson also found a 1994 Division of Elections opinion that he believed "to be right on all fours," i.e., the opinion dealt specifically with the issue. The 1994 Division of Elections opinion [DE 94-07] referred to by Mr. Michaelson provides, in pertinent part, as follows: It is also permissible for a candidate to make a purchase with his own personal check or currency if the candidate intends to seek reimbursement from his campaign. However, the purchase does not become a campaign expenditure until such time as the reimbursement is made by campaign check or petty cash through the candidate's campaign treasurer. In 1999, prior to opening his campaign account, Petitioner and Mr. Michaelson again discussed the "reimbursement issue." Mr. Michaelson checked Chapter 106, Florida Statutes, that had been in effect when the 1994 Division of Elections opinion [DE 94-07] had been issued and noted no changes in the statute. In addition, he did a computer search on Florida Statutes Annotated of District and Supreme Court cases and found nothing dealing with the subject that, in his opinion, would warrant a change in the Division of Elections opinion. He checked the Division of Elections website to see if the 1994 opinion was still there and concluded that it was. He did a computer check to see if there were any subsequent Division of Elections opinions that referred to expenditures; finding none, he concluded that the 1994 opinion was still in effect. Based on his review, he advised Petitioner that Petitioner could seek reimbursement from the campaign account for legitimate campaign expenditures that he paid with personal funds. Mr. Michaelson has been a campaign treasurer or deputy campaign treasurer on seven occasions, has, himself, been a candidate, is a lawyer who has practiced criminal defense law for 23 years, and, during his testimony at this formal hearing, demonstrated competency and understanding of the Florida election law/campaign financing law. He gave Petitioner advice on Florida election law/campaign financing law knowing that Petitioner would rely on his advice. Petitioner's reliance on Mr. Micahelson's advice was warranted. In the same general time period during which he opened his reelection campaign account, Petitioner spoke to David Bogenschutz, an attorney in Fort Lauderdale, and asked whether a candidate could incur campaign expenses and then seek reimbursement from his campaign account. Mr. Bogenschutz is a lawyer who has known Petitioner since 1971, whose practice is devoted largely to criminal defense, who had previously advised and represented candidates and public officials in proceedings related to the Florida's election law/campaign financing law, had himself been a candidate, and was believed by Petitioner to be knowledgeable regarding Florida election law/campaign financing law. While Mr. Bogenschutz was reluctant to acknowledge that he was an "expert" in Florida election law, his testimony at this formal hearing demonstrated a satisfactory working knowledge of Florida election law/campaign financing law; it was appropriate for Petitioner to seek his counsel and to be guided by his advice. Mr. Boganschutz advised Petitioner that he saw nothing wrong with his reimbursing himself from his campaign treasury for authorized campaign expenses. He further advised that he would research the matter and advise if he saw anything wrong. Mr. Boganschutz reviewed Section 106.021(3) and Subsection 106.07(4)(a)7, Florida Statutes, and Florida Statutes Annotated. He concluded that Subsection 106.07(4)(a)7, Florida Statutes, permitted a candidate to be reimbursed for authorized campaign expenditures from the campaign account and so advised Petitioner. In giving his advise, he did not review Division of Elections Opinion DE 94-07 or a later opinion, DE 97-06, because, while other Division of Elections opinions are found in Florida Statutes Annotated, neither of the referenced opinions is listed in Florida Statutes Annotated. In addition, he felt that the statute regarding reimbursement was so clear that there was no need to do further research. In addition to his discussions with Mr. Michaelson and Mr Bogenschutz, Petitioner conducted his own research and concluded that it was appropriate to pay vendors personally for campaign-related expenses and then be reimbursed from his campaign account for those campaign-related expenses. The qualifying period ended on July 21, 2000, with Petitioner having drawn no opposition. At about the same time, a local newspaper article questioned Petitioner's campaign spending habits and quoted a Division of Elections official saying Petitioner should have been using campaign checks. After reading the newspaper article, Mr. Michaelson called the local Supervisor of Elections who advised him that Division of Elections opinion DE 94-07 had been rescinded by Division of Elections opinion DE 97-06. This caused Mr. Michaelson obvious concern; the qualifying period had ended and, for Petitioner, the election was over. It appeared that he had incorrectly advised Petitioner regarding the propriety of paying campaign-related expenses personally and then seeking reimbursement. Mr. Michaelson then checked his research in an effort to understand how he had missed the rescission of Division of Elections opinion DE 94-07 and discovered that the Division of Elections website did not indicate that opinion DE 94-07 had been rescinded. The Division of Elections, Department of State, maintains a website which includes "Formal Opinions of the Division of Elections." This website lists all opinions from 1987-2000. Intermittently throughout the list of opinions is the notation "rescinded" in highlighted type, indicating that the particular opinion has been rescinded. No such notation appeared in reference to opinion DE 94-07. The 1997 Division of Elections opinion DE 97-06 indicates "Rescinding DE 76-16, 78-2, 88-32, 90-16, and 94-7." This is presented in the same type as the rest of the text and is not highlighted. Mr. Michaelson then used his web browser to search the Division of Elections website that lists these advisory opinions for the words "expenditure" or "reimbursement," the website did not direct him to the 1997 opinion DE 97-06. Division of Elections opinion DE 97-06, which, in part, rescinds Division of Elections opinion DE 94-07, provides in pertinent part, as follows: We held that candidates could make unlimited purchases by personal check as long as they intended for such expenditures to be reported as in-kind contributions. The opinion also stated that the "candidate cannot make such purchases as a campaign expenditure except by means of a campaign check . . . made through the candidate's campaign treasurer." This reasoning has resulted in some confusion as to when and under what circumstances a campaign expenditure or in-kind contribution occurs. Therefore, we rescind DE 94-07. Except for petty cash expenditures allowed under section 106.12, Florida statutes (1995), the only way that a candidate may make a campaign expenditure is by means of bank check drawn on the primary campaign depository, pursuant to section 106.11(1), Florida Statutes (1995). Having said this, we recognize the applicability of section 106.07(4)(a)7, Florida Statutes (1995), which requires that candidates report any reimbursements of authorized expenses from the campaign accounts to themselves. We believe that the purpose of this provision is to cover rare occurrences where the campaign must make an expenditure, but the campaign check book is not available. Such a situation could occur when a bill must be paid and the campaign has not received its first order of checks from the bank, or where, during the course of campaign travel, tolls or other miscellaneous expenses must be paid in cash and the candidate has failed to take the money out of his petty cash fund for such purposes. During the 2000 campaign, Mr. Michaelson maintained possession of the campaign checkbook which was usually kept at his home. On occasion, he would have one or two campaign checks on his person. If Petitioner asked for a campaign check, and Mr. Michaelson had one on his person, he would give it to Petitioner. On occasion, Petitioner would return a campaign check to Mr. Michaelson, indicating that the check was not accepted by a particular vendor. Most of the reimbursements at issue are a result of Petitioner's not having a campaign check with him at the time of a transaction or the vendor's unwillingness to accept a check or campaign check. In most instances the transaction involved purchases by Petitioner at restaurants. TGI Friday's located in Plantation, Florida, does not accept checks. Petitioner made one campaign-related purchase at TGI Friday's for which he was reimbursed from the campaign account. Bimini Boatyard does not generally permit patrons to pay with checks, although exceptions have been made. Petitioner made six campaign related-purchases at Bimini Boatyard for which he was reimbursed from the campaign account. During his 1996 campaign, Petitioner wrote 15 checks directly to Bimini Boatyard for campaign expenditures from the campaign account. Café de Paris and French Quarter have a policy of not accepting checks except when personally approved by the owner or for a special party. The owner indicated he would not accept a campaign check. Petitioner made 20 campaign related-purchases at Café de Paris and three campaign-related purchases at French Quarter for which he was reimbursed from the campaign account. The Sage Restaurant accepts only cash, MasterCard and Visa from restaurant patrons; checks are accepted for catering. The owner opined that had Petitioner called ahead and advised that campaign laws required him to pay by campaign check, she would accept that form of payment. Petitioner made two campaign-related purchases at Sage Restaurant for which he was reimbursed from the campaign account. Bar Amici and Cathode Ray do not accept checks; however, if a candidate advised that the law required payment by campaign check, a check would be reluctantly accepted. Petitioner made one campaign-related purchase at Bar Amici and Cathode Ray for which he was reimbursed from the campaign account. Greek Island Taverna does not accept checks. Petitioner sought reimbursement for three campaign-related expenditures at Greek Island Taverna for which he was reimbursed from the campaign account. Padrino's Restaurant does not accept checks. The owner, who is seldom at the restaurant, indicated that he would accept Petitioner's check. Petitioner made one campaign-related purchase at the Padrino's Restaurant for which he was reimbursed from the campaign account. Andrew's, a Tallahassee restaurant, does not accept checks from restaurant patrons. The manager opined that, if prior arrangements were made, a campaign check might possibly be accepted, but an out-of-town campaign check made it more problematic. Petitioner made two campaign-related expenditures at Andrew's for which he was reimbursed from the campaign account. Connie Evans, Chief, Bureau of Election Records, Division of Elections, Department of State, who has been employed by Division of Elections for 22 years and a bureau chief for five years, was qualified as an expert witness "in the area of Chapter 106 of Florida Statutes," without objection. She opined that Chapter 106, Florida Statutes, requires full disclosure of all contributions and expenditures for the public benefit. Ms. Evans further opined that Division of Elections advisory opinions are only binding on the candidate or organization who sought the opinion. Ms. Evans further opined that the Division of Elections, in applying Division of Elections opinion DE 97-06, considers that it is appropriate for a candidate to seek reimbursement for personal payment of a campaign-related expense at a restaurant when the restaurant refuses to take a check, but that the candidate should not return to the same restaurant knowing that the restaurant will not accept a campaign check in payment. She acknowledged that there is no statutory authority in Chapter 106, Florida Statutes, for this opinion. Ms. Evans further acknowledged that Division of Elections opinion DE 97-06 refers to Subsection 106.07(4)(a)(7), Florida Statutes (which allows reimbursement for campaign- related expenses), and that both DE 97-06 and DE 94-07 advise that it is permissible for candidate to reimburse himself for campaign-related expenses. Ms. Evans opined that the Division of Elections website should have indicated that Division of Elections opinion DE 94-07 had been rescinded in bold type, as is done with the other rescinded opinions. Ms. Evans further opined that, if a candidate were to reimburse himself or another person for authorized campaign- related expenses, it is the position of the Division of Elections that the reimbursement must be made by a campaign check, must be reported on the campaign treasurer's report as an expenditure, and the amount, date, and the purpose of the expenditure must be reported.
Recommendation Based upon the foregoing Findings of Facts and Conclusions of Law, it is recommended that the Florida Elections Commission enter a final order finding that Petitioner, Alan Schreiber, did not violate the Florida Campaign Financing Law as alleged and dismissing the Order of Probable Cause. DONE AND ENTERED this 19th day of September, 2001, in Tallahassee, Leon County, Florida. JEFF B. CLARK 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 19th day of September, 2001. COPIES FURNISHED: Mark Herron, Esquire Mark Herron, P.A. Post Office Box 1701 Tallahassee, Florida 32301-1701 Eric M. Lipman, Esquire Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050 Barbara M. Linthicum, Executive Director Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050 Patsy Rushing, Clerk Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050
Findings Of Fact The Respondent, Lydia Miller, ran for election to the Hillsborough County Commission, District 4, in 1992. It was her first campaign for election to public office. She declared her candidacy in September, 1991, and appointed her husband as her campaign treasurer and herself as deputy campaign treasurer. She ran as a Republican and had several Republican opponents in the primary. She did not have the backing of the Republican Party and had difficulty attracting financial support, especially at first. Of necessity, she ran a "grass roots" campaign and spent countless hours going door-to-door in her district asking for support and, when possible, making public appearances. She also tried to capitalize on the "grass roots" nature of her campaign. Trying to emulate a campaign technique that worked for Governor Lawton Chiles, she pledged that she would not accept financial contributions in excess of $100 (versus the $500 statutory maximum) and would not accept financial contributions (or endorsements) from "special interests." To substantiate the strength of her "grass roots" campaign, the Respondent saw value in her campaign treasurer's reports showing as large a number of relatively small contributions from individuals. In all, the Respondent raised less than $14,000. Yet, she was able to survive the first primary, win the second primary, and beat her Democrat opponent in the general election. Cash Not Deposited or Reported The Respondent admitted that she accepted a $20 cash contribution from Irene Herring and put it in her campaign's petty cash without reporting it in her campaign treasurer's reports. Herring made two other cash contributions to the Respondent's campaign- -one in the amount of $20 and another in the amount of $30. Neither contribution was reported. Both contributions were given to Susie Farmer, a campaign worker. Similarly, David Gill contributed between $50 and $100 cash to the Respondent's campaign, but the contribution was not reported. This contribution also was given to Susie Farmer. The Respondent denied specific knowledge of the two other cash contributions from Herring and the cash contribution from Gill. The only evidence which could support a finding that the Respondent knew of them was testimony of Larry Sweat, an aide the Respondent hired after her election but fired three months later. From an evaluation of the testimony of the Respondent and Sweat, taking into account all of the relevant evidence as well as their demeanor and overall credibility, and it is found that Sweat's testimony was not sufficient to overcome the Respondenet's denials by a preponderance of the evidence. By her own admission, however, it would not have been unusual for the Respondent to use small cash contributions (or allow and approve their use) to replenish her campaign's petty cash without reporting them in her campaign treasurer's reports. It certainly is possible that the other two cash contributions from Herring and the cash contribution from Gill were handled in that manner. The Respondent was aware that all contributions had to be deposited in her campaign account and reported in her campaign treasurer's report. Yet, for reasons not fully explained in her testimony, the Respondent also thought that it was permissible to use small cash contributions to replenish her campaign's petty cash. It is possible that the Respondent misread or misunderstood the election campaign financing laws dealing with petty cash and the reporting of expenditures from petty cash. See Conclusions of Law 79 through 81, below. The Respondent certainly was not handling the small cash contributions that way to "beef up" her campaign treasurer's reports. Cash Deposited and Reported But Donor Allegedly Unknown The Respondent's campaign treasurer's reports show the following cash contributions: $100 from Phillip Preston on August 17, 1992 $ 90 from Robert Preston on August 17, 1992 $100 from Kelley Preston on August 22, 1992 Robert, Kelley, and Phillip are the minor children of Allen and Rosina Preston, aged 16, 4, and 2. It is possible but improbable that Robert donated $100 of his own cash to the Respondent's campaign; it is all but impossible that Kelley or Phillip did. The Prestons were supporters of the Respondent and contributors to her campaign. The Respondent's Sun City Center campaign headquarters was in office space donated by Allen Preston. The offices of Preston's business also was in the same building. Allen Preston often visited the campaign headquarters and helped with the campaign, in addition to his financial contributions. Yet, Preston denied donating $290 cash in the names of his children. Preston does not think his wife would have done so without telling him, but his wife did not testify. The Respondent denies any specific knowledge concerning the $290 in cash contributions attributed to the Preston children. But it would not have been unusual for Susie Farmer or other campaign workers to leave cash contributions with "Post-It" notes attached to identify the donors. The campaign treasurer's reports normally would be prepared using the information on the "Post-It" notes. Especially in the days leading up to the three elections, the campaign headquarters became hectic and confused, and it is possible that incorrect information inadvertently was placed on the "Post-It" notes for these cash contributions. When the Respondent saw cash contributions from the Preston children in preparing or reviewing reports, she would not have questioned the accuracy of the information. She would have assumed that the Prestons had made the donations in the names of their children. She did not think there was anything wrong with adults making campaign contributions in the names of their minor children. She denies intentionally misreporting the contributions in order to hide contributions from Allen and Rosina Preston, or their businesses, or artificially to "beef up" the number of small contributions reflected in her campaign treasurer's reports. The evidence was not sufficient to overcome the Respondenet's denials by a preponderance of the evidence. The Respondent's campaign treasurer's reports also show a $25 cash contribution from Evelyn Ackerman on October 14, 1992. The parties stipulated in their Joint Prehearing Stipulation that Ackerman is an elderly woman on a fixed income and that Ackerman denies making the contribution. But the Respondent has a specific recollection that Ackerman offered the contribution, that the Respondent tried to decline in view of Ackerman's meager financial means, and that Ackerman insisted. It is found that the Respondent's testimony outweighs the statements from Ackerman, who has been know to hallucinate and whose memory may not be trustworthy. The Respondent's campaign treasurer's reports also showed a $100 cash contribution from Henry Farmer on October 18, 1992. Henry Farmer denies making the contribution and does not believe that his wife, Susie, would have donated $100 cash in his name without telling him. Susie did not testify, but she was an enthusiastic supporter, campaign worker and fund-raiser for the Respondent's campaign, and it certainly is possible that she donated the cash in her husband's name without his knowing it. Regardless of the actual source of the cash, the Respondent testified to her recollection of seeing a $100 cash contribution with a "Post-It" notes attached indicating that it was from Henry Farmer. She indicated that she had no reason to think it was not a contribution from Susie's husband, and it would not have been unreasonable for the Respondent to believe, without question, that the information on the "Post-It" note was accurate. The evidence was not sufficient to overcome the Respondent's testimony by a preponderance of the evidence. The evidence did not prove that the Respondent knew her campaign treasurer's report of the $100 cash contribution from Henry Farmer was not accurate. The Respondent's campaign treasurer's reports also showed a $100 cash contribution from Marie Schrag on October 18, 1992. Neither she nor her husband made the contributions. The Respondent did not testify to any specific recollection about the Schrag contribution. But Schrag was Allen Preston's bookkeeper and worked in the same building of Preston's where the Respondent's Sun City Center campaign headquarters was. Although she was not an active campaign worker for the Respondent, she did type one letter for the campaign, and her husband stuffed envelopes for the campaign on at least one occasion. In addition, she had been friends with Susie Farmer, one of the Respondent's most successful fund-raiser, for over 20 years. If the Respondent saw a $100 cash contribution with a "Post-It" notes attached indicating that it was from Marie Schrag, she would have had no reason not to believe, without question, that the information on the "Post-It" note was accurate. The evidence did not prove that the Respondent knew her campaign treasurer's report of the $100 cash contribution from Marie Schrag was not accurate. Alleged Business Contributions Allegedly Falsely Reported From Individuals The Respondent's campaign treasurer's reports listed a June 1, 1992, contribution in the amount of $25 from "Phil Boggs, Occupation (if over $100), Boggs Jewelry," when the check was written on the account of Boggs Jewelry, and signed by Phil R. Boggs. The Respondent reasonably did not think there was anything wrong with the way the Boggs contribution was reported. When the Respondent pledged not to take financial contributions or endorsements from "special interests," she did not intend to indicate that she would not accept financial support from any businesses or corporations. (In her mind, "special interests" meant political action committees, not any and all businesses and corporations.) The Respondent does not know Phil Boggs, and Boggs Jewelry had no business before the County Commission during the Respondent's term. The Respondent reasonably did not perceive the Boggs contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Boggs contribution or make it look like it was coming from Boggs, individually, instead of the business, Boggs Jewelry. The Respondent's campaign treasurer's reports listed a contribution on June 2, 1992, in the amount of $25 from "Charles Hostetter, Occupation (if over $100), Fisher Beauty Salon," when the check was written on the account of Fisher's Beauty Salon, and signed by Charles Hostetter. The Respondent reasonably did not think there was anything wrong with the way the Hostetter contribution was reported. The Respondent reasonably did not perceive the Hostetter contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Hostetter contribution or make it look like it was coming from Hostetter, individually, instead of the business, Fisher's Beauty Salon. The Respondent's campaign treasurer's reports listed a contribution on June 22, 1992, in the amount of $25 from "Charles Bingham, Occupation (if over $100), c/o Floral Decor Florist," when the check was written on the account of Floral Decor Florist, and signed by Charles Bingham. The Respondent reasonably did not think there was anything wrong with the way the Bingham contribution was reported. Bingham is a personal friend of the Respondent and personally gave the check to the Respondent. The Respondent reasonably did not perceive the Bingham contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Bingham contribution or make it look like it was coming from Bingham, individually, instead of the business, Floral Decor Florist. The Respondent's campaign treasurer's reports listed a contribution on June 24, 1992, in the amount of $100 from "John Williams Coppes Kitchen, Occupation (if over $100), Owner," when the check was written on the account of Williams Kitchens & Baths, Inc. The Respondent reasonably did not think there was anything wrong with the way the John Williams contribution was reported. The Respondent knows Williams's business as "John Williams Coppes Kitchens," the name on the business's signage. (Coppes is the name of the brand Williams sells.) The Respondent reasonably did not perceive the John Williams contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the John Williams contribution or make it look like it was coming from Williams, individually, instead of the business, whether known as Williams Kitchens & Baths, Inc., or as John Williams Coppes Kitchens. The Respondent's campaign treasurer's reports listed a contribution on August 16, 1992, in the amount of $100 from "Ann Williams, Guys & Dolls," when the check was written on the account of Guys 'N Dolls of Brandon, Inc., and signed by Ann Williams. The Respondent reasonably did not think there was anything wrong with the way the Ann Williams contribution was reported. Ann Williams is the Respondent's regular hairdresser and personally gave the check to the Respondent at the beauty parlor. The Respondent reasonably did not perceive the Ann Williams contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Ann Williams contribution or make it look like it was coming from Ann Williams, individually, instead of the business, Guys 'N Dolls of Brandon, Inc. The Respondent's campaign treasurer's reports listed a contribution on September 12, 1992, in the amount of $50 from "Martha Simmons, Tropical Fish Farms," when the check was written on the account of Gerald Simmons Tropical Fish Farm, and signed by Martha Simmons. The Respondent reasonably did not think there was anything wrong with the way the Simmons contribution was reported. The Simmonses were neighbors of the Farmers. The Respondent reasonably did not perceive the Simmons contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Simmons contribution or make it look like it was coming from Martha Simmons, individually, instead of the business, Gerald Simmons Tropical Fish Farm. The Respondent's campaign treasurer's reports listed a contribution on September 23, 1992, in the amount of $50 from Tommy Brock, when the check was written on the account of Brock Farms, and signed by Tommy Brock. The Respondent reasonably did not think there was anything wrong with the way the Tommy Brock contribution was reported. The Respondent reasonably did not perceive the Brock contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Brock contribution or make it look like it was coming from Tommy Brock, individually, instead of the business, Brock Farms. The Respondent's campaign treasurer's reports listed a contribution on October 15, 1992, in the amount of $100 from William Stearns, when the check was written on the account of F.E. Stearns Peat Co., Inc., and signed by William Stearns. If the Respondent had carefully compared check to the report, she probably should have known that the Stearns contribution was not reported properly. The check arrived in the mail, and there was no reason to think it was not from the F.E. Stearns Peat Co., Inc. Nonetheless, the Respondent reasonably did not perceive the Stearns contribution to have come from a "special interest," and it was not proven that the Respondent intentionally was trying to hide the true source of the Stearns contribution or make it look like it was coming from Williams Stearns, individually, instead of the business, F.E. Stearns Peat Co., Inc. It just as easily could have been a mistake or oversight. The Respondent's campaign treasurer's reports listed a contribution on October 15, 1992, in the amount of $100 from "William Bishop, c/o L.L. Corporation," when the check was written on the account of Leslie Land Corporation, signed by William Bishop, with the "memo": "William L. Bishop." If she had carefully compared check to the report, the Respondent probably should have known that the Leslie Land Corporation contribution was not reported properly. However, the "memo" on the check indicated "William L. Bishop," and the report gave Bishop's address as "c/o L. L. Corporation." It was not proven that the Respondent intentionally was trying to hide the true source of the Leslie Land Corporation contribution or make it look like it was coming from William Bishop, individually, instead of the business, Leslie Land Corporation. It is just as possible that the intention was to include all of the information on the check for full disclosure and that the initials "L. L." were used instead of the full name of the Leslie Land Corporation by mistake or oversight, or to compress all of the information into the limited space allotted on the report form. The Respondent's campaign treasurer's reports listed a contribution on October 22, 1992, in the amount of $100 from the "Bill Kincaid Company," when the check was written on the account of the Kincaid Company, and signed by William F. Kincaid. The Respondent reasonably did not think there was anything wrong with the way the Kincaid contribution was reported. All the report did was provide the additional information of Kincaid's first name, along with the company name. It was not proven that the Respondent was trying to hide the true source of the Kincaid contribution or make it look like it was coming from Kincaid, individually, instead of from the Kincaid Company. The Respondent also reasonably did not perceive the Kincaid contribution to have come from a "special interest." The Respondent's campaign treasurer's reports listed a contribution on October 29, 1992, in the amount of $50 from Kenneth Wetherington, when the check was written on the account of the Morgan and Wetherington Chiropractic, and signed by Kenneth Wetherington. The Respondent did not think there was anything wrong with the way the Wetherington contribution was reported. She thought that a chiropractor in partnership with other chiropractors acted in his own behalf when making a political contribution, even when writing a partnership check. Although the Respondent probably incorrectly reported this contribution, the Respondent reasonably did not perceive the Wetherington contribution to have come from a "special interest," and it was not proven that the Respondent intentionally was trying to hide the true source of the Wetherington contribution or make it look like it was not coming from the partnership of Morgan and Wetherington Chiropractic. The Respondent's campaign treasurer's reports listed a contribution on October 28, 1992, in the amount of $100 from Paul Rozeman, when the check was written on the account of the McCaw Communications of Florida, Inc., and signed by someone other than Rozeman. (The signature was illegible, and it could not be identified through testimony.) However, the check was delivered by Rozeman, who worked in McCaw's local office, and who introduced himself to the Respondent. Although McCaw Communications is a large corporation, the Respondent was not familiar with it and was willing to assume that the contribution was from Rozeman's company and to decided err on the side of using his name. Obviously, her assumption was incorrect, and the report was in error. In any event, the Respondent probably should have known that the contribution was not reported properly. (See Finding of Fact 36, above.) But the evidence did not prove that the Respondent was lying, and that she actually perceived McCaw Communications to be a "special interest," and intentionally was trying to hide the true source of the contribution and make it look like it was coming from Rozeman, individually, instead of from McCaw Communications. In all, the Respondent's campaign treasurer's reports that were admitted in evidence listed 216 separate contributions. ($3,052 in cash and check contributions and $1615.80 of in-kind contributions would have been listed in earlier reports that were not admitted in evidence.) Of the 216 separate contributions, 31 (aside from the ones discussed in paragraphs 15 through 43, above) unambiguously and properly listed the contributions as coming from corporations, businesses or organizations. Contributions Allegedly Over $100 And Falsely Reported As Several $100 Contributions On or about October 5, 1992, the Respondent's campaign received a $500 check on the account of, and signed by Allen Preston, with explicit instructions to consider it and report it as being a $100 contribution from each of the five family members: Allen; his wife, Rosina; and their three children, Robert, Kelley, and Phillip. On or about September 3, 1992, the Respondent's campaign received a $300 check on the account of Aquarius Water Refinery, Inc., and signed by Joe Gaskill, with explicit instructions to consider it and report it as being a $100 contribution from him, another $100 contribution from his wife, and another $100 contribution from his company, Aquarius Water Refinery, Inc. On or about September 3, 1992, the Respondent's campaign received a $200 check on the account of Care Animal Hospital, Inc., and signed by Richard Kane, a veterinarian and the corporation's president, with explicit instructions to consider it and report it as being one $100 contribution from him and another $100 contribution from his corporation. The Respondent did not specifically request that the Preston, Gaskill and Kane contributions be considered and reported as being several contributions of $100. Preston, Gaskill and Kane all were aware of the Respondent's campaign pledge to limit contributions to $100, and it was their desire and intention not to cause the Respondent to violate the pledge. The Respondent did not think it was improper or illegal or inaccurate to reports the Preston, Gaskill and Kane contributions as requested. It appears that the Petitioner has issued an advisory opinion that contributions in excess of the statutory maximum by check drawn on a joint account only can be divided into smaller contributions from more than one account holder if all of the donors sign the check. (The Petitioner's investigator testified to the existence of such an advisory opinion, but none was admitted in evidence at the hearing. The Petitioner attached to its proposed recommended order a copy of what purports to be its advisory opinion on the subject, designated DE 93-10, but technically the advisory opinion still is not in evidence in this case.) But there is no evidence that the advisory opinion was furnished to the Respondent or that she was aware of it. If the Respondent were aware of the advisory opinion, she should at least have been on notice to inquire whether it was permissible to report the contributions as she did. But it still would not have been clearly impermissible. Allegedly False Termination Report And Improper Disposition of Surplus Funds The deadline for submission of the Respondent's termination campaign treasurer's report was 90 days after the general election, or Monday, February 1, 1993. As the deadline approached, the Respondent reasonably thought she needed two things in order to file the termination report: first, the January, 1993, bank statement on the campaign account; and, second, the resolution of a dispute she had with the phone company (GTE of Florida, Inc., or GTE) about charges on bills she received after having the campaign headquarters phone disconnected. On the weekend before the termination report was due, the Respondent attempted to obtain the bank statement but was told that it just had been put in the mail and could not be regenerated by the bank's computer at that time. The bank personnel advised the Respondent to wait until the statement arrived in the mail. Without the bank statement, the Respondent reasonably could not prepare the termination report before the deadline. She asked officials at the local elections supervisor's office for advice and was told to write a note explaining the reasons why she could not meet the deadline. She wrote a note dated February 1, 1993, stating that she "could not report on the closing of my campaign account until I received the final Banking Statement." It is found that the note was truthful and that she did not have the January, 1993, bank statement at the time she wrote it. Testimony from Larry Sweat to the effect that the Respondent came into her office that day and gave him the bank statement to hide in a drawer is rejected as false or mistaken. The Respondent did not receive the bank statement in the mail until later that week. It is possible, as testified by Sweat, that he and the Respondent had a discussion to the effect that it was to the Respondent's advantage that her termination report would not be available for public scrutiny on the deadline, along with the reports of other candidates (assuming they were filed on time). But it is as likely, or more likely, that Sweat thought of the fortuitous side- benefit of filing late. In any event, it is found that the Respondent did not intentionally file late in order to reap the perceived side-benefit that might have been discussed. It is possible that, when the January, 1993, bank statement was received in the mail, the Respondent brought it into the office and gave it to Sweat to keep in his desk drawer until she was in a position to prepare the termination report. (The dispute with the telephone company still was not resolved.) But it is found that, contrary to Sweat's testimony, the Respondent did not give the bank statement to Sweat to "hide" in his desk drawer. On February 18, 1993, the Respondent filed the termination report. It showed a January 6, 1993, check on the campaign account (check number 1070) in the amount of $88.45, made out to cash. The check memo stated, "petty cash reimbursement," but the report clarified that the cash actually was paid to the Respondent and two others for the purchase of party goods for the celebration of the Respondent's victory in the general election. The February 18, 1993, termination report also showed that a February 16, 1993, check for $48.95 to GTE of Florida (check number 1072) "on account, balance due in dispute" was written on the campaign account on the day of the report. The report also showed a zero balance in the account. Check number 1072 never was presented to the bank, and its whereabouts is not known. The Petitioner contends that check number 1072 and the disputed telephone bill were fabrications to cover the improper disbursement of $48.95 of surplus to the Respondent. But the check just as easily could have been lost or, for some reason, simply not presented to the bank for payment. Besides, as reflected in the following Findings of Fact, the evidence was clear both that there was in fact a dispute regarding the GTE bill and that the $48.95 was not disbursed to the Respondent in February, 1993. The Petitioner presented the GTE telephone records for the Respondent's campaign office telephone account in an apparent attempt to prove that, as of November 10, 1992, there was only a $1.02 balance on the account and that GTE was not pursuing collection of the $1.02. But, while only a $1.02 balance appeared on the campaign telephone account as of November 10, 1992, approximately $154.68 was transferred at that time from the campaign telephone account to the Respondent's personal home telephone account. It was the transferred charges that the Respondent was disputing. For reasons not apparent from the record, on or about December 10, 1992, GTE reduced the balance transferred to the Respondent's home phone bill to $131.37. Apparently, GTE further reduced the transferred balance to $84.09 on December 19, 1992; again, no explanation for the further reduction is apparent. The $84.09 charge remained on the GTE records at least until an entry on one of the records indicating that GTE wrote it off as uncollectible on or about February 12, 1993. Although the records include the notation dated February 12, 1993, indicating that GTE was writing off the $84.09 charge as being uncollectible, the Petitioner did not call a witness from GTE to explain the GTE records, and the records presented at the hearing do not go beyond the February 12, 1993, entry. It is not clear from the records that GTE stopped soliciting payment of the charge at that time. On May 12, 1993, the Respondent filed an amended termination report showing a March 30, 1993, disbursement to the Respondent in the amount of $36.95 for reimbursement for partial payment of the campaign's GTE bill. It also attached a copy of the March 31, 1993, bank statement on the campaign account showing a beginning balance as of March 1, 1993, in the amount of $36.95 and one withdrawal/debit in the same amount during the month, for a zero balance at the end of the month. The Respondent testified that she paid the $84.09 charge in June, 1993. Unfortunately, the Respondent's testimony was not corroborated by any records. But the GTE records presented by the Petitioner did not go beyond February 12, 1993, and without testimony from a witness from GTE, they were insufficient to disprove the Respondent's contention that she paid the charge in June, 1993. If the June, 1993, payment date is correct, the amended termination report filed on or about May 12, 1993, would indicate that the Respondent disbursed the $36.95 balance of the campaign account (representing the $48.95 she thought she had paid to GTE on or about February 16, 1993, less a $12 bank service charge for February, 1993) to herself on or about March 30, 1993, believing that there still was a disputed $84.09 charge to GTE, and that she held the money pending resolution of the disputed charge. When she paid the GTE charge, she considered the March 30, 1993, disbursement to herself to be reimbursement for her payment of the GTE charge. The Respondent knew or should have known that it was improper to disburse surplus from the campaign account to herself, except to reimburse her own contributions to her campaign. But, according to the Respondent's testimony, she did not consider the $36.95 payment to herself to be "surplus" since she considered there to be an outstanding disputed liability to GTE.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Elections Commission enter a final order dismissing the charges against the Respondent, Lydia Miller. RECOMMENDED this 6th day of April, 1995, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 6th day of April, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-6612 To comply with the requirements of Section 120.59(2), Fla. Stat. (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1. First sentence, accepted but subordinate and unnecessary. The rest is conclusion of law. 2.-3. Last two sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Last two sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. Rejected as not proven. (Rather, she complied with the donors' instructions as to the source of the donations and how to report them.) First sentence, rejected as argument. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that the Respondent willfully filed false reports. As to Ackerman, rejected as not proven that the report was inaccurate. Otherwise, accepted and incorporated. First sentence, rejected as not proven that he admitted his wife did not make the contribution. (He said it was possible that she made it but he does not think she did.) Second sentence, rejected as not proven as to Ackerman but otherwise, accepted and incorporated. Third sentence, rejected as not proven that she said Suzie Farmer was responsible; the Respondent admitted to handling the Ackerman contribution and testified that said that someone, quite possibly Farmer, attached an explanatory "Post-It" note to the other cash contributions. Last sentence, rejected as not proven. Third, fifth and last sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that the Respondent willfully made false reports. Otherwise, accepted and incorporated. First, sixth penultimate and ultimate sentences, accepted but subordinate and unnecessary. The rest is rejected as not proven. (A review shows that she usually followed Barr's advice although not in each and every case.) Penultimate sentence, rejected as not proven as to petty cash. Otherwise, accepted and incorporated. Rejected as not proven. Last sentence, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. Third sentence, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Penultimate and ultimate sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. First and last sentences, ejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. First, sixth, seventh and eighth sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Last sentence, rejected as not proven as to petty cash. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Respondent's Proposed Findings of Fact. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary or argument. Third paragraph, fourth sentence (that the small size of the individual alleged "masked" cash donations makes the allegation "absurd"), rejected as contrary to the greater weight of the evidence. (The point of the Petitioner's argument that a single fairly large cash contribution--which could have been in addition to reported contributions--could have been "masked" by fabricating many small cash contribution.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary or argument. Second paragraph, first sentence (that the dispute concerned check #1072), rejected as contrary to the greater weight of the evidence. Third paragraph, first sentence, rejected in part (omission of January, 1993, bank statement as a cause of initial delay) as contrary to the greater weight of the evidence and in part (the Respondent's first campaign and the amounts involved) as irrelevant on the issue whether she willfully violated the law. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary or argument. COPIES FURNISHED: David R. Westcott, Esquire Assistant General Counsel Department of State, Division of Elections The Capitol, Room 2002 Tallahassee, Florida 32399-0250 Ralph C. Stoddard, Esquire Hampton, Stoddard, Griffin & Runnells 915 Oakfield Drive, Suite F Brandon, Florida 33511 Carlos Alvarez, Chairman Florida Elections Commission Room 1802, The Capitol Tallahassee, FL 32399-0250
The Issue The issues in the case are whether the allegations of the Second Administrative Complaint are correct, and, if so, what penalty, if any, should be imposed.
Findings Of Fact At all times material to this case, Respondent was an insurance agent, holding Florida license number A020887, and was licensed as a Resident Life, Health & Variable Annuity (2-15); Life (20-16); Life & Health (2-18); General Lines, Property & Casualty Insurance (2-20); and Health (2-40) agent. Respondent has been licensed in Florida since February 14, 1994, and has consistently met all continuing education requirements applicable to his licensure. At all times material to this case, Respondent was employed as an account executive by HRH of Southwest Florida, Inc. HRH of Southwest Florida, Inc., is a subsidiary of HRH, Inc., a large provider of insurance agency services. Respondent is not and has never been an officer, director, manager, or shareholder of HRH of Southwest Florida, Inc. HRH of Southwest Florida, Inc., provided insurance and risk management services to businesses. Insofar as is relevant to this case, HRH of Southwest Florida, Inc., offered to its clients both fully insured health benefit plans and partially self-funded health benefit plans. Fully insured health benefit plans are those in which an employer pays a premium (sometimes with an employee contribution) to an insurer, and health benefit insurance coverage is provided to participants in the plan. Petitioner has the responsibility for regulating fully insured health benefit plans sold in the State of Florida. Partially self-funded health benefit plans include those where an employer's funds (again sometimes with an employee contribution) are used to cover health expenses of plan participants. The employer's funds are collected by a third- party administrator responsible for paying claims out of the employer's funds, and for obtaining stop-loss insurance to cover claims in excess of the funds available from the employer. Properly created, partially self-funded health benefit plans may be exempt from regulation by state authorities under the provisions of the federal Employee Retirement Income Security Act (ERISA). In the April 2001, HRH of Southwest Florida, Inc., began offering to clients in Lee, Manatee, and Sarasota Counties, a health benefit product made available by Meridian Benefit, Inc. (MBI). MBI had no authorization to operate as an insurer in the State of Florida. Based on information provided to HRH of Southwest Florida, Inc., MBI was operating as a third-party administrator for partially self-funded health benefit plans. The information provided to HRH of Southwest Florida, Inc., initially came from Thomas Mestmaker and Associates, a managing general agency representing MBI, and was confirmed through information subsequently provided by MBI. The plans were presumed by Respondent to be exempt from regulation by Petitioner under the provisions of ERISA based on the information provided by MBI. According to the information provided to Respondent and to HRH of Southwest Florida, Inc., the MBI plan included establishment of a single employer trust (SET) on behalf of each business. Health claims from each business' employees would be paid from the funds contributed to the trust by the employer. "Stop-loss" insurance would be obtained to cover claims in excess of an employer's contribution. The information provided by Respondent to his clients was provided to Respondent or to HRH of Southwest Florida, Inc., by MBI and affiliated other sources. Based on such information, Respondent presumed that MBI was a stable organization and that the stop-loss coverage was in place. Respondent had no specific training related to ERISA- qualification of health benefit plans. He has sold other plans that he believed were ERISA-qualified plans to other employers in Florida. Typically, a business owner would initially contact HRH of Southwest Florida, Inc., seeking health benefits for employees. A representative of HRH of Southwest Florida, Inc., such as Respondent, would research a variety of options for the business owner and then present the options to the client. The evidence establishes that the MBI health benefit plan was one of several options (including both fully-insured and partially self-funded plans) presented to clients. A client was free to choose the MBI plan, another plan presented, or no plan at all. Clients generally reviewed health benefit plans on an annual basis, at which point the process of presenting various options was repeated. Respondent eventually sold the MBI plan to ten or twelve business clients seeking to provide health benefits to employees. Clients choosing to obtain health benefits through the MBI plan submitted information related to the client's employees through Respondent and HRH of Southwest Florida, Inc., to MBI, which would respond with a preliminary rate proposal. After a client chose to accept the rate proposal, representatives from HRH of Southwest Florida, Inc., including Respondent, would assist client employees in completing applications. The applications were submitted to MBI, which in turn established actual rates and communicated the actual rate directly to the client. Clients who chose to accept the final rate proposal then executed documents purportedly establishing an SET. The documents apparently were created by MBI, and were delivered to clients through representatives of HRH of Southwest Florida, Inc., including Petitioner. After execution by the clients, the documents were returned to MBI. Some clients received a general document on MBI letterhead titled "Technical Aspects of SET SINGLE EMPLOYER TRUST" wherein clients were advised that the SET was an "Employee Welfare Benefit Plan" that was "designed to conform to the Employee Retirement Income Security Act of 1974, as amended." The document described the process of establishing rates and advised that MBI was the plan administrator. The document also referenced a trust document and stated that the trust custodian was First Union National Bank. The document stated as follows: At First Union an account will be established for each single employer trust into which all contributions received by the trust from the employer group will be deposited. Any income earned from funds deposited in that account will be credited to that account and any fees charged by the bank will be charged to that account. Some clients received a disclosure document from "Hilb, Rogal and Hamilton of Sarasota" specifically applicable to the client, which provided that the client "intends to establish a SINGLE EMPLOYER TRUST Employee Welfare Benefit Plan," that client contributions would be made to a trust, and that "all benefits funded by the Plan will be paid out of the assets of the Trust." The document further provided that "[I]n its discretion, the Trust may purchase stop-loss insurance to pay any claims in excess of the amounts held in the Trust." Clients were provided with a document titled "DIRECTIVE TO ESTABLISH A HEALTH AND WELFARE BENEFIT PLAN UNDER ERISA" wherein each client provided information, including the number of total and participating employees and the plan coverage sought. The document required the signature of a client's representative and authorized MBI to establish a "Health and Welfare Benefit Plan under ERISA." Clients were provided with a document titled "HEALTH AND WELFARE PLAN - PLAN DOCUMENT," a lengthy document that set forth the specific health care benefits provided to each client under the selected benefit plan. Each client was provided with a document titled "HEALTH AND WELFARE PLAN SUMMARY" which essentially summarized the plan being provided to the client, identified as the "Plan Sponsor." The document identified MBI as the plan administrator and the claim administrator. The document provided as follows: The Plan conforms to and is governed by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan is not a policy of insurance. Neither the Plan Sponsor, nor any trust established to fund the benefits hereunder, is an insurance company. At various times, clients were provided with a document titled "WELFARE BENEFIT PLAN TRUST." In some instances, the document purported to be a trust agreement between the client and First Union, the designated custodian. In other instances, the "WELFARE BENEFIT PLAN TRUST" document did not identify the name of the trust custodian. In all cases, the document identified the plan administrator as MBI, and provided that MBI could "elect such financial institution as it deems appropriate to serve as the custodian with respect to the Trust. . . ." The document further provided that the plan administrator could "remove the Custodian at any time upon sixty (60) days notice in writing to the Custodian . . ." and that the custodian could resign with like notice to the plan administrator. In the agreements where First Union was designated the custodian, removal of the custodian required the client to designate a replacement custodian. In the agreements where no designation was made, the document provided that the plan administrator would designate the replacement custodian. Once the documents were executed and returned to MBI, MBI directly invoiced clients for payment of funds, and clients paid such funds directly to MBI. There is no evidence that Respondent was involved in handling funds transferred from the client to MBI. There is no evidence that Respondent received any information related to any trust accounts that may or may not have been established under the agreement between the client, a trust custodian, and MBI. There is no evidence that Respondent received cancelled checks or copies of account statements. There is no credible evidence that custodial accounts were established by MBI or that contributions submitted to MBI by employers were deposited into custodial accounts. Some checks from multiple employers appear to have been deposited into a single account at First Union. Some checks were deposited into the PNC Bank. There is no credible evidence as to the distribution of the deposited funds. Although under the terms of the trust agreement not all clients were required to approve substitute custodians, there is no evidence that any client required to approve a substitute custodian was ever asked to do so. There is no evidence that the plan administrator complied with the trust document language related to removal of the custodian. At some point in 2002, questions arose about the source of funds available to pay claims in excess of employer contributions. The information initially provided to clients by Respondent was that stop-loss insurance was in place to cover such claims. However, according to a letter on MBI letterhead dated February 25, 2002, to Thomas E. Mestmaker and Associates, "MBI is responsible for any amounts due under adjudicated claims in excess of the contribution amount of its client, assuming that all payments, obligations and bills submitted to the client are timely paid, and the Plan is in good standing with MBI." The letter further states, "MBI is responsible for any excess, subject to the terms and conditions of the initial Directive together with the Plan Trust Agreement, as applicable." There were apparently concerns regarding the soundness of MBI and their ability to handle losses. In March of 2002, information available to Respondent indicated that the stop-loss coverage MBI had supposedly obtained would not be renewed. Respondent began to prepare to move his MBI clients to other benefit plans. A letter to Respondent dated April 11, 2002, on MBI letterhead and purportedly from the Controller of MBI states in part as follows: Meridian Benefit Inc. has acted as an administrator for ERISA-based health plans that it has developed for years. Meridian Benefit Inc. has credibly sufficient contributions and reserves necessary to pay claims for these plans. Moreover, the finances of Meridian Benefit Inc. have been and continue to be sound. Since Meridian Benefit Inc. is a privately held company, we cannot share our detailed financial data, however through management and underwriting Meridian Benefit Inc. has been able to control claims and group losses. MBI then advised Respondent and others that the stop- loss insurance was in place via a statement dated June 19, 2002, indicating that "reinsurance" was being provided by American National Life Insurance Company effective July 1, 2002. As MBI or affiliated entities issued statements regarding the soundness of the MBI plan and the availability of stop-loss coverage, Respondent made the information, including the aforementioned letters, available to clients. The parties have stipulated that American National Life Insurance Company did not provide "reinsurance" or stop-loss insurance relative to any health and welfare benefit plan with MBI as plan administrator. There is no credible evidence that any stop-loss insurance was actually ever obtained by MBI on behalf of employers. In early 2003, MBI informed employers that the employers would be responsible for payment of claims in excess of contributions. By letter dated February 19, 2003, MBI issued a letter to clients which indicated that if a client's claims exceeded contributions, MBI would "advance funds" against the employer's account and then would "approach the employer for repayment of the deficit." The letter further provided that if MBI and the employer "cannot successfully negotiate repayment for the advance, MBI will unfortunately, be forced to stop payment on any existing or future claims." The February 19 letter clearly contradicted earlier affirmations that stop-loss insurance was in place to cover claims in excess of contributions. The evidence fails to establish from where funds "advanced" by MBI would have come. Respondent testified that he did not know the source of the funds. The evidence establishes that Respondent made no independent effort to review MBI or the MBI plan being offered to clients, to determine whether or not stop-loss insurance was actually in place by contacting the insurer identified by MBI as the stop-loss insurer, or to determine whether client funds were being deposited into custodial accounts. By letters dated February 20, 2003 (the day after notifying employers that they would be required to reimburse MBI for funds "advanced"), MBI advised employers of account deficits and directed the employers to pay the deficits. On or about May 15, 2003, MBI filed for Chapter 7 bankruptcy in the United States District Court in New Jersey. MBI had an agreement with Healthcare Sarasota, a local employer organization with an existing network of healthcare providers (a preferred provider organization or "PPO"), to permit MBI plan participants to utilize the Healthcare Sarasota provider network. Client benefit claims were handled between the PPO and MBI. On occasion, representatives of HRH of Southwest Florida, Inc., including Petitioner, became involved in resolving claim issues at the request of clients, but Petitioner had no direct involvement in paying claims. Prior to and by the time MBI filed for bankruptcy, there were numerous unpaid health benefits claims incurred by employees of the employers who became involved with the MBI plan through Respondent. Some employers have paid the claims and are seeking restitution from various parties. Other claims remain unpaid. Although the evidence fails to clearly establish the amount of the remaining unpaid claims, it is clear that at the time of the hearing, thousands of dollars in health benefit claims remain unpaid by any responsible party. Some employees of businesses that participated in the MBI plan have had unpaid claims forwarded by health providers to debt collection agencies. Petitioner has disseminated information to the public and to licensed agents about potential difficulties that may result from participating in health benefit plans that are not subject to state regulation. There is no evidence that licensed agents are required to read the information disseminated by Petitioner, and there is no evidence that Respondent did so. Child Development Center In mid-2001, Respondent met with a representative of the Child Development Center (CDC) to present various options for health benefit coverage for CDC employees. CDC chose to provide health benefits through the MBI plan. A CDC representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA." The document was dated June 21, 2001, with an effective date of July 1, 2001, and signed by Respondent, identified as the "Benefit Consultant." A CDC representative executed the document titled "WELFARE BENEFIT PLAN TRUST." The document provided an effective date of July 1, 2001, but was executed on September 19, 2001. The document stated that the trust custodian would be First Union. Nothing on the document indicated that First Union had agreed to be the custodian. Included with the information provided by Respondent to CDC was the letter dated February 25, 2002, from MBI to Thomas Mestmaker and Associates stating that MBI was responsible for amounts due under adjudicated claims in excess of the employer's contribution. By July 2002, there were no apparent problems with coverage or claims paid, and CDC renewed its participation in the MBI plan. By January 2003, problems with CDC claims payments were occurring and CDC representatives requested from Respondent an accounting of claims paid. The accounting was not immediately made available, although at some subsequent and unidentified time CDC received the information. In March 2003, an employee of CDC located information on the internet indicating that the States of Colorado and North Carolina had issued "cease and desist" orders against MBI. The CDC representative forwarded the information to "Tyla Heatherly" an employee at HRH of Southwest Florida, Inc., and asked that it be provided to Respondent. Respondent thereafter advised the CDC representative that the problems in other states were related to the type of plans that were being offered in those states, and that the CDC plan was an ERISA-qualified SET. By letter from MBI to CDC dated May 5, 2003, MBI advised CDC that MBI was "experiencing severe financial problems and is in the process of winding-down its business." The letter advised CDC to "make immediate arrangements" to obtain either a different third party administrator or to obtain other health benefit coverage. Beginning June 20, 2001, CDC paid funds by check to MBI pursuant to the invoices that MBI delivered directly to CDC. Although the CDC checks to MBI were deposited, the evidence fails to establish that the CDC funds were deposited into a custodial trust account for the benefit of CDC. Family Counseling Center of Sarasota, Inc. At some point in 2001, Respondent met with a representative of the Family Counseling Center of Sarasota, Inc. (FCCS), to present various options for health benefit coverage for FCCS employees. FCCS chose to provide health benefits through the MBI plan. An FCCS representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA" dated October 31, 2001, and signed by Respondent, as the "Benefit Consultant." By his signature, an FCCS representative acknowledged receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document indicating an effective date of December 1, 2001, which was also signed by Respondent. An FCCS representative executed the document titled "WELFARE BENEFIT PLAN TRUST." The document has an effective date of December 1, 2001, but the date of execution was January 3, 2002. The document stated that the trust custodian would be First Union. Nothing on the document indicated that First Union had agreed to be the custodian. Included with the information provided by Respondent to FCCS was the letter dated February 25, 2002, from MBI to Thomas Mestmaker and Associates stating that MBI was responsible for amounts due under adjudicated claims in excess of the employer's contribution. Respondent provided to FCCS the MBI letter to Respondent dated April 11, 2002, advising that MBI had sufficient contributions and reserves necessary to pay claims and was in sound condition. Respondent provided to FCCS the document on MBI letterhead dated June 19, 2002, stating that American National Life Insurance Company was providing "reinsurance." Towards the end of the first year of the MBI plan, FCCS learned that renewal of the MBI plan would involve a substantial cost increase. FCCS initially intended to change benefit plans due to the cost increase, but Respondent apparently negotiated with MBI to reduce the price increase to 40 percent over the initial year cost. FCCS renewed the MBI plan because even with the rate increase the MBI plan was still less expensive than other available benefit plans. FCCS received the MBI letter dated February 19, 2003, stating that if a client's claims exceeded contributions, MBI would "advance funds" against the client's account and then would "approach the employer for repayment of the deficit." The evidence fails to establish whether the letter was provided to FCCS by Respondent or by MBI. By letter from MBI to FCCS dated February 20, 2003, MBI advised FCCS that the client needed to submit "a one-time payment of $163,670.75 to bring your account into a positive position or an increase in your contribution of 200% effective 5/1/2003." The letters of February 19 and 20, 2003, contradicted the assurances by Respondent to FCCS that stop-loss coverage was in place to address claims in excess of employer contributions. FCCS contacted Respondent to advise him of the situation. By letter from FCCS to the chief executive officer of HRH of Southwest Florida, Inc., dated April 25, 2003, FCCS advised that MBI was not paying claims and that some of the staff were having accounts turned over to collection agencies for non-payment. By letter from MBI to FCCS dated May 5, 2003, MBI advised FCCS that MBI was "experiencing severe financial problems and is in the process of winding-down its business." The letter advised FCCS to "make immediate arrangements" to obtain either a different third party administrator or to obtain other health benefit coverage. FCCS paid funds by check to MBI pursuant to the invoices that MBI delivered directly to FCCS. Although the FCCS checks to MBI were deposited, the evidence fails to establish that the FCCS funds were deposited into a custodial account for the benefit of FCCS. Sarasota Land Services In the beginning of 2002, Respondent met with a representative of Sarasota Land Services (SLS) to present various options for health benefit coverage for SLS employees. SLS chose to provide health benefits though the MBI plan. An SLS representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA." The document was executed on February 11, 2002, with an effective date of March 1, 2002, and was signed by Respondent, as the "Benefit Consultant." By her signature, the SLS representative acknowledged receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document indicating an effective date of March 1, 2002, which was also signed by Respondent. An SLS representative executed the document titled "WELFARE BENEFIT PLAN TRUST." The document indicates the agreement was executed on February 11, 2002, and was effective as of March 1, 2002, but the SLS representative's signature was dated September 10, 2002. The document did not identify the name of the trust custodian, but provided that MBI could "elect such financial institution as it deems appropriate to serve as the custodian with respect to the Trust. " SLS received the disclosure document from "Hilb, Rogal and Hamilton of Sarasota" titled "DISCLOSURE AND ACKNOWLEDGEMENT REGARDING THE SARASOTA LAND SERVICES BENEFIT PLAN" dated March 1, 2002. The SLS representative's signature on the disclosure form is dated September 10, 2002. By letter from MBI to SLS dated February 20, 2003, MBI advised SLS that the claims history required an increase in SLS's contribution of 100 percent effective March 1, 2003. Upon receipt of the letter, the SLS representative contacted Respondent and discussed the situation. The discussion included references to the stop-loss insurance coverage that the SLS representative expected to cover claims in excess of contributions. SLS did not renew its participation in the MBI plan. Beginning February 12, 2002, SLS paid funds by check to MBI pursuant to the invoices that MBI delivered directly to SLS. Although the SLS checks to MBI were deposited, the evidence fails to establish that the SLS funds were deposited into a custodial account for the benefit of SLS. SLS also paid an administrative fee directly to HRH of Southwest Florida, Inc. The evidence does not establish what, if any, of the administrative fee was paid to Respondent. Center For Sight In the fall of 2001, the Center For Sight (CFS) entered into an agreement with MBI to obtain health benefit services for CFS employees. CFS was already participating in the MBI plan in March 2002, at the time the CFS representative who testified at the hearing became employed at CFS. A CFS representative executed on July 17, 2001, the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA." The document indicated an effective date of August 1, 2001, and was signed by Respondent, as the "Benefit Consultant." By their signatures, CFS representatives acknowledged receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document indicating an effective date of August 1, 2001. CFS representatives executed the document titled "WELFARE BENEFIT PLAN TRUST" with an effective date of August 1, 2001, although the document was executed on September 1, 2001. The document indicated that the trust custodian would be First Union. Nothing on the document indicated that First Union had agreed to be the custodian. The CFS representative who testified at the hearing was the chief operating officer for CFS. He reviewed the MBI plan upon beginning his employment. He testified that claims payment problems began "instantaneously," but stated that Respondent was helpful in getting claims processed and paid. He testified that he had no problems with Respondent. The CFS representative had concerns about the provision of stop-loss insurance and asked Respondent to obtain a copy of a policy, but the policy was never provided to CFS. However, prior to renewal in July 2002, Respondent provided to CFS the MBI document dated June 19, 2002, stating that American National Life Insurance Company was providing "reinsurance." At the end of the first year, Respondent presented various health benefit options to CFS, but despite the claims payment problems, CFS renewed the MBI plan in July 2002 because the MBI plan was substantially less expensive than other benefit plans. At some subsequent time, Sarasota Memorial Hospital and other local providers began to refuse services to CFS employees covered under the MBI plan, apparently because claims were not being paid. CFS received the MBI letter dated February 19, 2003, stating that if a client's claims exceeded contributions, MBI would "advance funds" against the client's account and then would "approach the employer for repayment of the deficit." By letter from MBI to CFS dated February 20, 2003, MBI advised FCCS that the client needed to submit "a one-time payment of $5,471.66 to bring your account into a positive position or an increase in your contribution of 15% effective 4/1/2003." By letter dated April 18, 2003, to MBI and copied to Respondent, CFS set forth a list of concerns related to claims which were unpaid or had been denied and to "high administrative cost" and asked that there be a resolution to the problems. Eventually CFS paid approximately $300,000 in pending employee claims using CFS funds and sought health benefits from another source. Beginning July 19, 2001, CFS paid funds by check to MBI pursuant to the invoices that MBI delivered directly to CFS. Although CFS checks to MBI were deposited, the evidence fails to establish that the CFS funds were deposited into a custodial account for the benefit of CFS. Michael's Gourmet Group Prior to 2002, Respondent had an existing relationship with Michael's Gourmet Group (MGG) and had previously assisted MGG in obtaining health benefits from various sources. In March of 2002, Respondent met with a representative of MGG to present various options for health benefit coverage for MGG employees. MGG chose to provide health benefits through the MBI plan. As he did in presenting available health benefit options to clients, Respondent informed MGG that the MBI plan was a partially self-funded plan and that stop-loss insurance would cover claims in excess of the MGG contributions. An MGG representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA." The document was executed on February 27, 2002, with an effective date of March 1, 2002, and was signed by Respondent, as the "Benefit Consultant." Although the evidence includes a "HEALTH AND WELFARE PLAN SUMMARY" document applicable to MGG and indicating an effective date of March 1, 2002, there are no signatures on the document. An MGG representative executed the document titled "WELFARE BENEFIT PLAN TRUST" with an effective date of March 1, 2002, although the document was executed July 24, 2002. The document did not identify the name of the trust custodian, but provided that MBI may "elect such financial institution as it deems appropriate to serve as the custodian with respect to the Trust. " MGG received a document from "Hilb, Rogal and Hamilton of Sarasota" titled "DISCLOSURE AND ACKNOWLEDGEMENT REGARDING THE SARASOTA LAND SERVICES BENEFIT PLAN" dated March 15, 2002. The MGG representative's signature on the disclosure form is dated July 24, 2002. MGG received the MBI letter dated February 19, 2003, which stated that if a client's claims exceeded contributions, MBI would "advance funds" against the client's account and then would "approach the employer for repayment of the deficit." By letter from MBI to MGG dated February 20, 2003, MBI advised MGG that the claims history required an increase in MGG's contribution of 300 percent effective March 1, 2003. Subsequent to receipt of the two letters, MGG discontinued its participation in the MBI plan. Beginning February 27, 2002, MGG paid funds by check to MBI pursuant to the invoices that MBI delivered directly to MGG. Although MGG's checks to MBI were deposited, the evidence fails to establish that MGG's funds were deposited into a custodial account for the benefit of MGG. MGG also paid an administrative fee directly to HRH of Southwest Florida, Inc. The evidence does not establish what, if any, of the administrative fee was paid to Respondent. Cheddar's Casual Cafe In September 2001, Respondent met with a representative of a restaurant chain known as Cheddar's Casual Cafe (Cheddar's). Respondent presented various options for health benefits to Cheddar's, and the Cheddar's representative chose to provide health benefits through the MBI plan. A Cheddar's representative executed the document titled "DIRECTIVE TO ESTABLISH A HEALTH & WELFARE BENEFIT PLAN UNDER ERISA" dated December 18, 2001, and signed by Respondent, as the "Benefit Consultant." By his signature, the Cheddar's representative acknowledged receipt of the "HEALTH AND WELFARE PLAN SUMMARY" document indicating an effective date of January 1, 2002. By his signature, the Cheddar's representative on January 14, 2002, executed the document titled "WELFARE BENEFIT PLAN TRUST" with an effective date of January 1, 2002. The document indicated that the trust custodian would be First Union. Nothing on the document indicated that First Union had agreed to be the custodian. Beginning February 5, 2002, Cheddar's paid funds by check to MBI pursuant to the invoices that MBI delivered directly to Cheddar's. Although Cheddar's checks to MBI were deposited, the evidence fails to establish that Cheddar's funds were deposited into a custodial account for the benefit of Cheddar's. Cheddar's also paid an administrative fee directly to HRH of Southwest Florida, Inc. The evidence does not establish what, if any, of the administrative fee was paid to Respondent. Cheddar's representative inquired as to the stability of MBI and was advised by Respondent that MBI was stable. The Cheddar's representative relied on Respondent's representation when the Cheddar's health benefit plan came up for renewal towards the end of 2002. Although Respondent presented health benefit plans from several companies, Cheddar's renewed the MBI plan, even though some employees had experienced late claims payments. By claim denial dated February 28, 2003, MBI denied the hospital claim for a Cheddar's employee because the claim was over 120 days old, but there is no evidence that Respondent was advised of the denied claim. By letter dated April 29, 2003, to MBI, Cheddar's cancelled coverage as of April 1, 2003. The letter states that "there are a substantial number of unpaid claims from calendar years 2002 and 2003" and asserts that MBI has been unresponsive to complaints about the problems. A copy of the April 29, 2003, letter was sent to Respondent with a cover letter expressing dissatisfaction with the MBI plan, with the MBI operation, and with Respondent's representation of MBI.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order suspending the insurance licensure of Bradley W. Beshore for a period of 78 months. DONE AND ENTERED this 10th day of March, 2005, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of March, 2005.
