The Issue All cases involve loan funding in the 2002 funding cycle for the HOME Rental program. The issue in DOAH Case No. 02-4137 is whether Respondent properly determined that Petitioner's application for the Magic Lake Villas development failed to meet the applicable scoring threshold. If Petitioner fails to prevail in DOAH Case No. 02-4137, DOAH Case No. 02-4594 is moot. If Petitioner prevails in DOAH Case No. 02-4137, the issue in DOAH Case No. 02-4594 is whether Respondent's rescoring of the application of the competing developer of the Brittany Bay development erroneously placed the Brittany Bay application ahead of the Magic Lake Villas application. The issue in DOAH Case No. 02-4726 is whether Respondent's rescoring of the application of the competing developer of the Brittany Bay development erroneously placed the Brittany Bay application ahead of Petitioner's application for another development, Magnolia Village. The 2002 funding cycle is closed, so, pursuant to Rule 67-48.005(4), Florida Administrative Code, Petitioner's application or applications would be included in the 2003 funding cycle, if it prevails in DOAH Case No. 02-4594 or 02-4726.
Findings Of Fact Respondent is a public corporation whose purpose is to administer programs for the financing and refinancing of affordable housing in Florida. The HOME Rental program is one of the programs administered by Respondent. Petitioner is a not-for-profit corporation that is in the business of developing affordable residential housing in Florida. Petitioner filed two applications for funding in the 2002 HOME Rental funding cycle. Petitioner's Magic Lake Villas application sought $5 million in HOME funds for a development costing about $6.5 million, and Petitioner's Magnolia Village application sought $3 million in HOME funds for a development costing about $3.5 million. Respondent receives funds for the HOME Rental program from the U.S. Department of Housing and Urban Development (HUD). Because the federal funds allocated to Florida are insufficient to meet demand, Respondent has adopted a competitive process for the allocation of these funds to developers seeking to develop qualifying projects. Rules 67-48.004 and 67-48.005, Florida Administrative Code, detail the scoring procedure applicable to HOME Rental applications. The application for the HOME Rental program 2002 funding cycle contains certain threshold items. Respondent rejects any application that fails to pass the threshold items. The scoring process for qualifying applications starts with a preliminary score for each application. Applicants may challenge these preliminary scores assigned to competing applications for scoring errors by issuing Notices of Possible Scoring Error (NOPSEs). After examining the NOPSEs filed against its application, as well as Respondent's proposed decision concerning each NOPSE, a developer may submit supplemental information, which is known as a Cure. The Cure information is limited to material responsive to the NOPSEs or preliminary scoring. After the applicant has submitted a Cure, competing applicants may issue Notices of Alleged Deficiencies (NOADs) to challenge the information submitted as a Cure. Respondent then rescores each application, issues a final score, and ranks all applications based on their final scores. Aggrieved applicants may challenge these pre-appeal scores in formal or informal hearings. After the conclusion of the hearings, Respondent issues the post-appeal scores and the final rankings of the applications. If a challenger prevails after the final rankings are approved by Respondent, the challenger's approved application is assigned to the next year's funding cycle. In these cases, Respondent issued the final rankings on October 8, 2002. In DOAH Case No. 02-4137, Petitioner challenges Respondent's determination that its Magic Lake Villas application fails to meet the threshold requirements. The Magic Lake Villas application is for funding to construct a 72-unit garden apartment complex in Ocala. Item III.A.3 of the HOME Rental Application (Application) requires the applicant to indicate the type of development design by checking a box next to one of eight categories. The categories are: "garden apartments," "townhouses," "high rise (a building comprised of 7 or more stories)," single family," "duplexes/quadraplexes," "mid-rise with elevator," "single-room occupancy," and "other." Petitioner selected "garden apartments" to describe the 11 one-story buildings that it was proposing to develop on 9.67 acres for a gross density of 7.45 units per acre. The proposed development nearly encircles a lake that is used for drainage. Item II.B.1 of the Application requires the applicant to "Provide the Developer's Prior Experience Chart behind the tab labeled "Exhibit 11." Exhibit 11 contains a certification, which Petitioner executed, that represents, among other things: "I have developed and completed at least two affordable housing developments similar in magnitude to the Development proposed by this Application as evidenced by the accompanying prior experience chart." The "Chart of Experience" that Petitioner attached as part of Exhibit 11 lists information under six columns: "Name of Development," "Location (City/State)," "New Const. or Rehab.," "Design Type," "# of Units," and "Affordable/Subsidized market." Petitioner's chart supplies four rows of information, by development. The first development is "Citrus County Scattered Sites," which comprise 40 single-family units of new construction in Citrus County under the HOME program. The second development is "Marion County Scattered Sites," which comprise 40 single-family units of new construction in Marion County under the HOME program. The third development is "Heron Woods Homeownership," which comprises 49 single-family units of new construction in Inverness, Florida. The fourth development is Heron Woods Rental, which comprises 50 single-family units of new construction in Inverness, Florida. Item II.B.1.c of the Home Rental Application Instructions and Information (Instructions) addresses the requirement of developer experience. The Instructions require: The Developer or principal(s) of Developer must demonstrate experience in the completion of at least two affordable housing developments of similar magnitude by providing a prior experience chart behind a tab labeled "Exhibit 11." The chart must include the following information . . .. For the developer-experience chart, the Instructions require: "Name of Development," "Location (City & State)," "Construction Category (New Construction or Rehabilitation)," "Design Type: garden, townhouses, high-rise, duplex/quad., mid- rise w/ elevator, single family, or other (specify type)," and "Number of Units." The ninth Threshold Requirement contained in the Instructions states: "Experience of the Development team must be demonstrated." Petitioner has failed to prove that any of its listed single-family development experience is similar in magnitude to garden apartment development. Petitioner has thus failed to satisfy the threshold requirement of prior developer experience. Garden apartments are a form of multifamily residential development--usually involving 6-12 units per building and a limited number of buildings, which may be one to three stories. As reflected by the itemization contained in the instructions, each of these types of development represents differences in developed density and development difficulty. In ascending order of developed density and development difficulty, the typical order would be single family, townhouses, duplex/quadraplex units, garden apartments, mid-rise with elevator, and high-rise. Petitioner's development experience has involved single-family construction, which contains simpler draw schedules than does multi-family construction. Petitioner's development experience has involved projects that were all consistent with the zoning, which may often not be the case with higher-density development. Petitioner's development experience has been limited to providing the typically less-demanding infrastructure needs of the relatively low-density single-family development. Higher-density multi-family development normally requires more planning for stormwater management, common area and facilities, parking and roads, and central water and sewer. Petitioner has failed to prove that its single-family development experience, as reflected on its application, was of a similar magnitude to the garden apartments that it proposed as Magic Lake Villas. Petitioner has thus failed to prove that Respondent incorrectly determined that Petitioner's Magic Lake Villas application failed to pass the threshold requirement of developer experience. This determination moots DOAH Case No. 02-4594. In DOAH Case No. 02-4726, Petitioner challenges Respondent's decision to fund another development, rather than Magnolia Village. Petitioner's Magnolia Village application passed the threshold requirements and received 82.65 points, which would have been sufficient for funding, until Respondent, following an informal hearing, rescored the application for the Brittany Bay, which is located in Collier County. The rescoring raised Brittany Bay's score from 81.55 points to the maximum available 86 points. To prevail, Petitioner must prove that Respondent erroneously added at least 3.35 points to Brittany Bay's score. Although Petitioner has identified two issues concerning the rescoring of Brittany Bay's application, one of them involves only 0.4 points, so it is irrelevant to this case, given the point spread of 3.35 between Petitioner's Magnolia Village score and Brittany Bay's rescore. The other issue is relevant because it involves 4.45 points. If Petitioner demonstrates that Respondent improperly awarded these points to the Brittany Bay application, Petitioner's Magnolia Village application would receive funding in the 2003 funding cycle. Respondent assigned the Brittany Bay application 4.45 more points because it qualified for a nonfederal match. In this case, Petitioner must prove that the match identified in the Brittany Bay application did not qualify as match under applicable law. Item III.F of the Instructions addresses match and states in relevant part: Insert requested HOME loan amount and calculate the state required match amount. HUD regulation 24 CFR Part 92.220 requires Florida Housing to match funds for each HOME dollar spent on a Development. Applicants who can provide the full 25 percent match requirement will receive the maximum score of 5 points. For information on eligible match sources and instructions on how to calculate match, refer to the HUD HOME regulations at 24 CFR Part 92.220. . . . Provide amounts of each source of match. For each source of match funding identified, Applicant must provide a signed statement from the source detailing the type of contribution, amount, and how it was calculated. If the amount of contribution is determined based upon a present value calculation, include the actual present value calculation as described in 24 CFR 92.220. No points will be awarded for any source for which a narrative and documented evidence are not provided. This documentation must be provided behind a tab labeled "Exhibit 28." The specific references to 24 CFR Section 92.220 do not relieve the applicants or Respondent from the necessity of complying with all applicable HUD regulations. The first sentence of the Instructions states: "All Applicants are encouraged to review Rule 67-48, F.A.C., 24 CFR Part 92 and the following instructions before completing this Application." The original Brittany Bay application contained no documentation for Exhibit 28 because the developer was not seeking points for match. Even though no NOPSE addressed match, the Brittany Bay developer added match information in its Cure, pursuant to a practice--endorsed by Respondent and unchallenged by Petitioner--in which developers may add match to a Cure even though their original applications omitted match. The Cure contains three elements in describing the match for which points are sought. First, the Cure states: "Collier County's commitment to or issuance of $10,200,000 in Multi-Family Housing Revenue Bonds will result in $5,100,000 in eligible HOME match. This match created by other affordable housing communities is being made available to Brittany Bay . . . by the Housing Finance Authority of Collier County." Second, the Cure states that "tax-exempt bond financing may be utilized to provide HOME match equal up [sic] to 50% of the amount of tax-exempt financing," again noting Collier County's "commitment to provide up to 50% of the tax- exempt financing issued or committed to on [sic] behalf of other multi-family projects in 2002 to Brittany Bay . . . for purposes of a HOME match." Third, the Cure incorporates a letter dated June 26, 2002, from the general counsel of the Housing Finance Authority of Collier County, which states: The Housing Finance Authority of Collier County (the "Authority") has committed to or has issued Multifamily Housing Revenue Bonds totaling $10.2 million for two affordable housing communities this year. It is our understanding that fifty (50) percent of the loan amounts made from bond proceeds to multifamily affordable housing developments quali[f]y as HOME Match funds under the HUD regulations. Based upon this understanding, we are requesting that [Respondent] consider the appropriate percentage of our Multifamily Housing Revenue Bonds as eligible match for the HOME loan requested for Brittany Bay . . .. The Authority is pleased to support this community . . . without an allocation of Region Eight Private Activity Bond Allocation or other Collier County resources. This Cure drew several NOADs. One NOAD notes that the Brittany Bay project is self-funded and was not using any tax- exempt bonds, but the claimed match was from tax-exempt bonds. This NOAD contended that bonds from unrelated developments do not qualify for match. Another NOAD asserts that the Brittany Bay developer does not claim to be receiving any funds from the Collier County tax-exempt bond proceeds, which are instead going to two other developments. This NOAD states that bond proceeds qualify as match only if the proceeds are made available to the development seeking the match. A third NOAD stresses that "match contributions must be attributed directly to the proposed HOME financed development and used to reduce the cost of the affordable housing development." A fourth NOAD notes that a non-participating jurisdiction is not authorized to commit match without providing bonds to the development purporting to receive the match. This NOAD states that HUD officials agreed that Brittany Bay would not qualify for match under these circumstances. The factual contentions of these NOADs are true. Unmoved by the Cure materials seeking match, Respondent's staff declined to award the Brittany Bay developer any points for match. The reason for declining to award points for the match was: "Per HUD, the Bond match which applicant requests in the cure can be considered as match is not eligible match. Funds from a HOME-like development which is not under control of [Respondent] is [sic] not eligible." Upon the request of the Brittany Bay developer and, due to the absence of disputed issues of fact, an informal hearing took place on, among other things, the accuracy of Respondent's refusal to assign Brittany Bay any points for the claimed match, as described above. The transcript of the hearing reveals that the parties addressed the issue addressed in DOAH Case No. 02-4726--whether the Brittany Bay application should be awarded points for match--but they focused on largely different arguments. In defending the decision not to recognize Brittany Bay's claimed match, Respondent raised questions concerning the technical sufficiency of the Cure materials. Respondent challenged the general counsel's letter. Respondent argued that the letter inadequately described the source of the funds and thus failed to preclude the possibility of a source that was a Section 501(c)(3) organization, from which a match cannot be derived for the HOME Rental program. Respondent also contended that the Brittany Bay developer was relying on information not contained in the Cure or other application materials to obtain the points for match. Respondent's proposed recommended order in the Brittany Bay case does not explicitly rely on the points raised by Petitioner in this case. Brittany Bay's proposed recommended order incorrectly asserts that the sole federal regulation governing match, as suggested by the portion of the Instructions covering match, is 24 CFR Section 92.220. Addressing directly the severance of the recipient of the match from the recipient of the funds used to generate the match, Brittany Bay's proposed recommended order contends that 24 CFR Section 92.220 does not so limit match and that Respondent agrees that this severance may take place, even when the recipients of the funds are not HOME-assisted. The recommended order succinctly addresses the complicated match issue by reciting the three elements of the Cure pertaining to "nonfederal match sources" and concluding: "Petitioner properly documented well in excess of $1,562,500 in non-federal match funds issued by the Collier County Housing Finance Authority for affordable housing." The final order adopted the recommended order without elaboration. It would have been a reasonable inference for the hearing officer to determined that Respondent's argument concerning a possible Section 501(c)(3) source of the funds was too improbable. But that inference, alone, would probably not account for the decision. If, as seems likely, the hearing officer also relied on the assurances of the general counsel, a problem would arise because the general counsel's assurance was expressly conditioned on "our understanding" that the match would qualify under HUD regulations--which is exactly the issue in question. As implied by the Cure and stated by the NOADs, Collier County attempted to provide Brittany Bay match out of bond proceeds that were allocated to two unrelated projects, Saddlebrook Village and Sawgrass Pines. In other words, Collier County attempted to sever the match, by sending it to Brittany Bay, from the funds, which were going to two projects that are not HOME-assisted. Neither Collier County nor the Collier County Housing Finance Authority was a participating jurisdiction, as designated by HUD, at the time of the allocation of the match to the Brittany Bay developer. HUD imposes upon Florida and other states certain match requirements. However, Florida currently maintains a large surplus in match, surpassing all HUD match requirements through a multifamily rental bond program unassociated with the HOME Rental program. As one of Respondent's witnesses testified, Florida could go years without any new match and continue to meet HUD match requirements. Based on these facts, Respondent does not now object to Brittany Bay acquiring more points by using the match that arises out of revenue bonds, whose proceeds are allocated to two developments having nothing to do with Brittany Bay. On the other hand, regardless whether Florida needs match, the purpose of awarding points to an applicant demonstrating qualifying match is to recognize some superior quality in its proposed development in terms of meeting the goals of the HOME Rental program. It is questionable whether qualities suitable for recognition include the mere fact that a development would be located within the jurisdiction of a funding entity or that the developer somehow succeeds in obtaining from the funding entity a designation that does not carry with it the expenditure of any of the entity's funds, but confers competitive advantage to that developer in seeking limited HOME Rental funding from Respondent. If match is untethered from funding, there may be sufficient available match for local governments to provide the maximum match points to all applicants for HOME Rental funding, so that the match criterion would become meaningless.
Recommendation It is RECOMMENDED that the Florida Housing Finance Corporation enter a final order: Dismissing Petitioner's challenge in DOAH Case Nos. 02-4137 and 02-4594; and In DOAH Case No. 02-4726, determining that Petitioner's Magnolia Village application should have been included in the funding range for the 2002 funding cycle of the HOME Rental program and funding the application in the next funding cycle, subject to the requirements of credit underwriting. DONE AND ENTERED this 14th day of May, 2003, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of May, 2003. COPIES FURNISHED: Mark Kaplan, Executive Director Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 Elizabeth Arthur, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 Jon C. Moyle, Jr. Cathy M. Sellers Moyle Flanigan Katz Raymond & Sheehan, P.A. 118 North Gadsden Street Tallahassee, Florida 32301 Paula C. Reeves Deputy General Counsel Hugh R. Brown Assistant General Counsel 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329
Findings Of Fact Findings regarding the RFP and all Petitioners On September 3, 1991, the Department issued RFP 92-005-LOT-TEN-P by which it sought proposals for the provision of advertising and related services to the Florida Lottery. During the following two weeks, the Department received written questions from would-be vendors. On October 3, 1991, the Department circulated Addendum 3 to the RFP which included numerous changes to the RFP and which provided written answers to the questions which were submitted to the Department prior to September 17. The Department of the Lottery had issued an earlier RFP to obtain substantially the same advertising and related services. The earlier procurement effort ended in a rejection of all bids and the initiation of the instant procurement effort. The timetable set forth in the RFP indicated that on a date certain the Department would make determinations of non-responsiveness in accordance with Section 3.2 and post a Notice of Non-responsive Technical Proposals. Only after responsiveness had been determined would responsive technical proposals be presented to an evaluation committee for scoring in accordance with the criteria set forth in the RFP. (RFP Section 2.6) In addition, Section 6 of the RFP provides that the evaluation committee shall complete an evaluation of all responsive proposals. All Petitioners timely submitted a proposal in response to RFP #92-005- LOT/TEN/P. The issuing officer for RFP #92-005-LOT/TEN/P is Mr. Russ Rothman, CPPO, Office of Purchasing, Florida Lottery, 250 Marriott Drive, Tallahassee, Florida 32301. As issuing officer, Mr. Russ Rothman served as agent of the Florida Department of the Lottery with respect to RFP #92-005-LOT/TEN/P, even though Mr. Rothman's regular employment is with the Department of Highway Safety and Motor Vehicles. The person most directly responsible for preparing the RFP #92-005- LOT/TEN/P was Mr. Russ Rothman. The person most directly responsible for initially determining whether each proposal was responsive or non-responsive was Mr. Russ Rothman. Respondent deemed the proposals of each Petitioner to be non-responsive for the reasons set forth in a Notice Of Non-Responsive Technical Proposal And/Or Non-Responsible Respondent, which notice was posted on October 28, 1991. (Respondent's Exhibit 10) The specific reasons stated in that notice are as follows: Respondent Determination Lintas Non-responsive. Failed to submit a TV commercial storyboard required by Section 5.9.6,B.6. Failed to complete Disclosure Affidavit question 7.b. The Ad Team Non-responsive. Failed to submit TV commercial storyboard (5.9.6,B.6) and 3 product or package designs (5.9.5,3.f). Absence of certification re: lack of audited financial statements (5.9.3,F). Ogilvy & Mather Non-responsive. Failed to submit all resumes and/or selection criteria (5.9.5,2) and 30 second radio spot (5.9.6,B.3). Proposal bond late (3.26). Apparent non- compliance with 3.8, "Conflict of Interest and Disclosure." Failed to complete Disclosure Affidavit, question 7. Beber Silverstein Non-responsive. Failed to present complete financial statements as required by Section 5.9.3,F). Footnotes were not included in any of the three years' statements; disclaimer of opinion on 1989 Statements of Operations and Cash Flows; absence of certification for lack of audited statements (1990 & 1988). Section 2.2 of the subject RFP contains the following definition of the terms "Responsive Proposal" and "Responsible Respondent." Responsive Proposal - A timely submitted proposal which conforms in all material respects to the RFP and which contains, in the manner required by this RFP, all documentation, drawings, information, plans, materials, certifications, affirmations, and documentation of qualifications and other matters required by the RFP. Responsible Respondent - A firm judged by the Lottery to be fully capable of providing the services required, considering security, integrity and financial condition. Section 2.6 of the subject RFP contains the following regarding the timetable for the procurement: October 15, 1991: Separately sealed technical and price proposals must be received at the Lottery's Headquarters, Purchasing Office, 250 Marriott Drive, Tallahassee, Florida 32301, no later than 2:00 p.m. Proposals must be addressed to the Issuing Officer as specified in Section 2.3. All technical proposals will be opened by Lottery employees starting at or after 2:01 p.m. at the Lottery Headquarters. The public may attend the opening but may not review any proposals submitted. The names of respondents will be read aloud, and the names of firms submitting "no proposal" responses will be read. Section 3.1 of the subject RFP contains the following provisions regarding "Mandatory Requirements:" The Lottery has established certain mandatory requirements which must be included as part of any proposal. The use of the terms "shall," "must" or "will" (except to indicate simple futurity) in this RFP indicate a mandatory requirement or condition. The words "should" or "may" in this RFP indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable feature will not by itself cause rejection of a proposal. Section 3.2 of the subject RFP contains the following relevant provisions regarding "Non-Responsive Proposals:" Proposals which do not meet all material requirements of this RFP or which fail to provide all required information, documents, or materials will be rejected as non- responsive. Material requirements of the RFP are those set forth as mandatory, or without which an adequate analysis and comparison of proposals is impossible, or those which affect the competitiveness of proposals or the cost to the State. The Lottery reserves the right to determine which proposals meet the material requirements of the RFP. Respondents which in the Lottery's judgment, after the investigations required by Section 24.111, Florida Statutes, fail to demonstrate sufficient financial responsibility, security and integrity, shall be rejected as non-responsible. Section 3.5 of the subject RFP includes the following provisions regarding an opportunity to ask questions about the RFP: Questions concerning conditions and specifications of this RFP, and/or requests for changes to conditions and specifications must be in writing, addressed to the Issuing Officer, and received no later than 5:00 p.m. on September 17, 1991. The Lottery will prepare tentative responses to all questions and/or requests for changes, timely received, for discussion at a pre-proposal conference to be held at 2:00 p.m., September 24, 1991. Copies of questions and final answers, along with any changes to the RFP resulting from or following discussion at the pre-proposal conference, will be mailed to all firms who were furnished a copy of this RFP by the Lottery, in the form of a written addendum, as soon as reasonably practicable. Respondents submitting a proposal must submit by the proposal deadline written acknowledgment of any addendum. In response to a vendor inquiry as to the meaning of the term "minor irregularity," the Department responded in the last addendum to the RFP by citing and quoting Rule 13A-1.001(32), Florida Administrative Code, which reads: Minor Irregularity - A variation from the invitation to bid/request for proposal terms and conditions which does not affect the price of the bid/proposal, or give the bidder or offeror an advantage or benefit not enjoyed by other bidders or offerors, or does not adversely impact the interests of the agency. Sections 3.7 and 3.8 of the subject RFP contain the following provisions regarding required disclosures.: Vendor Information and Disclosure. Respondents must provide information and disclosures required by Section 24.111, Florida Statutes. Copies of the Lottery's Vendor Information Addendum and Disclosure Affidavit Forms to be completed are attached hereto as Attachments "A" and "B." These forms must be properly completed, executed and submitted with Respondent's technical proposal. Conflict of Interest and Disclosure. The award hereunder is subject to the provisions of Chapters 24 and 112, Florida Statutes. Respondents must disclose with their proposals whether any officer, director, employee or agent is also an officer or an employee of the Lottery, the State of Florida, or any of its agencies. All firms must disclose the name of any state officer or employee who owns, directly or indirectly, an interest of five percent (5%) or more in the Respondent's firm or any of its branches or affiliates. All Respondents must also disclose the name of any employee, agent, lobbyist, previous employee of the Lottery, or other person, who has received or will receive compensation of any kind, or who has registered or is required to register under Section 112.3215, Florida Statutes, in seeking to influence the actions of the Lottery in connection with this procurement. Section 3.26 of the subject RFP contains the following provisions regarding the required proposal bond: Each Respondent is required to accompany its technical proposal with a certified or cashier's check or bid bond in the amount of $125,000 or have on file with the Department of Lottery an annual bid bond of at least $125,000. The check or bid bond shall be payable to the Department of Lottery. This check/bond is to insure against withdrawal from competition subsequent to submitting of the proposal and to guarantee performance when the Contract is awarded. This check/bond will be returned to all unsuccessful Respondents immediately upon the execution of the Contract. Sections 5.1, 5.2, and 5.3 of the subject RFP include the following requirements regarding the preparation and submission of proposals: Proposal Labeling. Respondent's technical proposal MUST be in a separate sealed envelope or other container and MUST be identified as the Respondent's technical proposal. The face of the envelope or other container shall contain the following information: Request for Proposal for Advertising and Related Services 2:00 p.m. October 15, 1991 Technical Proposal Name of Respondent Each Respondent's price proposal MUST be in a separate sealed envelope and MUST be identified as the Respondent's price proposal. The face of the envelope shall contain the following information: Request for Proposal for Advertising and Related Services 2:00 p.m. October 15, 1991 Price Proposal Name of Respondent Copies of Proposals. Respondents shall deliver an ORIGINAL AND SIX COPIES OF THE TECHNICAL PROPOSAL AND ONE COPY OF THE PRICE PROPOSAL AND CREATIVE SAMPLES to the Lottery no later than the date and time in which all proposals must be timely submitted. Information and materials submitted in response to a previous RFP will not be considered in connection with this RFP #92-005-LOT/TEN/P. This is not intended to preclude a respondent from submitting information or materials previously submitted provided they conform to the requirements of this RFP. Proposal Submission. It is the Respondent's responsibility to ensure that its proposal is delivered by the proper time at the place of the proposal opening. Proposals which for any reason are not timely received will not be considered. Late proposals will be declared non- responsive, and will not be scored. Unsealed and/or unsigned proposals by telegram, telephone, or facsimile transmission or other means are not acceptable, and will be declared non-responsive, and will not be scored. A proposal may not be altered after opening. Section 5.9.3 of the subject RFP describes as follows the documentation which must be submitted to demonstrate vendor responsibility: The proposing firm must submit the following documentation to establish that it is a responsible respondent: Vendor Information Addendum (Attachment A) Disclosure Affidavit (Attachment B) Sworn Statement on Public Entity Crimes (Attachment C) Statement of Agreement to Abide by the Lottery's Code of Ethics, Rule 53ER88- 79(3), Florida Administrative Code (Attachment D) Proposal Bond required by Section 3.26, in the amount of $125,000. Certified financial statements in customary form for the last three (3) fiscal years if they are completed, including an auditor's report. Certified financial statements must be the result of an audit of the Respondent's records in accordance with generally accepted auditing standards by a certified public accountant (CPA). If certified financial statements including an auditor's report were not prepared for one or more of the last three fiscal years respondent shall certify that fact, and shall submit in lieu thereof review reports of financial statements prepared by a CPA for the same period of time. The Lottery will not accept, in lieu thereof, financial statements prepared in whole or in part by an accountant as a result of a compilation engagement. If the parent company of Respondent intends to financially guarantee Respondent's performance of contractual obligations, then Respondent may, to satisfy this requirement, submit such financial statements of the parent company in lieu of its own plus a binding letter from the parent company expressing its commitment to financially guarantee the Respondent. In such event, the parent company shall be required to sign the Contract as Guarantor and shall be held accountable for all terms and conditions of the Contract. The language in Section 5.9.3,F which conditions the use of review reports on the submission of a certificate that there are no audited financial statements was for the purpose of minimizing the possibility that a vendor who had received an adverse audited opinion might conceal the adverse opinion from the Department by obtaining and submitting a favorable review report which did not disclose the adverse opinion. Section 5.9.4 of the subject RFP addresses the subject of "Firm Qualifications." The opening sentence of Section 5.9.4 reads as follows: "At minimum, each Respondent must provide the following information which demonstrates the Respondent's ability to provide the services requested." Section 5.9.5 of the subject RFP includes the following provisions regarding personnel qualifications: Provide the following information: Address the firm's plans for staffing the Lottery account. Include position titles, numbers, duties and responsibilities, and names of incumbents proposed to work on the Lottery account. Include both agency and subcontractor personnel. Resumes not to exceed one page each in length of all agency and subcontractor personnel who would be compensated in accordance with section 5.11.1 of this RFP, with a statement identifying the percentage of time, calculated annually, of each person who will work on the Lottery account. If recruitment of personnel to fill a position will be required, indicate firm's criteria for selection including, as appropriate, education, experience, knowledge, skills and abilities, etc. Creative samples (one copy of each) previously produced for the Respondent with the participation of key members of the proposed Lottery creative team and equal to the quality of the products proposed in your marketing plan, to include: * * * f) Three examples of product design or package design. Section 5.9.6 of the subject RFP contains the following provisions requiring a "Plan of Service:" Each Respondent shall provide a written statement of the firm's understanding of the services requested herein as well as a detailed written plan outlining how the firm proposes to go about providing the services. It is the intent of the Lottery that the Plan of Service be based on the premise that all products and product attributes remain as they are now. The plan of service shall consist of the following information and materials: A proposed advertising approach for the Florida Lottery which addresses the following items: A two-year summary outline advertising plan. Respondents shall include recommendations for advertising and promotions, and shall provide a plan for progress reporting, and ongoing evaluation and monitoring. A proposed one-year timetable for advertising, showing development of creative, production, approval, placement and run-time. Plan, Script and Comprehensive artistic representations (comps) of the following: A detailed media plan for an eight (8) week Florida Lottery Instant Game which has a $1,250,000 budget; A name, ticket design and prize structure for the Instant Game; A 30-second radio spot for the Instant Game; A print ad for newspaper or magazine placement for the Instant Game; A point-of-sale example for the Instant Game; A television commercial storyboard. All exhibits must be permanently marked or labeled, with identification of the proposing firm, and the specific section(s) of the RFP to which they respond. The requirement for submission of a television commercial storyboard was elaborated upon by responses which the Department made to two distinct questions submitted by the firms, Bozell, Inc., and West & Company. West & Company asked if proposers were prohibited from submitting fully executed television commercials and the Department responded that proposers were prohibited from submitting fully executed television commercials in complying with the RFP requirement for a television commercial storyboard. Bozell submitted a much more elaborate question in two parts. First, Bozell asked if a proposer could submit a television commercial in a more finished form using an animatic form as an example of a more finished form. The Department respondent in the negative. Second, Bozell asked if a proposer could submit such other more finished forms of television commercials in addition to the storyboard. Again, the Department answered in the negative. In responding thusly, the Department clearly indicated that it desired only traditional two-dimensional storyboards and would not accept more finished forms of television commercial concepts such as animatics. Also, the Lottery indicated that it did not wish to receive television commercial concepts in any form other than the traditional two-dimensional storyboard. The term "television commercial storyboard " is not defined in the RFP, but no definition is really necessary because the term has a clearly understood meaning in the advertising industry. It means a two-dimensional illustration of an advertising concept, presented on stiff cardboard or some similar material, and containing art work (illustrations or still photographs) to demonstrate the visual concept, and containing written words to demonstrate the text and/or describe any special effects. Television commercial storyboards have been in common use since the first days of television advertising and continue to be in common use today. Much more recently, especially since the advent of video cameras, alternative ways of presenting advertising concepts have come into popular use. These newer alternatives include video presentations, one type of which is known in the trade as "animatics," and another type of which is referred to as "stealamatics" or "ripamatics." An "animatic" is, in essence, a series of artistic drawings which is recorded on video. The drawings are developed specifically for a given "animatic" and are presented on the video in a manner which conveys the scenes and sequences in a proposed commercial. An "animatic" typically looks very much like a rough moving cartoon. More often than not an animatic will also include a sound track with a rough version of the words or music for the proposed commercial. An "animatic" is a more finished product than a two-dimensional storyboard because it more nearly resembles the format of the final version of the proposed concept. A "stealamatic" or a "ripamatic" is a video recording typically constructed from a variety of existing film footage and voice and music recordings. The film and sound used in a "stealamatic" or "ripamatic" frequently belong to people other than those who are creating the video, hence the name. "Stealamatics" and "ripamatics" are, in essence, a collage of second- hand images and sounds created for other purposes which are roughly edited together to demonstrate the creative concept of a proposed commercial. The video footage and sound track of a typical "stealamatic" or "ripamatic" is not of television commercial air quality and is not a finished product that can be used for actual advertising. The typical "stealamatic" or "ripamatic" is, in essence, a rough draft of a television commercial designed to demonstrate the primary ingredients of an advertising concept. Although rough, the typical "stealamatic" or "ripamatic" is a more finished product than an "animatic" in the sense that it more closely resembles the finished product than does an "animatic." If the concept of a proposed commercial involves critical timing, special effects, humor, or emotion, a "stealamatic" video is the most effective way, and often the only practical way, to present such a concept. "Animatics" and "stealamatics/ripamatics" are now commonly used in the presentation of advertising concepts in lieu of the old-fashioned, but still often useful, two-dimensional storyboards; they are frequent substitutes for two-dimensional storyboards. But "animatics" and "stealamatics/ripamatics" have not become storyboards and the term "television commercial storyboard" still means a two-dimensional presentation on a board-like material. Section 6.1 of the subject RFP contains the following provisions with regard to the allocation of points during the evaluation of the technical proposals: Firm Qualifications. - (Maximum 31 points) Size and Resources - Maximum 5 points Advertising Experience - Maximum 16 points Example of a Complete Campaign - Maximum 10 points Personnel Qualifications. - (Maximum 18 points) Staffing (numbers, levels, roles) - Maximum 5 points Resumes - Maximum 5 points Creative Samples - Maximum 8 points 6.1.3. Plan of Service - (Maximum 16 points) Advertising Plan and Timetable - Maximum 8 points Plan, Script and Artistic - Maximum 8 points Representations 6.1.4. Certified Minority Business Enterprise Participation. - (Maximum 10 points) Authorized Expenses - Maximum 5 points (1 point for each 2/10 percent (.2%) of participation) Agency Compensation - Maximum 5 points (Respondent's price) (1 point for each 3 percent (3%) of participation) Section 5.9.3 of the subject RFP requires that the proposing firm must, among other things, submit a "Disclosure Affidavit." The Disclosure Affidavit is attached to the RFP and is designated as Attachment B. All proposing firms who were corporations were required to answer Question 7 on Attachment B. Question 7 on Attachment B reads as follows: 7. Please complete either 7a or 7b, whichever is appropriate. RESPONDENT is not a publicly traded corporation. The names and addresses of the shareholders of RESPONDENT are as follows: The above-named persons constitute all of the shareholders of RESPONDENT. RESPONDENT is a publicly traded corporation. The names and addresses of the shareholders of RESPONDENT which own 5% or more of the corporate stock are as follows: The above-named persons constitute all of the shareholders of RESPONDENT which own 5% or more of the corporate stock. Findings regarding the Ad Team of Florida, Inc. Paragraph 5.9.6,B,6 of the RFP (as amended by Addendum 3) requires the submission of a television commercial storyboard. The Ad Team attempted to comply with this provision by submitting a video cassette which contained two short video presentations illustrating proposed advertising concepts. One of these presentations, titled The Fortune Teller, is what is known in the advertising business as an "animatic;" a rough cartoon with some animation and a sound track. The other of these presentations, titled Stars and Stripes, is what is known in the advertising business as a "stealamatic" or "ripamatic." Neither of the presentations on the video cassette submitted by the Ad Team is a television commercial storyboard. Section 5.9.5,3,F requires that a bidder provide three examples of product design or package design that, (1) were previously produced by the bidder, and (2) that were produced with the participation of key members of the proposed Lottery creative team. At the time of submission of its proposal, the Ad Team did not have three examples of product or package design that had earlier been produced with the participation of key members of the proposed Lottery team. Therefore, the Ad Team could not and did not submit three examples of product design or package design that had previously been produced with the participation of key members of the Lottery team. The Ad Team's failure to submit three examples of package or product design did not change the pricing of the proposal submitted to the Department by the Ad Team. The Ad Team did not gain a competitive advantage by virtue of its failure to submit three examples of product or package design. The Ad Team submitted complete review reports of financial statements for the last three years. The Ad Team did not submit any document certifying that no audited financial statements had been prepared for the Ad Team for the past three fiscal years. The Ad Team did not gain a competitive advantage by virtue of its failure to submit the certification that it had no audited financial statements for the past three years. The failure to submit the subject certification leaves the Department with no basis in the proposal materials for having confidence that no adverse audited statements are being concealed, and to that extent diminishes the extent to which it is prudent for the Department to rely on the financial statements submitted. Findings regarding Beber Silverstein & Partners Advertising, Inc. The only issue regarding the proposal submitted by Beber Silverstein relates to its efforts to comply with the requirements of Section 5.9.3,F of the RFP. In response to the requirements of that section of the RFP, Beber Silverstein supplied financial statements for the years 1988, 1989, and 1990. However, the footnotes to all of these financial statements were inadvertently omitted from Beber Silverstein's proposal. The footnotes were prepared by Beber Silversmith's accountants at the time the financial statements were prepared and were in Beber Silverstein's possession. The footnotes were simply inadvertently omitted during the preparation of Beber Silverstein's proposal. The Department of the Lottery knew at the time it reviewed Beber Silverstein's proposal for responsiveness that the vendor possessed the footnotes to the financial statements. In fact, the Department had previously reviewed these footnotes in Beber Silverstein's response to the first Request for Proposal earlier during 1991 when Beber Silverstein's proposal in the earlier RFP was evaluated by the Department. Beber Silverstein could have supplied the Department with the subject footnotes immediately after the omission was brought to Beber Silverstein's attention. The omission of the footnotes did not affect the cost or price of Beber Silverstein's proposal. The footnotes to financial statements do not change the figures presented on the face of the financial statements, but the footnotes are an integral part of any financial statement. The vast majority of the information necessary to conduct a meaningful review of a company's financial responsibility is contained in the footnotes to the financial statements. It is not possible to determine a company's financial responsibility from a review of financial statements without footnotes. In direct response to a request from its bank, Beber Silverstein had its balance sheet audited for the year 1989. However, it did not request its accountants to audit the statements of operations and cash flows for the year 1989 since the bank did not request it. Beber Silverstein provided the Department with all financial statements (except the footnotes) that were available on the company for the year 1989. The accountants' opinion for the 1989 statements clearly acknowledges that they were not engaged to audit the statements of operations and cash flows and, accordingly, no accountants' opinion was expressed on them. However the accountants' opinion for the 1989 statements does not explain why they were not engaged to audit the statements of operations and cash flows. Even though the accountants' opinion for Beber Silverstein's 1989 financial statement does not contain any opinion regarding the statements of operations and cash flows, the level of analysis actually performed by the accountants on the 1989 statements of operations and cash flows met the minimum standards for a review report. This was clarified in a letter dated May 1, 1991, which was submitted in conjunction with Beber Silverstein's prior proposal, but which letter was not included as part of Beber Silverstein's current proposal.2/ Beber Silverstein failed to include in its proposal the certification required by Section 5.9.3,F of the RFP to the effect that it did not have any audited financial statements for 1988 or 1990. The omission of the certificate was inadvertent. The absence of the certificate did not affect the price of Beber Silverstein's bid. Beber Silverstein supplied the Department with all financial statements (except for inadvertently omitted footnotes) that it had available. Although Beber Silverstein failed to provide a certificate, Beber Silverstein, in fact, did not have any audited financial statements (other than the 1989 balance sheet which was submitted). Findings regarding Benito Advertising, Inc. Benito Advertising, Inc., d/b/a Fahlgren Martin Benito, was founded in Tampa in 1954. It has offices in Tampa, Fort Lauderdale, Orlando, and Jacksonville. It employs approximately 70 people and its 1991 billings will be approximately $45 million. Benito Advertising, Inc., was acquired in 1989 by the Interpublic Group of Companies. Interpublic is one of the largest publicly-held advertising agency holding companies in the world with billings of $13 billion a year. Benito was subsequently assigned to Lintas:Worldwide, an operating unit of Interpublic. Benito and Lintas:Worldwide are wholly-owned subsidiaries of Interpublic. Attachment B to the RFP elicits the disclosure of ownership information (officers, directors, major shareholders, etc.) from vendors as required by Section 24.111, Florida Statutes. Question 7 thereof requires a corporate respondent to provide the names and addresses of its shareholders if the corporation is not publicly traded. A publicly traded corporation is required to state the names and addresses of those shareholders which own five percent or more of the corporate stock. The form which comprises Attachment B was never promulgated as a rule although it is intended for general use by the Lottery. Benito submitted five separate Disclosure Affidavits - one for Benito itself, one for Lintas:Worldwide, one for Interpublic Group, one for its Hispanic minority contractor, and one for its other minority partner. Benito responded "not applicable" to question 7-A on its affidavit as well as on the affidavit for Lintas:Worldwide on the bases that neither are publicly traded corporations because both are wholly-owned subsidiaries of Interpublic. The balance of the information on the five affidavits concerning officers, directors, shareholders, etc., was provided and is correct. Information concerning Benito's corporate status is alluded to throughout its proposal. More importantly, the corporate relationships as between Benito, Lintas, and Interpublic are explicitly stated in the Interpublic Annual Report which is a mandatory supplement to the proposal. Joan Schoubert, the Department accounting manager responsible for reviewing the annual reports and other financial statements, noted these corporate relationships in conjunction with her review and included the following statement on her reviewing document: Benito Advertising, Inc., d/b/a Fahlgren Martin Benito is a wholly - owned subsidiary of Lintas:Worldwide. Lintas:Worldwide is one of three operating subsidiaries of Interpublic Group of Companies, Inc. (guarantor of Respondents performance- bindings letter present) In the review of other proposals submitted in response to the subject RFP, the Department has overlooked an omission of information in response to a specific question if that information was otherwise available elsewhere in the proposal. An example of this is shown by the following notations on the Department's checklist concerning another proposal: Transmittal letter did not list subcontractors but they are revealed elsewhere, minor irregularity. Billings by media shown in percentages but can be interpreted in connection with Number 8. Paragraph 5.9.6,B,6 of the RFP (as amended by Addendum 3) requires the submission of a television commercial storyboard. Benito attempted to comply with this provision by submitting a so-called "video storyboard" which was recorded on a video cassette. This was submitted along with the balance of the proposal. Benito clearly stated in the text of the proposal that its "storyboard" was in video form. Benito's so-called "video storyboard" was in a format also referred to in the advertising business as a "stealamatic" or "ripamatic." Benito chose to utilize a "stealamatic" to convey its concept which, in essence, is nature photography with human voices inputed to the animals. This is very difficult to express in a two-dimensional format in that the concept does not have an actor carrying a story line. Furthermore, Benito knew that it was not going to be able to present the concept in person and thus could not explain it to the people who were to evaluate it. Given the reliance of the Benito message on animals, another medium would not have been as effective. Findings regarding Ogilvy & Mather Advertising At the time it submitted its proposal, Ogilvy Group, Inc., d/b/a Ogilvy & Mather, failed to submit all resumes and/or selection criteria required in Section 5.9.5,2 of the RFP. Further, it failed to submit a 30-second radio spot as required by Section 5.9.6,B,3 of the RFP and it failed to submit with its proposal the appropriate proposal bond required by Section 3.26 of the RFP. It further failed to comply with Section 3.8 of the RFP by failing to disclose the name of any employee, agent, lobbyist, previous employee of the Lottery, or other person who has received compensation of any kind or who has registered under Section 112.3215, Florida Statutes, in seeking to influence the actions of the Lottery in connection with this procurement. Finally, Ogilvy Group, Inc., failed to complete question 7 of the Disclosure Affidavit required by Section 3.7 of the RFP. With regard to the failure of Ogilvy Group, Inc., to submit all resumes and/or selection criteria required by Section 5.9.5,2 of the RFP, its submission in this regard was missing 17 resumes and 6 descriptions of selection criteria. The 6 missing descriptions covered 13 positions. Three of the missing resumes were found to be located in other portions of the Ogilvy Group, Inc., proposal, but 14 resumes are nowhere to be found in the proposal. Without the information of the missing resumes and in the missing descriptions of selection criteria, it would be difficult, if not impossible, for the Department to perform an adequate analysis and comparison of the Ogilvy Group, Inc., proposal with other proposals. The Ogilvy Group, Inc., also failed to submit a 30-second radio spot. Instead it submitted two 60-second radio spots because of its belief that 30- second radio spots are not economically feasible. With regard to the late submission of Ogilvy Group's, Inc., proposal bond, its attorney and lobbyist, James J. Cooney, Esquire, delivered its bid package (which included the original and six copies of its technical proposal) to the offices of the Department of the Lottery sometime shortly after 1:00 p.m. on October 21, 1991. The original technical proposal and each copy of the technical proposal contained a photocopy of the Ogilvy Group, Inc., proposal bond, which was in the form of a certified check in the amount of $125,000.00. The original certified check was in Mr. Cooney's pocket. The Ogilvy Group, Inc., proposal materials (minus the original certified check, which remained in Mr. Cooney's pocket) were logged-in and officially received by the Department of the Lottery at 1:39 p.m. that afternoon. Mr. Cooney then physically accompanied the dolly on which the Ogilvy & Mather proposal materials had been placed, up the elevator and into the room designated for the bid opening. After Mr. Cooney had accompanied the proposal materials to the room where the bid opening was to occur, Mr. Cooney handed the $125,000.00 certified check to Russ Rothman. The delivery of the check to Mr. Rothman occurred shortly after 2:00 p.m., but shortly before any of the proposals were opened. The deadline for submitting bids was 2:00 p.m. Ogilvy Group, Inc., has retained the services of James J. Cooney, Esquire, as a registered lobbyist and attorney. Mr. Cooney is registered as a lobbyist for Ogilvy Group, Inc., pursuant to Section 112.3215, Florida Statutes. During the period between the issuance of the subject RFP and the submission of the subject proposals, Mr. Cooney on several occasions contacted functionaries of the Department of the Lottery, including the Issuing Officer, Mr. Rothman, in attempts to influence the Department's decision with respect to using previously submitted materials as part of the Ogilvy Group, Inc., proposal in the instant RFP. Such communications by Mr. Cooney were efforts to influence the actions of the Department of the Lottery in connection with the instant procurement. Officials of Ogilvy Group, Inc., were aware of Mr. Cooney's efforts in this regard. Ogilvy Group, Inc., is a corporation that does business under the fictitious name of Ogilvy & Mather. Ogilvy Group, Inc., was the proposing entity on its proposal. As proposing entity, it executed a Disclosure Affidavit (Attachment B to the RFP). Corporations submitting a Disclosure Affidavit were required to answer either Question 7a or 7b. The Ogilvy Group, Inc., did not provide any answer to either Question 7a or 7b. This was because the Chief Financial Officer of the Ogilvy Group, Inc., did not believe that Question 7a was applicable and did not believe that any answer to 7b was required because there was no one who owned five percent or more of the stock of WPP Group, plc, the parent company of which Ogilvy Group, Inc., is a wholly-owned subsidiary. Even though Ogilvy Group, Inc., failed to answer either Question 7a or 7b on the Disclosure Affidavit, information concerning its corporate status and its relationship to WPP Group, plc, is contained in other portions of its proposal. Joan Schoubert, the Department accounting manager responsible for reviewing the annual reports and other financial statements, was able to determine from the information in other portions of the proposal that Ogilvy Group, Inc., was a wholly-owned subsidiary of Ogilvy & Mather Worldwide, which was in turn a wholly-owned subsidiary of WPP Group, plc.
Recommendation For all of the foregoing reasons, it is RECOMMENDED that the Department of Lottery issue a final order in these consolidated cases concluding that, on the basis of the findings of fact and conclusions of law set forth above, all four of the proposals submitted by all four of the Petitioners are not responsive to RFP #92-005-LOT/TEN/P. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 7th day of January 1992. MICHAEL M. PARRISH 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 7th day of January 1992.
The Issue The issue presented here concerns the entitlement of the Petitioners to be granted licenses to work in the Mutuels Department of the Fronton, Inc., a Florida Jai Alai concession located in West Palm Beach, Florida. More specifically, the matter to be resolved concerns the Respondent's refusal to license the named Petitioners in the aforementioned capacity based upon the alleged activities of those Petitioners during the 1977 season of the New Port Rhode Island Jai Alai Fronton. The Petitioners are alleged to have conspired to commit a fraudulent or corrupt practice in relation to the game of jai alai and committing fraud or corruption in relation to the game through conspiring to use and using positions as handicappers in misleading the public for the Petitioners' benefit, contrary to Rule 7E-3.12, Florida Administrative Code. It is further alleged that the Petitioners have violated Rule 7E-3.05, Florida Administrative Code, by associating with their fellow co-Petitioner with a knowledge that the co-Petitioner has violated State of Florida's rules and regulations related to jai alai by conspiring to commit and committing a corrupt and fraudulent practice in relation to the game of jai alai as specified in the discussion of Rule 7E-3.12, Florida Administrative Code. The Respondent also claims that it has information, to include the information related in the discussion of the two rules provisions, which information is a prima facia indication that the Petitioners are not of good moral character as required by Chapter 550, Florida Statutes, because of their conduct in the relation to the game of jai alai, which conduct would cause a reasonable man to have substantial doubt about the Petitioners' honesty, fairness and respect for the rights of others and would erode the public's confidence and the honest outcome of jai alai matches in the State of Florida. 1/
Findings Of Fact Prior to the season for the jai alai known as the Fronton, Inc., located in West Palm Beach, Florida, for the years 1980-81, the Petitioners In the above-styled actions made application for an occupational license to be granted by the Respondent. The licenses requested were to work as employees of the Fronton, Inc., in the mutuels department. The applications for licensure on the part of the Petitioners concerned re-licensure for the upcoming jai alai season in West Palm Beach, Florida. The Petitione'rs had never been denied an occupational license by the Respondent in the past. After reviewing the license applications, the Division Director of the Division of Pari-Mutuel Wagering issued letters on November 4, 1980, directed to the named Petitioners, denying their license requests. A copy of that correspondence may be found as Respondent's Composite Exhibit No. 1, admitted into evidence. The grounds for license denial were as set forth In the issues statement of this Recommended Order. The letters of denial indicated the Opportunity for the Petitioners to request a Section 120.57, Florida Statutes, hearing and the Petitioners availed themselves of that opportunity. Subsequent to the request for a formal hearing pursuant to Subsection 120.57(1), Florida Statutes, the Respondent forwarded the case to the Division of Administrative Hearings for a formal hearing. That hearing was conducted on the dates as stated in the introductory portion of this Recommended Order. At the time of the hearing, and continuing to the point of the entry of this Recommended Order, the parties are still desirous of being granted the subject occupational licenses. These licenses are required by the terms and conditions set forth in Section 550.10, Florida Statutes (1980). The Petitioners have complied with all procedural requirements for licensure and are entitled to be licensed unless the grounds for license denial as stated in the November 4, 1980, correspondence are well-founded. During the 1977 jai alai season at the Rhode Island Jai Alai in New Port, Rhode Island, Petitioner Gallo was employed as a sellers" This employment involved punching tickets in the mutuels area of the Fronton where tickets are issued to bettors. Petitioner Barth also worked at the Fronton in the calculating room as an employee of the Fronton. This is the area where the money is collected from the bettors and tabulated. In that racing season, while employed by the Fronton in Rhode Island, Gallo, Barth and one Robert Fusco, were involved as partners in a venture known as "list betting." Each of the partners had contributed five to six thousand dollars ($5,000.00 to $6,000.00) for the purpose of conducting "list betting." In particular, the "list betting" involved the placement of numerous combinations of numbers on each jai alai game in an effort to win the trifecta portion of the wagering on the individual games. To be successful in the trifecta wager, it was necessary that the three-number combination which constitutes an individual wager comport with the individual team performance for win, place and show. As example, if the individual number combination bet was 8-1-2, then the number (8) team would need to win, the number (1) team would need to place, and the number (2) team would need to show. The partnership was betting from a list of trifecta combinations which were the result of research conducted by the partnership on the subject of other jai alai seasons. The list of those numbers utilized in the betting may be found as Petitioners' Exhibit No. 4, admitted into evidence. The partnership utilized the "list betting" system for all games during the 1977 season up to August 24, 1977, when the partnership was dissolved. The philosophy of the "list betting" was to win often enough and in sufficient amounts of money to offset the cost of high volume betting. In this pursuit, the partnership leaned toward the utilization of trifecta combination numbers which would grant the largest return in a winning payoff, as opposed to being concerned with the frequency of the payoff of the chosen combination trifecta number. In addition, the skill of the players in the jai alai game was not a critical factor. The amount of money being spent on the individual games varied from five, to, eight hundred dollars ($500.00 to $800.00) and, as a result of the "list betting" activities of the partnership, the partnership realized a profit. The money that was won was constituted of the proceeds from the trifecta pool In a given game less cost deductions extracted by the State and the Fronton. The money pool that remained after these cost items had been deducted was divided between the winning ticket holders in the trifecta pool on an equal basis. Therefore, the fewer winning tickets, the larger the monetary return. After August 24, 1977, the Petitioners still continued to make trifecta bets, but not as part of the partnership. One of the other functions that the Petitioners performed together with another Fronton employee, Thomas F. Dietz, was the position as handicapper. (Dietz was a statistician at the Fronton.) Dietz and the Petitioners each would pick a single combination of three numbers to be placed on the game programs for each of the games during the meet under a code identification. Gallo was under the heading Massachusetts; Barth, Rhode Island; and Dietz, Connecticut. Dietz, In turn, made a determination about the "consensus" of the handicappers and made a three-number combination entry on the program under the heading "consensus." These handicap, picks, are depicted in copies of the racing programs which are found in the Respondent's Composite Exhibit No. 4, admitted into evidence. Gallo stopped making handicap selections some three or four days after August 24, 1977, and Dietz stopped his handicap selections on September 15, 1977. Barth made handicap selections for the entire season. It is not certain what the Fronton intended in having the handicappers place their "handicap line" on the game programs; however, the only compensation which the handicappers would receive from the Fronton for their efforts was a. monetary prize of twenty-five dollars ($25.00) to be awarded at the end of each month for that handicapper who selected the most quiniela predictions. (A quiniela nick is a combination of three numbers in which the successful bettor must have selected the win and place numbers in his three-number selection, without regard for the order of selection. As an example, if the quiniela picked by the bettor was the combination 1-2-3, and the winning number was (2) and the place number was (3), the bettor would win the quiniela selection.) There was no testimony on the subject of the betting public's perception of the "handicap line" found on the programs and nothing about those programs identifies the intended purpose. An analysis of those number combinations on the program, which are picks of a combination of three numbers within the range of (1) through (8)(the numbers representing the players in their game position), leads to the conclusion that the numbers could have been utilized by the betting public as trifecta or quiniela bets. The successful utilization of those numbers as a trifecta pick would always entail success as a quiniela selection, but a successful quiniela bet would not always be a successful trifecta bet. The established breakdown of betting patterns in the jai alai season shows that 55 to 60 percent of bets were made as quinielas. Management expressed no Opposition during the course of the season to the fact that the Petitioners were "list bettors"; employees of the Fronton and handicappers during the same time period. Moreover, it was not, per se, a violation of the regulatory statutes and rules in Rhode Island for an employee to be a "list bettor." It is the juxtaposition of "list bettor/employee/handicapper, which has put the question of the Petitioners' current request for licensure in Florida at issue. In this regard, the witness Dietz' testimony establishes the fact that on numerous occasions, during the 1977 jai alai season in Rhode Island, Gallo requested that Dietz change the numerical order of his picks in his position as handicapper for the individual games as appeared on the programs, because Gallo was of the persuasion that the Dietz selections interfered with the Opportunity for Gallo and Barth to be successful in their trifecta "list betting." Whether the fact of Dietz' changes in his "handicap line" brought about greater success for the Petitioners "list betting" system was not established in the course of the hearing. It is apparent that there was a substantial difference in the utilization of the numbers in Petitioners' Exhibit No. 4 (constituted of "list betting" combination numbers), in Barth's program selection In the "handicap line" several weeks prior to August 24, 1977, and several weeks beyond that point, the August date being the date that the partnership was dissolved. The comparison of these numbers demonstrates that Barth utilized the number combinations found in Petitioners' Exhibit No. 4, four times as much in the several week period beyond August 24, 1977, as contrasted with the several week period prior to August 24, 1977. Gallo had stopped handicapping some three or four days after August 24, 1977, so a comparison of the utilization of numbers in Petitioners' Exhibit No. 4, as a basis for handicap selections is limited to three or four days prior to August 24, 1977, and three or four days beyond that date. Again, Gallo used the numbers from the list for handicap selections subsequent to August 24, 1977, for that three or four day period as compared to the three or four day period prior to that date, roughly four times as frequently. A similar comparison of Dietz' handicap selections from several weeks prior to August 24, 1977, and several weeks after August 24, 1977, in the sense of the utilization of number combinations that were found in the Petitioners' Exhibit No. 4; shows that Dietz used those number combinations essentially with the same frequency prior to and after August 24, 1977. This analysis of the matter takes into account the fact that Gallo and Barth, on a few occasions, did not act as handicappers. An analysis of the Gallo, Barth and Dietz choice of handicap numbers and the comments of Gallo made to Dietz about changing Dietz' number combinations when Dietz was handicapping, leads to the conclusion that the Petitioners felt that there was some relationship between exempting the numbers from their list in Petitioners' Exhibit No. 4 from the handicap selections and Dietz altering his numbers on the handicap selections and success in the Petitioners' "list betting" pursuit. This is further substantiated by the fact that around August 24 or 25, 1977, Dietz asked Gallo why the nature of his selections in handicapping had changed and Gallo replied to the effect that he, Gallo, had stopped his "list betting" activities so he could now use "good numbers' without hurting his winnings. The evidence in this case does not reveal the success that the Petitioners had in this pursuit due to the choice not to use numbers from their list in their handicap selections and due to the change of Dietz' handicap selections promoted by the Petitioner Gallo. The lack of data on the question of the overall effect of removing the Petitioners' numbers in their Exhibit No. 4, from the "handicap line" and the further lack of testimony on the question of the public's utilization of the "handicap numbers," does not allow factual conclusions to be drawn on the question of the effect of the Petitioners' action on the outcome of betting; and the possible additional money to be realized by the Petitioners through the implementation of their technique of withholding the numbers from their list and influencing Dietz to change his numbers on order of finish, which caused the public to use the "handicap numbers" for trifecta betting, thereby decreasing the general public's opportunity to be successful In the trifecta bet.
Recommendation Based upon a full consideration of the facts found and the conclusions of law reached herein, it is RECOMMENDED: That Richard Joseph Barth and John Randy Gallo he denied occupational licenses to work in the mutuels department of the Fronton, Inc., West Palm Beach, Florida, for the 1981-82 season and that this recommendation he effectuated by the entry of a final order agreeing with the findings of fact, conclusions of law and recommendations set forth. DONE and ENTERED this 2nd day of November, 1981, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of November, 1981.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the respondent Division of Beverage issue the type 11-C license to petitioner without further delay. Respectfully submitted and entered this 24th day of March, 1976, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Mr. Charles A. Nuzum Division of Beverage Johns Building. Tallahassee, Florida
The Issue The first issue in this case is the amount of attorneys' fees to assess against Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (Respondent or Division), pursuant to an Order of the First District Court of Appeal (First DCA) granting a motion by Petitioner, Ft. Myers Real Estate Holdings, LLC (Petitioner or Ft. Myers REH), for attorneys' fees pursuant to section 120.595(5), Florida Statutes (2010),1/ and remanding the case to DOAH to assess the amount. The second issue is whether Petitioner is entitled to recover attorneys' fees and costs incurred in this proceeding, and, if so, in what amount.
Findings Of Fact For reasons that the First DCA found to be a "gross abuse of agency discretion," the Division rendered a Final Order dismissing Ft. Myers REH's petition for a formal administrative hearing to contest the Division's denial of Ft. Myers REH's amended application for a quarter horse racing permit. The premise of the Division's Final Order was that Petitioner could not prove that it meets the requirements for a permit, hence its claimed injury was not "redressable." Ft. Myers REH appealed the Final Order. The Notice of Appeal to the First DCA was filed on April 5, 2010, signed by Cynthia Tunnicliff for Pennington, Moore, Wilkinson, Bell and Dunbar, P.A. (the Pennington firm). After two motions to extend the deadline for filing the initial brief, Ft. Myers REH filed its Initial Brief on July 26, 2010. With the Initial Brief, Ft. Myers REH filed a motion for an award of attorneys' fees under section 120.595(5), asserting that the agency action which precipitated the appeal was a gross abuse of the agency's discretion. The motion's prayer for relief asked for "entry of an order awarding the Appellant the attorneys' fees it has incurred prosecuting this appeal, pursuant to . . . Section 120.595(5)." As stated in the opinion, the First DCA found that the Division's Final Order was "contrary to the basic, settled principle of administrative law that a person whose substantial interests are determined by an agency is entitled to some kind of hearing . . . to challenge the agency's decision[.]" The court determined that the dismissal of Ft. Myers REH's petition was "so contrary to the fundamental principles of administrative law" that Petitioner was entitled to an award of attorneys' fees under section 120.595(5). To assess reasonable attorneys' fees, a starting place is necessarily the time records of Petitioner's appellate legal team. Although Judge Farmer offered his opinion that the time records had little to no significance in this case, nonetheless, even Judge Farmer accepted the time-based attorneys' fees shown on those time records as the base amount to which a multiplier should be applied. Therefore, the undersigned examined the time records in the context of the appellate record and considered the conflicting opinions of the parties' experts to assess whether the time incurred by Petitioner's legal team was reasonable in light of the steps needed to successfully prosecute the appeal. There was extensive motion practice in the appeal, which significantly increased the amount of time that might otherwise be considered reasonable for an appeal of an order summarily dismissing a petition for administrative hearing, with no record to speak of from proceedings below, such as would be developed in a trial or administrative hearing. Several motions were filed by the Division, including a motion to dismiss the appeal, which resulted in an Order to Show Cause directing Ft. Myers REH to demonstrate why the appeal should not be dismissed. The Division also filed two different motions to strike, one directed to Ft. Myers REH's response to the Order to Show Cause why the appeal should not be dismissed, and the other directed to the reply brief; both of these motions were denied. Ft. Myers REH filed even more motions than the Division. In addition to the motion for attorneys' fees pursuant to section 120.595(5) and two perfunctory motions for enlargement of time to file the initial brief, Ft. Myers REH also filed a motion for substitution of counsel, making the mid-stream decision that David Romanik, whose expertise was in gaming law, should be counsel of record instead of Cynthia Tunnicliff, whose expertise was in administrative and appellate law, even though both attorneys remained involved before and after the substitution. More substantively, in reaction to the Division's motion to dismiss, Ft. Myers REH filed a motion to supplement the record and a motion for judicial notice, which were denied; a motion to consolidate the appeal with a separate mandamus action it had filed, which was denied; and a motion to strike the Division's response to the motion to supplement the record, or, in the alternative, a motion for leave to respond to new legal issues raised in the Division's response, both of which were denied. The basis for the Division's motion to dismiss was that a newly enacted law rendered the appeal moot, because under the new law, Ft. Myers REH could no longer qualify for the quarter horse racing permit for which it had applied. The Division sought to invoke the general rule that the law in effect at the time of a final decision applies to determine whether to grant or deny an application for a permit or other form of license. See Lavernia v. Dep't of Prof'l. Reg., 616 So. 2d 53, 54 (Fla. 1st DCA 1993). Ft. Myers REH's motion flurry, even though unsuccessful, was a reasonable response to the Division's position in that Ft. Myers REH sought to demonstrate that one of the exceptions to the general rule, as recognized in Lavernia, was applicable. See, e.g., Dep't of HRS v. Petty-Eifert, 443 So. 2d 266, 267-268 (Fla. 1st DCA 1983)(under the circumstances of that case, applicants were entitled to have the law applied as it existed when they filed their applications). In its opinion, the First DCA acknowledged both the Division's mootness argument and Ft. Myers REH's contention that there were circumstances that would preclude the Division from applying the statutory changes to the permit application. The court deemed these issues more suitable for fleshing out in the administrative hearing on remand. See Ft. Myers, 53 So. 3d at 1162-1163. In addition to the other motions, Ft. Myers REH also filed a motion for an award of attorneys' fees and costs pursuant to section 57.105, in which Ft. Myers REH asserted that the Division's motion to dismiss the appeal was unsupported by material facts and then-existing law. The court considered and denied the section 57.105 motion. There were four attorneys who worked on the appeal on behalf of Ft. Myers REH: David S. Romanik from Oxford, Florida; and Cynthia Tunnicliff, Marc Dunbar, and Ashley Mayer, all of the Pennington firm in Tallahassee, Florida. The first three of these attorneys are long-time practitioners with substantial experience and particular areas of expertise. Mr. Romanik, who became the counsel of record in the middle of the appeal, is an attorney with 35 years' experience, gained in private practice and in executive, legal, and consulting positions in the racing/gaming industry. He was described as the "general counsel, sort of," for the Florida interests of Green Bridge Company, which is the parent company of, and primary investor in, Ft. Myers REH. While Mr. Romanik has some experience in administrative litigation and appellate practice, his primary area of expertise is in gaming law. Ms. Tunnicliff is a shareholder of the Pennington firm, with vast experience and a well-established excellent reputation for her expertise in administrative law and administrative litigation under the Administrative Procedure Act (APA), chapter 120, as well as in appellate practice. Ms. Tunnicliff's appellate experience is documented in well over 100 appeals in which she has appeared as counsel of record, spanning the last 25 years. Marc W. Dunbar has been practicing law for 17 years, and he also is a shareholder of the Pennington firm. Like Mr. Romanik, Mr. Dunbar's recognized area of legal expertise is in gaming law. For the last 13 years, he has been head of the firm's gaming law practice group, and he has substantial experience in gaming law and in providing consulting services to the pari-mutuel industry. Mr. Dunbar's testimony was that this has been the focus of his practice and has grown over the years such that it is now virtually all he does. Ashley Mayer was the lone associate who worked on the appeal. Ms. Mayer graduated in 2009 with high honors from Florida State University College of Law, where she was a member of the moot court team. Those who worked with her regularly at the Pennington firm, including Ms. Tunnicliff and Mr. Dunbar, thought very highly of her work as a one-year associate. Based on the expert opinions offered for and against the reasonableness of the time records for these four attorneys, including the hourly rates applied to the time entries, the undersigned finds as follows: there are some obvious flaws and less obvious insufficiencies in the time records that require adjustment; there is a large amount of duplication, which is tolerable to some extent given the stakes, but which exceeds a tolerable degree and requires some adjustment; the hourly rates for the two gaming law experts are too high for the non-gaming law legal services they each provided, requiring adjustment; and that the hourly rate for the one-year associate is too high, requiring adjustment. The time records of each of the four timekeepers will be addressed in turn, starting with the one-year associate, Ms. Mayer. As an example of an obvious flaw in the time records, the very first time entry is for researching and analyzing case law regarding bringing a civil rights lawsuit under 42 U.S.C. section 1983, for 2.8 hours. Another time entry described work related to a separate mandamus action, which Petitioner sought unsuccessfully to consolidate with the appeal. These entries are unrelated to the appeal. In addition, Ms. Mayer performed research regarding the process for assessing appellate attorneys' fees by remand to the lower tribunal. These entries do not relate to the appeal or to litigating over the entitlement to attorneys' fees. Several of Ms. Mayer's entries do not reflect legal work, but, rather, administrative or secretarial work, such as retrieving a law review article from the law library, conferring with a secretary regarding formatting briefs, and revising documents to conform to others' edits. Other than these entries, Ms. Mayer's time records seem generally appropriate, in that she performed a large amount of research before the initial brief, she performed drafting, and she continued to carry out research assignments throughout the appeal. Of the total 66.7 hours claimed, a reduction of 6.4 hours is warranted to account for the inappropriate entries. 60.3 hours are reasonable for Ms. Mayer. An hourly rate of $225 was applied to Ms. Mayer's time. Petitioner's expert attested, in general and in the aggregate, to the reasonableness of the hourly rates in Petitioner's time records for attorneys with comparable experience and skill, but gave no specific information regarding the basis for his opinions. Respondent's expert disagreed and testified that in her opinion, an hourly rate of $225.00 for a one-year associate was excessive. She based her opinion on The Florida Bar's 2010 Economics and Law Office Management Survey, which reported that for the north region of Florida, 47 percent of all attorneys at any experience level charge an hourly rate of $200.00 or less. In the opinion of Respondent's expert, a reasonable hourly rate for Ms. Mayer would be $150.00, instead of $225.00. While Respondent's expert's information was also somewhat generalized, the undersigned finds that based on the limited information provided, a reasonable rate for a highly skilled, but not very experienced attorney one year out of law school, would be $185.00 per hour. A reasonable attorney's fee for Ms. Mayer's legal work on the appeal is $11,155.50. Turning to Ms. Tunnicliff's time records, the hourly rate for Ms. Tunnicliff of $400.00, though high, is accepted as appropriately so. The rate is comparable to the rates charged by other attorneys of comparable skill and experience in the same locale, as ultimately agreed to by both parties' experts. Ms. Tunnicliff's time entries show that in general, she limited her hours appropriately to a high level of supervision, direction, and review, while allowing others, particularly Ms. Mayer, to conduct the more time-intensive research and drafting efforts. Based on the expert testimony and a review of the time record entries, a few adjustments to Ms. Tunnicliff's records are necessary. One-half hour is subtracted for an entry related to mandamus, because the mandamus action was separate and unrelated to work done to prosecute the appeal at issue. Another adjustment is necessary because of an error in the time records: The billing summary shows that Ms. Tunnicliff's total time was 31.6 hours, which was multiplied by the hourly rate to reach the fees sought for Ms. Tunnicliff's time. However, the individual time entries add up to a total of only 24.6 hours. With the additional deduction of one-half hour for work unrelated to the appeal, a total of 24.1 hours will be allowed for Ms. Tunnicliff's time. Applied to the agreed reasonable hourly rate, a reasonable attorney's fee for Ms. Tunnicliff's work on the appeal is $9,640.00. The time records for the two gaming law experts present more difficult issues, because the legal questions presented in the appeal were not gaming law questions; they were administrative law questions and, indeed, "basic, settled" administrative law questions. While certainly gaming law was the substantive, regulatory context in which these issues arose, it is clear from the time entry descriptions of exhaustive, duplicative legal research on rights to administrative hearings, party standing, and what law applies in license application proceedings, that at their core, the questions presented were general administrative law principles and were treated as such. Yet not only one, but two highly specialized gaming law experts whose experience and specialized expertise allow them to command hourly rates of $450 when practicing gaming law, spent most of the total attorney time prosecuting this administrative law appeal. Mr. Romanik's time records claim 195.5 total hours at $450 per hour, while Mr. Dunbar's time records claim 80.6 total hours, of which 30.2 were claimed at the rate of $450 per hour, while 50.4 additional hours were claimed at $300 per hour. The reduced $300 per-hour fee was an adjustment made at the urging of Petitioner's expert to account for research time spent not within Mr. Dunbar's area of expertise. Mr. Romanik's time records require adjustment. In general, many of the types of criticisms of these records by Respondent's expert are accepted, although the undersigned does not agree with the degree of adjustments deemed warranted by Respondent's expert. In general, Mr. Romanik's time entries reflect excessive hours spent by Mr. Romanik, doing tasks that were duplicative of tasks more appropriately performed by Ms. Mayer, which were, in fact, performed by Ms. Mayer, including research and initial drafting. Perhaps one reason for the sheer number of hours invested by Mr. Romanik was that he was performing research on basic, settled principles of administrative law, such as standing, hearing rights, licensing proceedings, what happens when the law changes while a license application is pending, and other questions of administrative procedure. Mr. Romanik's time records also reflect too many basic drafting tasks, such as initially drafting a request for oral argument. The time records also show excessive secretarial or administrative tasks, such as listing and downloading cases and uploading briefs. Not only did Mr. Romanik's specialized expertise in gaming law not facilitate his performing these tasks efficiently, but he inefficiently performed these tasks very expensively, i.e., at the claimed rate of $450 per hour. Nonetheless, Mr. Romanik apparently did the lion's share of work in redrafting the initial brief (initially drafted by Ms. Mayer), drafting the reply brief, drafting the numerous motions and responses to the Division's motions, and performing well at the oral argument. The high stakes and good outcome cannot be denied. Yet the total time claimed would be high at the hourly rate claimed, if Mr. Romanik were the sole attorney working on the appeal. Given his role as the "general contractor," it is conceivable that many of his hours were invested, or should be considered as having been invested, as "client" time in which Mr. Romanik was serving as the client liaison for the prosecution of the appeal to oversee the work done by the attorneys prosecuting the appeal. Regardless of how Mr. Romanik's hours are characterized, they were excessive and duplicative. To adjust for excessive time in tasks outside Mr. Romanik's area of expertise and for duplication, the undersigned finds that Mr. Romanik's time should be reduced by 83 hours. Reflecting the high stakes and good outcome, as well as the aggressive motion practice in the appeal, a reasonable--though still very high--number of hours for Mr. Romanik to have spent in prosecuting this appeal (with the substantial help of three other attorneys) is 112.50 hours. With almost all of the time Mr. Romanik spent in this appeal falling in areas outside of his recognized legal expertise, the undersigned finds that a high, but reasonable, hourly rate to apply to Mr. Romanik's time is $325.00. Essentially, Mr. Romanik's legal services fell more within the legal expertise of Ms. Tunnicliff. If $400.00 per hour is the acknowledged reasonable rate for someone of Ms. Tunnicliff's experience and expertise, the rate to apply to Mr. Romanik's time should be less, although not substantially so, recognizing that Mr. Romanik's gaming law expertise was a big advantage. If intricate issues of gaming law were involved in this appeal, as opposed to just being the substantive, regulatory context in which basic, settled principles of administrative law arose, then perhaps Mr. Romanik could command his standard hourly rate. Instead, with the predominant focus of Mr. Romanik's work, as reflected in his time entries on administrative and appellate law and procedure, the reasonable rate that will be applied to the reasonable time total found above is a blended rate that is discounted because of reduced expertise in the main area, but increased because of expertise in a collateral area. Applying the reasonable rate of $325.00 per hour to 112.50 hours for Mr. Romanik yields a reasonable attorney's fee of $36,562.50 for Mr. Romanik's prosecution of the appeal. Mr. Dunbar's time records suffer from the same essential problem as Mr. Romanik's--he is a gaming law expert, but his expertise was hardly utilized. If it was not necessary to tap into Mr. Romanik's gaming law expertise to any great extent, then it was not necessary and redundant to have a second gaming law expert substantially involved in the appeal. Additional problems with Mr. Dunbar's time records include several time entries with inadequate descriptions (e.g., "Research" or "Research re: key cite authority") and other entries with descriptions that did not seem to relate to the appeal (e.g., several entries two months after the initial brief was filed for "Research re: standards for appellate review of motion denial" when there was no denied motion for which appellate review was sought). Mr. Dunbar's time records had a large number of entries for performing basic research on questions of administrative law or appellate practice, such as standing, hearing rights, standards for supplementing the record on appeal, standards for motions to strike and to consolidate appeals, standards for reply briefs, and similar descriptions. Substantial adjustments are in order to remove the inadequately described time entries and the entries seemingly unrelated to this appeal and to substantially reduce the duplicative research done by Mr. Dunbar outside of his area that was also done by Ms. Mayer and/or Mr. Romanik and/or Ms. Tunnicliff. While some overlap is tolerable to ensure that all bases are covered, the time entries do not sufficiently establish what was added by Mr. Dunbar's substantial time- performing tasks outside his area of expertise to the already substantial time allowed for Mr. Romanik outside his area of expertise. Mr. Dunbar's reasonable time spent as a fourth attorney prosecuting this appeal is reduced by 43 hours, to 37.6 hours. A little more than half of the 37.6 hours found to be reasonable were in the non-research category, such as Mr. Dunbar's review and comment on the draft briefs and motions and assistance in preparation for oral argument. The research hours found reasonable were those that appeared to augment, but not duplicate, work by one or more other attorneys. As with Mr. Romanik, a blended reasonable hourly rate is applied, which recognizes that even for the non-research time allowed for Mr. Dunbar, his work was primarily outside his recognized legal expertise, although his expertise provided benefit in understanding the context in which the issues arose. An hourly rate of $300.00 is reasonable for 37.6 hours of work done by Mr. Dunbar in prosecuting this appeal, equaling a reasonable attorney's fee of $11,280.00. The following summarizes the number of hours, hourly rate, and resulting fee found to be reasonable for each of the four attorneys who aided in prosecuting the appeal: Attorney Hours Hourly Rate Fee Mayer 60.3 $185 $11,155.50 Dunbar 37.6 $300 $11,280.00 Romanik 112.5 $325 $36,562.50 Tunnicliff 24.1 $400 $ 9,640.00 Total hours by all attorneys: 234.50 Total time-based fees: $68,638.00 As previously alluded to, the stakes of this appeal were very high, in that without success in the appeal, Petitioner would have no chance of obtaining the quarter horse racing permit for which it had applied. While success in the appeal would not assure Petitioner that it would ultimately prevail in its effort to secure a permit, winning the appeal was a necessary step to keep the permit application alive and allow Petitioner to take the next step in the process. If, at the end of the long road ahead, Petitioner secures the sought-after permit, the value of that permit could be in the neighborhood of $70 million. Given the stakes, a higher amount of hours and greater degree of duplication were allowed than might normally be considered reasonable. The undersigned finds that there was not a huge risk factor with regard to the outcome of the appeal. While in a general sense and statistically speaking, odds always may be greatly against success in an appeal, those across-the-board statistics are mitigated in this case by such a clear violation of a "basic, settled" and "fundamental" principle of administrative law and due process. The complexity and novelty of the issues on appeal are reflected, as one would expect, in the number of hours found to be reasonable for Petitioner's team of attorneys to have spent in prosecuting this appeal. Even as reduced, the total hours found reasonable for this appeal are nearly three times the amount of time Respondent's expert would expect in the typical appeal. Thus, the hours found to have been reasonably invested were substantially higher than typical for an appeal, when one might have expected less hours than typical since this appeal did not follow a trial or administrative hearing. No evidence was presented to show that any of the four attorneys on Petitioner's appeal team were precluded from taking other work because of their role in the appeal or that there were any time constraints placed on the attorneys, either by the client or the circumstances. The evidence was not entirely clear regarding the nature of the arrangements with Ft. Myers REH for payment of attorneys' fees for the appeal. Two separate contingency fee agreements were admitted in evidence. One agreement, "[a]s of August 15, 2010[,]" was between Ft. Myers REH and Mr. Romanik (and his firm, David S. Romanik, P.A.). The operative term of the agreement provided that "[u]pon and after the execution of this fee agreement, the [Romanik] Firm shall handle this matter and all aspects of it on a contingent fee basis." The "matter" covered by the agreement was broadly described as "the pursuit of the issuance by the Division of Pari-Mutuel Wagering of a quarter horse racing and wagering permit . . . ." Therefore, from August 15, 2010, forward, Mr. Romanik and his firm agreed to be compensated on a contingent fee basis for not only the appeal, but also, any subsequent administrative hearings if the appeal was successful and any other administrative or judicial litigation required to secure the permit. Services would be considered successfully completed upon commencement of Ft. Myers REH's gaming operation pursuant to the permit. For such successful services, the Romanik firm would receive $5 million. In addition, the agreement provided that the firm would be entitled to "any and all fees that may be awarded" by any court or administrative tribunal. No evidence was presented regarding the prior fee arrangement that was in place until August 15, 2010, when the contingent fee arrangement took effect. Mr. Romanik and his firm entered into a separate contingency fee agreement with the Pennington firm to secure the Pennington firm's assistance, as a subcontractor, in prosecuting the appeal of the Division's dismissal of Ft. Myers REH's request for an administrative hearing to contest the denial of its quarter horse permit application. The agreement, dated September 1, 2010, was called "a revised representation agreement," which superseded "all prior agreements related to this matter." Payment for services under the agreement was contingent on success in the appeal and was set at "the greater of $100,000 or any fee award from the court, if any." No prior representation agreement for services provided by the Pennington firm in the appeal before September 1, 2010, either with Mr. Romanik and his firm or with Ft. Myers REH, was offered into evidence. However, Mr. Dunbar testified that before the Pennington firm entered into a contingency fee arrangement with Mr. Romanik and his firm, the Pennington firm provided services to Ft. Myers REH under a standard fee agreement by which the Pennington firm attorneys provided legal services for which they billed and were paid at their standard hourly rates. As of August 16, 2010, the standard fee agreement between Ft. Myers REH and the Pennington firm was apparently still in place, because in the motion for section 57.105 sanctions served on Respondent on August 16, 2010, and subsequently filed with the First DCA on September 20, 2010, Mr. Dunbar represented that Ft. Myers REH "had retained the [Pennington law firm] to represent it in this matter and has agreed to pay its attorneys a reasonable fee for their services." This statement was not qualified by any contingency, such as that Ft. Myers REH only agreed to pay a reasonable fee to the Pennington firm if the appeal was successful. Thus, although Mr. Dunbar seemed to indicate in his testimony that the September 1, 2010, contingent fee agreement was intended to apply retroactively, that testimony is inconsistent with the representation in the section 57.105 motion signed by Mr. Dunbar. The evidence establishes that contingency fee agreements were entered into midway through the appeal. The greater weight of the credible evidence was insufficient to prove that before August 15, 2010, the attorneys providing services in the Ft. Myers REH appeal would only be paid if the appeal was successful. Thus, the undersigned finds that the fee arrangements for the appeal were partially contingent. The contingent fee agreements were reached as an accommodation to Ft. Myers REH's desire for such arrangements, rather than as an enticement that had to be offered by Ft. Myers REH in order to secure competent counsel to represent it in the appeal. No evidence was presented detailing the nature and length of Petitioner's relationship with its team of attorneys. As noted, Mr. Romanik has a relationship with Petitioner and its parent that is akin to general counsel over the parent's Florida interests, though it is unknown how long this relationship has existed. The Pennington firm, likewise, has done work for Petitioner and its parent before and has sent invoices for legal services to Mr. Romanik for his review, approval, and transmittal to the parent for payment. It is unknown how extensive or over what period of time this relationship existed. Petitioner established that it incurred an additional $28,087.00 in attorneys' fees charged for litigating the reasonable amount of attorney's fees in this proceeding, plus $44,016.00 in expert witness fees. In addition, Petitioner incurred $1,094.43 for expense items, of which $409.50 represents the cost of the final hearing transcript, and the balance represents costs for copying, courier service, and postage. Respondent did not dispute the reasonableness of those attorneys' fees, expert witness fees, and costs.
The Issue The issue is whether petitioner is entitled to an award of attorney's fees and costs under Section 57.111, Florida Statutes.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background This case involves a claim by petitioner, John E. Phillips, Jr., that he is entitled to an award of attorney's fees and costs because of an administrative action improvidently brought against him by respondent, Department of Banking and Finance (DBF). When the complaint was filed, Phillips was registered with DBF as an associated person with Aragon Financial Services, Inc. DBF contends the claim is without merit because Phillips is not a small business party within the meaning of the law, there is substantial justification to support the agency's decision to file a complaint, and special circumstances are present which would make an award of fees and costs unjust. The action which underlies this claim involved an administrative complaint filed against Phillips on February 4, 1994, charging him with violating various provisions within Chapter 517, Florida Statutes. That complaint was assigned Case No. 94-1266. The complaint also denied an application by Phillips to register as an associated person with a new firm. In addition, the complaint named Bruce M. Walker as a co-respondent, and as to that registrant, the complaint was assigned Case No. 94-1358. Both cases were consolidated for hearing and, after an evidentiary hearing was conducted on June 27, 1994, a Recommended Order was issued on September 13, 1994, recommending that all charges against Phillips be dismissed and that his application for registration be approved. The Recommended Order was adopted by DBF without change, and Phillips is accordingly deemed to be a prevailing party in that action. Phillips has requested fees and costs in the amount of $15,000.00, the maximum allowed by law. Respondent does not contest the reasonableness of that amount. Prima Facie Requirements for an Award of Fees and Costs In order to show entitlement to an award of fees and costs, petitioner must demonstrate that he is a "prevailing small business party" within the meaning of the law. Since he has filed the petition on his own behalf, he must show he is a sole proprietor of an unincorporated business, including a professional practice, whose principal office is in this state, who is domiciled in this state, and whose business or professional practice has, at the time the action is initiated by the state agency, not more than 25 full-time employees or a net worth of not more than $2 million. At the time the administrative complaint was filed, Phillips was domiciled in Pensacola, Florida, and had a net worth of less than $2 million. According to an uncontroverted allegation in his petition, Phillips had no "employees relating to business that formed the basis for the Agency's charges." Petitioner was also a 50 percent shareholder in a subchapter S corporation known as Phillips, Walker & Associates, Inc. (PWA), a Pensacola firm engaged in the sale of insurance products. Although Phillips was registered with DBF as an associated person with Aragon Financial Services, Inc., that firm was not the subject of the complaint nor is it otherwise relevant to this dispute. Petitioner's principal source of income was through the sale of insurance products sold through PWA although he occasionally sold a few securities during that same period of time. The administrative complaint was not filed against PWA, which held no licenses from the state, but rather was filed against the registration of Phillips as an individual. Although he was an officer, employee and shareholder of PWA, Phillips was not a sole proprietor of an unincorporated business, including a professional practice. Therefore, he does not qualify as a small business party. Was There Substantial Justification? The consumer complaint which eventually led to the filing of the charges in Case No. 94-1266 was made by Jane Hubbard, a Gulf Breeze realtor who had loaned a substantial amount of money ($50,000.00) to PWA in May 1988 and was never repaid. The loan was secured by a promissory note personally signed by Phillips and Walker, as the owners of the corporation. After PWA ceased doing business in May 1990, and both Phillips and Walker had filed for bankruptcy, Hubbard, or her attorney, contacted DBF in an effort to seek DBF's aid in collecting her money from Phillips and Walker. Since petitioner was registered with DBF as an associated person, and thus was subject to DBF's regulatory jurisdiction, Hubbard apparently assumed that Phillips may have violated the law in some respect, and the agency might be able to assist her in recovering all or a part of her money. A similar complaint filed with the Department of Insurance was not pursued by that agency. Hubbard's complaint was eventually referred to a DBF financial examiner, Robert R. Kynoch, who, among other things, interviewed Phillips, Walker, Hubbard, and three other persons who had made loans to Walker (but not Phillips). Although Kynoch did not place the persons interviewed under oath during the investigative stage, there was no requirement that he do so. Based on a representation by Hubbard that Phillips and Walker had failed to disclose to her all relevant information regarding PWA's financial status at the time the loan was made, Kynoch concluded that a reasonable basis existed to bring charges against the two if the loan was actually an investment, and thus subject to DBF's jurisdiction under Chapter 517, Florida Statutes. Accordingly, Kynoch prepared a written investigative report, received in evidence as respondent's exhibit 3, which recommended that the report "be further reviewed for appropriate disposition." The report was first reviewed by Michael D. Blaker, a DBF area financial manager, who approved the recommendation and forwarded it to his supervisor, Richard White. It was then reviewed and approved by a bureau chief, William Reilly, and finally by the division director, Don Saxon. After Saxon signed off on the report, it was sent to the general counsel's office for a legal determination as to whether the loan was an investment. Margaret S. Karniewicz, an assistant general counsel, concluded that it was, and recommended the issuance of an administrative complaint. After an evidentiary hearing was conducted, a determination was made that the loan constituted an investment. This determination in the Recommended and Final Orders was not contested by any party, including Phillips. There was, however, insufficient evidence to establish that misrepresentations were made by Phillips during the sale of the investment. For this reason, the charges against Phillips were dismissed and his application for registration with a new firm was approved. Because DBF had statements, which it assessed to be credible, from a complaining witness (Hubbard) that misrepresentations or material omissions were made by Phillips and Walker during the transaction, and DBF properly construed the transaction as an investment, it had a reasonable basis in fact and law to file the complaint. Since there was no showing that the agency's credibility assessment was unreasonable, DBF was substantially justified in bringing the charges in Case No. 94-1266. Special Circumstances There was no evidence presented by respondent to show that special circumstances exist that would make an award of attorney's fees and costs unjust.
Findings Of Fact The Petitioner is a nonprofit corporation whose purpose is to promote the betterment of the fire service in Ft. Lauderdale and Broward County; to promote the image of firemen and the City of Ft. Lauderdale and Broward County; to operate a pension program for the firemen in Ft. Lauderdale; and to help in community relations and youth work. Petitioner has recently built a meeting hall which, in addition to a large banquet room, has a lounge area, which can be physically separated from the banquet room, in which they would place a bar should they receive their license. Petitioner has been in existence in essentially its present form for more than 25 years. Over that period of time Petitioner has contributed money and its members have contributed time in the name of Petitioner, to many community activities, with particular emphasis on youth activities. According to the Executive Director of the Boys' Club of Broward County, Petitioner, since 1967, has been a major supporter of the Boys' Club. The members of the Petitioner have contributed a substantial amount of time in the name of Petitioner, since 1967, to functions from which the Boys' Club of Broward County raise the bulk of their funds. The Executive Director testified far that the Petitioner has been and continues to be a great help to the Boys' Club. The Director of Recreation for the City of Ft. Lauderdale has been acquainted with the Petitioner since 1959. During that period of time Petitioner has been the main source of manpower for the Ft. Lauderdale, Broward County Soapbox Derby. Petitioner has been very active in virtually all the youth baseball activities, as well as the youth football leagues, by sponsoring teams and contributing volunteer time. Petitioner has been active in local beauty contests. According to the Director of Recreation for the City of Ft. Lauderdale, Petitioner is one of four or five organizations he counts on for the main financial and manpower support of the county recreation programs. Mr. Alvin Ronald Hill, of the Ft. Lauderdale Gold Coasters, a wheelchair athletic group, testified that Petitioner is one of the largest supporters of the Gold Coasters. The Gold Coasters are an organization of handicapped people whose purpose is to promote services for the handicapped. Mr. Lou Thiese, a past president and member of the Board of Directors for Muscular Distrophy for Broward County, testified that Petitioner is the best organized group for collecting money in Broward County with regard to the Muscular Distrophy Foundation. When he was president, Petitioner collected $25,000 to $30,000 in the Muscular Distrophy Drive and continues to be an integral part of that fund raising effort. Petitioner was the initial contributor, in 1970, to the Little Yankees Football League in Broward County which now has 600 children participating and a $72,000 budget annually. The Petitioner sponsored a team in that football league until 1974, and contributed volunteer workers to do a substantial amount of the construction on the building which the league built for its operations. Since 1974 Petitioner has contributed very little, if any, monetary support to the community services in Ft. Lauderdale and Broward County because they have directed their financial resources to the construction of their meeting hall. It is the intention of the Petitioner to again undertake its financial support of many of the community projects as soon as it is in a financial position to do so. Petitioner has continued its support of the various community projects by contribution of voluntary manpower. The support, both financial and by manpower, of community programs such as the Soapbox Derby and youth athletic groups, as well as support of programs such as the Muscular Distrophy Drive, promotes community, municipal and county development. The actions of Petitioner over the years indicate its devotion to the promotion of community, municipal and county development. It is noted that Article II of the Articles of Incorporation of Petitioner sets forth its general nature and object. Is is further noted that the general nature and object of Petitioner as set forth in Article II, does not specifically state that an object of Petitioner is the promotion of community, municipal and county development.
The Issue The issue in this case is whether Petitioner, Conval-Care, Inc., is entitled to the payment of attorney fees and costs pursuant to Section 57.111, Florida Statutes, from the Agency for Health Care Administration, the successor in interest to the Respondent, the Department of Health and Rehabilitative Services.
Findings Of Fact By letter dated November 4, 1991, the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department"), notified Conval-Care, Inc. (hereinafter referred to as "Conval-Care"), that it intended to impose an administrative fine on Conval-Care pursuant to Section 409.913(9)(c), Florida Statutes. Conval-Care contested the proposed fine and requested a formal administrative hearing, including a request that it be awarded attorney fees and costs pursuant to Section 57.111, Florida Statutes. The matter was designated case number 92-0126 and was assigned to the Honorable Judge Robert T. Benton, then Hearing Officer Benton. On June 30, 1993, following a formal hearing held on March 24, 1993, Hearing Officer Benton entered a Recommended Order recommending dismissal of the sanctions letter of November 4, 1991. The findings of fact made by Hearing Officer Benton, in Conval-Care, Inc. v. Department of Health and Rehabilitative Services, DOAH Case No. 92-0126, are hereby adopted to the extent relevant to this proceeding. On September 19, 1993, the Department entered a Final Order. The Department accepted and incorporated into its Final Order the findings of fact made by Hearing Officer Benton. The Department, however, rejected Hearing Officer Benton's conclusions of law to the extent that he not had concluded that Conval-Care lacked authority to reject the demand for its records which was the subject of the proceedings. The Department concluded that, in light of the fact that Conval-Care had acted on the advice of counsel, it would reduce the fine from $25,000.00 to $5,000.00. The Department's decision was appealed by Conval-Care. On December 16, 1994, the District Court of Appeal, First District, filed an opinion reversing the Department's Final Order. Mandate from the First District was entered January 3, 1995. On February 14, 1995, Conval-Care filed a Petition for Attorneys Fees and Costs in this case. Conval-Care requested an award of $15,000.00 as a small business party pursuant to the provisions of Section 57.111, Florida Statutes. Attached to the Petition were the Final Order entered by the Department, the Recommended Order, the First District's Opinion and Mandate, an Attorney's Affidavit stating the nature, extent and monetary value of the services rendered and costs incurred in the proceedings, the Petition for Formal Administrative Hearing filed by Conval-Care in 1991 and the Department's November 4, 1991 sanctions letter. On March 2, 1995, the Agency for Health Care Administration, the successor in interest of the Department (hereinafter referred to as "AHCA"), filed a Response in Opposition to Petition for Attorney's Fees and Costs. 10 In its Response, AHCA admitted all of the allegations contained in paragraphs 1 through 6 and 8 through 9 of the Petition. AHCA denied the allegations of paragraph 7 of the Petition. Paragraph 7 of the Petition alleged the following: 7. The action of DHRS, in filing the admini- strative complaint against CCI, was not sub- stantially justified because there was no reasonable basis in law or fact to support the issuance of its letter seeking to impose an administrative fine upon CCI. Attached to the Response was an Affidavit from John M. Whiddon in support of its position that its actions were substantially justified. The Affidavit does not add any alleged credible justification not presented to Hearing Officer Benton or the First District Court of Appeal. AHCA did not assert in it Response the following: that the costs and attorney's fees claimed in Conval-Care's affidavit were unreasonable; that Conval-Care is not a prevailing small business party; that circumstances exist that would make an award unjust; or that AHCA was a nominal party only. AHCA also did not "either admit to the reasonableness of the fees and costs claimed or file a counter affidavit [specifying each item of costs and fee in dispute] along with its response." Finally, AHCA did not request an evidentiary hearing in its Response. The only issue which AHCA asserted in its Response was at issue in this proceeding is whether AHCA's actions were substantially justified. On April 6, 1995, an Order to Provide Information was entered. Although the parties had not requested an evidentiary hearing, the undersigned entered the Order soliciting input from the parties before the undersigned decided whether a hearing was necessary on the one issue raised by the Department. In the Order, the parties were given an opportunity to provide input concerning the procedures they believed should be followed to resolve this matter. The parties were specifically requested to answer certain specified questions, including the following: 1. Do the parties believe that an [sic] hearing is necessary to resolve any factual disputes and/or for purposes of oral argument before a decision is rendered? * * * 5. Do the parties agree that the documents attached to the Petition and the Response should be considered in rendering a decision in this case? . . ." Conval-Care filed a response to the April 6, 1995 Order indicating that there was no need for a hearing. Conval-Care asserted that a hearing would be improper unless Conval-Care consents to one. Conval-Care also asserted that all of the documents attached to petition should be considered. AHCA filed a response to the April 6, 1995 Order indicating that "[t]he Respondent feels a hearing in this matter is essential." AHCA did not provide any explanation of why it believed a hearing was necessary or any discussion of whether a hearing was authorized under the applicable statutes and rules. AHCA also indicated in its response that it "agrees that the documents attached to the Petition and Response should be considered in this case " On May 19, 1995, an Order Concerning Final Order was entered. Based upon a review of the pleadings and the lack of explanation from either party to justify an evidentiary hearing, it was concluded that no evidentiary hearing was necessary. Therefore, the parties were informed in the May 19, 1995 Order that a hearing would not be held in this case. The parties were also informed that they could file proposed final orders on or before May 30, 1995. Conval-Care filed a proposed order. AHCA did not. Neither Conval-Care nor AHCA timely requested an evidentiary hearing in this case. Both parties agreed that the documentation filed with Conval- Care's Petition and AHCA's Response could be relied upon in reaching a decision in this case. Based upon AHCA's failure to contest most of the relevant issues in this proceeding, the only issue which requires a decision if whether the Department's actions against Conval-Care were substantially justified. The documents, including the Mr. Whiddon's Affidavit filed by AHCA with its Response, sufficiently explain why the Department took the actions it took against Conval-Care which led to this proceeding. No evidentiary hearing was, therefore, necessary. The weight of the evidence failed to prove that the Department's actions in this matter were substantially justified. The Department could have sought the information it wanted by pursuing available discovery. Counsel for Conval-Care even remained the Department of the availability of discovery. The Department, however, rather than pursuing the information which it indicated it needed, elected to pursue a punitive action against Conval-Care rather than obtaining the information through discovery. The Department's reason for pursuing punitive actions against Conval-Care was not convincing to Hearing Officer Benton. Despite this fact, the Department entered a Final Order upholding its actions and imposing a fine of $5,000.00 for refusing to provide it with information which it could have obtained through other means. The First District Court reversed the Department's Final Order opining that the Department "lacked a legitimate investigatory purpose for demanding the records" which gave rise to its action against Conval-Care. Finally, the entire record in this case failed to indicate that there was any basis in law or fact to substantially justify the actions of the Department.
