The Issue Is the practice of the Respondent, Agency for Health Care Administration (Agency), to decline Medicaid-funded compensation for emergency medical services provided to undocumented aliens once the patients have reached a point of stabilization an unpromulgated rule? The Petitioners' Proposed Final Order identifies the Agency's use of limited InterQual criteria to determine medical necessity as an issue in this proceeding. But the Petition for Determination of Invalidity of Non-Rule Policy does not raise this issue. Neither party's pre-hearing statement identifies it as an issue. Consequently, this Order does not consider or determine whether the Agency's limitation on the use of InterQual criteria is an "unpromulgated rule."
Findings Of Fact Proceedings Before the Division of Administrative Hearings and the First District Court of Appeal In the beginning this was an action by the Hospitals aimed at stopping Agency efforts to recoup reimbursement of Medicaid payments to the Hospitals for emergency services provided to undocumented aliens once the patients have reached a point of “stabilization.” The issue of whether the Agency could apply the “stabilization” standard to the Hospital claims for Medicaid payment for services provided indigent aliens recurred in Agency claims against hospitals throughout the state to recoup Medicaid payments. Hospitals challenged Agency claims in individual proceedings under section 120.569, which the Agency referred to the Division for disputed fact hearings. Duane Morris, LLP (Duane Morris), led by Joanne Erde, represented the hospitals in the individual proceedings. The Hospitals collectively engaged Duane Morris to represent them in this proceeding challenging the Agency’s stabilization standard as an unpromulgated rule. Joanne B. Erde, Donna Stinson, and Harry Silver were the Hospital’s lawyers in this proceeding. Ms. Erde is an experienced lawyer who has focused her practice in health care. Ms. Stinson is an experienced lawyer who concentrated her practice in health care and administrative law litigation before the Division. The Agency does not question their expertise. Mr. Silver is an experienced lawyer with no Florida administrative law experience. His role in the case was minimal. Depositions taken in one of the individual reimbursement cases were significant evidence in this proceeding. Those depositions make it clear that the Hospitals’ counsel was tuned into the unpromulgated rule issue and using discovery in that case to gather and identify the evidence that they would need in this case. Representation of the Hospitals in individual reimbursement actions provided Hospitals’ counsel the advantage of preparing with level of detail before filing the petition. The engagement letters recognize this stating: “We have an understanding of the facts underlying this matter and have substantial knowledge concerning the law governing the issues in this case.” This well-developed understanding of the facts should have minimized the need for discovery and preparation in this proceeding. Counsel were well positioned to prosecute this matter efficiently. Likewise, counsel’s “substantial knowledge concerning the law governing the issues in this case” should have minimized the need for time spent in research. This is not what happened. The pre-existing representation in the reimbursement cases provided another obvious and significant benefit to the Hospitals and their counsel. Since counsel represented the individual hospital in the separate reimbursement matters, the Hospitals could band together to jointly finance one case that would resolve the troublesome point of “stabilization” issue more consistently and more cheaply than if they litigated it in each and every case. As the basically identical engagement agreements between each hospital and counsel state: “Because many hospitals’ interests in [sic] are similar or identical as it relates to the Alien Issue and in order to keep legal costs to a minimum, each of the participants in the [hospital] Group will [sic] have agreed that it wishes this firm to represent them in a Group.” Because of counsel’s pre-existing relationships with the Hospitals, litigating this matter should have continued or enhanced the client relationships. The time required for this matter could not result in lost business opportunities. In fact, by consolidating the issues common to all the clients and their cases, counsel freed up time to work on other matters. Presentation of the issue for resolution in a single case also saved the Hospitals the greater cost of disputing the issue in each case where the Agency sought reimbursement. The Hospitals and counsel dealt with the only possible downside of the representation by including disclosures about joint representation and a waiver of conflict claims in the engagement letters. This was not a contingent fee case. The agreement provided for monthly billing and payment from counsel’s trust account. Each group member made an initial payment of $10,000 to the trust account. Any time the trust account balance dipped below $15,000, each group member agreed to contribute another $10,000 to the trust account. For counsel, this representation was about as risk free as a legal engagement can be. The Hospitals and their counsel knew from the outset that they would have to prove their reasonableness of their fees and costs if they prevailed and wanted to recover fees. The Petition for Determination of Invalidity of Non-Rule Policy seeks an award of fees and costs. They could have adjusted their billing practices to provide more detail in preparation for a fees dispute. An "unpromulgated rule challenge" presents a narrow and limited issue. That issue is whether an agency has by declaration or action established a statement of general applicability that is a "rule," as defined in section 120.52(16), without going through the required public rulemaking process required by section 120.54. The validity of the agency's statement is not an issue decided in an "unpromulgated rule challenge." Courts have articulated the legal standards for unpromulgated rule challenges frequently. See, e.g., Coventry First, LLC v. Off. of Ins. Reg., 38 So. 3d 200, 203 (Fla. 1st DCA 2010); Dep’t of Rev. v. Vanjaria Enters., 675 So. 2d 252 (Fla. 5th DCA 1996); and the cases those opinions cite. The facts proving the “stabilization” standard were easy to establish. Many Agency documents stated the shift to the “stabilization” standard. Documents of Agency contractors did also. Two examples of how clear it was that the Agency was applying a new standard were the Agency’s statements in its 2009-2010 and 2010-2011 reports to the Governor on efforts to control Medicaid fraud and abuse. The reports describe the “stabilization” standard as “more stringent” and certain to recover millions of dollars for the Agency. As the Agency’s reports to the Governor indicate, the stakes were high in this matter. For the Hospitals and other hospitals collectively affected by the Agency’s effort to recoup past payments by applying the “stabilization” standard, $400,000,000 was at stake. This matter did not present complex or difficult issues, legally or factually. The Order of Pre-Hearing Instructions requiring parties to disclose documents and witnesses and update the disclosures alleviated the discovery demands present in other litigation. The Agency’s failure to fully comply with the pre- hearing instructions and unfounded Motion in Limine added some additional time demands for the Hospital’s counsel. Nonetheless the issues were narrow, and the facts were essentially undisputed, if not undisputable. This matter did not require extraordinary amounts of time for discovery or preparation. Ordinarily challenges to rules or unpromulgated rules impose time pressures on the attorneys because of the requirement in section 120.56 that the hearing commence within 30 days of assignment to the Administrative Law Judge. The time constraint was not a factor in this case. The Hospitals requested waiver of the time requirement to permit more time for discovery. The Agency agreed, and the undersigned granted the request. Thus the Hospitals had the time their counsel said they needed to prepare for the hearing. The appeal imposed no time constraints. Both parties received extensions of time for their filings. Seventeen months passed between filing the notice of appeal and oral argument. Time for the Administrative Proceeding The total number of hours claimed for the services of the three lawyers, their claimed hourly rate, and the total fees claimed appear below. Joanne B. Erde 458.20 hours $550.00 rate $252,010.00 Donna Stinson 136.20 hours $455.00 rate $61,971.00 Harry Silver 93.40 hours $550.00 rate $51,370.00 Total 687.80 hours $365,351.00 The Hospitals’ counsel’s billing records are voluminous. For the proceeding before the Division, the Hospitals’ counsel’s invoices list 180 billing entries for the work of three lawyers. A substantial number of the entries are block billing. In block billing, all of a lawyer’s activities for a period of time, usually a day, are clumped together with one time total for the entire day’s service. It is an acceptable form of billing. But block billing presents difficulties determining the reasonableness of fees because a single block of time accounts for several different activities and the invoice does not establish which activity took how much time. Here are representative examples of the block billing entries from the Division level invoices: August 20, 2012 (Erde) – Conference call with ALJ; telephone conference with AHCA attorney; telephone conference with newspaper reporters – 2.0 hours September 16, 2012 (Erde) – Review depositions; prepare opening remarks; develop impeachment testimony – 5.50 September 27, 2012 (Erde) – Intra-office conference; finalize interrogatories; work on direct – 8.50 October 2, 2012 (Stinson) – Review and revise Motion in Limine; Telephone conferences with Joanne Erde and Harry Silver; review emails regarding discovery issues - `2.60 October 19, 2012 (Erde) – Intra-office conference to discuss proposed order; Research Re: other OIG audits; research on validity of agency rules – 2.10 hours November 9, 2012 (Erde) – Conference with ALJ; Intra-Office conference to discuss status; further drafting of proposed order – 7.70 hours. November 19, 2012 (Stinson) – Final Review and Revisions to Proposed Final order; Telephone conferences with Joanne Erde to Review final Changes and comments; Review AHCA’s proposed order and revised proposed order – 3.20 hours. Many of the entries, block or individual, do not provide sufficient detail to judge the reasonableness of the time reported. “Prepare for deposition and hearing,” “review depositions,” “review new documents,” “review draft documents,” “intra-office conference” and “attention to discovery” are recurrent examples. Senior lawyers with more expertise and higher billing rates are expected to be more efficient. This, the fact that the matter was not complicated, the relative simplicity of the issue, and the fact that the Hospitals’ counsel already had a great deal of familiarity with the facts and law involved, all require reducing the number of hours compensated in order for them to be reasonable. For this matter, in these circumstances, the claimed number of hours is quite high. The claimed 687.80 hours amounts to working eight hours a day for 86 days, two of which were the hearing. This is not reasonable. A reasonable number of hours for the proceedings before the Division is 180. That is the equivalent of 22.5 eight-hour days. That is sufficient to handle the matter before the Division from start to finish. The number includes consideration of the worked caused by the needless difficulties presented by the Agency in discovery and with its Motion in Limine. Time for the Appellate Proceeding The fees that the Hospitals seek for the appeal are broken down by hours and rates as follows: Joanne B. Erde 255.10 hours $560.00 $142,856.00 Joanne B. Erde 202.80 hours $580.00 $117,624.00 Donna Stinson 88.50 hours $460.00 $40,710.00 Donna Stinson 67.10 hours $500.00 $33,550.00 W.D. Zaffuto 48.30 hours $435.00 $21,010.50 Rob Peccola 10.90 hours $275.00 $2,997.50 Rob Peccola 17.50 hours $300.00 $5,250.00 L. Rodriguez- Taseff 6.20 hours $520.00 $3,224.00 L. Rodriguez- Taseff 19.50 hours $545.00 $10,627.50 Rachel Pontikes 38.20 hours $515.00 $19,673.00 Total 754.10 hours $397,522.50 For the appellate proceeding, the invoices present 341 entries, a substantial number of which are block billing for work by six lawyers. Here are representative examples from the appellate level invoices: May 16, 2013 (Erde) – Reviewed AHCA’s initial brief; intra- office conference to discuss; preliminary review of record – 2.90 May 24, 2013 (Erde) – Intra-office conference to discuss response to brief; preparation to respond to brief – 2.50 May 30, 2013 (Erde) – Attention to Appeal issues; finalize request for extension; brief research re jurisdictional issues – 1.60 June 18, 2013 (Peccola) – Strategy with J. Erde regarding research needs; review/analyze case law cited in answer brief; conduct legal research regarding documentary evidence and exhibits on appellate review; write email memo to J. Erde regarding same – 2.00 July 19, 2013 (Zaffuto) – Revise/draft Answer Brief; discuss extension of time with H. Gurland; research appellate rules regarding extension of time and staying proceedings pending ruling on motion; review appendix to answer brief; instructions to assistant regarding edits and filing of answer brief and appendix prepare answer brief for filing; call to clerk regarding extension of time review initial brief by AHCA and final order by ALJ – 5.50 August 14, 2013 (Erde) – Intra-office conference to discuss brief; further revised brief – 5.80 August 15, 2013 (Stinson) Reviewed appellees' answer brief; discussed language in answer brief with Joanne Erde – 2.50 October 9, 2013 (Stinson) – Review draft motion to relinquish regarding admission of exhibit; exchange e-mails with Joanne Erde; telephone conference with Joanne Erde – 1.60 October 10, 2013 (Erde) – Attention to new motion re relinquishing jurisdiction; review of revisions; further revisions – 6.00 October 30, 2013 (Erde) – Research re: AHCA’s current behavior; intra-office conference to discuss status of action at DOAH - .70 November 7, 2013 (Peccola) – Strategy with J. Erde regarding Appellees’ response in opposition to Appellant’s motion for supplemental briefing; conduct research regarding same; draft same; look up 1st DCA local rule on appellate motions and email same to J. Erde – 3.60 December 5, 2013 (Erde) – Research Re: supplemental briefing issues; research to find old emails from AHCA re: inability to produce witnesses -.90 January 21, 2014 (Rodriguez-Taseff) – Working on Supplemental Answer Brief – legal argument re authentication and cases distinguishing marchines [sic]; editing facts – 6.70 February 3, 2014 (Erde) – Review and revise response to motion for further briefing; intra-office conference to discuss same – 2.20 May 2, 2014 (Pontikes) – Continue to review relevant case law regarding the definition of an unpromulgated rule; continue to analyze the briefs and the arguments; continue to draft an outline of the argument discussed – 5.00 June 5, 2014 (Erde) – draft email to group regarding AHCA’s settlement offer; reviewed supplemental settlement offer from AHCA; draft email to group re same – 1.70 June 11, 2014 (Erde) – Attention to finalizing response to AHCA’s notice of dismissal and filing of fee petition; memo to members of group – 8.00 July 21, 2014 (Erde) – completed motion for rehearing re: fees as sanctions; drafted status report for DOAH regarding status of DCA opinion; drafted status report in companion case; emails with AHCA re: withdrawing pending audits – 6.90 July 21, 2014 (Peccola) – Strategy with D. Stinson and J. Erde regarding motion for rehearing; revise/edit same; review/revise edit notices in trial court 1.20. The descriptive entries in the invoices for the appellate representation also lack sufficient detail. Examples are: “begin preparation to respond to AHCA”s brief,” “attention to appeal issues,” “preparation to draft answer brief,” and “research and draft answer brief.” For the appellate proceedings, Duane Morris added four lawyers, none with experience in Florida administrative or appellate matters. W.D. Zaffuto, L. Rodriguez-Taseff, and Rachel Pontikes are senior level lawyers in Duane Morris offices outside of Florida. Rob Peccola is a junior level lawyer from a Duane Morris office outside of Florida. The apparent result is those lawyers spending more time on issues than the more experienced Ms. Erde and Ms. Stinson would. One example of this is a July 19, 2013, billing entry where a lawyer spent time researching “appellate rules regarding extension of time and staying proceedings pending ruling on motion.” The two lawyers primarily responsible for this matter, both laying claim to Florida appellate expertise, would only need to quickly check the Florida Rules of Appellate Procedure to confirm their recollection of the rules, something that would probably take less time than it took to make the time entry and review the draft bill. Hospitals’ also filed a puzzling motion that presents a discreet example of needless attorney time billed in this matter. The Hospitals expended 21.8 hours on a Motion for Rehearing of the court’s order awarding them fees and costs. The court’s opinion and the Final Order stated that fees and costs were awarded under section 120.595(4)(a), Florida Statutes. Yet the Hospitals’ motion fretted that fees might be assessed under section 120.595(4)(b), which caps fees at $50,000. The court denied the motion. Two things stand out when reviewing the invoices for the appellate proceeding. The first is that the appeal took more hours than the trial proceeding. A trial proceeding is generally more time-consuming because of discovery, a hearing much longer than an oral argument, witness preparation, document review, and preparing a proposed order. The second is the sheer number of hours. Hospitals’ counsel seeks payment for 754.10 hours in the appellate proceeding. This is 66.3 more than for the Division proceeding. It included a two day hearing, trial preparation, research, and preparing a 37 page proposed final order. In eight-hour days the claimed hours amount to a staggering 94.26 days. That amounts to one lawyer working on the appeal for eight hours a day for three months. Of this time, 613.5 hours were spent by Ms. Erde and Ms. Stinson, lawyers with expertise in the subject area, who had prepared the case for hearing, who participated in the hearing, who closely reviewed the entire record for preparation of their proposed final order, who researched the issues before the hearing and for the proposed final order, and who wrote the proposed final order. With all this knowledge and experience with the record and the law, handling the appeal should have taken less time than the proceeding before the Division.2/ One factor supports the appellate proceeding taking as many hours, or a few more hours, than the administrative proceeding. It is the Agency’s disputatious conduct over a scrivener’s error in the Final Order which erroneously stated that the Agency’s Exhibit 1 had been admitted. The Agency’s conduct increased the time needed to represent the Hospitals in the appeal. The Agency relied upon the exhibit in its initial brief, although it twice cited page 359 of the transcript where the objection to the exhibit was sustained. Also the Agency’s and the Hospitals’ proposed final orders correctly stated that Agency Exhibit 1 had not been admitted. The Hospitals’ Answer Brief noted that Agency Exhibit 1 had not been admitted. The transcript of the final hearing and both parties’ proposed final orders were clear that the exhibit had not been admitted. Yet the Agency argued in its Reply Brief that it had been. This required the Hospitals to move to remand the case for correction of the error. The Agency opposed the motion. The court granted the motion. The Final Order was corrected and jurisdiction relinquished back to the court. The Agency used this as an opportunity to trigger a new round of briefing about whether Exhibit 1 should have been admitted. This has been considered in determining the reasonable number of hours for handling the appeal. A reasonable number of hours for handling the appeal is 225. Converted to eight-hour days, this would be 28.13 days. For the appeal, Duane Morris attributes 28.4 hours of the work to a junior lawyer. This is 3.8 percent of the total time claimed. Applying that percentage to 225 hours, results in 8.6 hours attributed to the junior lawyer with the remaining 216.45 hours attributed to senior lawyers. Attorneys and Fees Each party presented expert testimony on the issues of reasonable hours and reasonable fees. The Agency presented the testimony of M. Christopher Bryant, Esquire. The Hospitals presented the testimony of David Ashburn, Esquire. As is so often the case with warring experts, the testimony of the witnesses conflicts dramatically. Mr. Bryant opined that a reasonable rate for senior lawyers, such as Ms. Erde and Ms. Stinson, ranged between $350 and $450 per hour. The reasonable rate for junior lawyers was $200 per hour. Mr. Ashburn opined that the reasonable hourly rate for senior lawyers ranged between $595 and $700 and the reasonable rate for junior lawyers was between $275 and $300. The contrast was the same for the opinions on the reasonable number of hours needed to handle the two stages of this litigation. Mr. Bryant testified that the administrative proceeding should have taken 150 to 170 hours and that the appeal should have taken 175 to 195 hours. Mr. Ashburn testified that the Hospitals’ claimed 687 hours for the proceeding before the Division and 754.10 hour for the appellate proceeding were reasonable. The Hospitals argue that somehow practicing in a large national law firm, like Duane Morris justifies a higher rate. The theory is unpersuasive. A national law firm is nothing special. There is no convincing, credible evidence to support a conclusion that lawyers from a national firm in comparison to smaller state or local firms provide better representation or more skilled and efficient lawyering that justifies a higher rate. Based upon the evidence presented in this record, a reasonable rate for the senior lawyers participating in this matter is $425 per hour. A reasonable rate for the junior lawyer participating in this matter is $200.00. Fee Amounts A reasonable fee amount for representation in the proceeding before the Division of Administrative Hearings is $76,500. A reasonable fee amount for the proceeding before the First District Court of Appeal is $93,701.25. Costs Hospitals seek $6,333.63 in costs. The evidence proves these costs are reasonable. The Agency does not dispute them.
Findings Of Fact There are no disputed issues of fact. The parties stipulated to the following facts: (Exhibits referred to are not attached to this Recommended Order) As to Sun Oil Company: On February 14, 1978, a claim for refund was submitted to the Florida Department of Revenue and the Comptroller of the State of Florida. A copy of the transmittal letter is annexed as Exhibit 8 and a copy of the claim for refund is annexed as Exhibit 9. On August 31, 1978, another claim for refund, covering a subsequent time period was filed. A copy of the transmittal letter is annexed as Exhibit 10 and a copy of the claim for refund is annexed as Exhibit 11. Meanwhile, to the knowledge of all parties, the Exxon appeal referred to below was prosecuted. As to Exxon Corporation: On January 19, 1978, Exxon submitted to the Department of Revenue and to the Comptroller a claim for refund of severance tax which may have been overpaid by Exxon Corporation for the period March 1, 1974, through December 31, 1976. The claim reflected its contingent nature. A copy of the transmittal letter is annexed as Exhibit 1. A copy of the claim for refund of severance tax is annexed as Exhibit 2. (Subsequently, claims for subsequent time periods have also been filed with the Comptroller). By letter dated February 6, 1978, the Department of Revenue responded that the claim was barred by the one-year provision contained in Section 211.06, Florida Statutes. Enclosed with the response was a copy of an earlier letter to Exxon Corporation from the General Counsel of the Comptroller of the State of Florida, setting forth the position of the Comptroller that the contingent nature of the claim created no problem, but that the one-year provision in Section 211.06 was a statute of limitations. A copy of the letter of February 6, 1978, together with the enclosure, is annexed as Exhibit 3. On February 27, 1978, Petitioner wrote the Comptroller requesting consideration of the claim for refund under the provisions of Section 215.26, Florida Statutes. A copy is annexed as Exhibit 4. By letter dated March 7, 1978, the Comptroller wrote Petitioner denying the claim because it was not filed within one year from the date of payment of the tax as allegedly required by Section 211.06(2), stating that no further administrative review was available, and inviting judicial review, under Section 120.68, Florida Statutes. A copy of the letter is annexed as Exhibit 5. Petitioner filed a notice of appeal from the order contained in the letter of March 7, 1978 (Exhibit 5). The First District Court of Appeal of Florida in due course rendered a decision and opinion, a copy of which is annexed as Exhibit 6. The First District Court of Appeal held that the one-year period described in Section 211.06 did not bar the application for refund, that the refund provisions of Section 215.26, Florida Statutes, were applicable, and remanded the case. Thereafter, the Comptroller's Office asked for a further statement of Exxon's position on this matter, which was given in a letter dated May 24, 1979, a copy of which is annexed as Exhibit 7. As to Louisiana Land and Exploration Company: On January 25, 1978, Louisiana Land and Exploration Company submitted to the Department of Revenue and to the Comptroller a claim for refund of severance tax which may have been paid by Louisiana Land and Exploration company for the period March 1, 1974, through December 31, 1976. The claim reflected its contingent nature. A copy of the transmittal letter is annexed as Exhibit A copy of the claim for refund of severance tax is annexed as Exhibit 13. By letter dated February 6, 1978, the Department of Revenue responded that the claim was barred by the one-year provision contained in Section 211.06, Florida Statutes. Enclosed with the response was a copy of an earlier letter to Exxon Corporation from the General Counsel of the Comptroller of the State of Florida, setting forth the position of the Comptroller that the contingent nature of the claim created no problem, but that the one-year provision in Section 211.06 was a statute of limitations. A copy of the letter of February 6, 1978, together with the enclosure, is annexed as Exhibit 14. On October 31, 1978, Louisiana Land and Exploration Company again submitted to the Comptroller of the State of Florida a claim for refund of severance tax which may have been paid by Louisiana Land and Exploration Company for the period March 1, 1974, through December 31, 1976. The claim reflected its contingent nature. A copy of the transmittal letter is annexed as Exhibit A copy of the claim for refund of severance tax is annexed as Exhibit 16. Meanwhile, to the knowledge of all parties the Exxon appeal referred to above was prosecuted. As to Roadway Express, Inc.: On December 14, 1978, a claim for refund was submitted to the Florida Department of Revenue and the Comptroller of the State of Florida. A copy of the transmittal letter is annexed as Exhibit 17 and a copy of the claim for refund is annexed as Exhibit 18. On November 13, 1979, a similar claim for refund was submitted to the Department of Revenue and the Comptroller of the State of Florida. A copy of the transmittal letter is annexed as Exhibit 19 and a copy of the claim for refund is annexed as Exhibit 20. Meanwhile, to the knowledge of all parties the Exxon appeal referred to above was prosecuted. As to all Parties: In the case of each of the parties, by document entitled "Notice of Intent to Deny Refund" dated August 30, 1979 (and in the case of the second Roadway Express matter, Case No. 80-098, January 2, 1980), the Comptroller gave notice of his intent to deny refund solely because the contingent nature of the claim, stating as the sole grounds for denial: "At this time there is no basis under Section 215.26, Florida Statutes, to grant the requested refund." In response to the Notice of Intent to Deny Refund, Petitioners promptly requested a hearing, which has resulted in the above consolidated proceedings. There are no disputed issues of material fact with respect to this proceeding, at which the issue is whether or not the contingent claims filed within the three-year period prescribed by Section 215.26, Florida Statutes, should be held in abeyance until the contingency has occurred or it is determined that it will not occur. By agreeing that there are no disputed issues of material fact for the purpose of this proceeding, no party waives its right to present facts or contest facts in the event the case is considered in the future on its merits.
Findings Of Fact By Notice of Assessment and Jeopardy Findings dated November 14, 1990, the Department assessed Petitioner with taxes, interest and penalties in the total amount, as of the date of the notice of $14,478.75. This assessment was made pursuant to Section 212.0505, Florida Statutes, following an incident on November 9, 1990. A copy of the Notice of Assessment was forwarded to the State Attorney on the same day the Notice was issued to Petitioner. The Petitioner filed a letter of protest stating he was not the owner of the marijuana and neither drugs nor money was exchanged during the arrest. In the Department's Notice of Reconsideration dated May 7, 1991, the original assessment was sustained because the Petitioner admitted to using the locked room where the marijuana was located for storage. The following findings are made as to Petitioner, Robert Henry Ferguson, pursuant to the Stipulation of the parties: That Petitioner is Robert Henry Ferguson with Driver's License No. F622-768-64-180. Petitioner was arrested on November 9, 1990. That for the above-noted arrest, Petitioner was charged with possession of cannabis (marijuana) and possession with intent to sell or deliver. (F.S. 893.13) Petitioner had been given control of the N.W. bedroom at 7209 Hale Ave., Tampa, Florida. Petitioner had changed the lock on the door to the N.W. bedroom, and held the key to this new lock. Petitioner exercised control of the N.W. bedroom. Petitioner acknowledged to the police that his sister had no knowledge of the contents of the room and that the contents were his. Upon Petitioner's arrest on November 9, 1990, the police seized marijuana found in this N.W. bedroom, the quantity and value of which is dispute. Petitioner admits that there was at least 17 lbs. of cannabis and that it had a value of $6,500. The Department claims that there was 19.8 lbs. of cannabis and that it had a value of $19,305. Subsequent to Petitioner's arrest, the Department issued on May 7, 1991, its Notice of Reconsideration assessing Petitioner for $14,478.75 in taxes. This assessment was allegedly based on Section 212.0505, Florida Statues, and was allegedly for "use" and "storage" of cannabis. Petitioner never submitted to the Depart- ment any tax returns for the sale of cannabis or any other drug. Petitioner told his sister that he would use the N.W. bedroom for storage. Petitioner either owned or exercised possession and control of the cannabis found in the N.W. bedroom of the structure at 7209 Hale Ave., Tampa, Florida. Petitioner claims the cannabis (marijuana) was for resale. Petitioner does not contest that the police seized 19.8 lbs. of marijuana from the N.W. bedroom that he controlled (seizure date was November 9, 1991). Petitioner also does not contest that the value at retail of this marijuana was $19,305. In addition to the cannabis, a triple-beam scale was found in the northwest corner of the bedroom. The cannabis was packaged in several plastic bags weighing approximately six to eight pounds each. On March 11, 1991, Petitioner signed a written plea agreement in which he entered a plea of guilty to Possession of Cannabis with Intent to Deliver, pursuant to Section 893.13(1)(a), Florida Statutes. Neither the written plea agreement nor the court's Order of Probation mention Petitioner's tax liability for use or storage of cannabis. Petitioner has not tendered a bond for the disputed tax, penalty and interest, nor has he applied for a waiver of the bond.
Recommendation Based on all of the foregoing, it is recommended that the Department of Revenue issue a final order in this case concluding that the Petitioner, Robert Henry Ferguson, is liable for taxes, penalties, and interest pursuant to Section 212.0505, Florida Statutes, and assessing the amount of such liability at $14,478.75, plus interest at the rate of $4.75 per day since December 21, 1990. RECOMMENDED this 12th day of November, 1991, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY 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 12th day of November, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-4035 Petitioner's proposed findings of fact are addressed as follows: 1. Accepted. 2. Accepted. See HO #2B, 2D, 2F and 2H. 3. Accepted. See HO #2Q and #3-#4. 4. Accepted. See HO #2R 5. Accepted. 6. Accepted. See HO #1. 7. Accepted. 8. Accepted. See HO #5. 9. Accepted. 10. Accepted. See HO #6. 11. Accepted. See HO #2Q 12. Accepted. See HO #1. Rejected. Improper legal conclusion. Rejected. Improper legal conclusion. Rejected. This is a recommendation as opposed to a factual finding. Respondent's proposed findings of fact are addressed as follows: 1. - 18. Jointly stipulated findings of fact are accepted and reiterated in HO #2. Accepted. See preliminary statement. Accepted. See preliminary statement. Accepted. See preliminary statement. Accepted. See HO #2Q. Accepted. See HO #2R. Accepted. Accepted. See HO #3. COPIES FURNISHED: Matias Blanco, Jr., Esquire Vicki Weber, Esquire 701 North Franklin Street General Counsel Tampa, FL 33602 Department of Revenue 204 Carlton Building Ralph R. Jaeger, Esquire Tallahassee, FL 32399-0100 Assistant Attorney General Tax Section, Capitol Building Tallahassee, FL 32399-1050 J. Thomas Herndon, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100
Findings Of Fact 1. The Findings of Fact set forth in the Recommended Order are approved, adopted, and incorporated by reference as modified by Rulings on Respondent’s Exceptions noted above. 2. There is competent, substantial evidence to support the Findings of Fact.
Conclusions Based upon the foregoing findings of fact and conclusions of law, it is Ordered that Petitioner’s challenge to the licensure examination taken December 6, 2000, is Denied and his petition is Dismissed. This order takes effect upon filing with the Clerk of the Department of Health. Done and Ordered this ( , day of , 2002. BOARD OF PODIATRIC MEDICINE
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a Notice of Appeal with the agency clerk of the Department of Health and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal. That Notice of Appeal must be filed within thirty days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by Certified Mail to Charles Pellegrini, Katz, Kutter, Alderman, Bryant & Yon, P.A., 106 E. College Ave., Suite 1200, Tallahassee, FL 32301, and Perry Verleni, 7624 S.W. 56th Avenue, Gainesville, FL 32608, and by interoffice mail to Cherry Shaw, Department of Health, 4052 Bald Cypress Way, Tallahassee, FL 32399-1783, Ella Jane P. Davis, Division of Administrative Hearings, 1230 Apalachee Parkway, Tallahassee, FL 32399-3060, and to Ann Cocheu, Office of the Attorney General, PL 01 The Capitol, Tallahassee, FL 32399-1050, this IS. day of "\ , 2002. LE qlee F.\Usens\ ADMIN\WILMA\ Ann \pod\000208d.wpd
The Issue The issues to be determined are whether Respondent failed to provide workers’ compensation insurance as required by section 440.107, Florida Statutes (2019), and if so, what penalty should be imposed.
Findings Of Fact The Division is the state agency charged with enforcing the requirement in section 440.107(3), that employers in Florida secure workers’ compensation coverage for their employees. Respondent is a company engaged in the construction industry. James Colligan is its sole employee. Respondent’s office is 637 Four Point Road, Holt, Florida, 32564. On or about October 1, 2019, Sabrina Johnson, a compliance investigator for the Division, observed someone installing vinyl fencing on an existing home located at 101 Pine Court, in Niceville, Florida. She approached and spoke to the lone worker, who identified himself as James Colligan. Ms. Johnson identified herself as a compliance investigator for the Division and asked for proof of workers’ compensation insurance. Mr. Colligan advised her that he had an exemption. Ms. Johnson consulted the Department of State, Division of Corporation’s website to determine the identity of Respondent’s officers, and found that Mr. Colligan was the sole officer. She then consulted Petitioner’s Coverage and Compliance Automated System (CCAS) for proof of workers’ compensation coverage, and for any exemptions associated with Respondent. Ms. Johnson’s research revealed that Respondent did not have a workers’ compensation policy or an employee leasing policy, and did not have a current exemption. Mr. Colligan previously held an exemption, but it expired on July 20, 2018. He had applied for a renewal of the exemption on July 2, 2018, but his application was rejected as incomplete because the FEIN number on the renewal application did not match the one on file. Mr. Colligan was notified by email on July 3, 2018, that his application was being returned to him as incomplete. He acknowledged at hearing that he had provided his email address to the Division, but stated he gets so many emails, he does not always read them. He did not recall ever seeing the email from the Division, and believed that his exemption had been renewed. Mr. Colligan’s testimony was sincere and credible. However, it is his responsibility to make sure that his exemption is up to date, and he did not do so. Upon learning from Ms. Johnson that his exemption had expired, Mr. Colligan immediately applied for and received an exemption. However, the newly acquired exemption is prospective, and does not cover the period of noncompliance. Investigator Johnson consulted with her supervisor, who provided authorization for the issuance of a Stop-Work Order. She issued a Stop-Work Order and personally served it on Mr. Colligan on October 1, 2019. At the same time, she issued and served a Request for Production of Business Records for Penalty Assessment Calculation. Mr. Colligan executed an Agreed Order of Conditional Release from Stop-Work Order, paid the minimum $1,000 fine and, as noted above, submitted a new application for an exemption. The records requested fall into five categories: 1) payroll documents, such as time sheets, time cards, attendance records, earning records, check stubs, and payroll summaries, as well as federal income tax documents and other documents that would provide the amount of remuneration paid or payable to each employee; 2) account documents, including all business check journals and statements, cleared checks for all open and/or closed business accounts, records of check and cash disbursements, cashier’s checks, bank checks, and money orders; 3) disbursement records, meaning all records of each business disbursement including, but not limited to, check and cash disbursements, indicating chronologically the disbursement date, to whom the money was paid, the amount, and the purpose for which the disbursement was made; 4) subcontractor records, identifying the identity of each subcontractor of the employer, the contractual relationship held, and any payments to those subcontractors; and 5) documentation of subcontractor’s workers’ compensation coverage. Respondent worked as a subcontractor, but there was no evidence presented that he hired subcontractors, so records falling into the categories related to subcontractors likely do not exist. Respondent provided copies of bank statements, but these records did not contain earning records, income tax filings, check images, or other sufficient records from which the Division could determine payroll. Lynne Murcia reviewed Respondent’s records in her capacity as a penalty auditor for the Division. She testified credibly that income can be identified through direct wage payments to an employee, bonuses given, income distributions, loans that are not repaid, and the like. The bank statements provided by Respondent were simply insufficient for her to determine which items were reflective of payroll. Therefore, in accordance with section 440.107(7)(e) and Florida Administrative Code Rule 69L-6.028, she determined payroll in this case by imputing payroll for the work classification assigned to the identified work being performed. On October 29, 2019, the Division issued an Amended Order of Penalty Assessment, which was served on Respondent on October 30, 2019. The penalty assessed for noncompliance with chapter 440 workers’ compensation requirements was $15,260.56. The penalty calculation is based upon the classification codes listed in the Scopes® Manual, which have been adopted through the rulemaking process through rules 68L-6.021 and 69L-6.031. Classification codes are codes assigned to different occupations by the National Council on Compensation Insurance, Inc. (NCCI), to assist in the calculation of workers’ compensation insurance premiums. Ms. Murcia used classification code 6400 for Mr. Colligan. The description for code 6400 is for “specialist contractors engaged in the erection of all types of metal fences, i.e., chain link, woven wire, wrought iron or barbed wire fences.” There is no dispute that Code 6400 was the appropriate classification code for the type of work Respondent performed. Using this classification code, Ms. Murcia used the corresponding approved manual rates for that classification and the period of noncompliance. Ms. Murcia multiplied the average weekly wage by 1.5, in accordance with section 440.107(7)(e). The period of noncompliance in this case ran from the expiration of Mr. Colligan’s exemption (July 21, 2018), to the day that he applied for and received a new exemption (October 1, 2019). The average weekly wage is established by the Department of Economic Opportunity. Because the period of noncompliance involved two different pay rates, Ms. Murcia provided a separate calculation for each calendar year. The imputed gross payroll for July 21, 2018 through December 31, 2018, was $33,013.55, which she divided by 100 and then multiplied by the manual approved rate ($9.73), times two, to reach the amount of penalty to be imposed for that calendar year. A similar calculation was performed for the period from January 1, 2019 through October 1, 2019, using the manual approved rate of $8.01. All of the penalty calculations are in accordance with the Division’s penalty calculation worksheet. The Division proved by clear and convincing evidence that Respondent was engaged in the construction business for the period beginning July 21, 2018, and ending October 1, 2019, without prior workers’ compensation coverage or a valid exemption. The Division also demonstrated by clear and convincing evidence that the documents submitted by Respondent, which may be all of the documentation that Respondent possessed, were not sufficient to establish Respondent’s payroll, thus requiring the imputation of payroll. Finally, the Division proved by clear and convincing evidence that the required penalty for the period of noncompliance is $15,260.56.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order finding that Respondent failed to comply with the requirements of section 440.107 and impose the penalty identified in the Amended Order of Penalty Assessment, with credit for the $1,000 already paid. DONE AND ENTERED this 19th day of February, 2020, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of February, 2020. COPIES FURNISHED: James Colligan 637 Four Point Road Holt, Florida 32564 Rean Knopke, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Kami Alexis Sidener, Law Clerk Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Leon Melnicoff, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
Findings Of Fact In 1970, the Petitioner, WILLIAM C. HARRELL, was a student at Georgia Tech, a math major. Up to that time, he had been a very bright student and had been accepted for a full scholarship at Baylor University to study medicine. He planned to become a doctor, but that career opportunity was destroyed suddenly when he was involved in a severe automobile accident in which he was struck by a drunk driver. He sustained severe head injuries, almost died during neurosurgery, and was in a coma for many weeks thereafter. His initial medical prognosis following surgery was that he would be totally incapacitated, losing essentially all of his cognitive functions. In fact, however, he regained consciousness and over the ensuing four years, while under the care of Dr. Howard Chandler, his neurosurgeon in Jacksonville, Florida, effected a remarkable recovery. He had suffered severe memory and speech deficits as a result of the trauma, but through rehabilitation, gradually overcame much of this deficit. In 1974, his doctor released him and recommended that he try to renew his education and rebuild his life. He apparently began attending North Florida Junior College in Jacksonville, Florida, at approximately this time. He never was able to complete his college degree, however. His employment history thereafter is unclear in this record, but apparently he had some difficulty obtaining significantly rewarding employment. However, he did start his own lawn service business which he successfully operated for approximately 14 years. During this period of time in the late 1970's and early 1980's, he married and had a daughter and was enjoying some success at rebuilding a meaningful and productive life for himself and his family. Testimony adduced by the Petitioner through his witnesses, as well as evidence consisting of numerous testimonial letters regarding his character and reputation for honesty and sincerity (stipulated into evidence by the parties), established that the Petitioner is a willing and productive worker and an honest, sincere human being, both in his capacity as a husband and father and as to his dealings with customers of his lawn service business and as to his clients in his chosen career in insurance sales. In approximately late 1984 or 1985, the Petitioner's life began to go awry. He and his wife began experiencing severe marital difficulties, which ultimately culminated in the dissolution of their marriage. Thereafter, the Petitioner and his former wife became embroiled in a custody dispute regarding their young daughter. Apparently, the Petitioner's former wife had custody of their daughter, a very small child at the time; and they became embroiled in a bitter dispute over visitation rights, which was in litigation for approximately one year. The Petitioner states that he ultimately won visitation rights with his daughter as a result of this litigation, and his former wife became quite angry at this result. She was also, according to the Petitioner, quite jealous over his remarriage to his present wife and continued to actively obstruct his ability to have his daughter come to his home for visits. His former wife made statements to the effect that she would besmirch his reputation so that he would be unable to get employment and not ever be able to see his child again. The Petitioner states that his daughter at the time was subject to bed wetting frequently; and on one occasion, at least, when she was staying in his home, he would "wipe her bottom with toilet tissue". He states that during this visit or possibly on a number of them (the record is not clear), his daughter was very irritated and sore in the genital area due to bed wetting, and that he and his wife attempted to treat that condition while she was in their home. Apparently, his daughter made some mention of that incident to the former wife, who became angry and ultimately had the State Attorney file a criminal information against the Petitioner for sexual assault. This charge and the criminal litigation which ensued was the result of the bitter, ill feeling harbored against him by his former wife and was solely instigated at her behest. The date upon which the offense is supposed to have occurred was totally implausible because, according to the terms of the visitation decree, the Petitioner was only allowed to see his daughter on certain weekends. On the date he is alleged to have committed the sexual assault, his daughter was not even at his home or otherwise under his custody. Nevertheless, his former wife persisted in pursuing the matter; and ultimately, he was at the point of being tried for the charge of sexual assault, a felony. Upon advice of his attorney, an Assistant Public Defender, and after discussion with the State Attorney handling the case, an agreement was reached whereby the Petitioner would not be adjudicated guilty, but rather was given certain probationary terms. He was never convicted and adjudication was withheld in the matter. It is noteworthy that on the sentencing document executed by the Circuit Judge having jurisdiction of that case, (in evidence), the probationary sentence was noted by the judge to be less penalty than authorized by the sentencing guidelines because of the unlikelihood of any conviction should the matter be tried. The Petitioner maintains vehemently that he never committed this act and, further, that he did not consider, based upon his attorney's advice, that he had any felony charge on his record as a result of the outcome of that criminal matter. His attorney, Assistant Public Defender, E. E. Durrance, attested to that situation by a letter placed into evidence by agreement of the parties, which indicates that the Petitioner entered a plea of nolo contendere in that criminal case and that the court withheld adjudication of guilt which meant that the Petitioner does not have a felony conviction record. Based upon this advice at the time by his attorney, the Petitioner answered `1no" to question number 8 on the application for licensure involved in this case, wherein it was asked whether the applicant had ever been charged with a felony. The evidence in this proceeding reveals that, indeed, he was charged with a felony; but the Petitioner explained that he equated that question in his mind to mean whether he had a felony conviction on his record or a finding of guilt which he, of course, did not. The Petitioner's testimony about this entire situation was unrebutted. Due to observation of the Petitioner's obvious candor and sincerity in his testimony, as corroborated by the numerous testimonial letters stipulated into evidence, all of which testimony and evidence was unrebutted, the Petitioner's testimony is accepted in this regard. The Hearing Officer finds that, indeed, he did not commit the felony of sexual assault. The Hearing Officer further finds that he answered in the negative to the subject question on the application regarding the existence of a felony charge because he believed that he could honestly answer "no" because he had no conviction. Thus, his answer was due to a misunderstanding of the legal import of his criminal court experience in this matter and was not due to any effort to misrepresent his past record or to mislead the Respondent in an attempt to gain licensure. In 1986, the Respondent was arrested for petty theft or "shoplifting," which is the other basis for the denial of his application for licensure. This occurred when the Petitioner was embroiled in his severe marital discord described above. The dissolution of his marriage and related litigation had cost him virtually all of his significant, material possessions. He was unable to maintain steady employment, except for his lawn service, which he started himself. That was a very seasonal business; and at times, he was very short of funds. On one day, he made the mistake, as he admits himself, of going to a supermarket, buying a cup of coffee, for which he paid, but placing a package of ham into his pants pocket and walking out the door. He was arrested for stealing a $2.58 package of ham and was prosecuted and paid a small fine. The Petitioner is very remorseful that this occurred and states that it occurred at an emotional and financial low point in his life when he could obtain no regular, remunerative employment nor help from anyone. He was consequently thrust into a period of depression at this time. When he took the package of ham, he was in such an emotional state that he did not care about the consequences. He has since remarried, however, and has worked hard to rebuild his life, both his employment career and his family life. Since embarking upon his insurance sales career in recent months (as a temporarily licensed agent), he has been very successful. Although a new, inexperienced agent, he is one of the highest sales producing agents for Gulf Life Insurance Company's office, where he is employed, and is one of the highest producers in terms of collection of premiums due. His employer, supervisor and customers uniformly praise his honest, sincere and human approach to insurance sales and his sensitivity to the feelings of his customers or clients. The Petitioner's tetimony, as corroborated by other testimony and the numerous testimonial letters stipulated into evidence, establish in an unrefuted way, that he is, indeed, a sincere and honest person, who earnestly desires the opportunity to engage in an honorable profession within the field of insurance marketing. The incident involving the theft of the package of ham appears to be an isolated incident of aberrant conduct and does not, in itself, establish a lack of trustworthiness or fitness to engage in the business of insurance, given its singular nature and the emotional and financial straits in which the Petitioner found himself at the time. The Petitioner was candid in admitting this instance of petty theft, a misdemeanor. He did not fail to disclose this on the application in question because there was no category on that application calling for him to admit such an incident. The alleged failure to disclose involved question number 8, concerning the felony charge. Indeed, he did answer no? but gave that answer for the reasons delineated above. Further, it is noteworthy that upon inquiry by the Department after its own investigation had revealed indications of a criminal record incident, the Petitioner freely obtained certified copies of all pertinent court documents and otherwise cooperated and disclosed all information concerning the alleged felony charge. This full disclosure made by the Petitioner occurred before the agency took its purported final action in denying his application for examination and licensure. Thus, although he did not answer the question in an affirmative way concerning the felony charge at issue, he did fully disclose it and all circumstances surrounding it to the Department when the matter arose and was questioned in the Department's investigatory process.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED: That the applications of William C. Harrell for examination and licensure as a life, health and general-lines agent be granted. DONE AND ENTERED this 9th day of February, 1990, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF 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 9th day of February, 1990. APPENDIX TO RECOMMENDED ORDER The Petitioner filed no proposed findings of fact. Accordingly, rulings on the Respondent's proposed findings of fact will be made. Respondent's Proposed Findings of Fact Accepted. Accepted. Rejected, as subordinate to the Hearing Officer's findings of fact on the subject matter. It was not established that a knowing misrepresentation on the application was made. Accepted, but not as dispositive of material issues presented and not to the extent that it is indicated that a misrepresentation was made in the application. Rejected, as subordinate to the Hearing Officer's findings of fact on the subject matter, and as not, in itself, dispositive of the material issues presented. Rejected, as subordinate to the Hearing Officer's findings of fact on the subject matter, and not in accordance with the preponderant weight of the evidence since it was proven that the Petitioner did not commit sexual battery. Accepted, to the extent that it shows the factual background underlying the procedural posture of this case, but not as dispositive of material issues presented. COPIES FURNISHED: Mr. William C. Harrell P.O. Box 5503 Jacksonville, FL 32247 John C. Jordan, Esq. Department of Insurance and Treasurer Office of Legal Services 412 Larson Building Tallahassee, FL 32399-0300 Honorable Tom Gallagher State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Don Dowdell, Esq. General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 =================================================================
Findings Of Fact Pursuant to its authority to regulate water and sewer rates, charges and rate structures embodied in Chapters 367, Florida Statutes, and 25-30, Florida Administrative Code, the Public Service Commission entered Orders numbered 16971 and 17058, which adopted specific guidelines and conditions for utilities to implement certain income tax impact charges for contributions-in-aid- of-construction ("CIAC gross-up charges"). (See Orders numbered 20409, p.3; 16971, p.2-4; and 17058). One of these conditions requires that utilities submit appropriate tariff sheets (rates and charges sheets) for the Commission's approval prior to implementation of the CIAC gross-up charge. CIAC is the payment or contribution of cash or property to a utility from a customer or entity seeking service from that utility in order to secure the provision of such services or to reserve it for a future time. The Internal Revenue Code of 1986 changed the treatment of CIAC from being non-taxable to being taxable as income. A CIAC gross-up charge is a method by which a utility can recover that tax expense, represented by the income tax assessed against collected CIAC, through approved rates and charges to customers. The amount of CIAC tax impact funds collected by a utility is not itself treated as CIAC for rate-making purposes. The Respondent, St. Johns North Utility Corp., collected gross-up charges which were not authorized by its filed and approved tariff schedules (rate schedules), and without securing the requisite approval from the Commission. (See Orders numbered 20409 and 20762). The Commission was made aware of the charging of unauthorized CIAC gross-up charges by the Utility Respondent when a developer, Fruit Cove Limited, communicated with the Commission concerning its doubts about utility service being available for one of its subdivisions, when required, from the Respondent. Fruit Cove Limited had paid CIAC gross-up charges to St. Johns. On June 3, 1988, the Commission, through its staff, contacted Mr. Joseph E. Warren, the General Manager for the Respondent, and explained the Commission's requirements regarding the requisite pre-approval of the charging of CIAC gross-up charges. Mr. Warren agreed to file a written request for authorization to implement such charges. No request was filed, despite repeated admonitions and solicitations by the Commission and its staff and a lengthy opportunity to comply. Finally, Order No. 20409 was issued by the Commission on December 5, 1988, requiring the Utility to file a written request for authorization to implement CIAC gross-up charges within thirty (30) days of that Order. A written request was not timely filed, however. The Utility finally filed its written request for approval of these charges on September 5, 1989. The accompanying tariff sheets representing such charges were ultimately filed in response to Orders numbered 16971 and 20409, and Show Cause Order No. 20762. They became effective on September 15, 1989. The Commission, through its staff, also made repeated inquiries to the Utility regarding certain service availability charges and practices, initially by letter of July 29, 1988. The Utility was allowed until August 19, 1988 to make the requested responses. The letter was addressed to Mr. Joseph Warren at the Utility's mailing address of record. The Utility, however, did not provide written responses to the comments and questions by the Commission, despite repeated assurances that it would do so. Order No. 20409, issued on December 5, 1988, required the Utility to provide the full written responses to the July 29, 1988 letter within thirty (30) days of the date of that Order. The responses were not timely made. Order No. 20762 was issued on February 17, 1989, requiring the Utility to show cause in writing on or before March 13, 1989 why it should not be fined up to $5,000.00 per day, in accordance with the Commission's penalty authority, for failure to comply with the provisions of Order No. 20409, regarding the necessity for written responses to the Commission's specified questions and the submission of a written request to implement the CIAC gross-up charges referenced above. The first item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to seek approval, including submission of proposed rate tariff sheets for authorization to implement the CIAC tax impact charge referenced above. That item was responded to on September 5, 1989, more than eight months after the deadline set by Order No. 20409. The second item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to provide the names and addresses of financial institutions in which gross-up charge funds were being retained. That item was responded to as requested. The third item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to provide a listing of all gross-up monies received from each contributor. No response was ever provided by the Respondent. The significance of the information requested by the Commission is that it would provide identity of the individuals who were entitled to a refund of the unauthorized CIAC gross-up charges collected by the Utility, as provided in Order No. 20762. The fourth item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to provide a copy of all current developer agreements. That item was responded to within the deadline set by Order No. 20409. The fifth item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to file revised tariff sheets indicating the actual legal description of the Utility's certificated service territory. No response was ever provided. Order No. 20762 was ultimately issued on February 17, 1989 imposing a $5,000.00 fine on the Utility for serving outside of its authorized service area. Order No. 20409 requested the Utility to indicate to the Commission whether, with regard to the developer agreement between the Respondent and Fruit Cove Limited, the charges listed in the various paragraphs of that agreement would, upon completion of the real estate development involved, be adjusted to reflect actual utility service costs incurred. No response to that request was ever provided by the Utility. Additionally, in that Order, the Commission requested information concerning a so- called "step tank", which was referenced in paragraphs 12C and 13D of the developer agreement with Fruit Cove Limited. That request, in Order No. 20409, was never responded to. A certain fee was charged for installation of the step tank by the Utility to Fruit Cove Limited, and no response was given to the Commission's inquiry as to why that fee was omitted from the Utility's approved tariff on file with the Commission. The significance of the requested information was that the omission of the step tank installation fee from the Utility's tariff of rates and charges could cause the developer agreement to constitute a "special service availability agreement", which can only be approved in advance by the Commission. It is not a matter, approval of which has been delegated by the Commission to its staff members. The Order referenced last above also requested an explanation for why a meter installation fee, referred to in that same developer agreement, does not include a "curb stop" or a meter box. This information is significant because it is necessary in order for the Commission to determine whether the charge involved is reasonable. A cost breakdown for the meter installation, including the various hardware components and other charges, was necessary and was not provided by the Utility. Additional information concerning the area of service availability, required to be provided to the commission by Order No. 20409, included the requirement that approval be obtained from the Commission for the CIAC gross-up charge in the developer agreement with Fruit Cove Limited. As stated above, that approval was not requested in writing, as required by the Order, for more than eight months after the deadline set by that Order. By Order No. 20762, St. Johns was fined $5,000.00 for three separate violations of the statutes and rules, and the Orders enumerating them, for a total of $15,000.00. The Utility was fined for serving outside of its authorized service territory, for collecting unauthorized CIAC gross- up charges, and for failing to file its developer agreements with the Commission as required by law. The developer agreements were only submitted after repeated efforts by the Commission's staff which culminated in Order No. 20409 and which were either unresponded to or not properly responded to by the Utility. Additionally, by Order No. 21559, issued on July 17, 1989, St. Johns was fined $5,000.00 for failure to file an application for an extension of its territory as required by Order No. 20409. In the meantime, by Order No. 22342, issued on December 26, 1989, the Commission approved a transfer of the Utility's assets from St. Johns to Jacksonville Suburban Utilities Corporation ("Jacksonville Suburban"). That Order did not authorize transfer of the liabilities of the Respondent to Jacksonville Suburban. The Order specifies that St. Johns, and not Jacksonville Suburban, will remain liable for the previously imposed refund obligations and fines. Only in the event that there remained sales proceeds in excess of the certain debt of St. Johns owed to its institutional lender would funds from the Jacksonville Suburban sale be applied toward payment of the refund and fines found to be due and owing by the above-cited Orders, by way of escrow or otherwise. Any excess proceeds, absent Order No. 22342, were to be paid to St. Johns. Order No. 22342 does not make Jacksonville Suburban liable for the refund and fines at issue. It is speculative whether there will be any sales proceeds available from the sale, after payment of the debt, to be applied toward the refund and fines. The sales price was made dependent upon establishment of the Utility's "rate base" amount, to be established in that transfer proceeding at a point in time after entry of Order No. 22342. That Order, however, specifically preserves the liability of St. Johns for the refund and fines and does not provide for the extinguishment of such liability in the event that the sales proceeds prove to be insufficient to pay them.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that St. Johns be assessed a penalty of $5,000.00 for knowingly and willfully failing to comply with Order No. 20409. DONE AND ENTERED this 13th day of June, 1990, in Tallahassee, Leon County, Florida. Hearings Hearings 1990. P. MICHAEL RUFF Hearing Officer Division of Administrative The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative this 14th day of June, APPENDIX TO RECOMMENDED ORDER Petitioner's Proposed Findings of Fact 1.-24. Accepted. Respondent's Proposed Findings of Fact. (Respondent filed no proposed Findings of Fact) Copies furnished to: David Schwartz, Esq. Florida Public Service Commission Legal Division 101 E. Gaines Street Tallahassee, FL 32399-0850 Joseph E. Warren, Esq. 1930 San Marco Boulevard Suite 200 Jacksonville, FL 32207 Mr. Steve Tribble Director of Records and Recording Florida Public Service Commission 101 E. Gaines Street Tallahassee, FL 32399-0850 Mr. David Swafford Executive Director Florida Public Service Commission 101 E. Gaines Street, Room 116 Tallahassee, FL 32399-0850 Susan Clark, Esq. General Counsel Florida Public Service Commission 101 E. Gaines Street, Room 212 Tallahassee, FL 32399-0850
Findings Of Fact By agreement with the prosecution Dr. Brown had sought to delay consideration of his procedural motion to dismiss DPR Case No. 91-06883/DOAH Case No. 92-1076, pertaining to the patients J.C., D.R., T.E. and K.J. The parties to that action anticipated considering the motion at the final hearing as part of the case on the merits. The hearing officer was persuaded that the procedural motion to dismiss had to be examined separate and apart from the consideration of the case on the merits as to those four patients. Consequently the motion to dismiss was entertained concerning its evidential and legal basis prior to a hearing on the merits. This led to the decision on June 9, 1992, to dismiss the action pertaining to treatment of the patients J.C., D.R., and T.E., with leave to refile at some future date. The decision to dismiss was based upon the pertinent facts and law when examined in accordance with Section 455.255(1), Florida Statutes. The motion to dismiss the action concerning treatment of the patient K.J. was denied. The reason for the dismissal was announced in the record on June 9, 1992, and memorialized in the transcript of the proceedings. It was concluded that there was not an adequate basis to institute an investigation concerning the patients J.C., D.R., and T.E.; that the Department of Professional Regulation, now the Department of Business and Professional Regulation, did not furnish Dr. Brown or his attorney with a copy of the complaint or the document that resulted in the initiation of the investigation pertaining to the three patients; and, that Dr. Brown did not have the statutorily mandated opportunity to respond to the accusations made against him related to the care that he provided those three patients. Therefore, the procedural requirements under Section 455.225(1), Florida Statutes, had not been met and the case as it pertained to the three patients was dismissed with leave to refile. The procedural requirements related to the patient K.J. had been met and it was appropriate to present the K.J. case to the Probable Cause Panel for its deliberation, unlike the circumstance with the other three patients. It was determined that the quality of consideration by the Probable Cause Panel when voting to prosecute Dr. Brown for his treatment of K.J. was adequate. Based upon the ruling directed to the treatment of patients J.C., D.R., and T.E. the Department of Professional Regulation was not allowed to proceed against Dr. Brown for the care rendered those patients. A subsequent recommended order addressed in substance the prosecutions associated with DPR Case No. 91-06883/DOAH Case No. 92-1076 pertaining to the patient K.J.; DPR Case Nos. 011343 and 011344/DOAH Case No. 91-5325 and DPR Case Nos. 8901804, 0111385 and 0111353/DOAH Case No. 91-6358, traced the history of those cases in the preliminary statement to the recommended order and identified the prior ruling dismissing the actions pertaining to the patients J.C., D.R., and T.E. That recommended order was not an invitation to the Board of Medicine to respond to a recommendation of dismissal. The recommended order in the cases pertaining to patients other than J.C., D.R., and T.E. was entered on December 30, 1992, based upon the formal hearing conducted pursuant to Section 120.57(1), Florida Statutes, on various dates in June and July, 1992, and concluded on July 10, 1992, before the present hearing officer. On February 26, 1993, the Board entered its final order in the above- referenced cases and commented to the effect that it had approved the recommended dismissal by the hearing officer concerning the patients J.C., D.R., and T.E. with leave to refile. Neither party appealed the hearing officer's decision dismissing those counts within DPR Case No. 91-06883/DOAH Case No. 92-1076 directed to the patients J.C., D.R., and T.E. On March 8, 1993, Dr. Brown took an appeal from the final order of the Board of Medicine entered on February 26, 1993, which included the comment approving the actions by the hearing officer in dismissing the counts pertaining to the patients J.C., D.R., and T.E., but without prejudice to bring those actions again following compliance with Section 455.225, Florida Statutes. Robert C. Brown, Jr., M.D., is a licensed physician practicing in the state of Florida. He has held a license entitling him to practice in that state at all times relevant to the inquiry. At relevant times Dr. Brown has practiced medicine at 4519 Brentwood Avenue, Jacksonville, Florida, 32206. He is the sole medical practitioner of an incorporated professional practice. He has had less than 25 employees and his net worth has been not more than 2 million dollars. Dr. Brown is the only share holder in his incorporated professional association. No one else has ownership interest in the incorporated professional association. At times Dr. Brown has drawn a salary from the professional association as an employee of the professional association. His request for attorney's fees and costs are directed to the actions of the Department of Professional Regulation for its procedural noncompliance with Section 455.225, Florida Statutes, and the subsequent decision of the Board of Medicine to find probable cause and to have the Department of Professional Regulation proceed against Dr. Brown for care rendered the patients J.C., D.R., and T.E. The action to recover attorney's fees and costs not to exceed $15,000 was filed on April 27, 1993. The petition for attorney's fees and costs of April 27, 1993, was amended on July 15, 1993. Dr. Brown retained the law firm of Stowell, Anton and Kraemer to represent him in the aforementioned cases pertaining to the administrative prosecutions. His present attorney, Julie Gallagher, was principal counsel in those cases. No issue has been taken with the notion that $165.00 is a reasonable hourly rate for her services in defending Dr. Brown in the administrative prosecutions. Dr. Brown has paid all fees and costs charged by his lawyer in preparation for and participating in the proceedings related to the administrative prosecutions. To challenge the alleged procedural infirmities associated with the right to investigate, notice to the accused, opportunity for the accused to respond to the accusations and deliberations by the Probable Cause Panel contemplated by Section 455.225, Florida Statutes, it was not necessary for Dr. Brown to fully develop his defense on the merits of the accusations pertaining to patients J.C., D.R., and T.E. Dr. Brown's counsel in the exhibit associated with claims for attorney's fees and costs has highlighted the exhibit through color-codes in an attempt to assist the hearing officer in understanding the meaning of that exhibit. This color-code system attempts to identify those instances in which Dr. Brown claims that the work done on his behalf is associated only with patients with J.C., D.R. and T.E. and other occasions where a percentage is set forth in relation to work done in the entire DPR Case No. 91-06883/DOAH Case No. 92-1076, to include K.J. and in the other cases referenced before. The code is described in the August 16, 1993 cover letter from counsel for Dr. Brown. No attempt is made through the coding system to differentiate between those actions taken in moving to dismiss DPR Case No. 91-06883/DOAH Case No. 92-1076 pertaining to the patients J.C., D.R. and T.E. from other activities related to defending the accusations about those patients on the merits. The right to recover, if at all, is limited to those attorney's fees and costs associated with the motion to dismiss counts pertaining to the patients J.C., D.R., and T.E., together with the attorney's fees and costs associated with the present case. No other efforts by Dr. Brown's attorneys may be the proper subject for recovery. Not only was it not necessary to know information concerning the merits of the administrative complaint pertaining to patients J.C., D.R., and T.E. to pursue the motion to dismiss on procedural grounds, the decision that was made did not resolve the merits set forth in the administrative complaints directed to Dr. Brown's treatment of J.C., D.R., and T.E. The possibility exists that Dr. Brown could be called upon to defend against similar accusations to those set forth in the DPR Case No. 91-06883/DOAH Case No. 92-1076 at which time he could prepare himself to defend the merits and if successful that would be the appropriate moment to seek attorney's fees and costs for that aspect of the case. The arrangement by stipulation between the parties in the prior prosecution to delay consideration of the motion to dismiss until the place at which prosecution of the cases involving J.C., D.R., and T.E. were being examined on their merits was not appropriate. Consequently, Dr. Brown may not assert that he was required to prepare his motion to dismiss on procedural grounds simultaneously with his defense on the merits of the administrative complaint directed to the patients J.C., D.R., and T.E. Within this context, taking into account a lack of opposition to the $165.00 hourly rate charged by Dr. Brown's counsel, the following amounts are found to be associated with the pursuit of the motion to dismiss those counts related to patients J.C., D.R., and T.E. and claims under Section 57.111, Florida Statutes, to recover attorney's fees and costs: 3/11/92-$165.00; 3/14/92-$165.00; 3/16/92-$125.00; 3/31/92-$100.00; 4/2/92-$247.50; 4/6/92- $62.50; 4/6/92-$198.00; 4/10/92-$50.00; 4/16/92-$10.00; 4/17/92-$50.00; related to the motion to dismiss and 4/27/93-$165.00; 5/3/93-$33.00; 5/12/93-$15.00; 5/17/93-$82.50; 6/14/93-$165.00; related to the prosecution of the petition for attorney's fees and costs. No proof was offered concerning any special circumstances that point to any injustice in awarding attorney's fees and costs in the amount identified.
