The Issue At issue in this proceeding is whether Petitioner, an employee of the Department of Children and Family Services (the Department), was overpaid in the amount of $1,671.29 and should be required to repay that amount to the Department.
Findings Of Fact Petitioner is a career-service employee of Respondent and was initially employed on September 18, 1992. In a letter dated March 13, 2001, Petitioner was informed that a salary overpayment occurred on the supplemental payroll of February 22, 2000. Two warrants were inadvertently issued on that day for $847.57 and $823.72 totaling $1,671.29. The overpayment resulted because the Department made a series of administrative errors. The reason for the overpayment was communicated to Petitioner. Petitioner's pay was remitted to her bank account electronically. She received a written explanation of her pay each time she was paid. However, Petitioner was not monitoring her bank account closely and did not realize she had been overpaid. Currently, Petitioner's rate of pay is $963.36 bi-weekly. Ms. Henderson prepared a certified letter dated February 28, 2001, notifying Petitioner of the overpayments. The letter stated that Petitioner had received $1,671.29 in gross overpayments for the supplemental payroll dated February 22, 2000. The letter was not picked up by Petitioner and was, therefore, returned to the Department. Subsequently, Ms. Henderson prepared a letter dated March 13, 2001, notifying Petitioner of the overpayment. The letter indicated the overpayment would be deducted from her next two pay checks. Petitioner received the second letter. By letter dated March 15, 2001, Petitioner objected to the payroll deductions since the amount of the deductions would leave her with a little more than $100. The amount left to Petitioner would be below minimum wage. A meeting was arranged between Petitioner, Allean Lovett, Human Resources Manager, and Linda Ricke, Personnel Services Specialist, with the Department to discuss, inter alia, a schedule for repayment. The meeting took place on April 9, 2001, however, was not concluded and was to be continued, by mutual agreement, to April 13, 2001. Petitioner informed Mrs. Lovett on April 12, 2001, that she did not want to continue with their scheduled meeting and would prefer to have the matter determined through the administrative hearing process. At the hearing, Petitioner did not dispute the amount of the gross overpayment. Petitioner testified that she would be able to repay the money at a rate of $25 to $50 per pay period. She could not afford any greater amount due to her living and medical expenses. The repayment schedule of $50 per pay period is reasonable.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent repay $50 per pay period to the Department of Children and Family Services beginning with the pay period immediately following entry of a final order in this case and continuing each pay period thereafter until the overpayment is repaid. DONE AND ENTERED this 25th day of October, 2001, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of October, 2001. COPIES FURNISHED: Leslie Scott Jean-Bart, Esquire Farah and Farah, P.A. 1845 University Boulevard, North Jacksonville, Florida 32211 Craig A. Gibbs, Esquire Law Office of Craig Gibbs 1200 Riverplace Boulevard Suite 810 Jacksonville, Florida 32207 Robin Whipple-Hunter, Esquire Department of Children and Family Services Post Office Box 2417 Jacksonville, Florida 32211 Virginia A. Daire, Agency Clerk Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204B Tallahassee, Florida 32399-0700 Josie Tomayo, General Counsel Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204 Tallahassee, Florida 32399-0700
The Issue Whether or not Petitioner's application for registration as an associated person of Brauer & Associates, Inc., and as an investment adviser of G.G. Brauer & Associates, Inc. should be approved.
Findings Of Fact Respondent, Department of Banking and Finance, is the state agency charged with the administration and enforcement of Chapter 517, Florida Statutes, The Florida Securities and Investor Protection Act and the administrative rules promulgated thereunder. On or about October 30, 1990, Petitioner submitted a Form U-4, Uniform Application for Securities Industry Registration or Transfer, seeking transfer as an associated person of Brauer & Associates, Inc., and as an investment adviser of G.G. Brauer, Inc. On or about January 25, 1991, Respondent denied Petitioner's application for registration based upon its determination that Petitioner had filed a form U-4, which contained material misstatements and had demonstrated prima facie evidence of unworthiness by engaging in prohibited business practices. Petitioner was previously registered as an associated person with the St. Petersburg, Florida branch office of Smith Barney from March 1987 until July 25, 1990, when he was permitted to resign from the firm for ordering securities from the "over the counter" desk without prior client orders. Petitioner was also registered with the NASD and is charged with knowledge of their Rules of Fair Practice. On or about May 9 1990, Ronald Padgett filed a written complaint with Respondent alleging that Petitioner was engaging in unauthorized trading in his account and that the account was trading on margin without a signed margin agreement. Mr. Padgett also alleged that the signed margin agreement on file with Smith Barney was a forgery. After receiving Mr. Padgett's complaint, Respondent commenced its investigation in Petitioner's activities and requested that Smith Barney provide it with information regarding Padgett's complaint. Respondent also requested and was provided with copies of all other customer complaints that had been filed against Petitioner with Smith Barney. Smith Barney provided Respondent with copies of customer complaints that had been filed against Petitioner by Dorothy Juranko, Wayne Schmidt, Mark Madison, Michael Russo, Gloria Fallon, Patricia Schoenberg and William & Verna Bankhead. All of these individuals were investor clients of Petitioner. Prior to his employment with Smith Barney, Petitioner had not been the subject of a customer complaint or industry disciplinary proceeding or licensure revocation, suspension, or denial. Wayne Schmidt Sr. the owner of Suncoast Chrysler-Plymouth (Suncoast) opened his account at Smith Barney in 1985. Initially, the account executive assigned to Schmidt's account at Smith Barney was Steve Ellis. Schmidt maintained two accounts with Smith Barney and Steve Ellis, namely, a profit- sharing account for Suncoast Chrysler-Plymouth and a joint account with his wife. Schmidt exercised no control of the Suncoast account, but rather allowed his associate, Gloria Fallon to initially monitor the transactions in that account. Afterwards, Schmidt started overseeing the trading activities in the Suncoast account. Schmidt had no knowledge of any unauthorized transactions in the Suncoast account after he began monitoring it. Gloria Fallon did not testify at the proceeding. In connection with the maintenance of his joint account at Smith Barney, Schmidt executed a "Securities Account Agreement." During the time Schmidt maintained his account at Smith Barney, the Securities Account Agreement was utilized by Smith Barney as a margin contract. The Securities Account Agreement qualifies as a margin account agreement/margin contract as to form, and is consistent with industry standards, custom and usage. Although Florida Statutes proscribes certain procedures relative to margin agreements, neither the Florida Securities Act nor the rules promulgated thereunder require a broker/dealer to characterize a margin contract as a "margin agreement." The gravamen of Schmidt's complaint against Petitioner was that certain shares of stock were not liquidated from the joint account maintained by him in contravention of his directions to Petitioner. There was no proof submitted to support any conclusion that Petitioner failed to place an order for the liquidation of such securities for Schmidt's account. Likewise, there was no evidence of any unauthorized trading in the Schmidt's joint account. While Petitioner was assigned as account executive to the Schmidts joint account, a profit of approximately $10,000.00 was generated for that account in 1988 and in 1989, a net gain of approximately $15,000.00 was generated. Schmidt conceded at hearing that Petitioner probably did a better job handling his account than his prior broker, Steve Ellis. During the year 1988, Smith Barney generated and sent to Schmidt, monthly statements and confirmation statements regarding every transaction in his joint account. The monthly statements sent to Schmidt for the joint account contained entries regarding margin interest being charged to the account. For the year 1989, Smith Barney also generated and sent to Schmidt, monthly statements and confirms regarding every transaction in his joint account. The 1989 monthly statements sent to Schmidt also showed margin interest. For the years 1988 and 1989, Schmidt deducted from his individual tax returns, the margin interest charged to his account. Also, during 1988 and 1989, Schmidt did not complain to Petitioner or Smith Barney that the use of margin account was unauthorized. During his tenure at Smith Barney, Petitioner was the account executive assigned to the account of Michael Russo (Russo). Petitioner was assigned to the Russo account in approximately May of 1990, an account which was formerly serviced by an account executive whose last name is Dudenhaver. Michael Russo matriculated at City College of New York where he received a Bachelor of Business Administration degree and was a certified public accountant for approximately 30 years. Russo has been in the accounting business for approximately 40 years and during this time period, he operated his own accounting practice. Russo maintained three (3) accounts at Smith Barney which included an account with his wife, an individual account and an IRA account. Russo opened his first brokerage account in the early 1980s with Merrill Lynch, Pierce, Fenner & Smith. Russo has a history is investing in real estate and by mid 1990, he had accumulated a net worth of approximately $750,000.00. On or about July 13, 1990, Russo presented Petitioner a check in the amount of $26,000.00 which was to be deposited into Russo's accounts. The $26,000.00 check was deposited by Petitioner into Russo's accounts but were returned for non-sufficient funds (NSF). Russo then replaced the NSF check with a $22,000.00 check. The funds derived from the $26,000.00 of Russo originated from an interest-bearing money market account from the Fidelity- Spartan Mutual Funds Family. During the period July 13-20, 1990, Russo was on vacation and was away from his home visiting relatives in the Melbourne, Florida area. During that week, Russo spoke by telephone with Petitioner regarding his account on more than one occasion. Russo specifically recalls speaking with Petitioner on July 15, 1990, regarding his account. During that week, Russo spoke with Respondent about selling certain shares of stock in his account and his specific recall is that one of those conversations occurred on July 15, 1990. The shares were to be sold "at market." Russo again spoke with Petitioner on July 21, 1990, regarding transactions in his account. On July 24, 1990, Russo told Larry Youhn, the branch manager at Smith Barney, that he was very happy with Petitioner as his broker. The July 1990 month-end statement for the Russo account indicate that funds were deposited into the Russo accounts in an amount sufficient to satisfy security purchases made in his account during July 1990. Although these transactions appear at month-end in a type-2 margin account, a review of such statements indicate that the transactions initially occurred in a cash account and were mistakenly journaled to the margin account by Smith Barney as a result of an NSF check presented by Russo as payment for the purchase transactions. The individual account of Russo reflects the purchase of 500 shares of Wiley Laboratories on July 16, 1990, for $7,702.00. On that same day, $10,500.00 from the $26,000.00 NSF check was received into the account. The July 1990 monthly statement for Russo's individual account reflected that there would have been a $2,800.00 net credit in the account if Russo had not presented the NSF check. During his tenure at Smith Barney, Petitioner also served as the registered representative for an account maintained by Nicholas and Dorothy Juranko (Juranko). The Jurankos have a substantial history of business experience, having currently owned a service station in the Ohio area and Mrs. Juranko currently owns her own drapery shop and manages eight (8) apartment/rental units that they jointly own. The Jurankos opened their first securities brokerage account in approximately 1962. They have held accounts at several brokerage firms including Merrill Lynch, Blinder-Robinson and First Jersey Securities prior to opening their account at Smith Barney. At Blinder-Robinson, the Jurankos engaged in the purchase of several "Penny" stocks and fully realized that they were speculating. The Blinder- Robinson account was opened by the Jurankos so that Mr. Juranko would "have something to do." The Jurankos maintained a securities brokerage account at First Jersey Securities prior to Petitioner's employment with First Jersey. Petitioner was assigned as account executive for the Juranko account at First Jersey in approximately 1985. When the Jurankos opened their account at Smith Barney, their net worth was approximately $220,250.00. Although Mrs. Juranko maintains that unauthorized trades occurred in her account during the month of December 1987, when asked to identify which trade which unauthorized, she could not do so. This was so, despite an effort to refresh her recollection by presenting her the December 1987 monthly account statement which depicted all securities holdings and transactions generated in their account. Mrs. Juranko also alleged that she was losing money and did not want to deposit any additional funds into her account. However, Mrs. Juranko wanted to have profits generated from the funds that were then existing into her account as of year-end December, 1987. Respecting the December 1987 trades, the Jurankos received confirms for every transaction that occurred during the month. Through December 1987, while Petitioner was assigned to manage the Juranko account, the account generated a net profit. Also, continuing through January 1988, Petitioner had effected trades which produced a net profit for the Juranko account. As testified by Mrs. Juranko, "All I could see...greed, all I could see was $14,200.00 some dollars and $9,900.00 some dollars, and I thought, wow... I thought "wow", he's making me money." Although Mrs. Juranko complained that she was losing money, an analysis of the account revealed that during the two years that Petitioner was assigned her account, it made a net profit. Notwithstanding the documentary evidence to the contrary, Mrs. Juranko admitted that she was upset and complained to Smith Barney's compliance officer, a Mr. Singer, because of her unfounded belief that she had lost money. Mrs. Juranko identified anger as the basis for her inability to understand a letter which was sent by Larry Youhn, Smith Barney's branch manager, which show the activity that had been generated into her account. Notwithstanding the clear language of that letter, Mrs. Juranko maintained that she did not understand it. This is so, despite the fact that Mrs. Juranko did not telephone Smith Barney to complain because she "didn't want to get [Petitioner] in trouble." 1/ The use of margin in the Jurankos account was discussed because Mrs. Juranko believed the account was losing money; she wanted to do whatever was necessary over a period of time to make up for the losses and she refused to deposit additional funds into the account to generate profits in trading the account. In connection with the maintenance of the Juranko account at Smith Barney, Petitioner instructed his sales assistant to send a margin agreement to Mr. and Mrs. Juranko for execution. The use of margin was discussed with the Jurankos in approximately November 1987. Petitioner relied upon the Smith Barney infrastructure to maintain the necessary paperwork for margin accounts, including the Jurankos. This is a customary practice in the securities industry and is utilized by most large brokerage houses. Juranko first complained to Petitioner about the use of margin in January 1988, when she received her monthly account statement which contained an entry for margin interest. Mrs. Juranko explained that she thought the margin charges were too much and that she wanted to reduce the margin charges by liquidating securities from the account. Mrs. Juranko thereafter became uncooperative and it became difficult for Petitioner to transact business in the account consistent with Mrs. Juranko's desired objectives. As a result, in March 1988, Petitioner determined that the only thing he could do for the account was to liquidate positions at or near break-even points. Thereafter, Petitioner never made any other purchase recommendations to the Jurankos. Petitioner also serviced the account of Mark D. Madison while employed at Smith Barney. Madison is a marketing, advertising and management consultant who owns his own business. Madison maintained two (2) accounts at Smith Barney's St. Petersburg branch office, including an individual account and an account in the name of his mother, Mary Jean Madison. Mark Madison was a fiduciary for and conducted all transactions in his mother's account. Prior to Petitioner's assignment as broker to Madison's fiduciary account, it was assigned to broker Steve Ellis. The fiduciary account was maintained as a margin account since its opening in 1984. Commencing on February 13, 1986, broker Ellis and Madison executed several margin transactions in the fiduciary account. Through the period ending October 31, 1987, roughly 95% of the transactions in the fiduciary account were executed on margin. As of year-end 1987, the Madison fiduciary account and Mark Madison's personal account historically traded over-the-counter securities. During this period while Ellis was the broker, margin transactions were executed in both Madison accounts. During this period, broker Ellis actively traded both accounts and generated both profits and losses in the accounts. Mark Madison was familiar with the active trading in both accounts as well as the profit/loss picture. Madison estimated losses in the fiduciary account to be over $20,000.00 while the account was handled by Ellis. These losses all occurred while he was the fiduciary on the account and was in charge of approving trading in the account. When the fiduciary account was transferred from Ellis to Petitioner, Madison expressed his concern about the losses that his mother's fiduciary account had sustained as well as his responsibility for such losses. During his initial conversations with Petitioner, Madison explained his mother's displeasure at the approximately $30,000.00 in losses that had been generated while Ellis was assigned as broker. Madison also explained to Petitioner that his brother had made references to conversations with his mother about suing him as the fiduciary because of the losses generated. During the time that the fiduciary account was handled by Ellis, there were differences in the execution prices of transactions in the same securities which occurred in both the fiduciary account and his (Mark Madison's) personal account. When Petitioner was assigned the account, it became apparent to him that Madison consistently obtained higher prices on liquidating transactions than his mother was obtaining in the fiduciary account for the same securities. Petitioner was concerned with the type of trading in which Madison wanted to engage in for the fiduciary account and brought this trading strategy to the attention of branch manager, Youhn, who explained to Petitioner that it was the fiduciary who had ultimate responsibility for trading the account. In addition to discussing the trading strategy with Youhn, a review of the account history was conducted by Petitioner. Petitioner's review revealed that the account had lost approximately 40% in equity during the time it was handled by account executive Ellis and Mark Madison as fiduciary. As a result of the losses generated, Madison expressed his desire to Petitioner to recoup losses in the account by taking advantage of 2-3 point swings in certain over-the-counter securities. During the months of January through March 1988, Madison, despite his allegations to the contrary, authorized the purchase of a specified number of shares of certain securities and later maintained that certain additional shares of those securities were purchased without his authorization. Throughout this period, Madison maintained continuous telephone conversations with Petitioner regarding such securities. Throughout the period, Madison did not instruct Petitioner to cancel the trades, but rather instructed him that he wanted out of those positions as near as possible to "break even." The Department conducted an investigation of the allegations made by Petitioner's former clients in connection with the denial of his registrations as an associated person an investment advisor. In connection with the investigation, the Department, through its investigative employee, Carol Irizarry (Irizarry), spoke with individuals who had submitted written complaints against Petitioner. In furtherance of her investigation, Irizarry visited the office of William Lyman, Esquire, who represented several of the former customer/complainants, and reviewed the information that Lyman had relative to such complaints. Ms. Irizarry did not testify during the formal hearing herein. Dennis Farrar (Farrar), area financial manager, Division of Securities, Department of Banking and Finance, supervised the writing of the report completed by Irizarry. Farrar's first direct contact with the investors/complainants in this case occurred approximately one (1) week prior to the commencement of the hearing herein. Following Ellis' separation from employment with Smith Barney, several Smith Barney brokers and clients of Petitioner advised him that broker Ellis was out to get him and urged them to file complaints against Petitioner. Specifically, Petitioner received a telephone call from Gloria Fallon, an associate of Wayne Schmidt, who warned Petitioner that Ellis was "trying to stir up trouble for him." In connection with the initial customer complaint received by the Department, a request for information responsive to the complaint was sent to Smith Barney. Among the documents received by the Department was a securities account agreement which contained language normally contained in a margin contract. The securities account agreement is the document utilized by Smith Barney as its margin contract at all time material hereto. A Form U-4, Uniform Application for Securities Industry Registration for Transfer, is a document generated by the National Association of Securities Dealers (NASD) and the North American Securities Administrators Association (NASAA). The Form U-5, Uniform Termination Notice, also is generated by the above entities. The disclosure section of a Form U-4 requires an applicant to respond to the best of his ability. An intentional falsification of information on a Form U-4 will give rise to a violation of Section 517.161, Florida Statutes. It is customary in the securities industry for a registered representative to rely upon his current broker/dealer employer to determine which complaints, if any, are disclosable on the Form U-4. It is customary in the industry for a representative to rely on the Form U-5, termination notice for completion of his U-4 and usually the information on both forms track each other. Also, the prospective applicant filling out his U-4 usually consults with the firm that he separated from to ensure that both Forms U-4 and U-5 are consistent. Petitioner's completion of the Form U-4 on August 30, 1990 in connection with his employment at Brauer & Associates contained a disclosure of customer complaints consistent with the disclosures made by Smith Barney on its amended Form U-5 Termination Notice dated August 17, 1990. Petitioner's reliance on the information contained in his files and that provided by his employers was reasonable and there was no evidence that Petitioner intentionally falsified his Form U-4 application.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that Respondent enter a Final Order granting Petitioner's application for registrations as an associated person or broker/dealer of Brauer & Associates, Inc. and investment adviser to G.G. Brauer, Inc. RECOMMENDED this 13TH day of August, 1991, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of August, 1991.
Findings Of Fact On September 26, 1990, petitioner, Gulfstream Home Care, Inc. (Gulfstream), filed an application with respondent, Department of Health and Rehabilitative Services (Department or HRS), for a certificate of need to establish a Medicare certified home health agency in HRS District IX. Such application failed, however, to include an audited financial statement of the applicant. By letter of October 12, 1990, the Department provided Gulfstream with a list of items that had been omitted from its application, and accorded it an opportunity to cure such omissions by November 12, 1990. Among the omissions Gulfstream was offered an opportunity to cure, was its failure to include an audited financial statement with its application, as required by Section 381.707(3), Florida Statutes. On November 9, 1990, Gulfstream filed its omission response with the Department. That response included a balance sheet dated September 30, 1989 and a statement of income and expenses for the twelve-month period ending September 30, 1989, prepared by Royale Business Services on behalf of Gulfstream. Such statements were not, however, audited, and, as noted by Royale Business Services, the utility of such a compilation ... IS LIMITED TO PRESENTING IN FINANCIAL STATEMENT FORM INFORMATION PROVIDED BY MANAGEMENT OF THE BUSINESS. AS THE INFORMATION HAS NOT BEEN REVIEWED, AND THE FACT THAT WE ARE NOT CERTIFIED PUBLIC ACCOUNTANTS, WE DO NOT EXPRESS AN OPINION OR ANY OTHER FORM OF ASSURANCES ON THEM. At hearing, Gulfstream contended that, in addition to the compilations prepared by Royale Business Services, it had also submitted an audited financial statement of Gulfstream for the three-month period ending December 31, 1989, with its omissions response. The persuasive proof fails, however, to support Gulfstream's contention. Rather, such proof demonstrates that, when the Department notified Gulfstream by letter of November 19, 1990, that its application was deemed incomplete and was administratively withdrawn, no audited financial statements had been submitted to the Department.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that a final order be entered finding Gulfstream's application incomplete and withdrawing such application from further consideration. RECOMMENDED in Tallahassee, Leon County, Florida, this 4th day of April 1991. WILLIAM J. KENDRICK 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 4th day of April 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-0364 The Department's proposed findings of fact are addressed as follows: 1. Addressed in paragraph 1. 2-10. Addressed in paragraphs 2-4, otherwise subordinate or not necessary to the result reached. COPIES FURNISHED: Edward Labrador, Esquire Assistant General Counsel Department of Health and Rehabilitative Services Fort Knox Executive Center 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308 Mary Parlontieri, President Gulfstream Home Care, Inc. 4623 Forest Hill Boulevard, #103 West Palm Beach, Florida 33415 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Linda K. Harris, Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Whether Commercial Carrier Corporation (Petitioner), has the financial strength necessary to ensure the timely payment of all current and future workers' compensation claims in the State of Florida; Whether Petitioner has maintained a net worth of at least $1 million during the period 1999 to 2004; and Whether Petitioner shall post an additional qualifying security deposit to remain qualified to self-insure and the amount of the additional security deposit to be posted.
Findings Of Fact Upon careful consideration, it is found and determined as follows: Petitioner, Commercial Carrier Corporation, is a privately-owned trucking company headquartered in Auburndale, Florida, which has been in business for over 50 years. Petitioner is one of five operating subsidiaries of Comcar Industries, Inc. (Comcar), whose primary business is truckload transportation of general and specialized commodities in the continental United States. Comcar routinely prepares consolidated financial statements reflecting the operations of all five subsidiary companies. Although Petitioner is the nominal Petitioner, Comcar is the de facto Petitioner in this proceeding. All of Comcar’s subsidiaries operate as self- insured in Florida. Petitioner has been self-insured for workers’ compensation in Florida since January 1, 1973. Pursuant to Florida law, Respondent has jurisdiction over Petitioner as a self-insured employer for purposes of workers’ compensation. Under Florida law, the general requirement is that employers must obtain and maintain workers’ compensation insurance coverage. The exception of this general requirement is found in Subsection 440.38(1)(b), Florida Statutes (2004), whereby an employer can seek to qualify to self-insure by "furnishing satisfactory proof to the Florida Self-Insurers Guaranty Association, Inc., . . . that it has the financial strength necessary to ensure the timely payment of all current and future claims[.]" FSIGA is a not-for-profit corporation established by Section 440.385, Florida Statutes (2004), to guarantee payment of the covered workers’ compensation claims by employees of self-insurers that become insolvent. Other than governmental entities and public utilities, all self-insurers, including Petitioner, must be members of FSIGA. FSIGA pays the covered claims of current and former insolvent self-insurer members to the extent an insolvent self-insurer’s security deposit is insufficient. An insolvency fund is established and managed by FSIGA for the purpose of meeting the obligations of insolvent members after exhaustion of any security deposit. The insolvency fund is funded by assessments from members of FSIGA. Accordingly, FSIGA and all of its members share an interest in ensuring adherence to the legislative standard that only financially strong employers are granted the privilege to self- insure. To maintain self-insurer status, an employer must submit annual financial statements no later than four months following the end of the self-insured’s fiscal year and furnish satisfactory proof to FSIGA that it has the financial strength necessary to ensure timely payment of all current and future claims. The financial statements that must be submitted to FSIGA for financial analysis must be prepared in accordance with the United States Generally Accepted Accounting Principles (GAAP). GAAP-prepared financial statements must show, at all times, a net worth of $1 million. The requirements of furnishing proof of the requisite financial strength and maintaining a net worth of at least $1 million, as shown on the employer’s financial statements, are continuing annual requirements to become and remain qualified to self-insure, and those requirements are applied equally to applicants and current members. FSIGA is required to review the financial strength of its current members. It makes recommendations to Respondent regarding the members’ continuing qualification to self-insure and the amount of security deposit that should be required of each member. If FSIGA determines that a current member does not have the financial strength necessary to ensure the timely payment of all current and estimated future claims, it may recommend that Respondent require an increase in the member’s security deposit. FSIGA operates under a statutorily-approved plan of operations. FSIGA’s plan of operation provides that its executive director has the responsibility to make FSIGA’s recommendations to Respondent. FSIGA’s recommendations are based upon a review of the financial information collected from member employers. It may include recommendations regarding the appropriate security deposit amount necessary for a self-insured employer to demonstrate that it has the financial strength to ensure timely payment of all current and future claims. Respondent is required to accept FSIGA’s recommendations unless it finds, by clear and convincing evidence, that the recommendations are erroneous. 2002 Financial Review of Petitioner Petitioner is currently a member of FSIGA and has posted a qualifying security deposit of $2,500,000.00. On October 2, 2002, Brian D. Gee, C.P.A., who is now FSIGA’s executive director, completed a review of Petitioner’s audited financial statements for 1999, 2000, and 2001. Gee was FSIGA's financial analyst, responsible for conducting financial reviews and developing information for FSIGA's executive director, to determine the financial strength of self-insured members and make recommendations to Respondent. Gee’s review of Petitioner’s financial statement consisted of an assessment of Petitioner’s liquidity, profitability, degree of leverage, liabilities compared to net worth, and cash flow generated by operations. He also reviewed the financial statements to determine if Petitioner was maintaining a net worth of at least $1 million. Gee concluded that Petitioner did not have the financial strength necessary to ensure the timely payment of current and estimated future workers’ compensation claims. On October 8, 2002, FSIGA's executive director forwarded a letter to the Division of Workers’ Compensation, Department of Insurance (now Respondent). He recommended to Respondent that Petitioner be ordered to increase its security deposit to 150 percent of actuarially determined loss reserves. FSIGA’s recommendations were reviewed by Cynthia Shaw, assistant general counsel for the Division of Workers’ Compensation. Shaw drafted a letter for signature by Mark Casteel, General Counsel for Respondent, which adopted FSIGA's recommendations. Casteel signed that letter dated October 28, 2002, without revision or discussion. Shaw, an attorney, has no financial background or expertise. Shaw did not perform any additional financial analysis. Additionally, since Respondent did not have a CPA firm under contract, FSIGA’s recommendation was not reviewed by anyone with financial background before being transmitted to Petitioner. Petitioner responded to the October 28, 2002, directive from Respondent by filing a petition requesting a formal administrative hearing. Petitioner failed to file financial statements with FSIGA within four months following the end of its 2000 and 2001 fiscal years. Petitioner’s failure to timely file financial reports for 2000 and 2001 was due to the fact that it was in default on certain loan covenants and was engaged in negotiations with its lenders. In 1999 and 2000, Petitioner incurred additional long-term debt to finance the purchase of a new fleet of trucks. Petitioner’s creditors had exercised their right for accelerated payment of the outstanding loan balances, which by the end of 2001, was approximately $205 million. In 2001 and 2002, Petitioner entered into negotiations with its creditors to amend and restate its loan agreements. In 2002, Petitioner implemented a business plan calling for the sale of non-core assets, reduction of long-term debt, and transition from purchasing to leasing truck tractors. In July 2002, Petitioner entered into amended and restated loan agreements with its creditors. In order to secure the amended and restated loan agreements, Petitioner was required to pay increased interest, pledge substantially all of its property to secure the loans, pay the lenders $3.3 million, provide certain lenders with warrants to acquire an equity interest in Petitioner under certain conditions and agree to restrictions on how it could use cash generated by its operations and asset sales. Petitioner timely made all principal and interest payments due pursuant to the restated credit agreement and maintained compliance with all required financial ratios and standards. Furthermore, Petitioner continued to timely pay all claims for current and estimated future claims under its workers’ compensation system. Following execution of the amended and restated loan agreements, Petitioner’s auditors prepared the financial statements of 2001, which Petitioner then filed with FSIGA. Separate audited financial statements for 2000 were never filed with FSIGA, although prior-year financial results were shown (without footnotes) on the audited 2001 financial statements. With respect to liquidity, Petitioner’s financial statements showed a current ratio (current assets divided by current liabilities) of 1.41 at December 28, 2001. It did not disclose that Petitioner had any available funds under its revolving credit line as of December 28, 2001. Although Petitioner’s current ratio was acceptable, further analysis raised serious concern regarding Petitioner’s financial strength. With respect to Petitioner’s capital structure, the financial statement review showed that Petitioner’s total liabilities-to-book-equity ratio deteriorated from 4.91 at December 1999 to 30.46 at December 28, 2001. This deterioration reasonably raised concern because Petitioner became much more heavily leveraged from 1999 to 2001, relying much more heavily on debt to fund its operations. FSIGA concluded, Petitioner’s financial statement showed a "very weak capital structure." The impact of the increasing reliance on debt was marked by the end of 2001, when the financial statements showed that Petitioner was in default of its debt covenants at December 28, 2001. To address its defaults, Petitioner entered into an agreement to restructure its debt by which the creditors waived the defaults in return for imposing additional restrictions on Petitioner as described in paragraph 20 above. Although Petitioner maintained a net worth of $11.1 million at the end of 2001, Petitioner’s net worth at the end of 2001 was significantly lower than its net worth of $74.8 million at the end of 2000. In addition, the financial statement review showed that Petitioner had incurred net losses of $24.2 million, $39.5 million, and $5.7 million for the years 2001, 2000, and 1999, respectively. These losses were substantial and raised significant concerns about Petitioner’s financial strength. The 2002 financial review of Petitioner also showed a substantial decline in Petitioner’s cash flow from operations, from positive $32.6 million for 1999 to negative $2.1 million for 2001. This meant that in 2001, Petitioner was spending more cash in its operating activities than it was collecting. At the time FSIGA made its recommendation to Respondent, neither FSIGA nor Respondent had current information from Petitioner regarding the amount of Petitioner’s net outstanding liability for workers’ compensation claims in Florida. This is because Petitioner failed to file the Form SI-20 report that had been due on August 31, 2002. From October 2002 until December 14, 2004, FSIGA and Respondent did not have accurate information in regard to the amount of Petitioner’s outstanding liability for workers’ compensation claims in Florida, because Petitioner did not file its required Forms SI-17 and SI-20 reports or provide an actuarial study. At the final hearing, Petitioner did not present evidence disputing the reasonableness of FSIGA’s 2002 assessment of Petitioner’s financial statements or of FSIGA’s conclusions based thereon regarding Petitioner’s lack of financial strength in 2002. Based on FSIGA’s analysis of Petitioner’s 2001 financial statements and the financial statements for the two preceding years, FSIGA reasonably concluded that Petitioner had not demonstrated that it had the financial strength to ensure payment of current and future workers’ compensation claims. Based on the information then available to it, FSIGA made the correct recommendation to Respondent. There was no clear and convincing evidence available to Respondent that demonstrates FSIGA's recommendation was erroneous, instead, the available evidence supports FSIGA’s recommendation. Accordingly, Respondent’s direction to Petitioner to provide an actuarial report and post additional security was reasonable and appropriate. Continuing Financial Review of Petitioner After 2002. In November 2002, Petitioner challenged Respondent’s determination and requested a formal administrative hearing. Petitioner requested that Respondent hold the petition in abeyance. The request was granted, and the petition was not filed with DOAH until July 9, 2004. During this period, Respondent re-examined Petitioner’s financial strength. Following its business plan, on January 16, 2004, Petitioner refinanced its debt. While there was conflicting testimony regarding whether the actual interest on the refinanced debt was lower than on the debt it replaced, it was undisputed that $30 million of the refinanced debt was carrying an interest rate of 19 percent. This is a higher rate than the nine-percent and 11-percent interest applicable to the earlier debt. It is undisputed that substantially all of Petitioner’s property is pledged to secure the 2004 refinanced indebtedness, and there continues to be restrictions on Petitioner’s use of cash generated by its operations. However, the 19-percent interest on a portion of the January 2004 refinancing has now caused Petitioner to go into the lending market to attempt to refinance its debt once again. Nevertheless, the refinancing of its long-term debt has reduced its financing costs. Since Respondent’s 2002 request that Petitioner provide an actuarial report and post an additional security deposit, FSIGA has reviewed Petitioner’s audited financial statements for the years ended December 27, 2002, and December 26, 2003, as well as Petitioner’s unaudited financial statements for the year ended December 31, 2004. The financial information received from Petitioner since the 2002 review has not resulted in FSIGA changing its 2002 recommendations. Petitioner’s 2002, 2003, and 2004 financial statements revealed that Petitioner’s net worth had fallen below the required $1 million in each of those three years. The 2002 and 2003 financial statements also show that Petitioner continued to experience net losses. Petitioner sustained a net loss of $12.1 million for the year ended December 27, 2002, and a net loss of $9.9 million for the year ended December 26, 2003. Petitioner’s cash flow statement shows a $4.8 million decrease in cash in 2002 and a $2 million decrease in cash in 2003. Petitioner’s 2004 unaudited financial statements indicate net income of $4.1 million for 2004. However, because the 2004 financial statements are unaudited, whether adjustments may be necessary following the audit are unknown at this time. Financial statements prepared without footnotes are not prepared in accordance with GAAP. Even if the unaudited results are confirmed in audited financial statements, 2004 would be the first year that Petitioner has recognized net income since 1998, following a five-year string of annual losses totaling $90 million. Petitioner’s Financial Status Evidenced at Final Hearing At the final hearing, to demonstrate that it had the financial strength necessary to ensure the timely payment of current and future workers’ compensation claims, Petitioner presented testimony of its expert witness, Lawrence Hirsh, C.P.A. He posited that Petitioner's financial strength should be measured by determining its ability to generate cash flow through a calculation of its earnings before interest, taxes, depreciation and amortization (EBITDA). EBITDA is a measure commonly used by financial institutions to evaluate the ability of a company to generate cash flows and in determining whether to extend credit or to make investments. Petitioner’s lenders evaluated its EBITDA before deciding to refinance its credit facility in 2002 and to refinance its long-term debt in 2004. However, EBITDA is not a calculation provided for under GAAP. GAAP provides a method for determining cash flows and that method is used in preparing the portion of a GAAP- compliant financial statement called the "Statement of Cash Flows." Evidence presented by Respondent demonstrated that EBITDA has many limitations and is not a good proxy for cash flow. Application of EBITDA to Petitioner’s known financial performance in the past consistently overstates Petitioner’s ability to generate cash flow from operations. In every year from 1999 through 2003, Petitioner’s cash flow from operations, as shown on Petitioner’s cash flow statement that was prepared in accordance with GAAP, was significantly lower than the amount calculated for EBITDA by Hirsh: Year Petitioner's Cash Flow From Operations as Shown on GAAP-Compliant Cash Flow Statement EBITDA 1999 $32.6 million $61.1 million 2000 $344,000 $21.2 million 2001 ($2.1 million) $40.3 million 2002 $11.9 million $54.8 million 2003 $12.3 million $42.3 million Petitioner's unaudited 2004 cash flow statement showed $18.1 million in cash flow from operations. This is significantly lower than the $52.9 million in EBITDA calculated for 2004. Similarly, each year from 1999 to 2003, Hirsh's EBITDA's calculation grossly exceeds Petitioner's net loss as shown on its financial statements that were prepared in accordance with GAAP: Petitioner's Cash Flow From Operations as Year Shown on GAAP-Compliant Cash Flow Statement EBITDA 1999 (5.7 million) $61.1 million 2000 ($39.5 million) $21.2 million 2001 ($24.2 million) $40.3 million 2002 ($12.1 million) $54.8 million 2003 ($9.9 million) $42.3 million EBITDA is also misleading because it includes gain from the sale of assets. To the extent that Petitioner is selling its operating assets, such as trucks, Petitioner will have to expend cash to replace the assets, either by lease or purchase. To the extent that Petitioner is selling non-core assets, such as its unused real property, Petitioner cannot continue this practice indefinitely. Petitioner will soon run out of assets to sell. Therefore, cash generated from the sale of operating assets and non-core assets should not be considered in determining Petitioner's ability to generate cash from operating activities. Petitioner sought to bolster its evidence of its financial strength through testimony that it had received a credit rating in November 2003 from Standard & Poor's of B-plus. However, a B-rating is not an investment grade rating. It means that while a company currently has the capacity to meet its debt obligations, adverse business, financial, or economic conditions likely will impair the obligor's capacity or willingness to meet its financial commitment on the obligations in the future. In addition, Petitioner received a lower credit rating of B-3 from Moody's Investment Services. A B-3 rating from Moody's Investment Services is equivalent to a B minus rating from Standard & Poor's. The Standard & Poor's and Moody's credit ratings do not effectively demonstrate that Petitioner has the financial strength necessary to ensure the payment of current and future workers' compensation claims. Respondent's expert witness, Dr. Sondhi, disputed Petitioner's calculation of its EBITDA interest coverage ratio because Petitioner's calculation was based on interest paid as opposed to interest expense, and it failed to adjust for non-recurring items. Petitioner's interest expense is greater than the interest paid partly because Petitioner's loan agreement provides that a portion of the interest payments will accrue monthly with payments deferred until the final prepayment date or other principal payment milestone dates. Petitioner's calculation of the EBITDA interest coverage ratio was not performed in accordance with Standard & Poor's formula for determining the EBITDA interest coverage ratio. Even if the calculation of EBITDA interest coverage ratio was an appropriate measure of Petitioner's financial strength, the formula used by Petitioner to calculate the ratio overstates the results and shows greater financial strength than would be shown if the Standard & Poor's formula had been used. For the reasons noted above, Petitioner's EBITDA calculations are rejected as an inappropriate, overstated method to assess whether a company has the financial strength necessary to ensure the payment of current and future workers' compensation claims. Petitioner also argued that it had the required financial strength because it has paid all workers' compensation claims to-date and because, at the end of 2004, it had a cash balance of $26.6 million in the bank. The ability to currently pay workers' compensation claims does not demonstrate the financial strength to ensure the payment of workers' compensation claims in the future. Current capacity to pay is only part of the statutory standard, which is a risk-based standard requiring a company to ensure payment into the future because of the long period of time that workers' compensation claim payments continue. Likewise, having cash in the bank in the amount of $26.6 million at the end of 2004, does not demonstrate the required financial strength. Current cash balance is not an indicator, by itself, of financial strength to ensure payment in the future. Given Petitioner's extensive operating expenses, $26.6 million represents a very small amount of operating expenses. Petitioner’s consolidated balance sheets list its assets at historical or book cost, the cost at which those assets were purchased, and not at their current fair market value. Petitioner argues that adjusting the book values of assets to current market value would provide the most accurate assessment of Petitioner's net worth. To demonstrate that it has maintained a net worth of $1 million, Petitioner presented testimony that when determining net worth, the fair market value of its assets should be considered in place of the book value of its assets that is reflected on its balance sheet. However, GAAP does not permit the value of assets to be shown at fair market value and instead, requires that assets be shown at book value. Even if GAAP permitted the use of fair market value of assets to be used on a balance sheet, Petitioner did not offer any admissible evidence to prove the current fair market value of its assets for 2002, 2003, and 2004. Consequently, it cannot be determined whether the use of the current fair market value of assets would result in Petitioner's financial statements showing a net worth at all times of at least $1 million. Respondent has interpreted the term "net worth," as it is used in Florida Administrative Code Rule 69L-5.106, to mean the total assets of a company as reflected on the balance sheet, minus the total liabilities of the company as reflected on the balance sheet. Respondent's interpretation of the term "net worth" is a reasonable interpretation, consistent with the interpretation given to the term by accountants and financial analysts. The more credible expert testimony is that net worth appears on the balance sheet as stockholders' or shareholders' equity. Based on the above interpretation of Florida Administrative Code Rule 69L-5.106, for each year from 2002 through 2004, Petitioner has failed to maintain a net worth of at least $1 million. The preponderance of evidence demonstrates Petitioner's net worth was negative $976,000, and negative $10.8 million for the years ended December 27, 2002, and December 26, 2003, respectively. In addition, Petitioner's unaudited financial statements for 2004 show that Petitioner maintained a negative net worth of $6.7 million as of December 31, 2004. Although Petitioner's financial condition has strengthened significantly from year end 2001 to year end 2004, based on the evidence, Petitioner does not now have the financial strength necessary to ensure payment of current and future workers' compensation claims, nor has Petitioner maintained a net worth of at least $1 million. Therefore, an additional security deposit is required for Petitioner to remain qualified as a self-insurer. In May 2002, Thomas Lowe was employed by Petitioner as its vice-president in charge of Risk Management. Lowe instituted a number of risk management practices which have significantly reduced the number and costs of Petitioner's workers' compensation claims. In 2001, Petitioner's workers' compensation claims were adjusted by three separate third-party administrators (TPAs), resulting in three overlapping data bases of claims information. Petitioner was unable to reconcile this overlapping claims information and, consequently, was unable to accurately determine the amount of its workers' compensation reserves for 2001. As a result of its inability to determine its workers' compensation reserves in 2001, Petitioner did not submit the required SI-17 and SI-20 forms to FSIGA in 2002 and 2003. Petitioner informed FSIGA of the difficulty it was having in reconciling its claims data for 2001 and paid the required penalties for its inability to timely submit Forms SI-17 and SI-20 in 2002 and 2003. Failure to submit these forms did not affect Petitioner's ability to make timely payments of all current and estimated future workers' compensation claims. In 2004, Petitioner submitted Forms SI-17 to FSIGA reflecting incurred workers' compensation losses for calendar years 2002 and 2003. On December 14, 2004, Petitioner submitted Form SI-20 to FSIGA, reflecting that the present value of its estimated loss reserves was $6,894,776.00. Anthony Gripps, Sr., an independent actuary who is a member of the American Academy of Actuaries, reviewed Petitioner's workers' compensation claims data pursuant to Respondent's October 28, 2002, directive. Grippa issued two reports, one dated December 1, 2004, and the other dated December 15, 2004. Grippa concluded that the present value of Petitioner's workers' compensation loss reserves as of September 30, 2004, was $6,831,175.00. The parties stipulated to Grippa's finding that the amount of Petitioner's workers' compensation loss reserves as of September 20, 2004, was $6,831,175.00. Petitioner's financial statements for 2004 had not been audited as of the final hearing, but were received into evidence in unaudited form. There was no evidence presented that Petitioner's 2004 financial statements do not accurately represent its financial performance in 2004 and its financial condition as of December 31, 2004. Florida Administrative Code Rule 69L-5.101(4) does not require Petitioner to submit audited financial statements as it has been self-insured since prior to January 1, 1997. Petitioner timely supplied Respondent with unaudited financial statements at least annually as required by Florida Administrative Code Rule 69L-5.101(4). Petitioner currently has a qualified security deposit of $2,500,000.00 deposited with FSIGA. In 2002, FSIGA recommended that in light of Petitioner's "significant net losses and very weak capital structure," Petitioner's security deposit should be increased to 150 percent of the actuarially determined loss reserves. Upon consideration of all of Petitioner's financial statements from 1999 through 2004, FSIGA's recommendation should be followed. Petitioner's actuarially determined loss reserves for all current and estimated future workers' compensation claims are $6,831,175.00. One hundred and fifty percent of the actuarially determined loss reserves of $6,831,175 equals $10,246,762.50. Petitioner presented no evidence of a different amount of security deposit increase that would be sufficient assuming one were to find that Petitioner lacks the financial strength to ensure payment of future workers' compensation claims or that Petitioner has failed to maintain a net worth of at least $1 million.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that The chief financial officer issue a final order determining that: (i) Petitioner does not have the financial strength to ensure the timely payment of all current and future workers' compensation claims; and (ii) Petitioner has failed to maintain a net worth of at least $1 million; and Because Petitioner has failed to meet the requirements to continue self-insuring, the final order should require Petitioner to post an additional security deposit in the amount of $7,746,762.50. DONE AND ENTERED this 1st day of June, 2005, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE 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 1st day of June, 2005.
The Issue The issue is whether Respondent's otherwise-untimely filing of a request for a hearing on a proposed penalty for failing to secure workers' compensation coverage is timely due to the doctrine of equitable tolling.
Findings Of Fact The parties do not dispute that an Amended Order of Penalty Assessment dated February 21, 2018 (APO), assesses a penalty of $63,202.87 for Respondent's failure to secure workers' compensation coverage; Petitioner served the APO on Respondent on March 2, 2018; the APO provides Respondent with 21 "calendar" days from receipt within which to file a request for a hearing; Respondent filed the Petition on March 29; and March 29 is 29 calendar days and 19 business days after March 2. Respondent engages in the business of digging ditches and installing conduit and pipes. On October 26, 2017, Jean Carlos Hernandez, Petitioner's investigator, visited a worksite of Respondent. Determining that Respondent had failed to secure workers' compensation coverage, as required by law, Mr. Hernandez served the SWO, a Request for the Production of Business Records (RPBR), and an unrelated document upon Jorge Clark, Respondent's president and sole shareholder. Complicating this case, from the investigator's perspective, Mr. Hernandez also issued orders stopping work to three other corporations that were involved in the same work as Respondent. The RPBR orders Respondent to email relevant business documents within ten "business" days of receipt of the request. The RPBR warns that a failure to email timely the requested business records will result in Petitioner's imputing Respondent's payroll for the purpose of calculating the penalty for failing to secure workers' compensation coverage. In addition to "hereby" ordering Respondent to stop work, the SWO also states: "A penalty against the Employer is hereby ordered in an amount" equal to double the amount that the employer would have paid in premiums, but not less than $1000, as based on a statutory formula that is summarized in the SWO. Despite the use of "hereby" for the penalty, the SWO imposes no penalty because Petitioner's calculation of the penalty takes place after the service of the SWO; this part of the SWO operates more as notice to the employer that Petitioner will assess a penalty and the formula for its calculation. When he gave Mr. Clark the three completed forms, Mr. Hernandez explained that Mr. Clark could obtain relief from the order stopping work by paying $1000 to Petitioner. Mr. Hernandez also told Mr. Clark that he had ten business days to provide the requested business records. The next day, Mr. Clark delivered $1000 to Petitioner and obtained a conditional release of the order stopping work. Mr. Clark demonstrated compliance with workers' compensation coverage by providing a letter confirming that Respondent had terminated the subcontractors who had been found on the worksite. During a brief conversation, Mr. Hernandez reminded Mr. Clark to submit the requested business records within ten business days, as reflected by the notes of Mr. Hernandez. On the sixth business day after October 26, as is his practice, Mr. Hernandez called Mr. Clark and reminded him that this was the sixth business day of the ten business days that he had to produce the requested business records. On the tenth business day, Mr. Clark produced the requested business records, on which Petitioner relied, almost entirely, to calculate the penalty that it later assessed. After Petitioner completed the calculation of the penalty, Mr. Hernandez called Mr. Clark and asked him to come into the office to pick up the APO. On March 2, 2018, Mr. Clark visited Petitioner's office and obtained the APO from Mr. Hernandez. The APO acknowledges the assessable penalty described in the SWO and assesses the above-described penalty. The APO incorporates a Penalty Calculation Worksheet, which reveals that $239.12 of the assessed penalty is derived from imputed wages. Mr. Hernandez and Mr. Clark spoke briefly in Petitioner's office on March 2. Mr. Hernandez testified that he advised Mr. Clark, as stated in the APO, that he had 21 "calendar" days to file a request for hearing and 20 business days to produce additional business records. Mr. Clark testified that Mr. Hernandez told him that he had 21 "business" days to file a request for hearing. Mr. Clark's testimony is credited. During the hearing, Petitioner's counsel repeatedly asked Mr. Clark if he had read the provision of the APO that gave Respondent 21 calendar days within which to file a request for a hearing. The purpose of this questioning appears to have been to show that, given the straightforward nature of this filing deadline, Mr. Clark could not possibly have been misled or lulled by anything that Mr. Hernandez could say, even if he had misstated the filing deadline in business, rather than calendar, days. The simpler the requirement, the harder it should be to prove that the subject of the requirement has been misled or lulled into action or inaction resulting in noncompliance. In other words, as a practical matter, Respondent would have a much harder time proving that Mr. Clark had been misled or lulled if the APO consisted of nothing more than Respondent's name, the assessed penalty, and a boldfaced warning in large font: "YOU HAVE 21 CALENDAR DAYS FROM RECEIPT OF THIS ORDER TO FILE A REQUEST FOR A HEARING. NO AGENCY EMPLOYEE MAY EXTEND OR CHANGE THE DEADLINE. IF YOU MISS THE DEADLINE, YOU DO NOT GET A HEARING. NO EXCEPTIONS." Implying that, if Mr. Clark had read the APO, he would have drawn a firm understanding the he had 21 calendar days to file a request for hearing, Petitioner implies that the APO is no less clear than the hypothetical document. But the forms that Mr. Hernandez gave Mr. Clark are not so clear in terms of filing deadlines. For a nonlawyer like Mr. Clark, the APO is complicated by the business- and calendar-day deadlines set forth in the SWO and APO, as well as the business-day deadline set forth in the RPBR, and contingencies attached to calendar-day deadlines that might confuse an attorney. These confusing features of the forms that Mr. Hernandez gave Mr. Clark make it harder to understand the forms, including the APO, and likelier that Mr. Clark would instead rely on what Mr. Hernandez told him about the applicable deadline, so as lay the foundation for Mr. Clark to be misled or lulled by inaccurate information. As Petitioner insists, the SWO provides a clear point of entry of 21 calendar days to file a request for hearing on the order stopping work, but it is not so clear whether the employer may also challenge, at that time, the yet-to-be-calculated penalty or, if it does not, whether the employer may challenge the penalty when it is later calculated. At this point, three things probably were evident to Mr. Clark: Respondent could not continue to work on the subject worksite; based on what Mr. Hernandez told him, Mr. Clark could obtain relief from the order stopping work by paying $1000; and Respondent had not yet been fined. It is doubtful that Mr. Clark thought much about the calendar-day deadline in the SWO because of the absence of an actual consequence at the moment. As noted above, Mr. Clark promptly paid the $1000, and Petitioner lifted the order stopping work, so Mr. Clark found that he could rely on Mr. Hernandez and his description of Respondent's rights and responsibilities. Also, a few days later, when Mr. Hernandez called him, Mr. Clark likely understood that the deadline in the RPBR ran in business days. In March 2018, Mr. Clark learned of the amount of the penalty. According to his testimony, which is credited, Mr. Clark knew immediately that he could not accept such a large penalty without exercising his right to a hearing. After Mr. Hernandez told Mr. Clark that he had 21 business days to file a request for hearing on the penalty, Mr. Clark calendared the deadline and visited his lawyer's office shortly prior to the expiration of a 21-business-day deadline-- but after the expiration of a 21-calendar-day deadline--to have him prepare and file a request for hearing. As noted above, Mr. Clark had promptly attended to his responsibilities in connection with this matter on two prior occasions when he immediately delivered $1000 to obtain relief from the order stopping work and when he timely submitted business records: Mr. Clark met every deadline about which Mr. Hernandez told him. There are several reasons that Mr. Hernandez's testimony is not credited as to what he told Mr. Clark on March 2, but these findings about the March 2 conversation are not intended to suggest that Mr. Hernandez is lying about what he told Mr. Clark. It appears merely that Mr. Hernandez's memory and notes of what was a routine transaction for him are mistaken. Mr. Hernandez's deposition was taken on November 15, 2018, which was less than three weeks prior to the hearing. The notice did not require him to produce any documents, and he had none with him. Although Mr. Hernandez mentioned several times that he had taken notes, he had not brought them to the deposition and seemingly had not reviewed them prior to the deposition, so his deposition testimony is a good reflection of his independent memory of the March 2 conversation. In three respects, the brief deposition undermines Mr. Hernandez's credibility as a witness. First, early in the deposition, Mr. Hernandez refused to answer routine questions about past employment and a routine question about the hours of a present part-time job.1/ It is unclear whether he was attempting to prevent any inquiry into his other employment or whether he was attempting to discourage a robust inquiry into the matter at issue in this case. Either way, his lack of cooperation struck an unsettling note. Second, at the time of the deposition, Mr. Hernandez's recollection of the events was so vague as to establish that he has no present recollection of any encounter with Mr. Clark. Mr. Hernandez did not seem entirely sure that Mr. Clark had paid the $1000 and Respondent had released the order stopping work. Dep. Tr., p. 23.2/ Three times, Mr. Hernandez did not recall that Mr. Clark had submitted requested business records. Dep. Tr., pp. 24, 27-28. Mr. Hernandez did not seem to recall that he called Mr. Clark on the sixth business day to remind him of the deadline to produce business records within ten business days, Dep. Tr., pp. 27-28, even though Mr. Hernandez's notes state that he made the call. Mr. Hernandez did not recall whether his meeting on March 2 with Mr. Clark occurred in Mr. Hernandez's office or in the field. Dep. Tr., pp. 28-29. Third, Mr. Clark had no independent recollection of the March 2 conversation during his deposition. When asked if he had any recollection of talking to Mr. Clark on that day, Mr. Hernandez answered, "I can't recall off the top of my head right now." Dep. Tr., p. 32. When asked, "so you don't know what he said to you, or what you said to him; correct?" Mr. Hernandez answered, "Off the top of my head, no." Dep. Tr., p. 32. Later, Mr. Hernandez added that he remembered giving Mr. Clark the APO and explaining it, but this seems to have been a statement of customary practice than a present recollection. Dep. Tr., pp. 34-35. At the time of the March 2 meeting, Mr. Hernandez had been employed as an investigator for Petitioner a little over one year and had been working on his own for a little less than one year. Understandably, he is still acquiring knowledge that he requires to perform his job. For instance, during his deposition, Mr. Hernandez seemed confused when asked to define calendar days. He stated, "Calendar days include Mondays through Fridays, all days, including holidays." When asked about the deadline if the 21st day is a holiday, Mr. Hernandez testified that the holiday counted, so the required act had to be done by the deadline, even if it were a holiday or a weekend, even though he had seemed earlier to exclude weekends from calendar days. Dep. Tr., pp. 37-38. It is difficult to understand why Mr. Hernandez would have mentioned during the March 2 meeting the business-day deadline for producing business records, as he testified. As noted above, more business records could reduce the assessed penalty by only about $200. The modest amount of implied wages seems to suggest that Petitioner had found the already-produced business records to be nearly complete. There was thus no practical reason for Mr. Hernandez to mention the business-day deadline for producing more business records. Clearly, the focus of both men on March 2 was on the deadline for filing a request for a hearing on the assessed penalty. If, as Mr. Clark recalls, Mr. Hernandez only addressed this deadline, which makes sense, and Mr. Clark only heard "business" days, the most likely explanation is that Mr. Hernandez misspoke. Mr. Hernandez made a note stating that he told Mr. Clark that he had 20 business days to produce more records and 21 calendar days to file a request for a hearing. Mr. Hernandez testified at the hearing that he routinely takes handwritten notes, at the time of the events described in the notes and later enters them into Petitioner's computer system, but he did not identify exactly when he made or entered the notes at issue in this case, except that that he departed from his normal practice because he did not first make the crucial March 2 note in handwriting. In any event, the above-noted problems with Mr. Hernandez's testimony establish that this note, regardless of when prepared, is inaccurate. Based on the foregoing, Mr. Hernandez inadvertently misled or lulled Mr. Clark into filing the Petition after the deadline set forth in the APO. Extending the deadline in accordance with equitable tolling, the otherwise-late filing is timely.
Recommendation It is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order determining that the Petition was filed timely under the doctrine of equitable tolling. DONE AND ENTERED this 15th day of January, 2019, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 15th day of January, 2019.
The Issue The issue in this case is whether Respondent condominium association timely mailed or hand delivered to unit owners either a copy of the annual financial report for the year 2004 or, alternatively, a notice stating that a copy of the report would be provided to any owner, free of charge, upon request.
Findings Of Fact Respondent Eden Isles Condominium Association, Inc. ("Association") is the entity responsible for operating the common elements of the Eden Isles Condominium ("Condominium"), which consists of seven buildings comprising 364 units. As such, the Association is subject to the regulatory jurisdiction of Petitioner Division of Florida Land Sales, Condominiums, and Mobile Homes ("Division"). The Association retained Louis John Claps, C.P.A. & Associates, P.A. ("Claps") to audit the Association's books and prepare a financial statement respecting the year ending December 31, 2004. Thereafter, under a cover letter dated May 2, 2005, Claps delivered to the Association a financial report for the year 2004. This financial report was readily available to the members of the Association's governing Board of Directors ("Board"), who in turn could make copies thereof for delivery to the unit owners in their respective buildings. (The owners in each building elect a "building director" to serve on the Board.) In addition, the financial report was available for inspection and copying at the Association's office; any unit owner who asked for a copy was given one. The Association, however, did not mail or hand deliver to each unit owner either a copy of the financial report or, alternatively, a notice stating that a copy of such report could be had, at no charge, upon request.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division enter a final order finding the Association guilty of the charge of failing to timely provide each unit owner with either the annual financial report for the year 2004 or, alternatively, a notice stating that a copy of such report would be delivered, without charge, to any owner who requested one. In consequence of the Association's violation of Section 718.111(13), Florida Statutes, the Division should: (a) impose a civil penalty against the Association in the amount of $1,092; (b) order the Association to mail or hand deliver to each unit owner, within 30 days after the date of the Final Order, either a copy of the financial report for the year 2004 or, alternatively, a notice stating that a copy of such report will be provided at no cost to any owner who requests one in writing; and (c) order the Association to furnish the Division, within 45 days after the date of the Final Order, with an affidavit attesting that the remedial action just described has been taken. DONE AND ENTERED this 11th day of May, 2007, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings 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 11th day of May, 2007.
Findings Of Fact Based upon the stipulations of the parties, the following relevant facts are found: On March 5, 1986, the Hendry Corporation filed with the Department of Transportation (DOT) its application for qualification to bid on DOT projects for the year 1986. The audited financial statement submitted with the application was dated 125 days prior to March 5, 1986. By letter dated March 6, 1986, the DOT advised the petitioner that ". . . we are unable to act favorably on the qualification of your corporation with the Department. The audited financial statements submitted are of a date of more that [sic] 120 days prior to the application; therefore, they are unacceptable per Rule Chapter 14-22 and Florida Statutes 337.14." Petitioner was further notified of his right to request an administrative hearing within ten days. Petitioner timely requested a hearing, and the Department of Transportation requested the Division of Administrative Hearings to conduct the proceedings.
Findings Of Fact Respondent DeBellonia is president of Respondent CGFS, Inc. At all times material to these proceedings, the Respondents were business consultants who assisted their clients with the preparation and presentation of information for private lenders who were interested in making business loans. Their business offices were located at North Rocky Point Drive, Suite 800, Tampa, Florida. In late July or early August 1989, Constance J. Jones responded by telephone to an advertisement placed by Respondents in the Tampa Tribune newspaper. The ad communicated to her that the Respondent CGFS, Inc. was interested in providing business financing to new and established businesses. Upon receipt of the telephone call, a secretary at CGFS, Inc. scheduled an appointment for Mrs. Jones with Respondent DeBellonia for August 7, 1989. Mrs. Jones was excited about the appointment because the seller of commercial real property purchased by her and her husband had recently filed a foreclosure action to recover the property. The suit occurred because she and her husband had been unable to make the final balloon payment on the property. The seller had agreed to forebear the possibility of such a suit the year before when Mrs. Jones gave him twenty thousand dollars ($20,000.00) and the promise that she would obtain financing within a year's time and pay the outstanding balance in full. At the close of the year, Mrs. Jones had not been successful in her attempts to acquire the money to pay for the property. This appointment renewed her hopes that she could minimize her losses, settle the suit, and preserve her interest in the property. Prior to arranging her appointment with Respondent DeBellonia, Mrs. Jones had made applications for a loan at several banks. Her requests had been turned down because the banks had determined that the present value of the property was insufficient to provide the collateral needed for the secured loan she was seeking. When Mrs. Jones attended her meeting with Respondent DeBellonia, she voluntarily presented him with a copy of her agreement for deed, a property appraisal, and her owner's title insurance policy. Having submitted herself to a number of loan requests at various banks prior to this appointment, she assumed he would want to see the same documents that had been requested during those loan reviews. Respondent DeBellonia allowed Mrs. Jones to present her situation and her documentation to him in her own manner. He made copies of all of the papers offered to him and returned the originals. At the close of Mrs. Jones' presentation, Respondent DeBellonia agreed to be her business consultant and to assist her in her search for funding. Although Mrs. Jones originally stated that she needed to acquire $94,000.00, this amount was reduced to $20,000.00 when she was informed that the Respondents charge a professional service fee of ten percent of the loan amount ultimately accepted by the clients. To begin work on the funding project, the Respondents requested a non-refundable professional service fee of $1,900.00. Although Mrs. Jones did sign the business consultant agreement, she did not have the money with her to pay the non-refundable fee. When she informed Respondent DeBellonia that she did not have the money, he told her he needed the money as soon as possible so that he could go ahead and work on the transaction. He indicated that he could accomplish a fast transaction for the $20,000.00 in about three days time. According to Mrs. Jones, the seller of the commercial property was willing to forebear on the foreclosure for a while if she could give him $20,000.00 now and if she was actively pursuing a loan which would pay off the balance due. This proposal was another reason she changed her request from $94,000.00 to the $20,000.00 amount. Later that evening, Mrs. Jones telephoned Respondent DeBellonia and told him she needed a new document so that her husband could be on the agreement as well. When the second document was sent, the secretary mistakenly sent out the original agreement with a funding goal of $94,000.00 instead of the reduced request for $20,000.00. Mr. Jones' name had been placed on the document in order to obtain his signature. Both agreements given to Mrs. Jones clearly state that Respondent CGFS, Inc. is not a mortgage broker. Before Mrs. Jones returned a fully executed agreement to the Respondents with the non-refundable fee, she decided to call the Comptroller's Office in Tallahassee to get a business rating to see if this was a good-rated business for her own protection. Although nothing negative was stated by the Comptroller's Office, Mrs. Jones did not get the assurances she was seeking. After that, she decided not to retain the Respondents to provide their business consultant services. Without Mrs. Jones' presumption that the Respondents would eventually seek a mortgage on the real property she intended to purchase, there is no reliable circumstantial evidence which demonstrates that the Respondents were seeking to act as a mortgage broker under the set of facts presented at hearing. Even if the circumstantial evidence and ill-conceived presumptions were considered reliable, the evidence is outweighed by the clear statement within the consultant agreement that Respondent CGFS, Inc. is not a mortgage broker. In addition, if the Respondents had intended to see a mortgage for Mrs. Jones, they would have required her to have her husband sign the agreement because she was an equitable owner of the property in a tenancy by the entirety. Instead, it was Mrs. Jones who later requested that her husband's name be included on the agreement. Respondent DeBellonia clearly manufactured Respondents' Exhibit number E. If this proceeding had turned on his credibility versus the credibility of others, he would not have prevailed in the factual determination. Based upon the facts presented at hearing, the Department initially had reason to believe that the Respondents were violating or about to violate the law by acting as a mortgage broker and mortgage broker business without a license. However, the formal hearing process revealed that Mrs. Jones' impressions of what occurred during her meeting with Respondent DeBellonia were faulty. Documentary evidence prepared during the interview and Mrs. Jones' admissions during the cross-examination resolved the case in Respondent's favor. The actions taken by the Department in filing the Cease and Desist Order were proper, and were not harassment of the Respondents.
Recommendation Accordingly, it is RECOMMENDED: That the cease and desist order issued by the Department on February 20, 1990, be dismissed. DONE and ENTERED this 31st day of September, 1990, 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 21st day of September, 1990. APPENDIX TO RECOMMENDED IN CASE NO. 90-1720 Petitioner's proposed findings of fact are addressed as follows: Accepted. See HO number 1. Accepted. Reject the date of the interview. The rest is accepted. See HO number 2-number 6. Accepted. Accepted. See HO number 5. Accepted. See HO number 9 and number 10. Accept the first two sentences. See HO number 9. Reject the third sentence. Contrary to fact. Reject the fourth sentence. Irrelevant. 8. Accepted. See HO number 11 and number 12. 9. Accepted. See HO number 15 and number 18. COPIES FURNISHED: Stephen M. Christian, Esquire Office of the Comptroller Regional Service Center 1313 North Tampa Street, Ste. 615 Tampa, Florida 33602-3394 Michael C. Mone, Esquire 111 Eighth Street Belleair Beach, Florida 33535 Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 William G. Reeves, Esquire General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350
