The Issue The issues to be decided are: 1) whether Petitioner, Amerisure Mutual Insurance Company (Amerisure), is entitled to a credit or refund due to the elimination of credits by Respondent, Department of Financial Services (Respondent or the Department), that Amerisure claims accrued in the calendar year 2009 and should apply to future assessments owed to the Special Disability Trust Fund (SDTF) and the Workers? Compensation Administration Trust Fund (WCATF)(collectively the Trust Funds); 2) whether the elimination of these credits was accomplished by the Department?s application of a policy meeting the definition of a rule that has not been adopted through the chapter 120 rulemaking process; and 3) whether any refund or credit is barred by the statute of limitations in section 215.26, Florida Statutes.
Findings Of Fact Amerisure is a carrier as defined in section 440.02(4), Florida Statutes, authorized to transact the workers? compensation line of business in the State of Florida. At all times relevant to the Department?s Notice of Intent, Amerisure was authorized to transact the workers? compensation line of business in Florida, and required to pay assessments to both the SDTF and WCATF. Pursuant to section 440.49(9)(b), Florida Statutes, the SDTF is maintained by annual assessments, paid quarterly, upon the insurance companies writing compensation insurance in Florida; the commercial self-insurers under sections 624.462 and 624.4621, Florida Statutes; the assessable mutuals as defined in section 628.6011, Florida Statutes; and the self-insurers under chapter 440, Florida Statutes. Section 440.49(9)(b) requires the Department to determine the rate each year for the next calendar year, based on the Department?s estimate of the amount of money necessary to administer section 440.49, and to maintain the SDTF for that next calendar year. In addition, the total amount to be assessed against all entities subject to assessment is prorated among those entities. Similarly, pursuant to section 440.51(1), the WCATF is maintained by annual assessments, paid quarterly, upon the carriers writing compensation insurance in Florida and self- insurers. Section 440.51(1) provides that the rate is determined each year for the next calendar year based on the anticipated expenses of the administration of chapter 440 for the next calendar year. In addition, the total amount to be assessed against all entities subject to assessment is prorated among those entities. Workers? compensation policies are unique insurance policies in that they provide statutorily mandated coverage that must be purchased by most employers; they provide “no fault” coverage and have no maximum dollar amount limit in the primary coverage of medical benefits. To make such coverage affordable, the market has developed various types of policies which allow an employer, based upon its size and financial wherewithal, to limit its exposure for a possible reduction in premium. For example, there are standard policies that provide coverage from the first dollar of loss, there are large deductible policies where the employer shares in a greater amount of risk, there are retrospective policies where final premium amount is determined on the basis of loss development during the policy, and there are dividend plans which also take into account loss experience. Most workers? compensation policies are annual policies which can incept at any given day within a calendar year. It is not unusual for a workers? compensation policy to run between two calendar years. Regardless of the kind of workers? compensation policy issued to an employer, the initial premium at the time of policy inception is referred to as an “estimated premium.” This is because the “estimated premium” is based on the actual number of employees in a company?s payroll and the payroll classifications as to each employee?s particular job -- e.g., executive supervisor, window cleaner, etc. Because the final exposure is unknown until the last day of coverage, the “estimated premium” is always subject to change. Most workers? compensation policies have standard language copyrighted by the National Council on Compensation Insurance (NCCI), a statistical and rating organization which files rates and forms in Florida for use by carriers, which address this very point. Under the “Part Five Premium” section of a standard NCCI policy, “Section E” states that the premium shown on the information page, schedules, and endorsement is an “estimate.” Section E further states that the final premium will be determined by an audit after the policy ends by using the actual and not the estimated premium base, and the proper calculations and rates that lawfully apply to the business and work covered by the policy. Finally, Section E provides that if the actual premium is more than what the policyholder paid as an estimated premium, the insured must pay the balance. Conversely, if it is less than what was paid, the insurance company will refund premium. When audits are performed either at the end of the policy year or later, premiums may be refunded to a policyholder. Dividend plans are a kind of workers? compensation policy which allows for a dividend payment back to the policyholder if the actual loss experience observed is more favorable than anticipated. The payment of a dividend is not guaranteed, but is subject to the approval of an insurer?s Board of Directors. Significantly, the earliest that a dividend can be paid out under a dividend plan is six months after the policy has ended. As such, dividends are never paid in the same calendar year as a policy incepts. All workers? compensation carriers writing business in Florida pay an assessment on every premium dollar to fund the SDTF and WCATF. When the NCCI files for rates in Florida, it takes into account the assessments paid by carriers to the Trust Funds, and the charge for the assessments is included in the rates developed by the NCCI. The rate is the amount applied to the payroll, and the product of the payroll and rate equals the premium for a particular payroll classification. Reporting and Collection of Assessments The Department provides pre-printed forms entitled “Carrier and Self-Insurance Fund Quarterly Report” to workers? compensation carriers, such as Amerisure, to self-report “net premium” amounts on a quarterly basis. The Department also provides a “spreadsheet” form that the carriers may utilize to indicate how they are calculating the net premium amount for each of the trust funds. After calculating the net premium amount for each trust fund on the spreadsheet, the carrier writes in that net premium amount on the quarterly report and multiplies that amount by the assessment rate set by the Department (which is reflected on the quarterly report form). If a carrier returns more premium and/or pays more in dividends than it has written in one quarter, it has a “negative net premium” and owes no assessment for that quarter. The quarterly report form provides empty circles, referred to on the form as “buttons,” for the carrier to fill in indicating whether the net premium amount is negative or positive. When a carrier has negative net premium for a quarter, a credit amount is reflected on the next quarterly report form to be applied toward future assessments. This credit amount is pre-printed by the Department on the next quarter?s form. This amount appears in the “debit/credit box” on the quarterly report form or in the “balance carried forward” on the spreadsheet. The direct written premium in the insurance industry is the summation of all premiums for a given period less any returns made during that period. Amerisure subtracts any premium returned during the calendar year from its gross number to determine direct written premium, regardless of what year the policy, for which premium is returned, incepted. In order to calculate the net premium amount for assessment purposes, Amerisure deducts the amount of dividends paid or credited to policyholders from their direct written premium amount, regardless of the fact that the policy year for the dividend being paid is a different calendar year than the year that the dividend is paid or credited. By statute, workers? compensation insurance companies, such as Amerisure, are assessed by the Department for contributions to the SDTF based on the amount of “net premiums written,” and companies are assessed for contributions to the WCATF based on the amount of “net premiums earned” or “net premiums collected.” Since at least 2004, Amerisure has been utilizing “direct written premium” to calculate the “net premium” or “net premium collected” amount listed in its quarterly reports for both the SDTF and WCATF Funds. The Department utilizes annual reports filed with the NAIC by carriers to perform their audits and determine if an insurer has accurately reported the amount of net premium subject to assessments for the Trust Funds. Assessments to the Trust Funds are paid by Amerisure during the quarter that premium is written. Premium is considered written when a policy first incepts or when additional premium is charged on a policy. Because Amerisure utilizes net written premium as a “proxy” for net collected premium, it pays more in trust fund assessments up front than it would if it were able to report the company?s actual collected premium. Amerisure?s 2009 Credits In the last two quarters of 2008, Amerisure began to experience negative net premium. This continued through all of calendar year 2009 until Amerisure once again experienced positive premium in calendar year 2010. Amerisure?s negative premium was a result of the economic downturn, which gravely impacted a large portion of Amerisure?s Florida customer base in the construction industry. Due to so many employers downsizing their workforce, Amerisure returned 12 million dollars in premium in calendar year 2009. The majority of the 12 million dollars of premium returned to policyholders was for approximately 1200 policies which had incepted prior to 2009 and for which assessments had been paid into the trust funds prior to 2009. Amerisure?s payment to the trust funds of the original assessment amounts on the policies that incepted prior to 2009 was based on “estimated premium,” on what Amerisure believed the premium to be at that point in time, prior to the calculation of the final premium. According to Raymond Neff, who was accepted as an expert in the field of workers? compensation insurance, Amerisure?s experience of negative net premium in late 2008 and 2009 was not unique in the workers? compensation construction sector as verified by NCCI data showing similar impacts to other carriers due to the recession and reductions in payroll during this time frame. The Department did not rebut his testimony in any meaningful way. Reporting and Payments for the SDTF For the time periods in 2008, Amerisure paid quarterly assessments to the SDTF based upon reported net premiums written, or did not pay assessments due to reported negative net premiums written, as follows: for the quarter ending March 31, 2008, Amerisure reported $27,651,422 in net premiums, and paid an assessment of $1,249,844; for the quarter ending June 30, 2008, Amerisure reported $5,282,751 in net premiums, and paid an assessment of $238,780; for the quarter ending September 30, 2008, Amerisure reported negative net premiums of $923,570, and no assessment was due or paid; and for the quarter ending December 31, 2008, Amerisure reported negative net premiums of $1,269,343, and no assessment was due or paid. Because of premium refunds made to policyholders in the quarters ending September 30, 2008, and December 31, 2008, resulting in an overpayment, Amerisure received a credit against future SDTF assessment payments in the amount of $99,119.66. For the time periods in 2009, Amerisure did not owe or pay assessments to the SDTF due to reported negative net premiums written, resulting from reported payment of premium refunds to policyholders, as detailed below. For the quarter ending March 31, 2009, Amerisure reported negative net premiums of $1,422,158, and no assessment was due or paid. When the Department provided Amerisure with its Carrier and Self-Insurance Quarterly Premium Report to complete for the quarter ending March 31, 2009, it included a $99,119.66 "Debit/Credit" carried over from 2008 for the SDTF on the report form. For the quarter ending June 30, 2009, Amerisure reported negative net premiums of $2,382,484, and no assessment was due or paid. When the Department provided Amerisure with its Carrier and Self-Insurance Quarterly Premium Report to complete for the quarter ending June 30, 2009, it included a $163,401.20 "Debit/Credit" for the SDTF on the report form. This amount was the sum of $99,119.66 carried over from 2008, plus a $64,281.54 credit from the quarter ending March 31, 2009, calculated by application of the 2009 assessment rate to the $1,422,158 reported negative net premium for the quarter ending March 31, 2009. For the quarter ending September 30, 2009, Amerisure reported negative net premiums of $2,392,606, and no assessment was due or paid. When the Department provided Amerisure with its Carrier and Self-Insurance Quarterly Premium Report to complete for the quarter ending September 30, 2009, it included a $271,089.48 "Debit/Credit" for the SDTF on the report form. This amount was the sum of $99,119.66 carried over from 2008; plus a $64,281.54 credit from the quarter ending March 31, 2009, calculated by application of the 2009 assessment rate to the $1,422,158 reported negative net premium for the quarter ending March 31, 2009; plus a $107,688.28 credit from the quarter ending June 30, 2009, calculated by application of the 2009 assessment rate to the $2,382,484 reported negative net premium for the quarter ending June 30, 2009. For the quarter ending December 31, 2009, Amerisure reported negative net premiums of $3,237,419, and no assessment was due or paid. When the Department provided Amerisure with its Carrier and Self-Insurance Quarterly Premium Report to complete for the quarter ending December 31, 2009, it included a $379,235.27 "Debit/Credit" for the SDTF on the report form. This amount was the sum of $99,119.66 carried over from 2008; plus a $64,281.54 credit from the quarter ending March 31, 2009, calculated by application of the 2009 assessment rate to the $1,422,158 reported negative net premium for the quarter ending March 31, 2009; plus a $107,688.28 credit from the quarter ending June 30, 2009, calculated by application of the 2009 assessment rate to the $2,382,484 reported negative net premium for the quarter ending June 30, 2009; plus a $108,145.79 credit from the quarter ending September 30, 2009, calculated by application of the 2009 assessment rate to the $2,392,606 reported negative net premium for the quarter ending September 30, 2009. For the time periods in 2010, Amerisure paid quarterly assessments to the SDTF based upon reported net premiums, as detailed below. For the quarter ending March 31, 2010, Amerisure reported net premiums of $828,566, and paid an assessment of $37,451.18. The assessment was paid by application of $37,451.18 of the $99,119.66 credit carried over from 2008. When the Department provided Amerisure with its Carrier and Self-Insurance Quarterly Premium Report to complete for the quarter ending March 31, 2010, it included a $99,119.66 "Debit/Credit" carried over from 2008 for the SDTF on the report form. The credits of $64,281.54, $107,688.28, and $108,145.79 recognized in the reports for the quarters ending June 30, September 30, and December 31, 2009, were deleted. However, the Department did not otherwise notify Amerisure that it was deleting the credits or why it was deleting the credits. It also did not provide a point of entry for Amerisure to challenge the deletion of the credits. For the quarter ending June 30, 2010, Amerisure reported net premiums of $1,282,179. It paid an assessment of $57,954.49 by application of $57,954.49 of the $99,119.66 credit carried over from 2008. For the quarter ending September 30, 2010, Amerisure reported net premiums of $937,504. It paid an assessment of $13,687.56 in part by application of the remainder of the $99,119.66 credit carried over from 2008, along with a payment of $9,974.01. For the quarter ending December 31, 2010, Amerisure reported net premiums of $657,457, and paid an assessment of $9,597.41. For the time periods in 2011, Amerisure paid quarterly assessments to the SDTF based upon reported net premiums, as follows: for the quarter ending March 31, 2011, Amerisure reported $2,455,230 in net premiums, and paid an assessment of $35,846.36; for the quarter ending June 30, 2011, Amerisure reported $1,741,790 in net premiums, and paid an assessment of $25,430.13; for the quarter ending September 30, 2011, Amerisure reported $2,054,805 in net premiums, and paid an assessment of $30,000.15; and for the quarter ending December 31, 2011, Amerisure reported $1,823,063 in net premiums, and paid an assessment of $26,616.72. For the time periods in 2012, Amerisure paid quarterly assessments to the SDTF based upon reported net premiums, as follows: for the quarter ending March 31, 2012, Amerisure reported $4,816,098 in net premiums, and paid an assessment of $69,351.81; and for the quarter ending June 30, 2012, Amerisure reported $2,072,685 in net premiums, and paid an assessment of $29,846.66. Reporting and Payments for the WCATF For the time periods in 2008, Amerisure paid quarterly assessments to the WCATF based upon reported net premiums, or did not pay assessments due to reported negative net premiums, as follows: for the quarter ending March 31, 2008, Amerisure reported $30,353,820 in net premiums, and paid an assessment of $75,885; for the quarter ending June 30, 2008, Amerisure reported $6,696,958 in net premiums, and paid an assessment of $16,742; for the quarter ending September 30, 2008, Amerisure reported $874,225 in net premiums, and paid an assessment of $2,186; and for the quarter ending December 31, 2008, Amerisure reported $1,271,387 in negative net premiums, and no assessment was due or paid. Because of premium refunds made to policyholders in the quarters ending September 30, 2008, and December 31, 2008, resulting in an overpayment, Amerisure received a credit against future WCATF assessment payments in the amount of $3,178.47. For the time periods in 2009, Amerisure did not owe or pay assessments to the WCATF due to reported negative net premiums resulting from reported payment of premium refunds to policyholders, as detailed below. For the quarter ending March 31, 2009, Amerisure reported $1,321,194 in negative net premiums. When the Department provided Amerisure with its Carrier and Self- Insurance Quarterly Premium Report to complete for the quarter ending March 31, 2009, it included a $3,178.47 "Debit/Credit" carried over from 2008 for the WCATF on the report. For the quarter ending June 30, 2009, Amerisure reported $2,990,876 of negative net premiums. When the Department provided Amerisure with its Carrier and Self- Insurance Quarterly Premium Report to complete for the quarter ending June 30, 2009, it included a $6,481.46 "Debit/Credit" for the WCATF on the report, which is the sum of $3,178.47 carried over from 2008, plus a $3,302.99 credit from the quarter ending March 31, 2009, calculated by application of the 2009 assessment rate to the $1,321,194 reported negative net premium for the quarter ending March 31, 2009. For the quarter ending September 30, 2009, Amerisure reported $2,176,521 in negative net premiums.2/ When the Department provided Amerisure with its Carrier and Self- Insurance Quarterly Premium Report to complete for the quarter ending September 30, 2009, it included a $13,958.65 "Debit/Credit" for the WCATF on the report. This amount was the sum of $3,178.47 carried over from 2008; plus a $3,302.99 credit from the quarter ending March 31, 2009, calculated by application of the 2009 assessment rate to the $1,321,194 reported negative net premium for the quarter ending March 31, 2009; plus a $7,477.19 credit from the quarter ending June 30, 2009, calculated by application of the 2009 assessment rate to the $2,990,876 reported negative net premium for the quarter ending June 30, 2009. For the quarter ending December 31, 2009, Amerisure reported $3,549,615 in negative net premiums. When the Department provided Amerisure with its Carrier and Self- Insurance Quarterly Premium Report to complete for the quarter ending December 31, 2009, it included a $19,399.95 "Debit/Credit" for the WCATF on the report. This amount was the sum of $3,178.47 carried over from 2008; plus a $3,302.99 credit from the quarter ending March 31, 2009, calculated by application of the 2009 assessment rate to the $1,321,194 reported negative net premium for the quarter ending March 31, 2009; plus a $7,477.19 credit from the quarter ending June 30, 2009, calculated by application of the 2009 assessment rate to the $2,990,876 reported negative net premium for the quarter ending June 30, 2009; plus a $5,441.30 credit from the quarter ending September 30, 2009, calculated by application of the 2009 assessment rate to the $2,176,521 reported negative net premium for the quarter ending September 30, 2009. For the quarters in 2010, Amerisure paid quarterly assessments to the WCATF based upon reported net premiums, as detailed below. For the quarter ending March 31, 2010, Amerisure reported $225,027 in net premiums, and paid an assessment of $1,800.22 by applying $1,800.22 of the $3,178.47 credit carried over from 2008. When the Department provided Amerisure with its Carrier and Self-Insurance Quarterly Premium Report for the quarter ending March 31, 2010, it included a $3,178.47 "Debit/Credit" carried over from 2008 for the WCATF on the report. The credits of $3,302.99, $7,477.19, and $5,441.30 recognized in the reports for the quarters ending June 30, September 30, and December 31, 2009, were deleted. The Department did not otherwise notify Amerisure that it was deleting the credits or why it was deleting the credits. The Department also did not provide an opportunity for Amerisure to challenge the deletion of the credits. For the quarter ending June 30, 2010, Amerisure reported $2,011,533 in net premiums, and paid an assessment of $16,092.26, which was paid in part by application of the remainder of the $3,178.47 credit carried over from 2008. For the quarter ending September 30, 2010, Amerisure reported $1,094,027 in net premiums, and paid an assessment of $23,466.23. This payment included $14,714.01 due for an assessment owed for the quarter ending June 30, 2010. For the quarter ending December 31, 2010, Amerisure reported $656,608 in net premiums, and paid an assessment of $5,252.86. For the time periods in 2011, Amerisure paid quarterly assessments to the WCATF based upon reported net premiums, as follows: for the quarter ending March 31, 2011, Amerisure reported $2,456,006 in net premiums, and paid an assessment of $24,068.86; for the quarter ending June 30, 2011, Amerisure reported $1,864,571 in net premiums, and paid an assessment of $18,272.80; for the quarter ending September 30, 2011, Amerisure reported $2,539,405 in net premiums, and paid an assessment of $24,866.17; and for the quarter ending December 31, 2011, Amerisure reported $1,782,608 in net premiums, and paid an assessment of $17,469.56. For the time periods in 2012, Amerisure paid quarterly assessments to the WCATF based upon reported net premiums, as follows: for the quarter ending March 31, 2012, Amerisure reported $4,837,632 in net premiums, and paid an assessment of $84,658.56; and for the quarter ending June 30, 2012, Amerisure reported $2,348,810 in net premiums, and paid an assessment of $41,104.18. For its Carrier and Self-Insurance Fund Quarterly Premium Reports submitted to Respondent for the quarters ending March 31, 2008; June 30, 2008; September 30, 2008; and December 31, 2008, premium refunds made to policyholders included in the calculation of "net premiums" and "net premiums written" reflect premium refunds made to policyholders by Amerisure in the calendar year 2008. For its Carrier and Self-Insurance Fund Quarterly Premium Reports submitted to the Department for the quarters ending March 31, 2009; June 30, 2009; September 30, 2009; and December 31, 2009, premium refunds made to policyholders included in the calculation of "net premiums" and "net premiums written" reflect premium refunds made to policyholders by Amerisure in the calendar year 2009. For its Carrier and Self-Insurance Fund Quarterly Premium Reports submitted to the Department for the quarters ending March 31, 2010; June 30, 2010; September 30, 2010; and December 31, 2010, premium refunds made to policyholders included in the calculation of "net premiums" and "net premiums written" reflect premium refunds made to policyholders by Amerisure in the calendar year 2010. For its Carrier and Self-Insurance Fund Quarterly Premium Reports submitted to the Department for the quarters ending March 31, 2011; June 30, 2011; September 30, 2011; and December 31, 2011, premium refunds made to policyholders included in the calculation of "net premiums" and "net premiums written" reflect premium refunds made to policyholders by Amerisure in the calendar year 2011. For its Carrier and Self-Insurance Fund Quarterly Premium Reports submitted to the Department for the quarters ending March 31, 2012, and June 30, 2012, premium refunds made to policyholders included in the calculation of "net premiums" and "net premiums written" reflect premium refunds made to policyholders by Amerisure in the calendar year 2012. For its Carrier and Self-Insurance Fund Quarterly Premium Reports submitted to the Department for the quarters ending March 31, 2008; June 30, 2008; September 30, 2008; and December 31, 2008, premium refunds made to policyholders included in the calculation of "net premiums" and "net premiums written" reflect refunds made to policyholders by Amerisure for policies where assessments for premium for those policies were paid in calendar years prior to 2008. Likewise, for its Carrier and Self-Insurance Fund Quarterly Premium Reports submitted to the Department for the quarters ending March 31, 2009; June 30, 2009; September 30, 2009; and December 31, 2009, premium refunds made to policyholders included in the calculation of "net premiums" and "net premiums written" reflect refunds made to policyholders by Amerisure for policies where assessments for premium for those policies were paid in calendar years prior to 2009. Events Following the Deletion of 2009 Credits Gene Smith, Assessments Coordinator for the Division of Workers? Compensation of the Department, has the responsibility to calculate the assessment rate for the Trust Funds. Evelyn Vlasak was Mr. Smith?s predecessor as Assessments Coordinator. On September 13, 2010, Gene Smith sent an e-mail requesting that Amerisure provide for each quarter in 2008 and 2009 “[a]n original computer generated run showing the written premium for all Line of Business 160 (workers? compensation) in Florida by policy number with totals at the end.” Amerisure provided the requested information via Excel spreadsheet on October 1, 2010. By letter dated December 9, 2010 (received on December 14, 2010), Mr. Smith stated, in pertinent part: We received the excel spreadsheet of Amerisure Mutual Insurance Company?s 2008- 2009 Policy Level Details. To complete our audit we also need the detailed documentation for dividends and large deductibles. Please review the list below, and provide the requested documentation by December 20, 2010. The same Policy Level Detail spreadsheets for each quarter from January 1, 1999, through the current quarter 2010. There is no need to provide 2008 and 2009 as you have already provided these. Detail of annual dividends declared and paid from January 1, 1999, through the current quarter 2010. Detail of quarterly large deductible “add backs” from January 1, 1999, through the current quarter 2010. In response, Amerisure?s counsel contacted Mr. Smith via e-mail on December 14, 2010, to ask why the Department needed this information. Mr. Smith responded by e-mail on January 2, 2011, stating that the Department would respond very soon. On January 4, 2011, David Hershel, an attorney for the Department, contacted Amerisure?s counsel and advised that the additional data requested in the December 9, 2010, letter was needed to review the credit amounts claimed by Amerisure. Mr. Hershel stated that the Department would send a revised letter, paring down its information request. On January 10, 2011, Mr. Smith sent a letter, which stated: We received the excel spreadsheet of Amerisure Mutual Insurance Company?s 2008- 2009 Policy Level Details. To complete our audit we also need the detailed documentation for dividends and large deductibles, as well as the payments for the second and third quarters of 2010. Please review the list below. Detail of annual dividends declared and paid from January 1, 2008, through the 4th quarter 2010. Detail of quarterly large deductible “add backs” from January 1, 2008, through the 4th quarter 2010. Payments for the second and third quarters of 2010 for the WCATF as required by Florida law. Please provide the requested documentation by January 21st, 2011. Thank you in advance for your time and assistance. If you have any questions, please feel free to contact me. On January 17, 2011, Amerisure agreed to send in the requested payments as a sign of good faith. In this transmittal, Amerisure reserved its rights to withhold against further assessments. On January 27, 2011, Amerisure provided Gene Smith with Excel spreadsheets containing the information sought in items 1 and 2 of the January 10, 2011, letter. On July 1, 2012, some 17 months later, Gene Smith responded by letter, directing that the appropriate procedure and remedy to request a refund of monies paid into the State Treasury is set forth in section 215.26, Florida Statutes, and providing the forms developed for this request. On September 26, 2012, Amerisure submitted its applications for credit or refund pursuant to section 215.26. Amerisure requested a credit or refund of $25,095.70 paid into WCATF and $236,663.25 paid into SDTF from October 26, 2010, through July 26, 2012, which Amerisure alleges it should not have been required to pay in light of the amount of credit it had accrued in 2008 and 2009. For example, the request for refund with respect to the SDTF states: Through the reporting period of June 30, 2012, Amerisure has paid $236,663.25 in assessments to the SDTF that the company should not have been required to pay since it had credits that should have been applied against its assessment liability. As such, Amerisure requests a refund of the total amount of $236,663.25 paid into the SDTF between September 30, 2010, and June 30, 2012. Furthermore, Amerisure asserts its right to apply, and requests the SDTF to facilitate, the application of the remaining credit balance of $189,783.75 against future assessment liability. The Department denied Amerisure?s request for refund of the overpayment of assessments paid into the SDTF and WCATF from January 2011 onward in its NOI dated January 28, 2013. The Department states in its NOI that Amerisure is “seeking to be paid in cash for supposed credits which it never accrued.” The denial letter also informed Amerisure of its right to an administrative hearing. Amerisure timely filed a Request for Administrative Hearing, which gave rise to this proceeding. The statement that the credits never accrued is inconsistent with the Department?s prior calculation of the credits on the reporting forms that the Department sent to Amerisure each quarter to complete. The forms for 2009 clearly indicated accrued credits and Department staff acknowledged eliminating those credits. The Department?s Treatment of “Excess Credits” Maya Brown is a government analyst with the Department?s Division of Workers? Compensation. Her duties include creating manuals, performing audits on insurance carriers, and processing refunds for carriers. According to Ms. Brown, she was instructed in 2009 by Ms. Vlasak that at the end of a year, if a company has negative premiums and does not owe any assessments or has not paid any assessments, that balance, which she described as “excess credits,” is then removed. Based upon this understanding, Ms. Brown removed $451,532 (which Amerisure refers to as the 2009 credits) from Amerisure?s rolling calculations when the 2010 quarterly report forms were sent to Amerisure. She did not call Amerisure and notify them that she was deleting the credits or of the reason for doing so, and does not know of anyone else providing that information to Amerisure. The quarterly report form for the first quarter of 2010, however, carried forward the 2008 credits that Amerisure had accumulated in 2008. Ms. Brown first learned about the concept of “excess credits” in 2004 when she was trained to perform audits by Ms. Vlasak. Since 2004, the only other Assessment Unit employee performing audits besides Ms. Brown was Ms. Vicki Griffin. Ms. Griffin was also trained by Ms. Vlasak and utilized the same procedures with regard to “excess credits.” Sometime before May 2009, Ms. Vlasak drafted proposed rules for the Assessment Unit that addressed “excess credits” based on negative “net premium”. An early version of the draft rules was prepared as early as March 29, 2006. The July 26, 2008, draft of proposed rule 69L-4.003, entitled “Completion of Quarterly Reports and Payment of Assessment by Carriers,” included the following in subsection (e)(5): If as a result of premium offsets for dividends paid or credited and premium refunds, a Carrier will owe no assessments for any of the four calendar year quarters, the Carrier will be able to apply the unused premium offset to reduce assessments owed in any of the other three quarters of the same calendar year. However, after the Quarterly Report is filed for the period ending December 31, the Division will adjust the Carrier?s records to remove any credits due to these premium offsets that were not used in that year. Therefore the (credit) debit pre-printed on the upcoming March 31st Quarterly Premium and Assessment Report will reflect only overpayment of assessment(s) owed for the previous calendar year. If this adjustment is necessary, the Carrier will be [sic] receive written notification. Section (h) of the draft proposed rule addressed the Department?s procedure for “overpayments”: When a Carrier has computed its net assessable premiums and assessments according to this rule and later determines that either the WCATF or SDTF assessment has been overpaid, the company may elect to apply the overpayment against future assessments owed to the same fund or may submit an [sic] refund request under Section 215.26, Florida Statutes. Written notification of an overpayment must be accompanied by detailed documentation of the computation of the alleged overpayment, a copy of the State Page of the Annual Report for the referenced year, and as needed, revised Quarterly Reports. Written notification that a refund has been requested must meet the requirements of Section 215.26, Florida Statutes, including the submission of the approved form. The refund request must be received within three years of the date the alleged overpaid amount was initially deposited into the state treasury. Written notification of the election to apply the overpayment against future assessment payments must be received within three years of the date the overpaid amount was initially deposited into the state treasury. Upon verification of an overpayment, future assessments may be offset until the verified overpayment is fully utilized, with no time limitations. Each Carrier shall bear the responsibility to notify the Division in written format, that an overpayment may have occurred and to provide documentation that will allow the Department to verify the amount of the alleged overpayment. If an overpayment has occurred, and revised Quarterly Reports are submitted, the Carrier does not submit an Application for Refund on an approved form, the Carrier will be allowed to offset future assessments to the extent of the overpayment. However, after the end of the three-year window, in the absence of a written refund application, the unused portion of the overpayment, if any, will no longer be available as an offset against future assessments, or for the issuance of a refund pursuant to Section 215.26(2). The Division shall bear the responsibility to acknowledge receipt of this notification and to verify the amount of overpayment, if any, as well as respond to the request for credit or refund. The Department acknowledges that these draft proposed rules were never promulgated or published in a notice of proposed rule development. In 2011, Mr. Jenkins, the new Bureau Chief, revived attempts to promulgate rules for the Assessment Unit. That is, he circulated Ms. Vlasak?s draft proposed rules to members of his staff for their consideration. However, other office priorities took precedence, and as of 2013, no further attempts at rule development have been undertaken by the Department in this regard. Ms. Brown understood that the language in Ms. Vlasak?s draft rules is consistent with what occurred in 2009 regarding Amerisure?s reporting of negative premium. Despite the failure of the Department to adopt the draft rules, or some other version of them, the policy reflected in these proposed rules has been applied by the Department to eliminate Amerisure?s 2009 credits. Ms. Vlasak based her procedures on section 624.5094, Florida Statutes. However, the Department has since acknowledged that the statute does not speak to or define “excess credits.” The elimination of “excess credits” at the end of the year is currently the policy of the Division of Workers? Compensation and is how its employees process quarterly reports and assessment payments. This procedure is also reflected in a draft policy and procedures manual put together by Gene Smith at the direction of Greg Jenkins to capture the policies and procedures of the Assessment Unit. Under the caption “Prior Balance Carried Forward,” the manual provides: . . . a company may report (in very rare circumstances) negative net premium on Line 1 of the Quarterly Premium Report for either the WCATF or SDTF which would otherwise result in a negative assessment amount. This will carry over the following quarter. Should the company continue to reflect a negative amount by calendar year end, these negative amounts are removed per Section 624.5094, F.S. Mr. Jenkins wrote and compiled these policies and procedures when he was the Assessment Unit coordinator, a position he held until about a year and a half ago. If, on the other hand, a carrier only experiences negative net premium during some quarters but not all, these credits may be deemed an “official overpayment” and be allowed to carry forward. The process to determine if an overpayment is “official” has not been written into any policy or procedure, proposed rule, rule, or statute. Determining whether credits for a given calendar year are “excess” or “official overpayments” is a process that occurs only after a company has filed its annual report with the NAIC. This never occurs before March of the year following the year in question. Pursuant to current Department policy, a company cannot request a refund for an overpayment until after it is deemed an “official overpayment.” Mr. Smith testified that he agreed with the Department?s position that section 624.5094 required credits accumulated to be eliminated if the company continued to reflect a negative amount of net premium by the end of the calendar year, despite the fact that the statute does not include or define the term “excess credits.” Mr. Smith acknowledged that his interpretation of section 624.5094 stems from his belief that a carrier can experience negative net written premium for all four quarters of a year, which he believes is a violation of section 624.5094. This, in turn, is based on Mr. Smith?s definition of net written premium. To determine the net premium amount for assessment purposes, Mr. Smith took the position that carriers can only deduct return premium for a policy that incepts in the same calendar year that the premium is returned. Mr. Smith believed that additional premiums collected in a calendar year subsequent to the policy year for which the premium is collected would likewise not be included in the direct written premium or net premium number. Mr. Smith could point to no statute, rule, or bulletin which defines net premium in this fashion. Mr. Jenkins, the Bureau Chief, agreed with Mr. Smith?s interpretation, deferring to his judgment. Mr. Jenkins acknowledged that the determination made with regard to Amerisure?s 2009 credits was based on Mr. Smith?s definition of net premium, because Amerisure could not offset refunds or dividends from prior policy years in determining the amount of net premium. Mr. Jenkins also agreed with Mr. Smith that section 624.5094 “tied the Department?s hands” with regard to Amerisure. The Department?s determination that its “excess credits” policy prevents Amerisure from utilizing the 2009 credits against future assessments is further outlined in a June 9, 2011, email from Victoria Griffin to Gene Smith which states: Gene, You had asked me about my recall of the unit?s procedure for dealing with negative premium and section 624.5094 FS in the past. Since I have been here it has been common practice to accept all reporting at face value to include negative premiums till such time that we received the report from NAIC which reflected the written, earned and dividends the carriers reported, which may include negative amounts. In regards to your question regarding 624.5094, we have not ever reviewed individual policy holder information for any insurance company. My understanding of what happened with the Amerisure Mutual file is that they reported negative premiums for all four (4) quarters of 2009, (stating verbally that they took a loss for that year and wanted to recoup) and they believed that they were entitled to the credit amount reflected for 2009. Regardless of the fact that no assessment amounts had been paid in to the funds for that time frame. When we completed the audit for 2009, those negative amounts were removed; leaving a credit balance reflected from actual overpayments of 2008 to both funds. These overpayments were used towards future assessments and as of 4th quarter 2010 were exhausted. Let me know if you need any more information. Thanks, Vicki If Amerisure and other carriers were to use the Department?s definition of “net premium” and not include additional premium written for policies that incepted in prior calendar years, the Department would most likely experience a substantial drop in the amount of assessments collected for either Trust Fund. This represents the most probable scenario because it is more likely for an insurer to charge additional premium after a year-end or subsequent audit than to return premium. In fact, for the last 12 years that Andrea Koehler has worked at Amerisure, other than the period at issue in 2008-2009, the company consistently wrote more premium than it returned. Most importantly, this interpretation of the definition of net premium is inconsistent with using the amounts listed in a company?s NAIC reports as an audit method to insure proper reporting by the insurance companies. In order for the numbers to be comparable, the amount reported must be consistent with industry practice in reporting to the NAIC.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order incorporating the findings of this Recommended Order and reinstating Amerisure?s 2009 credits as credits toward future assessments due to the Trust Funds. DONE AND ENTERED this 15th day of November, 2013, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS 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 November, 2013.
The Issue The issue presented is whether the Department's audit assessment against Petitioner for additional insurance premium tax for the tax years 1989 and 1990 is proper.
Findings Of Fact Prior to the Final Hearing, the parties agreed to numerous facts and entered into a Joint Prehearing Statement. The Hearing Officer entitles the Findings of Fact section of the Recommended Order "Agreed Facts"; however, instead of reciting the actual stipulation facts submitted by the parties, the Hearing Officer paraphrases and adds facts that were not agreed to by the parties. The "Agreed Facts" section should only recite the facts that were actually agreed to by the parties. Accordingly, the Department substitutes the Joint Prehearing Statement for the Hearing Officer's "Agreed Facts" numbers 1 through 6 as follows: Central Dade is, and at all material times was, a Medical Malpractice Self Insurance Fund as defined in Sec. 627.357, Fla. Stat. Central Dade is a trust, not a corporation. It has been in existence and operation since 1979. Its sole purpose is to provide medical malpractice insurance for its members, i.e., approximately 100 doctors in Dade County. Central Dade has no capital and is not operated for profit. It does not and cannot, absent permission from the Department of Insurance, legally pay dividends to its members; rather it is required by law to hold one hundred percent of its premium and investment income to fund medical malpractice claims and pay its operating expenses (including taxes). Central Dade's members are individually liable or assessable for any shortfall in its trust funds. Central Dade has standing to challenge Fla. Admin. Code Rule 12B- 8.001(5) because it is substantially affected by the Rule. The Department, as an agency within the Executive Branch of the government of the State of Florida, is authorized by Chapters 213 and 624, Fla. Stat., to conduct audits and make assessments of tax pursuant to Chapter 624, Fla. Stat., (Insurance Premium Tax). The Department conducted an audit of Central Dade for the audit period of 12/31/89 through 12/31/90 for Insurance Premium Tax. After the conclusion of the audit and after administrative protest of the proposed assessment by Central Dade, an assessment was issued on July 20, 1994. The assessment became a Final Assessment on July 20, 1994. Central Dade was assessed $8,996.31 tax; $899.63 penalty; and $2,346.58 interest through March 10, 1993. Central Dade paid the entire assessment and is seeking a refund of the payment through this action. Central Dade timely filed a Petition seeking to have the tax assessment declared invalid. Additionally, Central Dade filed a Petition pursuant to Sec. 120.56, Fla. Stat. challenging Fla. Admin. Code Rule 12B-8.001(5) as invalid. Upon Motion by the Parties, the cases were consolidated for Final Hearing. Medical Malpractice Self-insurance Funds became subject to the Insurance Premium Tax beginning July 1, 1989. Ch. 88-206, ss. 6, Laws of Fla. Fla. Admin. Code Rule 12B-8.001(5) became effective March 25, 1990. The parties agree the Rule was correctly promulgated and the Petitioner is only challenging the applicability of the Rule to Petitioner and the substance of the Rule. The dispute between the parties concerns whether Petitioner is entitled to the credits contained in Sec. 624.509.(4), Fla. Stat. The parties additionally stipulated to the following: If the Department prevails in this action, the Petitioner will not be entitled to any refund for the tax years 1989 and 1990. [Joint Exhibit Two] Any overpayment made by the Petitioner will be applied to subsequent tax years. 1/ If the Petitioner prevails in this action, it will be entitled to a refund of $23,774.76 for the tax years 1989 and 1990. [Joint Exhibit Two] The Department rejects the Hearing Officer's "Agreed Fact" number 7 because it is a conclusion of law and not a finding of fact. The Department rejects the Hearing Officer's "Agreed Fact" number 8 as irrelevant to this proceeding. The Department makes the following additional findings of fact based on competent and substantial testimony and evidence presented at the Final Hearing: A premium tax on "medical malpractice self-insurance [funds]" was first imposed in 1989. Effective July 1, 1989, Chapter 88-206, ss. 6, Laws of Fla., amended Sec. 627.357, Fla. Stat. to provide: 627.357 Medical malpractice self-insurance -- (9) Premiums, contributions, and assessments received by a fund are subject to s. 624.509 (1), (2), and (3), except that the tax rate shall be 1.6 percent of the gross amount of such premiums, contributions and assessments. E.S. The premium tax imposed on medical malpractice self-insurers was, pursuant to the above-quoted statute, 1.6 percent of the gross amount of the premiums, contributions and assessments. A premium tax on "dental service plan corporations" self-insurance funds was first imposed in 1989. Effective July 1, 1989, Chapter 88-206, ss. 6, Laws of Fla., amended Sec. 627.357, Fla. Stat. to provide: 637.406 Tax on premiums, contributions, and assessments. Premiums, contributions, and assessments received by a dental service plan corporation are subject to the tax imposed by s. 624.509. The premium tax imposed on dental service plan corporations in 1988 was 2 percent of the gross amount of the premiums, contributions, and assessments pursuant to Sec. 624.509(1)(a), Fla. Stat. (1989). The Legislature in the same Bill that added the amendments to Sec. 627.357 Fla. Stat., which subjected medical malpractice self-insurers to subsections (1), (2) and (3) 2/ of Sec. 624.509, Fla. Stat., 3/ and made dental service plan self-insurers subject to "s. 624.509" in its entirety also made multiple employer welfare arrangements, 4/ Commercial self-insurance funds, 5/ professional liability self-insurance, 6/ and group self-insurer funds subject to subsections (1), (2), and (3) of Sec. 624.509, Fla. Stat.; but made other insurers, such as the continuing care contracts, 7/ subject to Sec. 624.509, Fla. Stat., in its entirety. Further, all those entities which the Legislature specifically made subject to noncredit paragraphs (1), (2) and (3) of Sec. 624.509, Fla. Stat. (Supp. 1988) were given a lower 1.6 percent tax rate by the Legislature. In contrast, those entities made subject to Sec. 624.509, Fla. Stat., in its entirety, such as the dental service plan self-insurers, without a listing of the specific paragraphs, and which are clearly entitled to the credits therein, were made subject to the higher 2 percent tax rate provided in Sec. 624.509(1), Fla. Stat. (Supp. 1988). 18. Sec. 624.509(1), (2), (3), (4), and (9), Fla. Stat. (Supp. 1988), states in pertinent part: 624.509 Premium tax; rate and computation. In addition to the license taxes provided for in this chapter, each insurer shall also annually, and on or before March 1 in each year, except as to wet marine and transportation insurance taxed under s. 624.510, pay to the Department of Revenue a tax on insurance premiums, risk premiums for title insurance, or assessments, including membership fees and policy fees and gross deposits received from subscribers to reciprocal or interinsurance agreements, and on annuity premiums or considerations, received during the preceding calendar year, the amounts thereof to be determined as set forth in this section, to wit: An amount equal to 2 percent of the gross amount of such receipts on account of life and health insurance policies covering persons resident in this state and on account of all other types of policies and contracts (except annuity policies or contracts taxable under paragraph (b)) covering property, subjects, or risks located, resident, or to be performed in this state, omitting premiums on reinsurance accepted, and less return premiums or assessments, but without deductions: For reinsurance ceded to other insurers; For moneys paid upon surrender of policies or certificates for cash surrender value; For discounts or refunds for direct or prompt payment of premiums or assessments; and On account of dividends of any nature or amount paid and credited or allowed to holders of insurance policies; certificates; or surety, indemnity, reciprocal, or interinsurance contracts or agreements; and An amount equal to 1 percent of the gross receipts on annuity policies or contracts paid by holders thereof in this state. Payment by the insurer of the license taxes and premium receipts taxes provided for in this part of this chapter is a condition precedent to doing business within this state. Notwithstanding other provisions of law, the distribution of the premium tax and any penalties or interest collected thereunder shall be made to the General Revenue Fund in accordance with rules adopted by the Department of Revenue and approved by the Administration Commission. The intangible tax imposed under chapter 199, the income tax imposed under chapter 220, and the emergency excise tax imposed under chapter 221 which are paid by any insurer shall be credited against, and to the extent thereof shall discharge, the liability for tax imposed by this section for the annual period in which such tax payments are made. As to any insurer issuing policies insuring against loss or damage from the risks of fire, tornado, and certain casualty lines, the tax imposed by this section, as intended and contemplated by this subsection, shall be construed to mean the net amount of such tax remaining after there has been credited thereon such gross premium receipts tax as may be payable by such insurer in pursuance of the imposition of such tax by any incorporated cities or towns in the state for firemen's relief and pension funds and policemen's retirement funds maintained in such cities or towns, as provided in and by relevant provisions of the Florida Statutes. For purposes of this subsection, payments of estimated income tax under chapter 220 and of estimated emergency excise tax under chapter 221 shall be deemed paid either at the time the insurer actually files its annual returns under chapter 220 or at the time such returns are required to be filed, whichever first occurs, and not at such earlier time as such payments of estimated tax are actually made. (9) As used in this section "insurer" includes any entity subject to the tax imposed by this section.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding that the Department's assessment issued July 20, 1994, was improper and finding Petitioner entitled to a refund in the amount of $23,774.76. DONE and ORDERED this 19th day of May, 1995, at Tallahassee, Florida. LINDA M. RIGOT, 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 19th day of May, 1995. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact numbered 4, 5 and 7 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 1, 3, 6, and 8 have been rejected as not constituting findings of fact. Petitioner's proposed findings of fact numbered 2, and 9-11 have been rejected as being subordinate to the issues involved herein. Respondent's proposed findings of fact numbered 1, 4, 5 and 12 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 3, 6-10, 13, and 15-19 have been rejected as not constituting findings of fact. Respondent's proposed finding of fact numbered 2 has been rejected as being subordinate to the issues herein. Respondent's proposed findings of fact numbered 14, 20, and 21 have been rejected as being irrelevant to the issues in this cause. Respondent's proposed findings of fact numbered 11 and 22 have been rejected as not being supported by the weight of the competent evidence in this cause. COPIES FURNISHED: Curtis H. Sitterson, Esquire Stearns, Weaver, Miller, et al. Museum Tower 150 West Flagler Street Miami, Florida 33130 Linda Lettera, General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Lisa M. Raleigh, Esquire Office of the Attorney General Tax Section, The Capitol Tallahassee, Florida 32399-1050 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue for consideration herein is whether the Respondent's licenses and eligibility for licensure in the insurance field as a life insurance agent, (216); life and health insurance agent, (218); and solicitor for property, surety and miscellaneous lines, (420), should be disciplined because of the misconduct outlined in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the allegations herein, the Petitioner, Department of Insurance, was the state agency responsible for the regulation of the insurance industry in Florida. This included the licensing of insurance agents and solicitors. At the same time, the Respondent, Tim Calvin Olk, was licensed or eligible for licensure in this state as a life and health agent, a life insurance agent, and a solicitor for property, surety, and miscellaneous lines. He is currently eligible for licensure and appointment in this state in the same capacities. On or about November 10, 1988, Respondent contacted Gulf Coast Water & Waste, Inc., in Engelwood, Florida, and sold that company workers' compensation insurance coverage to be effective that date. He received a check for $1,000.00 payable to Brokerage Central as a premium for the coverage from Kyle James and Barbara Griffith, which, on November 14, 1988, he endorsed "Brokerage Central" and deposited into the Brokerage Central account at First American Bank. At that time, Respondent maintained an account with First American in the name of Brokerage Central which he used for his own funds. After making the deposit to the Brokerage Central account, Respondent failed to submit either the premium funds paid to him or a policy application on behalf of Gulf Coast Water & Waste, Inc. to his agency, Key Agency, Inc.. Instead, he used the $1,000.00 for his personal purposes. Since Gulf Coast Water & Waste, Inc. had been informed by the Respondent that effective November 10, 1988, the day of the application, it had worker's compensation coverage, the company thereafter utilized its employees in work activities under the mistaken belief they were covered. In reality they were not and they remained uncovered until Mr. James, at some date subsequent to November 10, 1988, actually procured the coverage from Key Agency, Inc.. On or about December 15, 1988, Respondent contacted Michael Piscopo, owner of Dante's Ristorante in Venice, Florida, with a view toward selling him business insurance to be effective that date, for one year through December 15, 1989. He collected a premium check for $3,000.00 payable to Key Agency to pay for this coverage, and on or about December 19, 1988, endorsed that check with the name, "Key Agency", and cashed it, receiving the $3,000.00 in cash. At the time, Mr. Olk represented Key Agency, Inc. as a solicitor for property, surety, and miscellaneous lines, having been hired on August 6, 1985. His relationship with Key Agency continued until December 19, 1988 but at no time included authority to convert agency funds to his own use. Notwithstanding the fact he had secured both a policy application and the $3,000.00 premium check from Mr. Piscopo for Dante's, Respondent failed to turn over either the check or the application to the agency, thereby leaving Mr. Piscopo without the coverage he had purchased. Instead of transferring the funds to his agency as he was required to do, Mr. Olk converted the money to his own use, attempting to conceal his actions by the issuing and reissuing of cashier's checks to various parties. On or about January 28, 1989, Joanna Pappas allegedly was injured while a patron in Dante's Ristorante. When the claim was processed through Key Agency, Inc., Mr. Piscopo first learned that he had no insurance coverage notwithstanding his submittal of an application and payment of the premium to the Respondent. As a result of Respondent's actions, Mr. Piscopo was without insurance coverage for the Pappas incident. It wasn't until on or about February 14, 1989 that Respondent attempted to obtain insurance coverage for Dante's Ristorante through Italiano Insurance Services, Inc., with whom he began employment as a solicitor for property, surety and miscellaneous lines on January 4, 1989. To pay for the coverage he sought for Dante's, Mr. Olk issued his personal check to Italiano. On this personal check, Respondent indicated that Dante's had paid him the $3,000.00 for the premium in cash, when in reality the premium payment was made by Mr. Piscopo by check. The check issued by Mr. Olk on his own account to Italiano to pay for the Piscopo coverage was subsequently dishonored by the bank because of insufficient funds in the account to cover it. On or about February 24, 1989, while employed as a solicitor for Italiano Insurance Services, Inc., Respondent sold group health insurance to Karen and Steven King of Symbiotic Systems Corporation of Engelwood, Florida, to be effective on or about March 1, 1989, for which he received a check for $1,420.40. Approximately two days later, on February 26, 1989, Respondent submitted both the premium check and the insurance application to Creative Planning Insurance Agency, an entity with which he was not authorized to deal directly. Some three days later, the agency returned the application to the Respondent without issuing a binder, with instructions to obtain additional information from the applicant. He did not do so right away, however, and it was not until April 1, 1989, that Respondent secured the proposed coverage. From March 1, 1989 to April 1, 1989, Symbiotic Systems Corporation employees did not have the coverage for which their employers had paid. During that period, the company did not know it was not covered. Evidence introduced at the hearing indicates that the Respondent improperly advised Symbiotic that its employees would be covered as of March 1, 1989, and did not mention to the company thereafter that from March 1 to April 1, 1989, the coverage was not in force. In addition to this failure, Respondent also improperly advised the company that its monthly premium would be $1,420.40, when in reality, the premium for the coverage applied for was $1,737.85.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered in this case revoking all licenses and eligibility for licensure and appointment in the insurance industry in this state held by the Respondent herein, Tim Calvin Olk, a/k/a Timothy Calvin Olk. RECOMMENDED this 18th day of March, 1991, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of March, 1991. COPIES FURNISHED: Gordon Thomas Nicol, Esquire Department of Insurance 412 Larson Building Tallahassee, Florida 32399-0300 Michael P. Sampson, Esquire Holland & Knight, P.A. 92 Lake Wire Drive P.O. Box 32092 Lakeland, Florida 33802 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neill General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue The issue is whether Petitioner violated Chapter 440, Florida Statutes, by not having workers’ compensation insurance coverage, and if so, what penalty should be imposed.
Findings Of Fact Petitioner operates a gas station and convenience store in Winter Garden. Mohammad Sultan is Petitioner’s owner and president. On November 2, 2006, Margaret Cavazos conducted an unannounced inspection of Petitioner’s store. Ms. Cavazos is a workers’ compensation compliance investigator employed by the Department. Petitioner had nine employees, including Mr. Sultan and his wife, on the date of Ms. Cavazos' inspection. Petitioner had more than four employees at all times over the three-year period preceding Ms. Cavazos' inspection. Petitioner did not have workers’ compensation insurance coverage at the time of Ms. Cavazos’ inspection, or at any point during the three years preceding the inspection. On November 2, 2006, the Department served a Stop-Work Order and Order of Penalty Assessment on Petitioner, and Ms. Cavazos requested payroll documents and other business records from Petitioner. On November 6, 2006, the Department served an Amended Order of Penalty Assessment,1 which imposed a penalty of $70,599.78 on Petitioner. The penalty was calculated by Ms. Cavazos, using the payroll information provided by Petitioner and the insurance premium rates published by the National Council on Compensation Insurance. The parties stipulated at the final hearing that the gross payroll attributed to Mr. Sultan for the period of January 1, 2006, through November 2, 2006, should have been $88,000, rather than the $104,000 reflected in the penalty worksheet prepared by Ms. Cavazos. The net effect of this $16,000 correction in the gross payroll attributed to Mr. Sultan is a reduction in the penalty to $68,922.18.2 On November 3, 2006, Mr. Sultan filed a notice election for exemption from the Workers’ Compensation Law. His wife did not file a similar election because she is not an officer of Petitioner. The election took effect on November 3, 2006. On November 6, 2006, Petitioner obtained workers’ compensation insurance coverage through American Home Insurance Company, and Petitioner also entered into a Payment Agreement Schedule for Periodic Payment of Penalty in which it agreed to pay the penalty imposed by the Department over a five-year period. On that same date, the Department issued an Order of Conditional Release from Stop-Work Order. Petitioner made the $7,954.30 “down payment” required by the Payment Agreement Schedule, and it has made all of the required monthly payments to date. The payments required by the Payment Agreement Schedule are $1,044.09 per month, which equates to approximately $12,500 per year. Petitioner was in compliance with the Workers’ Compensation Law at the time of the final hearing. Petitioner reported income of $54,358 on gross receipts in excess of $3.1 million in its 2005 tax return. Petitioner reported income of $41,728 in 2004, and a loss of $8,851 in 2003. Petitioner had total assets in excess of $750,000 (including $540,435 in cash) at the end of 2005, and even though Petitioner had a large line of credit with Amsouth Bank, its assets exceeded its liabilities by $99,041 at the end of 2005. Mr. Sultan has received significant compensation from Petitioner over the past four years, including 2003 when Petitioner reported a loss rather than a profit. He received a salary in excess of $104,000 in 2006, and he was paid $145,333 in 2005, $63,750 in 2004, and $66,833 in 2003. Mr. Sultan’s wife is also on Petitioner’s payroll. She was paid $23,333.40 in 2006, $25,000 in 2005, and $12,316.69 in 2004. Mr. Sultan characterized 2005 as an “exceptional year,” and he testified that his business has fallen off recently due to an increase in competition in the area. Todd Baldwin, Petitioner’s accountant, similarly testified that 2006 was not as good of a year as 2005, but no corroborating evidence on this issue (such as Petitioner’s 2006 tax return) was presented at the final hearing. Mr. Sultan testified that payment of the penalty imposed by the Department adversely affects his ability to run his business. The weight given to that testimony was significantly undercut by the tax returns and payroll documents that were received into evidence, which show Petitioner’s positive financial performance and the significant level of compensation paid to Mr. Sultan and his wife over the past several years. The effect of the workers’ compensation exemption elected by Mr. Sultan is that his salary will no longer be included in the calculation of the workers’ compensation insurance premiums paid by Petitioner. If his salary had not been included in Ms. Cavazos’ calculations, the penalty imposed on Petitioner would have been $40,671.36. Ms. Cavazos properly included Mr. Sultan’s salary in her penalty calculations because he was being paid by Petitioner and he did not file an election for exemption from the Workers' Compensation Law until after her inspection.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department issue a final order imposing a penalty of $68,922.18 on Petitioner to be paid in accordance with a modified payment schedule reflecting the reduced penalty and the payments made through the date of the final order. DONE AND ENTERED this 22nd day of August, 2007, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II 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 22nd day of August, 2007.
The Issue Whether Petitioner is entitled to a refund of state group life insurance premiums retroactive to the date she became disabled and continuing through the date of approval of a waiver of premium based on disability.
Findings Of Fact During her entire career with the State, Petitioner was employed by the Department of Corrections (DOC). At all times material, DOC, like all State governmental agencies, had its own personnel office. At all times material, the Division of Retirement (Retirement) handled all governmental agencies’ employees’ retirement issues. At all times material, the State has provided its employees, including Petitioner at DOC, with various types of insurance through Respondent Department of Management Services (DMS), Division of State Group Insurance (DSGI), the Respondent herein. For more than 20 years, ending January 1, 2007, the State of Florida provided state officials, employees and retirees basic life insurance coverage through Prudential Insurance Company of America (Prudential). Although Petitioner retired on full disability in mid- 2000, at all times relevant to these proceedings, Petitioner has continuously participated in the State Group Insurance Program’s (Program’s), life insurance plan (Plan). The Program is authorized by Section 110.123, Florida Statutes. Because of enhanced benefits, employees were required to complete a new life insurance enrollment form during “open enrollment,” conducted in 1999, for coverage beginning January 1, 2000. Petitioner completed the life insurance enrollment form and dated it "10/04/99." Directly below Petitioner's signature on this enrollment form, the following statement appears: Waiver of Premium for Disability If you are totally disabled for a continuous 9 months and are less than 60 years of age at the time disability begins, Prudential will continue your coverage with no premium due, provided you report your disability within 12 months of its start and submit any required proof to Prudential. The second page, last paragraph of the 1999, enrollment form provided an address and a toll-free telephone number for Prudential, and advised participants that the form was intended to provide a summary of benefits, as more completely set out in the certificate. Petitioner produced the enrollment form in response to Respondent's request for production of documents. She identified her signature thereon at hearing, and had the enrollment form admitted in evidence as Exhibit P-1. She also admits in her Proposed Recommended Order that she signed it. Although her testimony waffled in some respects, on the whole, she testified to the effect that she had retained a copy of this form where she had access to it at all times material. She is, therefore, found to have had knowledge of its contents since 1999. Petitioner testified that she never received either a life insurance policy nor a certificate of insurance, from Prudential or from any entity of Florida State Government, and that neither her DOC Personnel Office, Retirement, Florida First,1/ or DMS/DSGI advised her at the time of her retirement in mid-2000, that she could apply to Prudential for a life insurance premium waiver. However, Petitioner also had admitted in evidence as Exhibit P-2, a “Continuation/Termination Form” which she signed on “4-11-00,” stating a retirement date of “3- 10-00.” That form specifies that “. . . the amount of life insurance shall be $10,000 . . .” with a footnote reading, “This [referring to the $10,000, amount] would only apply if Waiver of Premium is not approved.” (Bracketed material supplied.) Also, the credible testimony of Respondent’s witnesses and of exhibits in evidence show that a complete certificate of life insurance was mailed to Petitioner in a timely manner. There is no proof that the insurance certificate varied the substance of the enrollment form as quoted in Finding of Fact 7. Indeed, the certificate provided, in pertinent part: The Policyholder will continue the full premium for continuance of insurance in accordance with item 8 above, [referring to “Total disability commencing before age 60— Unlimited for Employee Term Life Insurance”] provided the employee furnishes written proof of such total disability when and as required by the Policyholder. * * * Period of Extension Protection for a Disabled Employee— one year after receipt by Prudential’s Home Office of written proof that his total disability has existed continuously for at least nine months, provided the employee furnishes such proof no later than one year after the later of (1) the date premium payments for the employee’s insurance under the Group Policy are discontinued or (2) the cessation of any extended death benefit under the provisions for “Extended Death Benefit for Total Disability” above, and successive periods of one year each after the year of extension under (1), provided the employee furnishes written proof of the continuance of the employee’s total disability when and as required by Prudential once each year. Only employees disabled before retirement and under 60 years of age were eligible for the premium waiver. Employees who became disabled during retirement were not eligible for the waiver. By the terms of her enrollment form and certificate, if Petitioner did not notify Prudential before the twelfth month, she could not receive the waiver. When, precisely, Petitioner became “totally disabled” for purposes of her State life insurance certificate’s definition is debatable, because for some time prior to her actual retirement date, she was working off and on while pursuing a “permanent total disability” determination, pursuant to the definition of that term as expressed in Chapter 440, Florida Statutes, The Florida Workers’ Compensation Law. Petitioner ultimately received the workers’ compensation ruling she sought, possibly before March 10, 2000. Petitioner’s last day of work was March 10, 2000, when, she testified, a superior had her forcibly removed from DOC property. Despite her assertion that she was not approved for in-line-of-duty retirement until September 1, 2000, Petitioner also testified that the State granted her retirement upon disability, effective April 1, 2000, and April 1, 2000, is the date put forth by Respondent as Petitioner's disability retirement date, as well. Upon that concurrence, it is found that Petitioner qualified for total disability for State life insurance purposes before retirement and that she qualified for the waiver by age at retirement. When Petitioner retired on disability in 2000, employees of both DOC and of Retirement knew that she was retiring on disability. Retirement provided Petitioner with printed materials referring her to the insurance company and/or DMS/DSGI for insurance questions and stating that Retirement did not administer any insurance programs. There is no evidence Petitioner asked anyone about the waiver in 2000. From her retirement date in mid-2000, until Prudential ultimately granted her a premium waiver in 2007, Petitioner paid the full life insurance premiums to the State Life Trust, either via deduction from her retirement or directly by her own check. From the date of her retirement through December 2006, Petitioner paid $4.20, per month for life insurance, and beginning January 1, 2007, through November 2007, she paid $35.79, per month. According to Petitioner, she only became aware of the availability of the potential waiver of premiums when she received a booklet during open enrollment in October 2007, advising her that beginning January 1, 2008, the State life insurance coverage would be provided through Minnesota Life Insurance. The specific language that caught her eye was: No premium to pay if you become disabled --- If you become totally disabled or as defined in your policy, premiums are waived. Petitioner conceded that there is no substantive difference between the foregoing instruction and the statement on her 1999, enrollment form for Prudential. (See Finding of Fact 7.) Petitioner applied for the Minnesota life insurance, with premium waiver, triggering a series of bureaucratic decisions that maintained her continuous life insurance coverage by Prudential and permitted Petitioner to apply to Prudential for waiver of the life insurance premium as described in her 1999, enrollment form. Although bureaucratic delays occurred through DOC’s personnel office, Prudential accepted Petitioner’s proof of age, disability, etc., and granted the waiver of premiums based on disability. The monthly premiums of $35.79, that Petitioner paid in October and November 2007, were retroactively reimbursed to her by the State, based upon Prudential's receipt of Petitioner's waiver package on October 3, 2007. Beginning in December 2007, Prudential activated the waiver of premium, so that Petitioner has not had to pay any premium since. Adrienne Bowen, a DSGI manager of Prudential contracts for twenty years, testified that, in 1999-2000, Prudential’s waiver did not apply until after nine months of continuous disability and after the participant had reported the disability to Prudential, and after Prudential had approved the waiver of premiums. She further testified that she believed that there was no provision for the waiver to apply retroactively. For this testimony, Ms. Bowen relied upon Exhibit R-11, a “Group Life Administration Manual,” which had been devised so that the State life insurance plan would be consistently administered. On the foregoing issues, The Group Life Administration Manual states, in pertinent part: WAIVER OF PREMIUM When an employee becomes disabled and is unable to work because of a disability, the employee may be eligible to extend the group life coverage without premium payments. In order to extend coverage, the employee must submit proof of disability within the period shown on the Group Contract (generally at least 9 months but less than 12 months after the total disability starts). If the proof is accepted, you may stop the premium on behalf of the employee’s group coverage. We recommend that premium payments continue for that employee until a decision is made regarding the claim. (Emphasis in original.) However, Ms. Bowen also testified that DSGI and Prudential now allow an insured to request the waiver at any time after nine months of continuous disability, without automatic denial if the employee’s first request is not made within 12 months after she first becomes disabled. This was done in Petitioner's situation in 2007. Prudential did not refuse to waive premiums because Petitioner’s application was not made within 12 months of total disability. However, the premiums refunded related back only to the first day of the month in which she made application for waiver. Petitioner seeks a reimbursement for overpayment of premiums from April 1, 2000, to September 30, 2007. Her first request to Respondent for an administrative hearing appears to have been made on or about May 12, 2008. After several levels of internal agency “appeals,” the cause was referred to the Division of Administrative Hearings on or about August 28, 2008.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, enter a final order which calculates the State group life insurance premiums Petitioner paid between May 12, 2006, and October 1, 2007, and orders payment to Petitioner of that amount within 30 days of the final order. DONE AND ENTERED this 23rd day of December, 2008, in Tallahassee, Leon County, Florida. S ELLA JANE P. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December, 2008.
The Issue The issue presented is whether the Department's Rule 12B-8.001(5), Florida Administrative Code, is an invalid exercise of delegated legislative authority.
The Issue Whether the Petitioner is entitled to receive Health Insurance Subsidy payments retroactive to July 1995, the month she began to receive retirement benefits from the Respondent as the surviving spouse of a member of the Florida Retirement System.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Division is, and was at the times material to this case, the state agency charged with the responsibility of administering the Florida retirement and pension systems. Section 121.025, Florida Statutes (1995). The Division is, and was at the times material to this case, also responsible for administering the Retiree Health Insurance Subsidy. Section 112.363(7), Florida Statutes (1995). Harold Mosser, the former husband of Mrs. Kirkley, retired from his job as a school principal in August 1979, and he was a member of the Florida Retirement System. Mr. Mosser received a monthly state retirement benefit, and, as a supplement to the retirement benefit, he received a monthly Health Insurance Subsidy. Mrs. Kirkley retired from her job as a schoolteacher in 1989, and she is a member of the Florida Retirement System. Since her retirement, Mrs. Kirkley has received a monthly state retirement benefit and a monthly Health Insurance Subsidy. Mr. Mosser died on April 28, 1995. Mrs. Kirkley did not advise the Division of Mr. Mosser's death. Rather, the Division learned of his death in July 1995, when conducting a routine check of the Bureau of Vital Statistics "death tape." As Mr. Mosser's surviving spouse and the person he named as his joint annuitant, Mrs. Kirkley was entitled to receive an "Option 3" monthly retirement benefit for the remainder of her lifetime, pursuant to Section 121.09, Florida Statutes (1995). Mrs. Kirkley was also eligible to receive a monthly Health Insurance Subsidy upon filing an application for the subsidy with the Division, and this benefit included payment of the subsidy from the date of Mr. Mosser's death or for the six months prior to the date the application was filed.1 In a Statement of Retirement Benefit Payments dated 1/31/95, the components of Mr. Mossers's monthly retirement benefit payments were identified. At the time of his death, Mr. Mosser received a gross monthly retirement benefit of $1,730.60, plus a Health Insurance Subsidy of $90.00, minus $250.00 withholding tax, for total net monthly benefits of $1,570.60. Because the Division did not learn of Mr. Mosser's death until July 1995, his monthly benefit check was issued in May and June 1995 and electronically deposited in NationsBank. When the Division learned of Mr. Mosser's death, a Division representative tried to reach Mrs. Kirkley by telephone but could not obtain her unlisted telephone number. The representative then sent Mrs. Kirkley a letter dated July 20, 1995, in which the representative advised Mrs. Kirkley that Mr. Mosser's estate was entitled to receive his benefits for the month of April 1995 in the net amount of $1,570.60 and that she must apply for a continuing monthly benefit as Mr. Mosser's designated beneficiary. The representative also advised Mrs. Kirkley to complete the Division Form FST-11b that was enclosed with the letter and to return it to the Division together with Mr. Mosser's death certificate. Mrs. Kirkley completed the form enclosed with the letter and mailed it to the Division as directed. The Division changed Mr. Mosser's account over to Mrs. Kirkley, and she began receiving a monthly retirement benefit check in October 1995.2 Mr. Mosser's Health Insurance Subsidy was terminated effective July 1995, and the net monthly benefit received by Mrs. Kirkley as Mr. Mosser's beneficiary did not include a Health Insurance Subsidy payment. It is the Division's practice to send each retiree added to the system a "retiree packet" that includes, among other things, an application for the Health Insurance Subsidy and an explanation of the subsidy, as well as a booklet containing an explanation of all of the benefits available to retirees and beneficiaries under the Florida Retirement System. The process of sending out the retiree packets is automated, so that a packet is sent to every retiree and beneficiary when they are first entered into the system. Pursuant to the Division's regular practice, Mrs. Kirkley would have been sent the retiree packet in October 1995, when she was added to the system as Mr. Mosser's beneficiary. The Division also sends retirees and beneficiaries an annual newsletter, and the Health Insurance Subsidy was discussed in the 1995 and 1996 newsletters. Mrs. Kirkley received a Statement of Retirement Benefit Payments, as Mr. Mosser's beneficiary, each July, December, and January. This statement includes a separate entry for the Health Insurance Subsidy, with the amount of the subsidy noted; Mrs. Kirkley would have been aware of this entry because the Statement of Retirement Benefit Payments that she had been receiving on her own account would have shown an amount paid as her Health Insurance Subsidy. Mrs. Kirkley received her first statement in December 1995, and it would have been apparent from the statement that no amount was included for the Health Insurance Subsidy. Mrs. Kirkley does not recall having any direct contact with the Division between the time she submitted her application for the retirement benefit as Mr. Mosser's beneficiary and late September 1997, when she called the Division to request that the monthly check be electronically deposited in her bank account. During the conversation in September 1997, the Division's representative advised Mrs. Kirkley that she was entitled to receive a monthly Health Insurance Subsidy as Mr. Mosser's surviving spouse, in addition to the monthly retirement benefit she received as Mr. Mosser's beneficiary. The representative told Mrs. Kirkley that she would send her an application for the Health Insurance Subsidy, which the representative did in September 1997. Mrs. Kirkley completed the application she received from the Division and sent it to the Division with a cover letter dated October 17, 1997. The application required certification of health insurance coverage, which Mrs. Kirkley satisfied by attaching a copy of her Medicare Health Insurance card. Mrs. Kirkley did not hear anything from the Division for quite a long time. She contacted the Division and was told that they had not received her application for the Health Insurance Subsidy. The Division sent her another application form, which she completed and sent to the Division in January 1998, and she began receiving a monthly Health Insurance Subsidy as Mr. Mosser's surviving spouse; she also received retroactive benefits effective July 1997 through December 1997, a period of six months prior to January 1998. The Division eventually located Mrs. Kirkley's October 1997 application, and it advised her in a letter dated April 6, 1998, that she would receive retroactive Health Insurance Subsidy payments for an additional three months, moving the effective date of her entitlement to the benefits back to April 1997. Including the retroactive benefits she received, Mrs. Kirkley has been receiving a Health Insurance Subsidy as Mr. Mosser's surviving spouse since April 1997. She also had the benefit of Mr. Mosser's May and June 1995 Health Insurance Subsidy, which were paid by the Division because it was not aware that Mr. Mosser was deceased. Mrs. Kirkley seeks to recover an additional $1890.00 in retroactive Health Insurance Subsidy payments as Mr. Mosser's surviving spouse, which is the difference between the total Health Insurance Subsidy payments she has received and the total Health Insurance Subsidy payments she would have received had the benefits been paid to her retroactive to Mr. Mosser's death (21 months x $90.00 per month = $1890.00). Summary The evidence presented by Mrs. Kirkley is insufficient to establish her entitlement to retroactive Health Insurance Subsidy payments from July 1995 to March 1997. It is uncontroverted that she submitted her application for the Health Insurance Subsidy with her certification of health insurance coverage in October 1997 and that the Division paid retroactive Health Insurance Subsidy payments for the six months prior to the date it received the application. In addition, Mrs. Kirkley has not presented sufficient evidence to establish that the Division should be required to pay her the additional retroactive Health Insurance Subsidy payments because it failed to send her an application until September 1997. The Division did not make any specific representations to her regarding her entitlement to the Health Insurance Subsidy payments until September 1997, and she failed to establish by the greater weight of the credible evidence that she did not receive any general information from the Division that included information regarding the Health Insurance Subsidy. In addition, Mrs. Kirkley knew or should have known in December 1995 that she was not receiving a Health Insurance Subsidy as Mr. Mosser's surviving spouse, when she received her first statement detailing the components of her gross monthly benefit as Mr. Mosser's beneficiary, and she could have made inquiry of the Division at that time.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of Retirement, enter a final order dismissing the Petition for Review of Final Agency Action filed by Mary J. Mosser, now known as Mary J. Kirkley. DONE AND ENTERED this 20th day of November, 2001, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO 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 20th day of November, 2001.
The Issue The issue is whether Petitioner timely filed his request for claim form requesting reimbursement for certain covered expenses under the Florida Flexible Benefits Program--Reimbursement Plan.
Findings Of Fact Petitioner is a member of the faculty of the University of South Florida. He participates in the Florida Flexible Benefits Program--Reimbursement Program (Program). The Plan allows participants to pay certain eligible medical or dependent day care expenses with pretax earnings. Each year, during an open enrollment period, an employee may elect to participate in the Program and select an amount of salary to be deducted from his or her pay. The amount of salary so deducted is not subject to federal income tax, but is available to reimburse the employee for covered expenses. In order for the Program to continue to enjoy preferential treatment under the federal income tax law, Respondent, which administers the Program, must adhere to certain rules. Most relevant to this case is that that the deducted salary must be at risk. Specifically, an employee is not entitled to a refund of all or part of the deduction if he or she does not timely submit sufficient reimbursable expenses to exhaust his or her account. The Program brochure clearly warns participants of this "use it or lose it" rule. The plan year for the Program is the calendar year. In 1997, Petitioner was a participant in the Program. He and his wife chose not to submit claims for covered expenses, as they paid them during the year. Instead, they accumulated the receipts with the intent of submitting a single claim for their account balance at the end of the plan year. The Program sets a claims filing deadline of April 15 for filing claims arising out of the expenses paid in the preceding calendar year. The Program brochure warns that this deadline means all claims for expenses incurred during a plan year must be postmarked by midnight, April 15 of the following year to be considered for processing. Any claims received after this date will be returned to the participant unprocessed, regardless of the account balances. Participants should file claims as soon as the required documentation is obtained. This case involves only one issue: whether Petitioner timely submitted his claims for reimbursement under the Program. There is no issue concerning Petitioner's payment of these expenses or his account balance. There is no issue whether these expenses are eligible for reimbursement. In early March 1998, Petitioner and his wife collected their receipts for covered expenses from 1997. Petitioner completed a reimbursement form and addressed the envelope to Respondent at the correct address. Wanting to make copies of the materials, Petitioner did not immediately mail the package to Respondent. A few days later, prior to copying the materials or mailing the package, Petitioner's father became ill in the Mideast, where he lives. Petitioner and his wife agreed that she would copy the materials and mail the package to Respondent. On March 21, which marks the birthday of Petitioner's wife and a cultural holiday for Petitioner and his wife, Petitioner's wife telephoned her husband, who was still visiting his sick father. In the ensuing discussion, Petitioner learned that she had not yet mailed the package. They discussed the matter and again agreed that she would copy the materials and mail the package without further delay. Without further delay, Petitioner's wife copied the materials and mailed the package to Respondent at the correct address. She placed the package with sufficient postage in a mailbox across from her home. The package consisted of a claims reimbursement form and receipts for eligible expenses. It appears that she may have written an old return address on the envelope. Respondent never received the package. Respondent's procedures are carefully designed and executed to ensure that it will not lose a claim form. Repeated searches for the missing form never uncovered it. The package was lost after its mailing by Petitioner's wife and prior to its delivery to Respondent. Possibly, the incorrect address precluded notification to Petitioner of problems with delivery. Possibly, the package was just lost. Unfortunately, Petitioner learned only after the April 15 deadline that Respondent had never received the package.
Recommendation It is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, enter a final order determining that Petitioner timely submitted the claim and eligible expenses that were the subject of this case. DONE AND ENTERED this 8th day of March, 2000, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of March, 2000. COPIES FURNISHED: Paul A. Rowell, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Thomas D. McGurk, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Mohsen M. Milani 15927 Ellsworth Drive Tampa, Florida 33647 Julia Forrester Assistant General Counsel Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399
