The Issue The issue for determination is whether Intervenors are entitled to reasonable attorney fees and costs pursuant to Section 120.595, Florida Statutes (2003).1
Findings Of Fact Petitioner is an insurer and carrier within the meaning of Subsections 440.02(4) and 440.02(38), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(w).2 Petitioner is licensed in the state as a workers' compensation insurance carrier (carrier).3 Respondent is a state agency within the meaning of Subsection 440.02(3), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(b). In relevant part, Respondent is responsible for resolving reimbursement disputes between a carrier and a health care provider. Intervenors are health care providers within the meaning of Subsection 440.13(1)(h), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(u). Each Intervenor is a health care facility within the meaning of Subsection 440.13(1)(g), Florida Statutes (2005). Intervenors seek an award of attorney fees and costs against Petitioner pursuant to Sections 57.105 and 120.595, Florida Statutes (2003). The proceeding involving Section 57.105, Florida Statutes (2003), is the subject of a separate Final Order entered on the same date as this Recommended Order. The scope of this Recommended Order is limited to Section 120.595, Florida Statutes (2003). Intervenors allege that Petitioner is the "non- prevailing adverse party" in an underlying proceeding and participated in the underlying proceeding for an "improper purpose" as the quoted terms are defined, respectively, in Subsections 120.595(1)(e)3. and 120.595(1)(e)1., Florida Statutes (2003). The underlying proceeding involves eight consolidated Petitions for Administrative Hearing. Petitioner filed each Petition for Administrative Hearing after Respondent determined Petitioner had improperly discounted the amount of reimbursement Petitioner paid for hospital services that Intervenors provided to eight patients from March 13, 2004, through February 11, 2005. From April 13 through May 23, 2005, Respondent issued separate orders directing Petitioner to pay the disputed amounts pursuant to Subsection 440.13(7), Florida Statutes (2005). From June 1 through June 21, 2005, Petitioner filed eight separate Petitions for Administrative Hearing. The eight petitions were subsequently consolidated into one underlying proceeding. Petitioner is the non-prevailing adverse party in the underlying proceeding. On December 8, 2005, Petitioner filed a Notice of Voluntary Dismissal in the underlying proceeding. On December 9, 2005, Intervenors filed their motion for attorney fees based on Section 120.595, Florida Statutes (2003). The formal hearing in the underlying proceeding was set for January 18, 2006. The ALJ amended the issue for the formal hearing to exclude the original reimbursement dispute and to limit the scope of the formal hearing to the fee dispute. The ALJ did so to avoid delay in the resolution of the proceeding. The fee dispute at issue in this proceeding includes only six of the original eight reimbursement disputes because Intervenors were not the medical providers in two of the original eight disputes.4 In the six reimbursement disputes involving Intervenors, Respondent ordered Petitioner to pay additional reimbursements in the aggregate amount of $54,178.52. Approximately $51,489.27 of the $54,178.52 in additional reimbursement involved inpatient hospital services provided to one patient.5 The remaining $2,689.25 in additional reimbursement involved outpatient hospital services in the emergency room.6 Subsection 440.13(12), Florida Statutes (2005), mandates that a three-member panel must determine statewide schedules for reimbursement allowances for inpatient hospital care. The statute requires hospital outpatient care to be reimbursed at 75 percent of "usual and customary" charges with certain exceptions not relevant to this proceeding. Notwithstanding the statutory mandate to schedule reimbursement rates for hospital inpatient services, the inpatient services at issue in the underlying proceeding were apparently unscheduled inpatient services. By letter dated April 13, 2005, Respondent ordered Petitioner to pay Intervenor, Holmes Regional Medical Center, Inc. (Holmes), an additional reimbursement in the amount of $51,489.27. The total reimbursement to Holmes was 75 percent of the charges that Holmes submitted to Petitioner for reimbursement.7 Respondent interprets Subsection 440.13(12), Florida Statutes (2005), to authorize reimbursement of both unscheduled inpatient hospital services and outpatient hospital services at the same rate. There is no dispute that Respondent reimburses unscheduled inpatient hospital services and outpatient hospital services at 75 percent of the "usual and customary" charges. The dispute in the underlying proceeding was over the meaning of the phrase "usual and customary" charges. Petitioner challenged the interpretation asserted by Respondent and Intervenors. Respondent and Intervenors contended that the quoted statutory phrase means Intervenors' usual and customary charges evidenced in a proprietary document identified in the record as the "charge master." Each Intervenor maintains its own charge master, and the information in each charge master is proprietary and confidential to each Intervenor. Petitioner asserted that the statutory phrase "usual and customary" charges means the usual and customary charges imposed by other hospitals in the community in which Intervenors are located. Petitioner maintains a data base that contains information sufficient to determine the usual and customary charges in each community. Petitioner did not participate in the underlying proceeding for an improper purpose within the meaning of Subsection 120.595(1)(e)1., Florida Statutes (2003). Rather, Petitioner presented a good faith claim or defense to modify or reverse the then-existing interpretation of Subsection 440.13(12), Florida Statutes (2005). Petitioner had a reasonable expectation of success. The statutory phrase "usual and customary" charges is not defined by statute. Nor has the phrase been judicially defined. Respondent bases its interpretation of the disputed phrase on two agency final orders and relevant language in the Florida Workers' Compensation Reimbursement Manual for Hospitals (2004 Second Edition) (the Manual). The Manual is developed by the Florida Department of Financial Services (DFS).8 The Manual interprets the quoted statutory phrase to mean the "hospital's charges." However, after the effective date of the Manual in 2004, DFS developed a proposed change to the Manual that, in relevant part, interprets "usual and customary" charges to mean the lesser of the charges billed by the hospital or the median charge of hospitals located within the same Medicare geographic locality.9 The trier of fact does not consider the new interpretation of the disputed statutory phrase as evidence relevant to a disputed issue of fact. As Respondent determined in an Order to Show Cause issued on February 16, 2006, and attached to Intervenors' PRO, "what constitutes 'usual and customary' charges is a question of law, not fact." The ALJ considers the new interpretation proposed by DFS for the purpose of determining the reasonableness of the interpretation asserted by Petitioner in the underlying proceeding. The ALJ also considers the new DFS interpretation to determine whether the interpretation asserted by Petitioner presented a justiciable issue of law. Intervenors assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to initially explain its reduced reimbursement to Intervenors with one of the codes authorized in Florida Administrative Code Rule 69L-7.602(5)(n) as an explanation of bill review (EOBR). None of the EOBR codes, however, contemplates a new interpretation of the statutory phrase "usual and customary" charges. Intervenors further assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to respond to discovery. However, responses to discovery would not have further elucidated Petitioner's rule-challenge. Petitioner stated eight times in each Petition for Administrative Hearing that Florida Administrative Code Rule 69L-7.501, the DFS rule incorporating the Manual by reference: [S]hould be read to allow recovery of 75% of the usual and customary fee prevailing in the community, and not 75% of whatever fee an individual provider elects to charge. Respondent and Intervenors were fully aware of the absence of statutory and judicial authority to resolve the issue. Petitioner did raise at least one factual issue in each Petition for Administrative Hearing. Petitioner alleged that Respondent's decision letters ordering Petitioner to pay additional reimbursement amounts had no legal effect because Respondent acted before each provider requested and received the carrier's reconsidered reimbursement decision. The absence of a formal hearing in the underlying proceeding foreclosed an evidential basis for a determination of whether each provider in fact requested and received a reconsidered reimbursement decision before the date Respondent ordered Petitioner to pay additional reimbursements. In this fee dispute, Petitioner presented some evidence to support the factual allegation and thereby established the presence of a justiciable issue of fact. It is not necessary for Petitioner to present enough evidence to show that Petitioner would have prevailed on that factual issue in the underlying proceeding. If the letters of determination issued by Respondent were without legal effect, Petitioner would not have waived its objections to further reimbursement within the meaning of Subsection 440.13(7)(b), Florida Statutes (2005). A determination that Petitioner did, or did not, submit the required information is unnecessary in this proceeding. During the formal hearing in this proceeding, Petitioner called an expert employed by a company identified in the record as Qmedtrix. The testimony showed a factual basis for the initial reimbursement paid by Petitioner. It is not necessary for Petitioner to show that this evidence was sufficient to prevail on the merits in the underlying case. The evidence is sufficient to establish justiciable issues of fact in the underlying case. In this proceeding, Petitioner submitted some evidence of justiciable issues of fact in the underlying proceeding. Petitioner need not submit enough evidence in this fee dispute to show Petitioner would have prevailed on these factual issues in the underlying proceeding. Intervenors are not entitled to a presumption that Petitioner participated in this proceeding for an improper purpose in accordance with Subsection 120.595(1)(c), Florida Statutes (2003). Although Petitioner was the non-prevailing party in two previous administrative hearings involving the same legal issue, the two proceedings were not against the same prevailing hospital provider and did not involve the same "project" as required in the relevant statute. Intervenors seek attorney fees in the amount of $36,960 and costs in the amount of $2,335.37 through the date that Petitioner voluntarily dismissed the underlying proceeding. Absent a finding that Petitioner participated in the underlying proceeding for an improper purpose, it is unnecessary to address the amount and reasonableness of the attorney fees and costs sought by Intervenors. If it were determined that Petitioner participated in the underlying proceeding for an improper purpose, the trier of fact cannot make a finding that the proposed attorney fees and costs are reasonable. Such a finding is not supported by competent and substantial evidence. The total attorney fees and costs billed in the underlying proceeding were charged by six or seven attorneys or paralegals employed by the billing law firm. However, the fees and costs at issue in this proceeding exclude any time and costs charged by paralegals and include only a portion of the total fees and costs charged by the attorneys. The total amount of time billed and costs incurred in the underlying proceeding is evidenced in business records identified in the record as Intervenors' Exhibits 20-23. However, those exhibits do not evidence the reasonableness of the fees and costs billed by the attorneys.10 Either the testimony of the billing attorneys or the actual time slips may have been sufficient to support a finding that the attorney fees and costs are reasonable. However, Intervenors pretermitted both means of proof. Intervenors asserted that the time slips contain information protected by the attorney-client privilege. However, Intervenors neither submitted redacted time slips nor offered the actual time slips for in-camera review. Nor did Intervenors allow the attorneys to testify concerning unprivileged matters. The absence of both the testimony of the attorneys and the time slips is fatal. The fact-finder has insufficient evidence to assess the reasonableness of the fees and costs, based on the novelty and difficulty of the questions involved. Intervenors' expert opined that the attorney fees and costs are reasonable. The expert based her opinion, in relevant part, on her review of the actual time slips maintained by each attorney. However, Petitioner was unable to review the time slips before cross-examining the expert. In lieu of the actual time slips, Intervenors submitted a summary of the nature of the time spent by each attorney. The summary is identified in the record as Intervenors' Exhibit 2. Petitioner objected to Intervenors' Exhibit 2, in relevant part, on the ground that it is hearsay. The ALJ reserved ruling on the objection and invited each side to brief the issue in its respective PRO. The paucity of relevant citations in the PROs demonstrates that neither side vigorously embraced the ALJ's invitation. Intervenors' Exhibit 2 is hearsay within the meaning of Subsection 90.801(1)(c), Florida Statutes (2005).11 The author of Intervenors' Exhibit 2 summarized the unsworn statements of attorneys from their time slips and submitted those statements to prove the truth of the assertion that the time billed was reasonable. Intervenors made neither the attorneys nor their time slips available for cross examination.12 Even if the summary were admissible, the summary and the testimony of its author are insufficient to show the attorney fees and costs were reasonable. The insufficiency of the summary emerged during cross-examination of its author. The author is the lone attorney from the billing law firm who testified at the hearing. Q. What other information did you look at to decide what time to actually bill . . .? A. The information I used was the information from the actual bill. Q. If we look at the first entry . . . were you the person that conducted that telephone conference? A. No, I wasn't. Transcript (TR) at 510-511. Q. In other words, [the entries] go with the date as opposed to the event [such as a motion to relinquish]? A. That's correct. Q. So if I wanted to know how much time it took you to actually work on the motion to relinquish, I would have to look at each entry and add up all the hours to find out how long it took you to do one motion. Is that how I would do that? A. It would be difficult to isolate that information from this record, we bill and explain in the narrative what work is performed each day, and unless that was the single thing worked on for several days, there would be no way to isolate the time, because we don't bill sort of by motion or topic. . . . Q. Well, if I'm trying to decide whether the time billed is reasonable, wouldn't I need to know how much time was spent on each task? A. I'm not sure how you would want to approach that. . . . Looking at this document, it does not give you that detail. It doesn't provide that breakout of information. Q. Is there a way for us to know who you spoke with on those entries? A. The entry . . . doesn't specify who participated in the conference. I don't recall what the conference entailed . . . . And many of these entries are from months ago, and I can't specifically recall on that date if I was involved in a conference and who else might have been there. . . . And so my guess is where the conference is listed on a day when lots of activity was performed on behalf of the client, most of it in this case was research. TR at 516-521.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order denying the motion for attorney fees and costs. DONE AND ENTERED this 27th day of April, 2006, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 27th day of April, 2006.
Findings Of Fact In July, 1992, the Department of Health and Rehabilitative Services (HRS) published notice soliciting proposals from interested attorneys to provide intrastate and interstate child support legal services HRS District VI. The services were to be provided from October 1, 1992, through June 30, 1993. (Exhibit #4). Within relevant deadlines, protests to the written specifications of the solicitation were filed by Petitioner, Donald W. Belveal, and others. HRS determined that material disputes of fact existed and the protests were referred to the Division of Administrative Hearings (DOAH) where the cases were consolidated and set for final hearing. (Exhibit #5) Hearing Officer, Veronica Donnelly, conducted the hearing and issued a recommended order on December 22, 1993, recommending that the specifications be rejected as flawed and that they be extensively revised. (Exhibit #5). Exceptions were filed, and upon a suggestion of mootness HRS entered a final order on March 17, 1993, dismissing the proceedings and finding further: No Final Order has been issued in this cause which granted any affirmative relief to Petitioners. Therefore, they are not a prevailing party, and are not entitled to attorney fees. The request for a determination of attorney fees is DENIED. The request to dismiss the department's exceptions to the Recommended Order is DENIED. (Exhibit #6) Donald Belveal appealed this final order to the Second District Court of Appeal. The full opinion of the court in Donald W. Belveal v. State of Florida, Department of Health and Rehabilitative Services, case no. 93-01121, dated February 25, 1994, provides: The law firm of Donald Belveal appeals a final agency order entered by the Florida Department of Health and Rehabilitative Services (HRS) which dismisses administrative proceedings and denied Belveal's motion for attorney's fees and costs under section 57.111(4), Florida Statutes (1991) on the ground that Belveal was not a prevailing party. We reverse. Belveal and other lawyers formally protested a bid solicitation package prepared by HRS to procure legal services for its child support program in Hillsborough County. The Department of Administrative Hearings (DOAH) held a formal hearing after which the hearing officer entered a recommended order that the package be revised, citing numerous improprieties. HRS filed excep- tions to the order. In addition, to prevent a lapse in services during the protest proceedings, HRS extended the existing contract for legal services to cover the remainder of the bid proposal period. Arguing that the extension nullified the bid solicitation and rendered the administrative contest moot, Belveal and the others filed a motion to dismiss the exceptions. They also asked that the case be remanded to DOAH for an award of attorney's fees and costs under the Florida Equal Access to Justice Act, section 57.111(4), Florida Statutes (1991). The deputy secretary for human services of HRS entered a "final order" which concluded that Belveal's motion to dismiss/suggestion of mootness was tantamount to a request that the proceedings be discontinued. The department dismissed the proceedings, denied the request to dismiss HRS's exceptions, and denied the request for attorney's fees stating, "[n]o final order has been issued in this cause which granted any affirmative relief to Petitioners. Therefore, they are not a prevailing party, and are not entitled to attorney fees." HRS exceeded its authority in entering this order. First, the dismissal of the action exceeded the scope of the motion to dismiss the exceptions. Second, the determination of whether Belveal was a prevailing party entitled to attorney's fees and costs was solely within the jurisdiction of the DOAH hearing officer. See Dep't. of Health and Rehabilitative Services v. S. G., 613 So. 2d 1380, 1384 n.1 (Fla. 1st DCA 1993). Because HRS denied the motion to dismiss the exceptions yet never ruled on the hearing officer's recommended order, we remand the case to HRS for further proceedings in accordance with section 120.57, Florida Statutes. Reversed; remanded. In addition, the appellate court issued its order granting fees in the appeal, "...provided that appellant is ultimately the prevailing party in the proceeding below." (Exhibit #2) HRS entered its corrected final order on June 22, 1994, finding the case to be moot with the exception of the attorney's fees issue, acknowledging that the agency is without jurisdiction to determine who is the prevailing party and entitled to fees, and dismissing the case. (Exhibit #4) It is undisputed that Donald Belveal is a small business party. (Respondent's proposed final order, paragraph 8). Donald Belveal claims total fees of $21,292.25, incurred in the administrative proceeding, which fees are based on 121.67 hours at an hourly rate of $175. He claims additional fees for the appeal. (Exhibit #3) As stipulated, the claimed fees are reasonable, but the award may not exceed $15,000. (Respondent's proposed final order, paragraph 9.)
Findings Of Fact On April 23, 2013, the undersigned entered an Order on Remand requiring Petitioner to submit any documentation, including supporting affidavits, within 20 days of said Order setting forth the amount of attorney’s fees Petitioner seeks in DCA Case No. 1D12-3557. Petitioner filed two Motions for Extension of Time in which to comply with the Order on Remand. The Motions were granted and on June 12, 2013, Petitioner filed Petitioner’s Request for Appellate Attorney’s Fees and Costs with the Division. The Order on Remand required Respondent to file its response to Petitioner’s Request for Attorney’s Fees and Costs within 20 days of Petitioner’s filing. To date, Respondent has not filed any response and has not requested an extension of time in which to file a response. The parties were further ordered to state whether or not either party believed that an evidentiary hearing was necessary. Petitioner requested an evidentiary hearing only in the event that the undersigned was inclined to reduce or deny Petitioner’s request for attorney’s fees or costs. Accordingly, no evidentiary hearing is necessary. Attorney's Fees and Costs Petitioner/Appellee requests attorney’s fees in the total amount of $47,170. This total includes attorney’s fees in the amount of $42,760 attributable to Proctor Appellate Law, PA, and attorney’s fees in the amount of $4,410 attributable to Avera & Smith, LLP. The hourly rate for Sharon H. Proctor of Proctor Appellate Law, PA, is $400 per hour; the hourly rate for Jennifer C. Biewend of Avera & Smith, LLP, is $350 per hour. Detailed billing records are attached to the attorneys’ affidavits as exhibits to the Motion for Attorney’s Fees and Costs. Ms. Proctor, who was retained to represent Petitioner/Appellee in the appeal of this case, served as primary counsel in all matters pertaining to the appeal and incurred 106.9 attorney hours. Ms. Biewend served as counsel of record in the underlying merits case and as co-counsel of record before the First District Court of Appeal and incurred 12.6 attorney hours on the appeal. Petitioner submitted the affidavit of attorney Paul Donnelly, Esquire, as an expert in support of Petitioner’s request for attorney’s fees and costs. The undersigned has read Mr. Donnelly’s affidavit and finds that it supports the number of hours expended and hourly rates charged. The undersigned reviewed the affidavits of the attorneys of record and the billing records, and finds Petitioner/Appellee's requests for attorney's fees to be reasonable. Petitioner requests appellate costs in the amount of $764.36. The undersigned reviewed the cost ledger submitted by Petitioner’s counsel. The appellate costs reflect travel expenses of counsel to attend the oral argument. The amount of costs is reasonable.
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original Notice of Appeal with the agency Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner's Final Determination be approved and that Respondent be required to repay $1,753 in grant funds expended in a manner inconsistent with Department regulations. DONE and ENTERED this 16th day of February, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of February, 1982. COPIES FURNISHED: Sonja P. Mathews, Esquire Suite 117-Montgomery Building 2562 Executive Center Circle, East Tallahassee, Florida 32301 Robert L. Davis Post Office Box 350 Apalachicola, Florida 32320
Findings Of Fact The Findings of Fact set forth in the Final Order entered in DOAH Case Nos. 15-7010 through 15-7016 and 15-7022 are hereby adopted in this Final Order. The PFO is hereby adopted and incorporated in this Final Order as though set forth in full. During the course of the rulemaking proceedings regarding “designated player” card games, Petitioners submitted a good-faith proposal for a lower cost regulatory alternative (LCRA) indicating that the proposed rules would have a significant monetary impact on Petitioners, which required Respondent to prepare a statement of estimated regulatory costs (SERC) pursuant to sections 120.54(3)(b) and 120.541, Florida Statutes. Respondent did not prepare a SERC. That failure was determined to be a material failure to follow applicable rulemaking procedures and became a basis for the invalidation of the proposed rules.
The Issue Whether the Petitioner is entitled to an award for attorney's fees for litigating the attorney's fees issue where the appellate court has determined the Petitioner is entitled to attorney's fees and costs under the provisions of Section 120.57(1)(b)10., Florida Statutes. Whether the Petitioner is entitled to a multiplier enhancement to the lodestar in an award of attorney's fees and costs under Section 120.57(1)(b)10., Florida Statutes.
Findings Of Fact In March, 1989, the Respondent, Department of Health and Rehabilitative Services sought bids for 17,500 square feet of office space in central Orlando, for a period of seven years beginning in December, 1989, with two three-year option extensions. Petitioner and two others submitted bids. After committee review, the bid was awarded to another bidder on or about June 26, 1989. Petitioner timely filed his informal and formal bid protests, and the matter was heard at length before the Division of Administrative Hearings in August, 1989. The Hearing Officer found that Petitioner had sustained the burden of proof and demonstrated that the Department had acted arbitrarily and capriciously in the bid process, and recommended that the lease be re-bid. The Secretary for the Department adopted the Recommended Order but also added an additional condition that the lease be re-bid only if necessary. Petitioner appealed to the Fifth District Court of Appeal which sustained the position of the Petitioner and, although disputed by the Department, granted attorney's fees and costs for all stages of the proceedings. This matter was remanded to the Department for re-bidding and to the Division for the determination of the amount of fees and costs to be awarded. Courtenay v. Department of Health and Rehabilitative Services, 581 So.2d 621 (Fla. 5th DCA 1991). The Law Office of Terrence William Ackert represented Petitioner through all stages of the administrative bid protest and appeal pertaining to the Invitation to Bid for 17,500 square feet of professional office space in the central Orlando, Florida area. Petitioner, a long time client of counsel of record, agreed to pay counsel at the rate of one hundred twenty-five Dollars, and later at one hundred thirty-five Dollars, per hour and for legal assistant charges ranging from twenty-five Dollars an hour to sixty Dollars an hour, and for costs. The Petition for Costs and Attorneys' Fees was timely filed on July 19, 1991. The parties were unable to reach a stipulation regarding the amount of reasonable attorney's fees to be awarded. A fair and reasonable fee for attorney and legal assistant time is as follows: For the period: 6/27/89-2/27/90 Trial attorney time...141.9hrs at $125.00hr =$17,737.50 Legal assistant time...66.0hrs at $45/50hr = $2,990.00 Total. $20,736.50 For the period: 2/27/90-6/30/91 Post-hearing appellate attorney time...92.4hrs at $125.00 =$11,550.00 Post-hearing appellate attorney time...50.6hrs at $135.00 = $6,871.50 Total. $18,421.50 Post-hearing appellate time for various legal assistants at $25/35/50/60hr. =$4,980 Total. $23,401.50 For the period: 7/1/91-to present Post-remand attorney time...48.2hrs at $135.00 = $6,489 Post-remand legal assistant time...50.1hrs at $25/35/60hr =$2,013.00 Total. $8,502 Costs expended for hearing, appeal and remand hearing Total. $8,548.10 Total due for reasonable attorneys' fee and costs. $61,188.10 During the administrative appeal, the Respondent vacated space previously leased from Petitioner and the consequent loss of income rendered Petitioner unable to make payments to counsel. Total payments to counsel of record have been limited to $5,785. Petitioner remains liable for all fees and costs, and has been billed regularly for the total due and owing. Challenge of a proposed award of bid by an agency is complicated, difficult and time consuming process because the litigation is focused primarily in the administrative arena, where few attorneys are willing to accept cases of this type. In order to attain a successful result, it required considerable skill by counsel to properly perform the service. Acceptance by counsel of this matter precluded the acceptance of other litigation because of the three stage administrative process in order to secure relief for his client.
Findings Of Fact This cause originated in a disciplinary action resulting from an administrative complaint filed by the Department of Professional Regulation, Division of Real Estate against the Petitioners herein, Malcolm Lewis Hardy and Aquatic Realty, Inc. The Petitioners herein were the Respondents in the licensure disciplinary proceeding. That proceeding was resolved in their favor by the Recommended Order of the Hearing Officer and by the Final Order filed April 15, 1988 by the Department of Professional Regulation. They have accordingly filed a request for attorney's fees and costs on the ground that the prosecution involved in the underlying case was not "substantially justified." The cause came on for a brief hearing. The parties elected to dispense with calling witnesses at the hearing because they entered into a factual stipulation whereby all germane facts were placed of record. It was thus established that Petitioners Malcolm Lewis Hardy and Aquatic Realty, Inc. (hereafter Hardy) were the Respondents in a licensure disciplinary action brought against them by the above-named Respondent. That disciplinary action was resolved by Final Order filed April 15, 1988 by the Department of Professional Regulation. The Respondents in that case, the Petitioners herein, were totally absolved of any wrongdoing with regard to the charges in the administrative complaint in that proceeding. A copy of that Final Order was mailed by the agency to "Diane Cleavinger, Esquire, 300 East 15th Street, Panama City, Florida 32405." Ms. Jan Nelson, a secretary at that address, and employed by Ms. Cleavinger's former law firm, received a copy of that order and executed the return receipt appearing on the envelope on April 18, 1988. Ms. Nelson was not Ms. Cleavinger's secretary, but rather the secretary of Ms. Fitzpatrick, one of Ms. Cleavinger's former law partners. In any event, Ms. Nelson executed the return receipt on April 18, 1988, but Ms. Cleavinger never received the Final Order nor notification of its filing or receipt by Ms. Nelson. Mr. Hardy never became aware of or received a copy of the Final Order either, until the agency sent another copy to him on September 12, 1988. The affidavit and request for attorney's fees was filed within sixty days of that date. Ms. Cleavinger had left her law firm on January 1, 1988 to become a Hearing Officer with the Division of Administrative Hearings. Mr. Hardy only learned of the Order when he made a direct contact with the Department of Professional Regulation and they learned that he had not received the Final Order. It was thus mailed to him on September 12, 1988 and received on September 14, 1988. That Order dismissed all claims against Hardy and Aquatic Realty, Inc. and thus those parties are in fact "prevailing, small business parties," within the meaning of Section 57.111, Florida Statutes. It was stipulated at hearing, as well, that these Petitioners are small business, prevailing parties and that they incurred attorney's fees in the amount of $1,642.04 for services rendered by Ms. Cleavinger when she represented them in the underlying case-in-chief and that costs amount to $333.71. Additionally, Mr. Hardy further incurred attorney's fees and costs in the amount of $500 in connection with the pursuit of this fee claim by attorney Whitton. It was stipulated that that amount is reasonable. Additionally, the Department accepted its burden of establishing that its action was "substantially justified," within the meaning of Section 57.111, Florida Statutes, and have stipulated that they have not done so. Thus the only issue for resolution concerns whether the claim of Hardy was time-barred.
The Issue Whether or not all or part of the 40 statements challenged in the petition of Great American Reserve Insurance Company violate Section 120.535 F.S. requiring the agency to immediately discontinue all reliance upon the statements or any substantially similar statement as a basis for agency action.
Findings Of Fact On June 13, 1994, Petitioner filed a petition for administrative determination of agency statement. The petition listed the following agency statements and alleged that each constituted a rule pursuant to Chapter 120.52(16), F.S. which had not been adopted by the rulemaking procedures provided by Section 120.54 F.S. [1993]. The challenged statements are as follows: Respondent issues a form which solicits information as follows: Please provide the following information for each approved and pending annuity contract: Form number. Name of form, if any. Date approved or if pending. What are the surrender charges and for how long? What is the initial interest rate and for how long? What is the guaranteed interest rate? Are there any bonuses? If so, for how long and under what circumstances are they paid? Is this annuity two-tier? If so, how is interest applied? What field compensation is paid for each variation? Are any of these forms field issue that allow the agent to write in the current rate of interest? If so, what controls are in place to guarantee accuracy? Respondent issues a form which solicits information as follows: Please list any other annuities offered by the company and their corresponding contract maintenance fees, administration charges, surrender charges, etc. Respondent issues a form which solicits information as follows: Please provide the agent compensation levels associated with each form and/or set of surrender charges. Respondent issues a form which solicits information as follows: Please describe the specific calculation basis of the various annuity purchase rates/settlement options. Please include sample calculations of all options at a selected age(s). Respondent issues a form which solicits information as follows: What percentage sales are expected to be replacements of an existing contract? Please identify the replacement percentages by source (internal, external, 1035 exchanges, etc.). Respondent issues a form which solicits information as follows: [Provide] a brief description of the market and marketing method. Respondent issues a form which solicits information as follows: Please provide the following: Agency training procedures as they relate to this form, Any brochures provided to agents which refer to this form, Any guidelines to assure that policy comparisons are accurate and fair, Standards to ensure that no marketing methods are used which would have the effect of inducing replacement sales through misleading representations, and All forms, other than those required by Rule 4-151.006 and 4-151.007(3)(b), used to a execute replacement sales. Respondent issues a form which solicits information as follows: Please describe the company's practice concerning credited interest rates for annuity products in renewal years. Does the credited interest rate on a given date vary by the duration of the policy within a policy form block of business? If so, please describe the relationship between the various rates. How is this practice disclosed in sales literature for its products? On an annuity policy, varying the death benefit by issue age and duration is unfair discrimination under Ch. 626.9541(1)(g). It is not appropriate to vary the death benefit by age at death for an annuity policy. Variation of surrender charges in an annuity policy by age results in unfair discrimination under Ch. 626.9541(1)(g). Basing the surrender charge in an annuity policy on the age of the annuitant is unfair discrimination under Ch. 626.9541(1)(a). Where surrender charges, which are guaranteed in an annuity contract, vary between forms and the policy parameters, which vary in support of these different surrender charges (interest, bonuses, etc.), are not guaranteed in the contract, if a company were to have products with different surrender charges this would constitute unfair discrimination under Ch. 626.9541. Unfair discrimination is prohibited under annuity contracts by Florida Statute 626.9541(1)(g). The Department continues to receive filings with many variations of interest rates and surrender charges for which the surrender charges are guaranteed and the interest rates are not. These many combinations, applied to the same type contracts, violate this statute. If a single insurance company offers more than one annuity policy in the same market in Florida, the values to the purchaser pursuant to guaranteed parameters under each policy must be actuarially equivalent to those of each other policy. A withdrawal provision in an annuity contract which waives surrender charges on all or part of a partial surrender but imposes surrender charges on all of a total surrender will produce unfair discrimination. Proposed interest rate differentials must result in compensatory guarantees across whatever number of free withdrawal options are made available in an annuity contract for a block of business. It is the position of the Florida Department of Insurance that where multiple annuity products are presented for approval in the State of Florida that the examination of the guaranteed parameters of the policies must all result in the same actuarially equivalent benefit to the beneficiary of the policy for a block of business. If you looked at a block of business sold under each policy, taking into account the distribution of that business and the persistency patterns of that business over the life of that block of business, there must be a comparable return to the policyholder. Less than half a point would be considered approaching reasonable. In an annuity policy, where the present value at death of the amount of death benefit paid is based on the manner in which it will be paid, this is discriminatory pursuant to Ch. 626.9541. It should be revised so that the death benefit options are actuarially equivalent. Each settlement option which may be exercised under an annuity policy must be the actuarial equivalent of each other settlement option offered under that policy. Settlement options offered in an annuity policy may not vary based on the age of the policyholder. An annuity policy may not contain a one direction market value adjustment. One direction MVA does not provide equitable treatment. such an adjustment should be allowed to move equally in both directions to prevent inequitable and discriminatory treatment under Ch. 626.9541. The Department of Insurance mandates compliance with the provision in the current draft of the standard non-forfeiture law for annuities that guaranteed minimum annuitization rates must be at least that guaranteed during the accumulation phase, for a policy not to violate Ch. 626.9541(1)(a) and Ch. 627.411(2). In an annuity contract, the guaranteed minimum annuitization rate may not be less than the guaranteed minimum accumulation rate, per the current draft of the standard non- forfeiture law for deferred annuities. The Department considers a minimal measure of benefits being reasonable in relation to premiums under Ch. 627.411(2), to be compliance with the standard non-forfeiture law. The guaranteed minimum annuitization rate in an annuity policy may not be less than the guaranteed minimum accumulation rate, per the current draft of the standard non-forfeiture law for deferred annuities. The Department continues to feel that attribution of mortality expense charge to variations in the annuitization phase is inappropriate. The current draft of the standard non-forfeiture law for deferred annuitities allows use of projection scale G to be applied to the 1993 table a to account for possible future mortality improvement. It would also appear inappropriate to deduct a mortality charge in the annuitization phase for a mortality risk from the accumulation phase, as the risk no longer exists. Annuity policy forms may not be approved unless all sales brochures and literature are submitted with the forms. All annuity contracts must contain a table of guaranteed values. A table of guaranteed values in an annuity policy must demonstrate any available partial withdrawals not subject to surrender charges, even if the free partial withdrawal provisions are set out in the policy. An annuity contract must include a table of guaranteed minimum annuitization rates. Current company practice may not be presented in the illustration or brochure as a product characteristic of an annuity policy. Only contractually guaranteed items may be presented as policy parameters. If a contract contains proposed provisions which would allow the company to reserve the right to make future changes in charges, guarantees or contractual provisions in the policy, this would violate Ch. 627.474. A sales illustration in an annuity policy must display surrender values, even if the surrender charges are disclosed in the illustration. An illustration in advertising of an annuity policy must demonstrate any available partial withdrawals not subject to surrender charges, even if the terms of a free partial withdrawal provisions are set out in the advertising. Computer generated sales illustrations for annuity policies must include the following: Name of the person that the illustration is prepared for. Name of the agent preparing the illustration. A current date. A proposed date of maturity. Disclosure of all expense charges including a clear statement of the surrender charges. An illustration in advertising of a one tier annuity policy must specify the maturity date. The agent is not permitted to write in the current interest rate in the sales brochure. Death benefits or settlement options in an annuity policy to be sold to males and females must be based on male mortality tables for men, female mortality tables for women or gender blended mortality tables. Statements 1-8 challenge forms used by the Department of Insurance soliciting the enumerated information. Statements 9-40 challenge statements of policy used by the Department in review of annuity insurance policy and advertising forms. Between the filing of the Petition herein and the date of formal hearing, the Respondent agency filed a notice of rule development workshop. (See Finding of Fact 36) The parties stipulated: That Petitioner has standing herein as a person substantially affected by the agency statements challenged in the petition herein. That each challenged agency statement is an agency statement defined as a rule under Section 120.52(16) F.S.; and That none of the challenged agency statements have been adopted by the rulemaking procedure provided by Section 120.54 F.S. [1993]. By reason of the parties' stipulations, the only matter to be determined is whether or not the agency is currently using the rulemaking procedure expeditiously and in good faith to adopt rules which address the statements challenged by the petition herein. In an effort to establish minimal standards on a wide variety of issues, the Department of Insurance and State Treasurer has recently tried to approach rulemaking in a holistic or coordinated manner among its various bureaus and areas of technical expertise instead of piecemeal, as historically. In 1989-1990, the agency adopted 225 forms as rules, reducing the number of forms in use from 800. Its last wholesale rules review and revision occurred in the fall of 1991, partly in response to the legislative creation of Section 120.535 F.S., was internally code-named "the rules reorganization project," and met the statutory March 1, 1992 deadline to formalize existing non-rule policies. Both projects were conducted under the oversite of agency attorney Ruth L. Gokel, of the agency's legislative and rules section. Since then, the agency has largely deferred to its technical experts to initiate rulemaking, and not to its lawyers. However, anytime a regulatory employee approaches the legislative and rules section, that section immediately initiates rulemaking procedures. While Ms. Gokel does not provide routine oversite to the agency's bureaus or divisions to determine whether they are routinely using non-rule policy, she has the authority to recommend to agency bureaus and divisions that they are in need of rules. Because she is familiar with the complex processes for promulgating rules, she coordinates much of the agency's rule drafting. Ms. Gokel created a departmental manual on rulemaking in June 1991. The manual was published after enactment of Section 120.535 F.S. Portions of that manual, upon which Petitioner strongly relies, provides: any interpretation of a statute or any requirement generally imposed on agents, companies or other regulated entities as a group which has not been adopted as a rule, is a non-rule policy. * * * The first time we interpret a statute and apply it to a particular fact situation, the interpretation is not as yet a statement of general applicability and thus is not a rule. The second time an issue arises . . . we need to begin to formulate a rule. The third or fourth time a statute is interpreted and applied in a given manner, a rule should be published. Petitioner views this manual as binding upon the agency to begin rulemaking in some form immediately upon any agency employee imposing any statutory interpretation for the first time and even if the statutory interpretation is still only part of an individual's mental process. Petitioner also views the manual as requiring the agency to publish a rule upon the third or forth similar interpretation. However, the competent substantial evidence as a whole shows that the manual's pronouncements were, at best, aspirational. The manual was designed as the agency's first best attempt to educate its non-lawyer experts concerning their responsibilities under a new law, to ensure agency compliance with the new law by "picking up any non-rule policy floating around", to head off potential violations of the new law, and to minimize the number of potential petitions challenging agency statements under the new law. The manual also was in line with the agency's new evolving coordinated approach to rulemaking. The manual is designed to alert laymen to rulemaking problems, and was revised in December 1993. It will continue to be revised periodically. Prior to the filing of the Petition herein, the Department adopted checklists to aid insurers in their submission of policy forms and to aid the Department staff in their reviews of such form filings. The checklists are adopted as forms in Part II of Rule Chapter 4-149. Prior to the filing of the Petition herein, the Department adopted rules governing the review of advertising material for annuities. Those rules may be found in Part II of Rule Chapter 4-150. The Department has conducted actuarial reviews of annuity filings only since May of 1992. Although there were no statutory changes on or about that date, the Department was motivated to institute much closer scrutiny of annuities and the sale of annuities in this state as a result of the rule challenges to the Department's "bank rules", Chapter 4-223 F.A.C. Actuarial review by the agency has evolved in order to ensure that the products are clearly presented, that they are not unfairly discriminatory, that the sales presentations and contracts are not misleading, and that the product has not been designed for use with inappropriate marketing practices. These are statutorily permissible goals. See, Chapter 627 F.S. Of necessity, the Department review must combine its regulatory concerns into one cohesive set of policy statements. The actuarial review of annuities was first conducted by actuary Mike Morgan from May 1992 to about February 1993, when that responsibility was assumed by another Department actuary, Tom Foley. In December, 1993, the responsibility shifted to yet another Department actuary, Linda Ziegler. During the course of the reviews performed by each of these agency employees, judgments were made as to particular aspects of the actuarial review. Those judgments regarding the particular forms being reviewed were expressed in letters to the companies involved. Some of these letters were requests for additional information. If the additional information were supplied and, in the opinion of the reviewing actuary, it did not result in a violation of Florida statutes or rules, then the filing was approved. If the reviewing actuary found a violation based on the additional information, the filing was disapproved. Other letters were disapproval letters after a complete review of all the requested information. Actuarial review is an arcane business involving informed consideration of many different aspects of a filing. The decision to approve or disapprove is made on the basis of the totality of the filing. It may be that one aspect of a particular filing might not be entirely within the required parameters in the judgment of the actuary, but that aspect, in that particular filing, might be offset by another aspect, which in turn would render the filing approvable. All pieces of the whole are interrelated and the whole is complex. When Ms. Ziegler became responsible for the filings, she consulted with Mr. Morgan and Mr. Foley. Over the course of the two years of review, the actuaries involved wrote several hundred letters addressing actuarial issues on a situation by situation basis as each situation arose. Between December 1993 and the filing of the Petition herein, Ms. Ziegler was the responsible reviewing actuary. During those approximately six months, Ms. Ziegler consistently and uniformly applied the statements challenged to every application for annuity policy form and advertising form approval filed. Thus, even those statements used relatively few times have been used every time the policy embodied in the statement could have been applied. Additionally, departmental letters to insurance company applicants for approval of annuity policy and advertising forms, some 630 separate applications of challenged statement numbers 2, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23 and 40, related to unfair discrimination pursuant to Section 627.9541(1)(g) F.S. Challenged statement number 29 has been the articulated agency policy for at least 21 months, since the issuance of Department of Insurance Informational Bulletin 92-032 issued October 21, 1992. In January of 1994, Mike Morgan drafted language intended for the agency's legislative package for the 1994 session to address parts of the problem of actuarial review statutorily. Although agency personnel believed the agency had, and has, authority to perform these reviews, Ms. Ziegler testified that it is always better if matters are addressed by specific statutes because they are then much less subject to challenge. The Legislature did not address the issue of annuities in 1994. However, Mr. Morgan's work remained available to Ms. Ziegler when she began drafting what eventually became the Department's proposed rules on the subject. In March 1994, Ms. Ziegler began work on a draft bulletin to send to the companies to inform them in a more comprehensive way of the Department's current interpretations of several parts of the actuarial review problem. At about that time, she met with Department attorney Dennis Silverman who advised that eventually she would need to pursue rulemaking. Ms. Zeigler was unavoidably absent from the workplace at some time during this period due to an accident. When she returned to her office, she prioritized what she considered "more immediate" work. In May 1994, Ms. Ziegler returned to the draft bulletin, made a few minor changes, and then abandoned the project in favor of proposed rules. The Petition in this cause was filed June 13, 1994. Ms. Ziegler was aware that the forty statements had been challenged by the Petition shortly after the Petition herein was filed. In the third week of June 1994, Ms. Ziegler sought out Ms. Gokel. At that time, Ms. Ziegler had draft rules she felt cohesively addressed the actuarial review necessities, including addressing certain misleading sales practices. She also had several of the checklists adopted in Part II of Chapter 4-149 F.A.C. on which she had drafted proposed changes. Her comprehensive package addressed the totality of the necessary review and, as a result, also addressed each of the forty statements challenged in the pending Petition. Ms. Ziegler represented to Ms. Gokel that she was comfortable with the whole package and was ready to go public with it. Ms. Gokel informed Ms. Ziegler that since February, 1994 Ms. Gokel had had an assignment to make changes to the same checklists and had already had two meetings, in February and in March, with two other members of the Department regarding the same matter. Yet another member of the Department, Kim Forrester, had been working on proposed changes to the advertising rules in Part II of Chapter 4-150 F.A.C. Ms. Forrester was working with another departmental attorney, so in line with the agency's comprehensive approach to rules, Ms. Gokel had the foregoing assignment transferred to her. Based upon Ms. Gokel's considerable education, training, and experience in rulemaking, her understanding of agency policy concerning the need for and use of rule development workshops, the great amount of insurance industry interest which can reasonably be anticipated for the draft rules, and her personal knowledge regarding the complexity and breadth of the actuarial matters addressed in the draft rules, Ms. Gokel determined that a rule development workshop was essential. Rule workshops have been more the norm than the exception with this agency since at least 1992. The agency published its Notice of Rule Development Workshop in the Florida Administrative Weekly on July 1, 1994. The notice stated that a preliminary draft of the rules would be available for distribution on July 22, 1994, and that the workshop would be held on August 23, 1994, from 2 to 4 p.m. Respondent's witnesses affirmatively demonstrated significant planning and tangible steps that have been taken in furtherance of the rulemaking process since the filing of the foregoing notice. Ms. Gokel has devised a feasible preparatory checklist or schedule for meeting the deadlines announced in the published notice. Between publication of the Notice of Rule Development Workshop and formal hearing, something has been accomplished almost every day. In accord with this schedule, Ms. Gokel has once again met with Ms. Ziegler to discuss the proposed changes; has worked on the needed changes to the checklists with the secretary in the Bureau of Life and Health Forms and Rates because those checklists are documents in the "Lotus Notes" software program not available to Ms. Gokel in the agency's legislative and rules section; has reviewed the statutory authority supplied by Ms. Ziegler and has added the history notes where they were missing in the draft prepared by Ms. Ziegler; has incorporated Ms. Ziegler's and Ms. Forrester's proposed changes into the draft of the advertising rules; has reworked Ms. Ziegler's and Ms. Forrester's drafts for compliance with the Secretary of State's filing requirements; and has produced preliminary rule drafts. These steps have been expeditious and are themselves tangible evidence of the agency's current good faith efforts in the rulemaking procedure. Other steps listed by Ms. Gokel as necessary remained to be accomplished after formal hearing. Those included a meeting between Ms. Gokel and Ms. Forrester about the advertising rules; preparation of the existing rules which adopt the checklists showing the new revision dates; a meeting with Ms. Ziegler to discuss another proposed new rule in the actuarial review rules; a comprehensive review of the history notes; consolidation of the existing drafts into a single document for distribution as noticed for July 22, 1994; and preparation of the sign-in sheets and agenda for the workshop noticed for August 23, 1994. Provisions for timely accomplishing these tasks has been made on Ms. Gokel's schedule. As of the date of formal hearing, Ms. Gokel had already discovered several other statutory sections which should have been included in the Notice of Rule Development Workshop. She expressed the intent to file an amended notice reciting the additional statutory authority, but not otherwise changing the date or time of the workshop. This discovery represents at least one advantage of a comprehensive approach to agency rule drafting as practiced by this agency. Once the workshop draft has been distributed on July 22, 1994, the agency anticipates holding the workshop on August 23, 1994 and leaving the record open for written comments if appropriate. The agency's current intent is to leave the record open for only two weeks, which the agency's past workshopping experience has proven sufficient. Although this period could be extended further, there is no evidence in this record to suppose it will be. After the record closes, the plan is for agency personnel to conduct an internal review of the comments that were received, if any; Ms. Gokel will prepare a revised draft of the rules, as warranted, and will circulate an internal route slip for approval of the agency "senior management" involved. Only the lattermost effort of the route slip is an internal procedure peculiar to this agency and is not a requirement of Chapter 120 F.S. Historically, this route slip procedure has been ministerial and has only taken a few days. There is no clear evidence to show it will be different or take longer this time. Finally, the agency will have to file for notice, pursuant to Section 120.54 F.S. Petitioner presented only speculation to the effect that the foregoing schedule would not be met. The agency's assessment that in the area of actuarial review, moving from "first-time-ever" review of annuities to a comprehensive rule package in two years is the rulemaking equivalent of the "speed of light," may be more colorful than informative and is not binding upon the finder of fact, but the foregoing agency schedule and the agency's actions thereon are found to be currently expeditious in the circumstances of the number and type of rules necessary for such complex subject matter. If any challenged statement were not being addressed by the rulemaking process, the agency would have been unable to demonstrate that the agency rulemaking process is currently proceeding expeditiously and in good faith. However, here, the agency affirmatively demonstrated through unrefuted testimony that its draft rules have addressed, with at least some degree of particularity, each of the forty statements challenged by the Petition. Statements (1) and (2) of the Petition for Administrative Determination of Agency Statement involve requests for information of a company as to the other annuity products which the company is offering, have approved or are pending approval. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, and DI4-557. Statement (3) of the Petition involves a request for information concerning the agent compensation levels paid on the proposed product. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-548, DI4-555, DI4-556, and DI4-557. Statement (4) of the Petition involves a request for information regarding a specific description of the basis of the guaranteed minimum annuitization rates in the contract. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, and DI4-557. Statement (5) of the Petition involves a request for information regarding sales of the product which are expected to be replacements of existing coverage. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, and DI4-556. Statement (6) of the Petition involves a request for information regarding the market to be targeted and the marketing method to be used with respect to the proposed form. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-548, DI4-549, DI4-551, DI4-555, DI4- 556, and DI4-557. Statement (7) of the Petition involves a request for information regarding the agency training methods to be used with respect to the proposed form. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1 Forms DI4-555, DI4-556, and DI4-557. Statement (8) of the Petition involves a request for information regarding the credited interest rates in renewal years and their disclosure to consumers as practiced by the company. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, and DI4- 557. Statements (9) and (10) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., in the death benefit offered in an annuity product. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.064(2)(a)3. Statements (11) and (12) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., in the variation of surrender charges by age in an annuity product. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.065(4). Statements (13), (14), (15), and (18) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., between essentially identical products which have variations in guaranteed surrender charges, and other guaranteed parameters, and do not provide comparable benefits for premiums paid for the annuity products. This subject is addressed in the proposed draft Rule 4-149.071, Petitioner's Exhibit I. Statement (16) of the Petition addresses the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., between policyholders of the same annuity form in treatment under the withdrawal provisions. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.065(4)(c). Statement (17) of the Petition addresses a special case scenario of the Department's concern as expressed in statements (13), (14), (15), (18). This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.071. Statement (19) of the Petition addresses the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S. regarding the payment of a death benefit. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.066, and 4- 149.064(2)(a)3. Statement (20) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S., in the value of the annuitization value available in an annuity product. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.066. Statement (21) of the Petition address the Department's concern about unfair discrimination under Section 626.9541(1)(g), F.S. in the choice of annuitization options available in an annuity product. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.066. Statements (22) and (23) of the Petition address the Department's concern about misrepresentation and unfair discrimination under Section 626.9541(1)(a) and (g), F.S., in the inclusion of a Market Value Adjustment which affects the policy in only one direction. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.067(2). Statements (24), (25), and (27) of the Petition address the Department's concerns about misrepresentation under Section 626.9541(1)(a), F.S., and ambiguity and reasonableness of benefits to premiums under Section 627.411(1)(b), and (2), F.S. in the interest rate component of the guaranteed minimum annuitization rates in the annuity contract. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.064(2)(a)4. Statement (26) of the Petition addresses the Department's concern about reasonableness of benefits to premiums under Section 627.411(2), F.S. for an annuity contract. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.064(2)(a). Statement (28) of the Petition addresses the Department's concern about reasonableness of benefits to premiums under Section 627.411(2), F.S., in the treatment of charges under an annuity contract. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4- 149.064(2)(c). Statement (29) of the Petition addresses the Department's concern about timely review and approval of sales literature as noticed by Bulletin 93- 032's expression of existing Rule 4-150.120 F.A.C.. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-548, DI4-549, DI4-550, DI4-551, and DI4-555. Statements (30) and (31) of the Petition involve a requirement for the contract to contain an accurate table of guaranteed values, to prevent ambiguity under Section 627.411 (1)(b), F.S. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, DI4-557. Statement (32) of the Petition involves a requirement for the contract to contain an accurate table of guaranteed minimum annuitization values, to prevent ambiguity under Section 627.411(1)(b), F.S. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-555, DI4-556, DI4-557. Statement (33) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft rules in Petitioner's Exhibit J, proposed draft Rule 4-150.105(1)(a). Statement (34) of the Petition addresses the Department's concern that a contract explicitly describe policy provisions over the life of the contract, under Section 627.474, F.S. This subject is addressed in the proposed draft rules in Respondent's Exhibit 1, Forms DI4-548, DI4-555, DI4-556, and DI4-557. Statement (35) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft rules in Petitioner's Exhibit J, proposed draft Rule 40150.105(1)(b). Statement (36) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105(1)(f) F.A.C.. Statement (37) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft rules in Petitioner's Exhibit J, proposed draft Rule 4-150.105. The requirement expressed by statement (37)(e), is presently found in currently promulgated Rule 4-150.106(1). Statement (38) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft Rule 4-150.105(1)(e). Statement (39) of the Petition addresses the Department's concern about accurate, complete and non-misleading presentation of policy characteristics in sales literature, under existing Rule 4-150.105. This subject is addressed in the proposed draft rules in Petitioner's Exhibit J, proposed draft Rule 4-150.105(1)(d). Statement (40) of the Petition addresses the Department's concern about reasonableness of benefits to premiums under Section 627.411(2), F.S., and unfair discrimination under Section 626.9541(1)(g), F.S. in the value of the death benefits and guaranteed annuitization rates for an annuity contract. This subject is addressed in the proposed draft rules in Petitioner's Exhibit I, proposed draft Rule 4-149.064(2)(a)4. The testimony that the forty challenged statements are addressed in the Department's draft rules [Pet.I, J; Resp. 1], as set forth above, is uncontroverted. The Petitioner did not present any evidence nor elicit any testimony refuting or otherwise discrediting this testimony on that issue.
The Issue The issue to be determined is the amount of reasonable attorney's fees and costs incurred by Citrus Mining and Timber, Inc. ("CMT") in Robert A. Schweickert, Jr. v. Department of Community Affairs and Citrus Mining and Timber, Inc., Case. No. 1D10-3882 (Fla. 1st DCA 2011).
Findings Of Fact Appellate Attorney's Fees Sarah Lahlou-Amine of the law firm of Fowler White Boggs, P.A. ("Fowler") was the attorney with primary responsibility for research and drafting documents for the appeal on behalf of CMT. She prepared and filed a notice of appearance, a motion to dismiss, a motion for attorney's fees, an amended motion for attorney's fees, the answer brief, a notice of supplemental authority, a second motion for attorney's fees, and a motion for clarification. Ms. Lahlou-Amine was assisted and supervised by more senior lawyers at Fowler. The total number of hours charged by Fowler was 134.8. The total attorney's fees charged by Fowler was $39,010. Lawyers from two other law firms were employed by CMT and charged attorney's fees and costs for the appeal. The Law Office of Clark Stillwell, P.A., charged 18 hours for a total attorney's fees of $6,030. Edward de la Parte and other lawyers of the law firm of de la Parte & Gilbert, P.A., charged 24.9 hours for total attorney's fees of $5,382.50. The grand total of all the attorney hours expended for the appeal is 177.7 hours and the grand total of all fees charged to CMT for the appeal is $50,422.50. It was the opinion of CMT's expert witness, Daniel Stengle, that all of these hours and fees are reasonable. Schweickert's expert witness, Howard Heims, believes that 25 or 30 hours was all the effort that was reasonable for this appeal. The hourly rates of $225.00 to $435.00 an hour that were used by CMT's attorneys are not contested by Schweickert. The evidence established that the rates are reasonable. The dispute focused on the number of hours expended for the appeal. Heims contends that it was unreasonable for CMT to file a motion to dismiss for lack of standing, because appellate courts rarely grant such a motion and the standing issue could have been saved for CMT's answer brief. The court did not summarily deny CMT's motion to dismiss but, instead, ordered Schweickert to show cause why the motion should not be granted. The issuance of the order to show cause indicates that it is not the court's practice to deny all motions to dismiss that are filed before the briefs. Following Schweickert's response, the court still did not deny the motion to dismiss, but deferred ruling to the panel of judges that would determine the merits of the appeal. It was not unreasonable to file a motion to dismiss in this case because Schweickert's lack of standing was unusually clear. The controlling factual issue was simple--whether Schweickert made timely comments to Citrus County about the proposed comprehensive plan amendment. Furthermore, the argument made in the motion eventually prevailed. Heims also believes that it was unreasonable for CMT to file three motions for attorney's fees and costs. The motions were not identical, but filing three such motions is unusual and was not shown to be necessary or important. It was not persuasively shown that 177.7 attorney hours was reasonable for this appeal. The evidence does not establish that the attorney's fees charged by the law firms of Clark Stillwell and de la Parte & Gilbert should be included as part of the reasonable fees for the appeal. These fees were not shown to be necessary or to contribute materially to the appeal. Rule 4-1.5 of the Rules Regulating the Florida Bar, Code of Professional Conduct, sets forth factors to be considered in determining a reasonable attorney's fee. The factors listed in rule 4-1.5(b)(1) are addressed below, in sequence: the time and labor required, the novelty, complexity, and difficulty of the questions involved, and the skill requisite to perform the legal service properly; The time and labor expended on the appeal was not shown to be reasonable. The questions involved were not difficult. The case was not complex. No unusual skills and expertise were required to perform the legal services. the likelihood that the acceptance of the particular employment would preclude other employment by the lawyer; CMT did not contend that this factor was applicable. the fee, or rate of fee, customarily charged in the locality for legal services of a comparable or similar nature; Reasonable hourly rates were charged, but persuasive evidence was not presented to show that the total amount of the fees charged to CMT are customary for the services that were performed. the significance of, or amount involved in, the subject matter of the representation, the responsibility involved in the representation, and the results obtained; Although a reversal of the Department's Final Order would have had adverse consequences for CMT, it was not shown that the situation was of an unusual nature. Furthermore, a reversal on the merits (to find the comprehensive plan amendment not in compliance) was almost impossible because no factual findings were made that supported Schweickert's claims. CMT points to the unusual result--attorney's fees awarded against a pro se litigant--as justifying the attorney's fee, but this unusual result is due to Schweickert's unusually weak case. The issues and the law applied were not unusual. the time limitations imposed by the client or by the circumstances and, as between attorney and client, any additional or special time demands or requests of the attorney by the client; CMT's argument that time limitations of an usual nature existed in this matter was not persuasive. the nature and length of the professional relationship with the client; The applicability of this factor was not argued by CMT and was not demonstrated by the evidence. the experience, reputation, diligence, and ability of the lawyer or lawyers performing the service and the skill, expertise, or efficiency of effort reflected in the actual providing of such services; and The lawyers involved have good reputations and experience, but those attributes were not likely to have materially affected the outcome. Performing the legal services did not require unusual skills. The services were not efficiently provided. whether the fee is fixed or contingent, and if fixed as to amount and rate, then whether the client's ability to pay rested to any significant degree on the outcome of the representation. This factor was not shown to be a basis to support a larger fee. It was Heims' opinion that 25 to 30 hours was a reasonable number of attorney hours to prepare the answer brief and one motion for attorney's fees. Thirty hours was a sufficient number of hours for the research and drafting work done by Ms. Lahlou-Anime. However, because it has been determined that the filing of the motion to dismiss was reasonable, some additional time should be added. CMT Exhibit 1 indicates that Ms. Lahlou-Anime charged about 23 hours for her work on the motion to dismiss. However, in determining a reasonable number of hours for the work on the motion to dismiss, consideration must be given to the fact that the standing arguments made in the motion were repeated in CMT's answer brief, which has already been accounted for in the 30 hours. The parties did not address this specific issue. However, the evidence supports the addition of 10 hours for Ms. Lahlou-Anime, for a total of 40 hours. Forty hours for Ms. Lahlou-Anime at her rate of $260 per hour equals $10,400. Heims also failed to fairly account for the reasonableness of the attorney hours expended by Karen Brodeen, a senior attorney at Fowler who represented CMT in the lower administrative proceedings and who assisted Ms. Lahlou-Anime in the preparation of the motion to dismiss and answer brief. CMT Exhibit 1 shows that Ms. Brodeen charged 0.9 hours at $375 per hour and 16.9 hours at $385 per hour, for a total fee of $6,844. The grand total of reasonable attorney time is 57.8 hours and the total reasonable attorney's fee is $17,244. Appellate Costs CMT is seeking $3,250.95 in costs for the appellate proceeding, comprised of $3,156.41 in costs charged by Fowler and $94.54 charged by de la Parte & Gilbert. However, as discussed in the Conclusions of Law, the costs which CMT seeks to recover --routine office expenses--are not recoverable legal costs under the applicable statutes. Prejudgment Interest CMT seeks daily prejudgment interest at the rate of 0.01644 percent. Requested Sanctions in the DOAH Remand Proceeding CMT also seeks to recover its attorney's fees and costs incurred following the remand from the Court of Appeal to DOAH to determine the amount of appellate attorney's fees and costs, as a sanction for alleged misconduct by Schweickert. CMT seeks a sanction against Schweickert for his failure to appear at a scheduled deposition for which Schweickert had been subpoenaed. Schweickert was not represented by an attorney at the time. Schweickert told CMT's attorneys that he was not going to appear at the deposition, but CMT's attorneys went forward as planned. Schweickert did not appear for his deposition. CMT seeks to recover its attorney's fees charged by de la Parte & Gilbert that are related to Schweickert's failure to appear for his deposition, which are $17,975.00, and costs of $818.63. CMT also sought a sanction against Schweickert for having to respond to Schweickert's Motion for Cause of Contempt for Citrus Mining and Timber’s Violation of Court Order, which demanded sanctions against CMT for CMT's scheduling of Schweickert's deposition without attempting to contact him to arrange a mutually agreeable date and time. The motion was denied. Schweickert was not represented by an attorney at the time. CMT seeks to recover its attorney's fees charged by de la Parte & Gilbert to respond to the motion, which are $2,357.50, and costs of $21.52. The day before the final hearing, CMT filed a motion for sanctions for Schweickert's failure to provide complete answers to some of CMT's discovery requests. At the time of the final hearing on September 7, 2011, CMT showed a total of $35,570 in attorney's fees associated with the DOAH remand proceeding, and costs of $1,693.73. CMT seeks recovery of those fees and costs as well as subsequent fees and costs through issuance of the Final Order in this remand proceeding, which are estimated to be $22,000 and $10,870, respectively. In summary, CMT seeks to recover $70,133.73 in fees and costs that it was charged by its attorneys for their effort to show that CMT's appellate fees and costs of $53,673.45 were reasonable.
