Filing # 45201254 E-Filed 08/15/2016 10:23:19 AM IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIALCIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA JAMES F. FEE, JR., Individually, Plaintiff, vs. CASE NO. 2016-020607-CA-01 THE NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC., A Delaware not for profit corporation, THE FLORIDA OFFICE OF INSURANCE REGULATION, an agency of the State of Florida, and DAVID ALTMAIER, as Commissioner of the Florida Office Insurance Regulation, Defendants. / DEFENDANT, THE NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. S RESPONSE IN OPPOSITION TO PLAINTIFF S AMENDED EMERGENCY MOTION FOR EXPEDITED HEARING Defendant, The National Council on Compensation Insurance, Inc. ( NCCI ), by and through undersigned counsel, responds in opposition to Plaintiff, James F. Fee, Jr. s Amended Emergency Motion for Expedited Hearing, and states: SUMMARY OF ARGUMENT 1. Plaintiff seeks a hearing on the merits of this case before he has even served the Defendants with a copy of his Complaint, and appears to be seeking such via a hearing on an improperly pled temporary injunction, despite the fact that Plaintiff cannot meet the requirements for a temporary injunction and indeed has not even attempted to meet such requirements. As more fully developed below, Plaintiff is not entitled to the relief he requests for four primary reasons: 1
First, the OIR has filed a Motion to Transfer Venue based on its home venue privilege, and that motion must be heard and ruled upon prior to a decision on the merits; Second, Plaintiff s alleged emergency is of his own creation; Third, NCCI is not subject to Florida s public records laws, and therefore an expedited hearing pursuant to section 119.11, Florida Statutes, is moot; and Finally, section 86.111 does not provide for the type of expedited hearing requested by Plaintiff, and any expedited hearing granted under section 86.111 should not be scheduled until the Complaint has been served on all Defendants and the Defendants have been able to conduct appropriate discovery into Plaintiff s allegations. 2. Importantly, Plaintiff filed his Complaint in an improper venue, as demonstrated by the Motion to Dismiss/Transfer Venue filed by the Office of Insurance Regulation and the Insurance Commissioner. The Venue Motion must be heard, and the Complaint dismissed, or transferred to Leon County, before any hearing on the merits can be conducted. 3. Plaintiff s alleged emergency is also of his own creation, and no true emergency exists. Although Plaintiff and his counsel have known for weeks (as demonstrated by the July 26, 2016 correspondence attached as Exhibit 2 to the Complaint) of the issues he now alleges necessitate emergency relief, Plaintiff waited until 10:44PM on Wednesday, August 10 th to file his Complaint. Plaintiff then appears to have waited until 7:59PM on Friday, August 12 th, to file his Emergency Motion for Expedited hearing. Plaintiff has still not served the Complaint on all Defendants to this action. 4. Plaintiff s sole basis for seeking an expedited hearing is based on his allegations that NCCI has not complied with Florida s public records laws. Plaintiff alleges that he is entitled to 2
an expedited hearing pursuant to section 119.11, Florida Statutes, to determine whether NCCI has complied with Florida s public records laws. However, NCCI is not subject to Florida s public records laws, and the requested hearing is therefore moot. Additionally, Plaintiff s Amended Motion appears to seek a hearing far broader than that permitted by section 119.11, and appears instead to be seeking an improper temporary injunction to prevent the scheduled August 16, 2016, hearing before the Office of Insurance Regulation ( OIR ) from being conducted until after the allegations in this case (including allegations having nothing to do with Florida s public records laws) are heard. There is no basis in law for such relief, and Plaintiff has failed, indeed not even attempted, to demonstrate the elements required to obtain a temporary injunction. Presumably because Plaintiff cannot meet the requirements for a temporary injunction, Plaintiff instead invites error by seeking to improperly obtain the same relief through the guise of a section 119.11 hearing. 5. Finally, although Plaintiff s Amended Motion includes a cursory reference to section 86.111 as permitting an expedited hearing to be held, section 86.111 does not provide for the type of expedited hearing requested by Plaintiff, and any expedited hearing granted under section 86.111 should not be scheduled until the Complaint has been served on all Defendants and the Defendants have been able to conduct appropriate discovery into Plaintiff s allegations. Additionally, as Plaintiff admits in his Motion, even if this case could somehow affect the OIR s approval of NCCI s amended rate filing, the rate will not be effective for insurers which utilize NCCI s rates unless it is approved following the August 16 th public hearing, and even if approved will not be effective until October 1, 2016 at the earliest. Moreover, the OIR s Notice of Public Hearing states that public comments will be accepted until August 23, 2016. 3
6. In sum, Plaintiff has no legal right to the relief he requests. Moreover, the relief requested by Plaintiff, essentially an improper temporary injunction delaying the August 16 th OIR hearing, could cause severe public harm, as workers compensation rates are currently not adequate to meet claims. Delaying the hearing would likely delay the effective date of any necessary rate increase. The combined total statewide unfunded liability to workers compensation insurers (including self-insurers) estimated up to October 1, 2016 could potentially exceed $1 billion dollars. If delayed, the unfunded liability will increase by tens of millions of dollars each month and may threaten the solvency of Florida workers compensation insurers and their ability to pay claims. Insurers may react to this threat in ways that impact the availability and affordability of insurance products for Florida employers. For the above reasons, as discussed in more detail below, NCCI requests the Motion be denied, the Venue Motion be granted, and this case be heard in an orderly fashion in accordance with applicable rules of procedure. FACTUAL BACKGROUND 7. NCCI is a national workers compensation rating, advisory, and statistical organization, which is licensed by the State of Florida to make workers compensation rate filings on behalf of its members and subscribers, licensed Florida workers compensation insurers, subject to regulatory approval. 8. The OIR is an agency of the State of Florida, to which the Florida Legislature has delegated the authority to regulate insurance companies and related organizations, including rating organizations like NCCI, that provide services to entities licensed to transact insurance in Florida. 4
9. On April 28, 2016, the Supreme Court of Florida issued its decision in Castellanos v. Next Door Co., 192 So. 3d 431 (Fla. 2016), which declared the mandatory attorney fee schedule set forth in section 440.34, Florida Statutes, unconstitutional. As a result of this decision, and 2016 Senate Bill 1402, which ratified updates to the Florida Workers Compensation Reimbursement Manual for professional health care providers, NCCI proposed a rate increase of 17.1% in order to account for the additional insurance liability which will be incurred by insurers. 10. On May 27, 2016, NCCI s proposed rate filing was submitted to the OIR on behalf of those insurers who are members or subscribers of NCCI in this state, pursuant to section 627.091, Fla. Stat. 11. On June 30, 2016, NCCI amended its rate filing to include the estimated impact on workers compensation insurer liability resulting from the Florida Supreme Court s decision on June 9, 2016 in Westphal v. City of St. Petersburg, etc. et al, No(s) SC13-1930 and SC13-1976, 2016 WL 3191086 (Fla. June 9, 2016). The amended rate filing proposed an overall average rate level increase of 19.6% for industrial classifications, as the existing workers compensation rates are inadequate, in part, due to the rulings in Castellanos and Westphal. Current projections demonstrate the unfunded liability for workers compensation to date may exceed $1 billion dollars, and a continuation of inadequate rates could threaten the solvency of Florida workers compensation insurers, as workers compensation insurers in Florida are prohibited from recouping prior losses or recouping unfunded liabilities. The rate level increase is required to ensure the rates charged by workers compensation insurers are not inadequate and in violation of statutory requirements for insurance rates in Florida pursuant to section 627.062, Florida Statutes. 5
12. The OIR determined that it was in the public interest to hold a public hearing to hear public comment and determine whether the amended rate filing meets the requirements of chapter 627, Florida Statutes. On July 1, 2016, in accordance with section 627.101, Florida Statutes, the OIR issued a Notice of Public Hearing, to be held on August 16, 2016. 13. Thousands of pages of NCCI filings, including filings related to the August 16, 2016, hearing, are publicly available online from the OIR, and have been available for review prior to the public hearing. Indeed, Plaintiff retained the services of an actuary who obtained such publicly available documents and has already prefiled his own testimony with the OIR for purposes of the August 16, 2016, hearing. Plaintiff s actuary has also advised that he will be testifying at the August 16 th hearing on behalf of the Plaintiff. 14. On August 10, 2016, 41-days after OIR issued the Notice of Public Hearing and 6 days prior to the hearing, Plaintiff filed his Complaint in this Court against the OIR, the Insurance Commissioner, and NCCI. In addition to a number of other allegations, the Complaint incorrectly alleges that NCCI is subject to Florida s public records laws and was, and is, required to provide Plaintiff with more information on the proposed rate increase than NCCI was required by law to provide to OIR. 15. On August 12, 2016, at 7:59 P.M., Plaintiff filed an Amended Emergency Motion for Expedited Hearing, seeking an expedited hearing pursuant to section 119.11, Florida Statutes. As of the time of this filing Plaintiff s Complaint has not been served on all Defendants. Plaintiff s counsel emailed a copy of the Complaint and Motion to NCCI s counsel after 8PM on Friday, August 12 th, and stated that NCCI would be formally served with the Motion and the Complaint on Monday, August 15, 2016. Plaintiff s email is attached hereto as Exhibit A. 6
16. On August 15, 2016, the OIR and the Commissioner filed a Motion to Transfer Venue, seeking an order transferring venue in this matter to Leon County, where the OIR is headquartered, pursuant to the home venue privilege afforded to the State, its agencies, and its political subdivisions. MEMORANDUM OF LAW Plaintiff is not entitled to the emergency hearing it seeks for several reasons. First, the OIR s pending Motion to Transfer Venue must be heard and venue transferred prior to a hearing on the merits. Second, the alleged emergency is of the Plaintiff s own making. Third, the Florida Public Records Act does not apply to NCCI, a private corporation, and the expedited hearing permitted by section 119.011 is therefore not applicable. Fourth, even if chapter 119 applied and Plaintiff was entitled to an expedited hearing regarding public records issues, Plaintiff is not entitled to an expedited hearing, let alone an emergency hearing, on its other allegations. I. The OIR s Motion to Transfer Venue Must Be Heard Before the Merits of this Case are Considered As detailed in the OIR s Motion to Transfer Venue, [i]t has long been established common law of Florida that venue in a civil actions brought against the state or one of its agencies or subdivisions, absent waiver or exception, properly lies in the county where the state, agency, or subdivision, maintains its principal headquarters. Carlile v. Game & Fresh Water Fish Comm n, 354 So. 2d 362, 363-64 (Fla. 1977). The purpose of the home venue privilege given to state agencies is to promote orderly and uniform handling of state litigation and to minimize expenditure of public funds and manpower. Fish and Wildlife Conservation Comm n v. Wilkinson, 799 So. 2d 258, 263 (Fla. 2d DCA 2001) (marks and citation omitted). It is undisputed that the OIR s principal headquarters are in Leon County, Florida. Accordingly, 7
venue for this lawsuit is improper, and the case should either be dismissed, or venue transferred to Leon County, prior to any determination on the merits. See, e.g., Fla. Dep t of Mgmt. Serv. v. Fastrac Const. Inc., 701 So. 2d, 1200 (Fla. 5d DCA 1997) (reversing order requiring a state agency to litigate the merits while a motion to transfer venue based on home venue privilege was pending because by requiring the Department to litigate the merits, the order fixes the locus of the action, and thus concerns venue ); Straughn v. Grootemaat, 291 So. 2d 669, 669 (Fla. 2d DCA 1974) (reversing denial of motion to transfer venue and vacating order on motion to dismiss because the motion should not be considered until after the change of venue has been accomplished ). Any assertion by Plaintiff that this Court should rule on the merits of this case prior to venue being transferred would be a clear violation of Florida law, and would violate the Defendants due process rights to properly and completely defend themselves against claims brought against them in the proper court. II. An Expedited Hearing Pursuant to 119.11, Florida Statutes is Not Warranted Because NCCI is Not Subject to Florida s Public Records Act. Plaintiff s request for an expedited hearing regarding NCCI s alleged failure to comply with Florida s Public Records Act (chapter 119, Florida Statutes) must be rejected, as NCCI is not subject to chapter 119. Plaintiff s assertion that NCCI is subject to chapter 119 is based on an apparent misunderstanding by the Plaintiff of NCCI s business and duties. Plaintiff alleges that because NCCI is responsible for researching, analyzing and filing [workers compensation rates] on behalf of the vast majority of insurers within the State, it has been delegated an otherwise governmental responsibility and is therefore acting on behalf of a governmental agency. This assertion is incorrect. NCCI is not a state agency, and does not 8
possess any authority delegated by a state agency with regard to workers compensation rate filings. Instead, NCCI is a private corporation, organized under the laws of the State of Delaware, which performs a private function on behalf of private insurance companies throughout Florida. NCCI is therefore not an agent of the state, but is a private company which provides services to private insurers who are members or subscribers of NCCI. Contrary to Plaintiff s assertions, the Florida legislature delegated to the OIR the authority to regulate insurance rates as herein provided to the end that they shall not be excessive, inadequate or unfairly discriminatory. 627.031, (1)(a), Fla. Stat. The OIR complies with its regulatory responsibilities by requiring all insurers, and rating organizations, to file rates, classifications, rules, and rating plans with the OIR. See 627.091(1), Fla. Stat. In lieu of making its own rate filing, a workers compensation insurer may adopt the rate recommendation filed by a rating organization. Upon receipt of the filed rates (whether filed by an individual insurer or a rating organization such as NCCI), the OIR reviews such rates to determine if they meet the statutory requirements, and such rates do not become effective until they are approved by the OIR. 627.101, Fla. Stat. The OIR has not delegated its responsibility to NCCI as it does not solely rely on the recommendation of NCCI. The OIR considers other information, conducts an independent analysis, and regularly makes a rate determination which is different than NCCI s recommendation, just as it would if a rate filing was made by a workers compensation insurer. If the OIR had delegated its authority, one might assume that NCCI s rate recommendations would be approved as filed. Thus, the OIR s role is to review and approve, or disapprove, rate recommendations requested by private entities which are filed for review by the OIR. 9
The Public Records Act provides that all state, county, and municipal records are open for personal inspection and copying by any person. 119.01(1), Fla. Stat. Accordingly, the legislature intended the Public Records Act to apply only to governmental bodies of the State of Florida. Florida courts have also determined that a private corporation s records may be subject to the Public Records Act in limited situations where the private corporation is acting on behalf of a governmental agency. See News and Sun-Sentinel Co. v. Schwab, Twitty & Hanser Architectural Grp, Inc., 596 So. 2d 1029, 1031 (Fla. 1992). The Florida Supreme Court, in Schwab, set forth a totality of factors test to determine when a private entity is subject to the Public Records Act. Id. These factors include: 1) the level of public funding; 2) commingling of funds; 3) whether the activity was conducted on publicly owned property; 4) whether services contracted for are an integral part of the public agency's chosen decision-making process; 5) whether the private entity is performing a governmental function or a function which the public agency otherwise would perform; 6) the extent of the public agency's involvement with, regulation of, or control over the private entity; 7) whether the private entity was created by the public agency; 8) whether the public agency has a substantial financial interest in the private entity; and 9) for who's benefit the private entity is functioning. Id. (citing Sarasota Herald-Tribune Co. v. Community Health Corp., Inc., 582 So. 2d 730 (Fla.2d DCA 1991). As described in more detail below, each of these factors demonstrates that NCCI is not subject to the Public Records Act. As a preliminary matter, NCCI simply does not act on behalf of the OIR. If NCCI ceased operations in Florida, the services performed by NCCI still would not be performed by the OIR. Workers' compensation insurers would have to create and file their own workers' compensation rates, a far less efficient and more costly process than exists today. Second, 10
NCCI: (1) does not receive public funding; (2) does not commingle funds with the OIR; (3) does not conduct activity on publicly owned property; (4) does not contract with the OIR to provide rate-making services (NCCI instead works on behalf of private insurers); (5) is not subject to any greater regulatory oversight by the OIR than a private insurer; (6) was not created by the OIR; (7) the OIR has no financial interest in NCCI, and (9) NCCI does not function as a benefit to the OIR. Accordingly, NCCI is clearly not performing a governmental function and is not subject to the Public Records Act. Because NCCI is not subject to the Public Records Act, there is no basis for the Plaintiff to request, or obtain, an expedited hearing in this proceeding. III. Plaintiff s Remaining Allegations Do Not Entitle Plaintiff to an Expedited Hearing. None of Plaintiff s remaining allegations, founded on section 627.291, Florida s Sunshine Law, and Florida s declaratory judgment statute, entitle Plaintiff to the expedited hearing he seeks. In addition to section 119.11, which does not apply to NCCI, Plaintiff asserts he is entitled to a speedy hearing pursuant to section 86.111, Florida Statutes. However, nothing in section 86.011 permits Plaintiff to obtain the relief he requests. Plaintiff s sole asserted need for an expedited hearing is that a public hearing is scheduled to begin on August 16th to hear public comment regarding the amended rate filing made by NCCI. The Public Hearing was properly noticed in accordance with section 627.111, Florida Statutes, on July 1, 2016 47-days prior the Public Hearing date. See Notice of Hearing attached hereto as Exhibit B. As evidenced by numerous correspondence between the Plaintiff and NCCI and OIR, Plaintiff was aware of the scheduled Public Hearing at the time it was noticed. Yet, Plaintiff provides no explanation of why it was necessary or reasonable for 11
Plaintiff to delay until one day before the scheduled public hearing to attempt to obtain from this Court improper extraordinary relief, rather than file the Motion and Complaint with sufficient time for all Defendants to be served and prepare their own evidence and arguments. Plaintiff s delay in bringing this action appears to be nothing more than a calculated effort to feign an emergency in an attempt to limit Defendants ability to respond to Plaintiff s meritless allegations in a reasonable manner. Additionally, no emergency exists, as Plaintiff has failed to identify any harm which it will suffer if it is not provided a hearing on its allegations prior to the August 16 th public hearing. As Plaintiff admits in his own Motion, even if this case could somehow affect the OIR s approval of NCCI s amended rate filing, the rate will not be effective for insurers which utilize NCCI s rates unless it is approved following the August 16 th public hearing, and even if approved will not be effective until October 1, 2016 at the earliest. Finally, section 86.111, does not require an expedited preliminary hearing of the nature requested by Plaintiff, but instead permits the court, in its discretion, to order a speedy hearing of an action for a declaratory judgment. The purpose of this statutory provision is not to provide for an emergency hearing in lieu of seeking injunctive relief, but instead to permit courts, in their discretion, to consider the setting of expedited trial dates when necessary in declaratory judgment actions. Florida law clearly provides that a trial date cannot be set until the action is at issue and the notice requirements of Rule 1.440(c), Rules of Civil Procedure, are complied with. See Amber Reinforcing, Inc. v. Hubbard Construction Co., 801 So. 2d 314 (Fla. 1st DCA 2001). An action is not at issue until after any motions directed to the last pleading served have been disposed of or, if no such motions are served, 20 days after service of the last pleading. Fla. R. Civ. P. 1.440(a). As discussed herein, none of the Defendants have been 12
served in this case with the Complaint, and the Court has pending before it the OIR s Venue Motion, which must be heard prior to the setting of any expedited trial dates. Accordingly, although a court has discretion under section 86.011 to order a speedy hearing, that is not what Plaintiffs request here, and in any event such hearing cannot be ordered until after the case is atissue. CONCLUSION For the foregoing reasons, Plaintiff has failed to demonstrate any legal right to the expedited hearing he seeks, and NCCI respectfully requests that this Court deny Plaintiff s Motion in its entirety or, in the alternative, defer ruling on Plaintiff s Motion until this Court rules on the OIR s Venue Motion. Respectfully submitted this 15 th day of August, 2016 William E. Davis Wdavis@foley.com Fla. Bar. No. 191680 Foley & Lardner LLP One Biscayne Tower 2 South Biscayne Boulevard Suite 1900 Miami, FL 33131 (305) 482-8400 (Telephone) (305) 482-8600 (Fax) /S/ JAMES A. MCKEE James A. McKee jmckee@foley.com Fla. Bar No. 638218 Nicholas R. Paquette npaquette@foley.com Fla. Bar. No. 104800 Foley & Lardner LLP 106 E. College Avenue Suite 900 Tallahassee, FL 32301 (850) 222-6100 (Telephone) (850) 561-6475 (Fax) Counsel for NCCI 13
CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was formally served on the following individuals this 15th day of August, 2016: Shaw Stiller Chief Assistant General Counsel Lacy End-Of-Horn Assistant General Counsel Office of Insurance Regulation 200 East Gaines Street Tallahassee, Florida 32399-4206 Telephone: (850) 413-4317 Fax: (850) 922-2543 shaw.stiller@floir.com Lacy.End-Of-Horn@floir.com Counsel for OIR and Commissioner David Altmaier. John K. Shubin, Esq. Lauren G. Brunswick, Esq. Mark E. Grafton, Esq. SHUBIN & BASS, P.A. 46 S.W. First Street, Third Floor Miami, Florida 33130 Tel (305) 381-6060 Fax (305) 381-9457 jshubin@shubinbass.com lbrunswick@shubinbass.com mgrafton@shubinbass.com Counsel for Plaintiff /S/ JAMES A. MCKEE 14
EXHIBIT A
EXHIBIT B