IN THE SUPREME COURT OF FLORIDA CASE NO.: SC11-299 SERVICE INSURANCE COMPANY, Appellant, vs. OFFICE OF INSURANCE REGULATION AND THE FINANCIAL SERVICES COMMISSION, Appellees. BRIEF ON JURISDICTION OF APPELLEES OFFICE OF INSURANCE REGULATION AND THE FINANCIAL SERVICES COMMISSION Submitted by: Elenita Gomez Florida Bar No.: 0121185 Legal Services Office Office of Insurance Regulation 612 Larson Building Tallahassee, Florida 32399-4206 (850) 413-4186 Counsel for Appellees
TABLE OF CONTENTS Page(s) TABLE OF CONTENTS... ii TABLE OF CITATIONS... iii REFERENCES IN THE BRIEF... v STATEMENT OF THE CASE... 1 STATEMENT OF THE FACTS... 2 SUMMARY OF THE ARGUMENT... 3 ARGUMENT... 6 CONCLUSION... 10 CERTIFICATE OF SERVICE... 11 CERTIFICATE OF COMPLIANCE... 11 ii
TABLE OF CITATIONS Cases... Page Aravena v. Miami-Dade County, 928 So.2d 1163 (Fla. 2006)... 8 Canal Ins. Co. v. Cont l Cas. Co., 489 So.2d 136, 138 (Fla 2nd DCA 1986)... 8 Christo v. State, Dep t. of Banking and Fin., 649 So.2d 318 (Fla. 1st DCA 1995)... 7 Department of Revenue v. Sheraton Bal Harbour Assoc., Ltd., 864 So.2d 454 (Fla. 1st DCA 2003)... 8 Hulmes v. Div. of Ret., Dep t. of Admin., 418 So.2d 268 (Fla. 1st DCA 1982)... 8 Witmer v. Dep t. of Bus. and Prof. Reg., Division of Pari-Mutuel Wagering, 662 So.2d 1299 (Fla. 4th DCA 1995)... 4, 6, 7, 8, 9, 10 Statutes... Page 120.56(1), Florida Statutes... 4, 7 120.56(3)(a), Florida Statutes... 3, 4, 6, 8, 10 627.062(6), Florida Statutes... 2, 3, 5, 7 682.06, Florida Statutes... 8 682.10, Florida Statutes... 10 682.13, Florida Statutes... 2, 8 682.14, Florida Statutes... 2, 8 Rules....... Page 9.030(2)(A)(iv), Fla. R. App. P.... 6 9.030(2)(A)(v), Fla. R. App. P.... 6, 9 4-170.105(4), Florida Administrative Code... 1 69O-170.101, Florida Administrative Code... 2 iii
69O-170.105(1)(d), Florida Administrative Code...2, 3, 7, 8, 9 69O-170.135(7), Florida Administrative Code... 2, 5, 7 69O-170.137, Florida Administrative Code... 2 Laws of Florida Page s. 4, ch. 96-194... 2 s. 16, ch. 96-159... 4 iv
REFERENCES IN THE BRIEF References to the First District Court of Appeal will be referred to as the DCA or First DCA. References to the Per Curiam Opinion issued by the First District Court of Appeal shall be referred to as Opinion at p.. References to the Administrative Law Judge will be referred to as the ALJ and the Division of Administrative Hearings will be referred to as DOAH. Service Insurance Company will be referred to as Service or Appellant. The Office of Insurance Regulation will be referred to as Office and the Financial Services Commission will be referred to as FSC. Jointly they will be referred to as Appellees. The former Department of Insurance will be referred to as the DOI. v
STATEMENT OF THE CASE AND FACTS STATEMENT OF THE CASE This action arises as the result of an untimely rule challenge filed by Appellant in this matter regarding Rule 69O-170.105(1)(d) 1, F.A.C., and from a Per Curiam Opinion issued by the First District Court of Appeal on November 10, 2010. The First DCA s opinion determined that Appellant s rule challenge was not filed during the rule s existence and that the ALJ below should have declined to hear the untimely rule challenge. The Per Curiam Opinion thus reversed the ALJ s Final Order which had found that Rule 69O-170.105(1)(d), F.A.C., was an invalid exercise of delegated legislative authority. Prior to June 2009, when Appellant filed its rule challenge, no challenge had ever been filed to Rule 69O- 170.105(1)(d), F.A.C. or the predecessor rule. Subsequent to the First DCA s opinion, on November 29, 2010, Appellant filed a Motion for Rehearing and a Motion for Certification. On January 10, 2011, the First DCA issued orders denying the motion for rehearing and denying certification to the Supreme Court. There is absolutely no express or direct conflict 1 Rule 69O-170.105(1)(d), F.A.C. is the former Rule 4-170.105(4), F.A.C. It attained its current numbering on January 7, 2003, when the Office of Insurance Regulation was created and the arbitration rules were transferred to the newly formed Office. 1
between the First DCA s opinion and the Fourth District Court of Appeal as alleged by Appellant. STATEMENT OF THE FACTS The underlying rule challenge filed in June 2009 was filed subsequent to an arbitration held in February 2008 regarding the disapproval of a rate filing submitted by Appellant and the issuance of an Award in that matter in early June 2008. Section 627.062(6), F.S., which was effective January 1, 1997, permitted insurers whose rate filings were disapproved to elect either an arbitration proceeding before an arbitration panel or an administrative proceeding before an Administrative Law Judge ( ALJ ). s. 4, ch. 96-194, Laws of Florida. Arbitration proceedings were to be held pursuant to Sections 627.062(6), 682.06-682.10, 628.13, and 682.14, F.S., as well as Rules 69O-170.101 through 69O-170.137, F.A.C. The contested portion of that Award states in Paragraph 8: Pursuant to 627.062(6)(a), Fla. Stat., and Fla. Admin. Code R. 69O-170.135(7), all fees and expenses of this arbitration, including fees and expenses of arbitrators and the administrative fees and charges of the American Arbitration Association, shall be borne by Service. Rule 69O-170.135(7), F.A.C., mentioned in the Award was not the subject of the rule challenge below, and indeed has never been challenged. The text of that unchallenged rule reads: The decision or award may not impose on the Office an obligation to pay any monetary amount. The Office 2
shall not be liable for any costs, expenses or fees related to or associated with the rate filing arbitration. During the rule challenge before the Division of Administrative Hearings ( DOAH ) the Appellees maintained that the DOAH did not have jurisdiction to hear the rule challenge and that the ALJ exceeded her authority in invalidating Rule 69O-170.105(1)(d), F.A.C., the enabling statute, Section 627.062(6), F.S., having been repealed on July 1, 2008. SUMMARY OF THE ARGUMENT Section 120.56(3)(a), F.S., became law effective October 1, 1996. Thus, in 2008 when Appellant initiated its rule challenge, applicable law at the time required that [a] substantially affected person may seek an administrative determination of the invalidity of an existing rule at any time during the existence of the rule. The First DCA upheld the plain meaning of the statute by overturning the ALJ s Final Order and determining that the ALJ did not have jurisdiction to hear the rule challenge when the enabling statute had been repealed in 2008. An administrative rule which implements a statute automatically expires upon repeal of such a statute. Thus, upon the automatic expiration of an administrative rule, DOAH is divested of jurisdiction. Contrary to Appellant s assertion, there is no express or direct conflict between the First DCA s opinion and any other district court including the Fourth 3
District Court of Appeal. In Witmer v. Dep t. of Bus. and Prof. Reg., Division of Pari-Mutuel Wagering, 662 So.2d 1299 (Fla. 4th DCA 1995) the Court addressed the enforcement of emergency rules against a licensee when the pertinent language now found in Section 120.56(3)(a), F.S., did not even exist. At the time of the Fourth DCA s opinion, in Witmer, supra, Section 120.56(1), F.S., which is the statutory predecessor to Section 120.56(3)(a), F.S., supra, read [a]ny person substantially affected by a rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority. Therefore, in 1995, there was no language limiting the time within which a rule challenge could be brought. The statutory language the First DCA relied upon for its holding in the case below became law on October 1, 1996. See, Laws of Florida, s. 16, ch. 96-159. Therefore, Witmer having been decided in 1995, could not have analyzed the issue raised before and decided by the First DCA in the instant case below as to whether a rule is deemed to be in existence when the statute under which it was implemented has been repealed. There being a substantial difference between the legal issues addressed by the two decisions, there cannot be a conflict (express, direct, or otherwise) between the two courts. In order to invoke the discretionary jurisdiction of this Court, there must be an express or direct conflict between two district courts. Here there is no such 4
conflict, therefore, the discretionary jurisdiction of this Court does not attach and the Court should decline review. Further, the facts of this case are not analogous to the Witmer case. In Witmer a veterinarian s license was disciplined pursuant to emergency rules enacted by the Division. Here, the underlying action is the result of Appellant availing itself of the arbitration provisions of then-existing Section 627.062(6), F.S., and then failing to abide by the rules that were in place and unchallenged during the time of the arbitration proceeding by refusing to pay the Office s expert witness fees, costs, and expenses despite an arbitration Award that directed them to do so after the arbitration was completed. Rule 69O-170.135(7), F.A.C., under which the arbitration panel made those findings has never been challenged. 5
ARGUMENT THERE IS NO DIRECT OR EXPRESS CONFLICT BETWEEN THE OPINION ISSUED BY THE FIRST DISTRICT COURT OF APPEAL AND THE WITMER OPINION ISSUED BY THE FOURTH DISTRICT COURT OF APPEAL IN 1995 In order to invoke the discretionary jurisdiction of the Florida Supreme Court when the district court below has failed to certify the matter, an Appellant must demonstrate that its case fits within one of the parameters of Rule 9.030, Fla. R. App. P. The provision which Appellant seeks to proceed under states specifically: (2) The discretionary jurisdiction of the supreme court may be sought to review (A) decisions of district courts of appeal that (iv) expressly and directly conflict with a decision of another district court of appeal or of the supreme court on the same question of law; [Emphasis added] In this instance Appellant claims that there is a direct or express conflict between the decision in this case from the First DCA and the decision in Witmer v. Dep t. of Bus. and Prof. Reg., 662 So.2d 1299 (Fla. 4th DCA 1995), from the Fourth DCA. No such conflict exists nor can it exist when the statute under which the rule challenge in this case was brought did not exist in its current iteration when the Witmer opinion was issued. Further, where the district court below has not certified the matter, Appellant cannot proceed under subsection (2)(A)(v) of the appellate rule cited above which states a question certified to be of great public importance. Section 120.56(3)(a), F.S. (2008) sets the temporal parameters within which 6
an existing rule may be challenged. It states in pertinent part [a] substantially affected person may seek an administrative determination of the invalidity of an existing rule at any time during the existence of the rule. [Emphasis added]. The prior iteration of this statute under which Witmer was decided, Section 120.56(1), F.S. (1995), stated [a]ny person substantially affected by a rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority. Thus, at the time Witmer was decided there was no temporal limitation requiring that the rule still be in force and effect at the time of the rule challenge. Here, subsequent to the disapproval of a rate filing, Appellant availed itself of the provision of Section 627.062(6), F.S. permitting an arbitration in lieu of an administrative hearing. The arbitration was held, no administrative rules were challenged during the arbitration process, and an Award was issued in June 2008. Then by letter dated July 23, 2008, after availing itself of the arbitration process, Appellant refused to pay the Office s expert witness even though such payment was required by Rules 69O-170.105(1)(d), and 69O-170.135(7), F.A.C. Subsequent to the Award being issued, effective July 1, 2008, Section 627.062(6), F.S., permitting arbitration, was repealed by the Legislature. When a statute is repealed, any rules created to implement the statute automatically expire upon such repeal. Christo v. State, Dep t. of Banking and Fin., 7
649 So.2d 318 (Fla. 1st DCA 1995); Canal Ins. Co. v. Cont l Cas. Co., 489 So.2d 136, 138 (Fla 2nd DCA 1986) (citing, Hulmes v. Div. of Ret., Dep t. of Admin., 418 So.2d 268 (Fla. 1st DCA 1982)). The rule challenge was not filed until June 5, 2009, roughly one year after the arbitration Award had been entered and well past the time for challenging that Award pursuant to Sections 682.13 and 682.14, F.S. and Rule 69O-170.135(7), F.A.C. Appellant is attempting to benefit from the right to arbitrate while ignoring a valid administrative rule and seeking to invalidate that rule long after the appropriate time for such a challenge. Upon the automatic expiration of the administrative rule by operation of law, neither the DOAH nor its ALJ had jurisdiction to hear the rule challenge under the plain language of Section 120.56(3)(a), F.S. Department of Revenue v. Sheraton Bal Harbour Assoc., Ltd., 864 So.2d 454 (Fla. 1st DCA 2003). Simply put, that is what the First DCA found in its opinion. [Op. at p. 3]. A direct or express conflict exists when the difference between two appellate opinions on the same question of law are so diverse as to be irreconcilable. Aravena v. Miami-Dade County, 928 So.2d 1163 (Fla. 2006). The First and Fourth DCA s opinions at issue here analyzed and rendered decisions regarding two different statutes and two dissimilar sets of factual circumstances. In 1995, the Witmer Court had the option of permitting a rule challenge against an emergency rule that was no longer in existence because there was no limitation in the statute to prevent that. 8
Here, the plain language of the statute prevents a rule challenge to be brought after the rule ceases to exist. Therefore, there is no conflict. Appellant argues that like in Witmer the agency here has brought a disciplinary proceeding against Appellant that would permit a rule challenge afterthe-fact. However, that proposition is distinguishable on the basis of the disparate facts between the cases. Witmer involved a disciplinary action against a licensee where the emergency rules created the operative allegation that the licensee had violated those emergency rules. Here, by contrast, Appellant elected to arbitrate the disapproval of its rate filing under the applicable statute and rules in effect at that time knowing full well that it was required to comply with those statutes and rules unless it instituted a challenge to those rules prior to or during the arbitration process. That did not happen. Instead, when the Office sought to enforce the arbitration Award and sought payment of its expert witness fees, costs, and expenses, Appellant refused to comply with the unchallenged rules requiring it to pay the Office s expert witness. Nothing prevented Appellant from initiating a timely rule challenge prior to or during the arbitration process. Appellant is now seeking to utilize this Court to redress its failure to timely challenge Rule 69O- 170.105(1)(d), F.A.C. Finally, with regard to Appellant s argument that this case is a matter of great public importance, that is only significant when there is a certification by the district 9
court. See, Rule 9.030(2)(A)(v), Fla. R. App. P. Even absent that, this case deals with a statute that has been repealed and rules that have expired by operation of law. It is not a scenario that can be repeated because the arbitration statute has been repealed and all pending arbitrations have come to conclusion. The facts of this case relate only to this particular Appellant. CONCLUSION It is clear that the rule challenge below was brought pursuant to Section 120.56(3)(a), F.S., (2008), which requires that a rule be in existence at the time of the rule challenge. The statute considered and applied by the Witmer Court did not have that language in it and therefore there can be no direct or express conflict between the two district courts. As that is a requirement to invoke the discretionary jurisdiction of this Court when the district court has refused to certify the matter, Appellees respectfully request that this Court decline review. 10
Respectfully submitted this day of, 2011. ELENITA GOMEZ, ESQUIRE Fla. Bar No. 0121185 Assistant General Counsel Office of Insurance Regulation Legal Services Office 200 E. Gaines Street Tallahassee, Florida 32399-4206 (850) 413-4186 11
CERTIFICATE OF SERVICE I HEREBY CERTIFY that an original of the JURISDICTIONAL BRIEF OF THE APPELLEES OFFICE OF INSURANCE REGULATION AND FINANCIAL SERVICES COMMISSION has been furnished by Hand-Delivery to Thomas D. Hall, Clerk of Court, Supreme Court of Florida, and by Electronic Mail to e-file@flcourts.org, and that a true and correct copy has been furnished via Electronic Mail to: Richard Santurri, Esquire and Douglas Mang, Esquire, Mang Law Firm, P.A., 660 E. Jefferson Street, Tallahassee, Florida, 32301, this day of, 2011. Elenita Gomez, Esquire CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that the size and style of the print used herein is 14 point proportionally spaced Times New Roman type in compliance with the font requirements of Rule 9.210(a)(2), Fla. R. App. P. 12 Elenita Gomez, Esquire