10-002089RX Ameriloss Public Adjusting Corp. vs. Department Of Financial Services
 Status: Closed
DOAH Final Order on Tuesday, June 29, 2010.

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Summary: Rule challenge petition was dismissed where the challenged rule had been superceded by the statute.





14Petitioner, )


17vs. ) Case No. 10-2089RX




29Respondent. )

31_________________________________ )


37The instant matter is before the undersigned on

45Respondent's Motion to Dismiss Rule Challenge Petition.

52Argument on the motion was heard by telephone conference call on

63June 25, 2010.


67For Petitioner: Patrick K. Wiggins, Esquire

73Stephanie Alexander, Esquire

76Tripp Scott, P.A.

79200 West College Avenue, Suite 216

85Tallahassee, Florida 32301

88For Respondent: William W. Tharpe, Esquire

94Department of Financial Services

98200 East Gaines Street

102Tallahassee, Florida 32399-0333


109Whether Petitioner's Petition Seeking an Administrative

115Determination of the Invalidity of an Existing Rule (Petition)

124should be dismissed on the ground that the "challenged rule in

135this proceeding has been effectively repealed by the Florida

144Legislature by Section 626.854(11), Florida Statutes, effective

151October 1, 2008," as requested by Respondent.


160On April 16, 2010, Petitioner filed with the Division of

170Administrative Hearings (DOAH) a "petition requesting a formal

178administrative hearing seeking a final order determining that

186Rule 69B-220.201(5)(d), Florida Administrative Code, of

192Respondent, Department of Financial Services ("DFS"), regarding

201a retroactive and perpetual fee cap of ten percent (10%) on

212public adjuster contracts that relate to claims arising out of a

223declared State of Emergency, is an invalid exercise of delegated

233legislative authority within the meaning of § 120.52(8), Florida


243On April 28, 2010, the undersigned issued a notice advising

253Petitioner and Respondent that an evidentiary hearing on the

262Petition would be held on May 28, 2010. The hearing was twice

274continued at the joint request of the parties, and it is

285currently scheduled for August 16, 2010.

291On June 17, 2010, Respondent filed a Motion to Dismiss Rule

302Challenge Petition, arguing that the Petition should be

310dismissed because the "challenged rule in this proceeding has

319been effectively repealed by the Florida Legislature by Section

328626.854(11), Florida Statutes, effective October 1, 2008."

335Petitioner filed a response opposing the motion on June 24,

3452010. Argument on the motion was heard by telephone conference

355call on June 25, 2010.


362Challenged Rule Provision

3651. Florida Administrative Code Rule 69B-220.201 is a rule

374adopted by Respondent.

3772. The effective date of the version of Florida

386Administrative Code Rule 69B-220.201 currently published in the

394Florida Administrative Code was September 3, 2006.

4013. Subsection (5) of the rule provides as follows:

410Public Adjusters, Ethical Constraints During

415State of Emergency. In addition to

421considerations set forth above, the

426following ethical considerations shall apply

431to public adjusters in the event that the

439Governor of the State of Florida issues an

447Executive Order, by virtue of the authority

454vested in Article IV, Section 1(a) of the

462Florida Constitution and by the Florida

468Emergency Management Act, as amended, and

474all other applicable laws, declaring that a

481state of emergency exists in the State of


490(a) No public adjuster shall require,

496demand, charge or accept any fee, retainer,

503compensation, commission, deposit, or other

508thing of value, prior to receipt by the

516insured or claimant of a payment on the

524claim by the insurer.

528(b) As to any one insured or claimant, no

537public adjuster shall charge, agree to, or

544accept as compensation or reimbursement any

550payment, commission, fee, or other thing of

557value equal to more than ten percent of the

566amount of any insurance settlement or claim


574(c) No public adjuster shall enter into any

582contract, agreement or other arrangement

587with any person, including an attorney,

593building contractor, architect, appraiser or

598repairman, by which the person would enter

605into an agreement to assist a claimant or

613insured on an insurance claim, utilize the

620services of the adjuster to carry out the

628agreement and pay the adjuster an amount

635that would exceed the limitation of the

642adjuster's compensation or reimbursement as

647provided in paragraph (b) above.

652(d) This subsection applies to all claims

659that arise out of the events that created

667the State of Emergency, whether or not the

675adjusting contract was entered into while

681the State of Emergency was in effect and

689whether or not a claim is settled while the

698State of Emergency is in effect.

7044. The Petition challenges Subsection (5)(d)'s placing "a

712retroactive and perpetual fee cap of ten percent (10%) on public

723adjuster contracts that relate to claims arising out of a

733declared State of Emergency" as "an invalid exercise of

742delegated legislative authority within the meaning of §

750120.52(8), Florida Statutes."

753Section 626.854(11), Florida Statutes :

7585. As Petitioner correctly observed in the Petition:

766In June 2008, Senate Bill 2012 was enacted

774by the Florida Legislature and signed into

781law by Governor Crist (Florida Laws Ch.

7882008-220). Section 10 of the Bill amended §

796626.854 ("Public adjuster defined;

801prohibitions"), by adding subsections (5)

807through (12), with an effective date of

814October 1, 2008. New subsection (11)

820establishes, inter alia , that the ten

826percent cap of the fees of a public adjuster

835is limited to one year from the

842[declaration] of the State of Emergency,

848directly overriding and repudiating the

853approach of Rule 69B-220.201. That

858subsection provides as follows:

862(a) If a public adjuster enters into a

870contract with an insured or claimant to

877reopen a claim or to file a supplemental

885claim that seeks additional payments for

891a claim that has been previously paid in

899part or in full or settled by the

907insurer, the public adjuster may not

913charge, agree to, or accept any

919compensation, payment, commission, fee,

923or other thing of value based on a

931previous settlement or previous claim

936payments by the insurer for the same

943cause of loss. The charge, compensation,

949payment, commission, fee, or other thing

955of value may be based only on the claim

964payments or settlement obtained through

969the work of the public adjuster after

976entering into the contract with the

982insured or claimant. The contracts

987described in this paragraph are not

993subject to the limitations in paragraph


1000(b) A public adjuster may not charge,

1007agree to, or accept any compensation,

1013payment, commission, fee, or other thing

1019of value in excess of:

10241. Ten percent of the amount of

1031insurance claim payments by the insurer

1037for claims based on events that are the

1045subject of a declaration of a state of

1053emergency by the Governor. This

1058provision applies to claims made during

1064the period of 1 year after the

1071declaration of emergency.

10742. Twenty percent of the amount of all

1082other insurance claim payments.

1086Respondent's Response to the Statutory Change

10926. Notwithstanding that it recognizes that Section

1099626.854(11), Florida Statutes, "clearly superseded" Florida

1105Administrative Code 69B-220.201(5)(d), 1 Respondent has not yet

1113taken all of the steps required by Section 120.54, Florida

1123Statutes, to formally delete Subsection (5)(d) from the

1131published version of the rule (although it has begun rulemaking

1141in an effort to accomplish this objective).


11517. The instant challenge is being made pursuant to Section

1161120.56(3), Florida Statutes, which allows substantially affected

1168persons to administratively challenge an existing rule's facial

1176validity and, if successful, to obtain from a DOAH

1185Administrative Law Judge a declaration of the rule's invalidity

1194(which declaration has prospective effect only). See Fairfield

1202Communities v. Florida Land and Water Adjudicatory Commission ,

1210522 So. 2d 1012, 1014 (Fla. 1st DCA 1988)("At the outset, we

1223note that we are being asked [in this appeal of a final order in

1237a DOAH rule challenge proceeding] to determine the facial

1246validity of these two rules [being challenged], not to determine

1256their validity as applied to specific facts, or whether the

1266agency has placed an erroneous construction on them."); State

1276Board of Optometry v. Florida Society of Ophthalmology , No. 88-

1286142, 1989 Fla. App. LEXIS 1518 **6-7 (Fla. 1st DCA February 10,

12981989)("It is apparent that the statutory scheme in chapter 120

1309for invalidating agency rules contemplates that once a

1317rule . . . has been issued and acted or relied upon by the

1331agency or members of the public in conducting the business of

1342the agency, the rule will be treated as presumptively valid, or

1353merely voidable, and must be given legal effect until

1362invalidated in a section 120.56 rule challenge

1369proceeding. . . . The statutory scheme is obviously intended to

1380avoid the chaotic uncertainty that would necessarily flow from

1389retroactively invalidating agency action taken in reliance on

1397the presumed validity of its rule prior to a proper rule

1408challenge proceeding holding the rule invalid. Applying the

1416theory underlying section 120.56(3)[ 2 ] to this case, we hold that

1428rule 21Q-10.001, which was held invalid by the hearing officer

1438and our opinion, will become void and ineffective as of the date

1450the decision of this court becomes final."); MDG Capital

1460Corporation v. Florida Housing Finance Corporation , No. 09-

14685115RX, slip op. at 2 (Fla. DOAH October 6, 2009)(Final Order of

1480Dismissal)("[B]ecause rules can be invalidated only on a

1489prospective basis, Petitioner, in consequence of the Rule's

1497expiration, already enjoys the very relief that would be

1506available via a successful rule challenge, namely a status quo

1516in which the Rule is void and ineffective.")(citation omitted);

1526The Florida Retail Federation, Inc. v. Agency for Health Care

1536Administration , No. 04-1828RX, 2004 Fla. Div. Adm. Hear. LEXIS

15452018 *26 (Fla. DOAH July 19, 2004)(Final Order), aff'd per

1555curiam , 903 So. 2d 939 (Fla. 1st DCA 2005)(table)("[A]n

1565administrative decision invalidating a rule cannot be applied

1573retroactively."); and Advantage Therapy and Nursing Center

1581(Beverly Health and Rehabilitative Services, Inc.) v. Agency for

1590Health Care Administration , No. 97-1625RX, 1997 Fla. Div. Adm.

1599Hear. LEXIS 5550 *17 (Fla. DOAH July 29, 1997)(Final

1608Order)("Additionally, in a rule challenge, the issue to be

1618determined is whether the rule, either proposed or adopted, is

1628valid on its face.").

16338. Section 120.56(3), Florida Statutes, provides as


1641Challenging existing rules; special


1646(a) A substantially affected person may

1652seek an administrative determination of the

1658invalidity of an existing rule at any time

1666during the existence of the rule. The

1673petitioner has a burden of proving by a

1681preponderance of the evidence that the

1687existing rule is an invalid exercise of

1694delegated legislative authority as to the

1700objections raised.

1702(b) The administrative law judge may

1708declare all or part of a rule invalid. The

1717rule or part thereof declared invalid shall

1724become void when the time for filing an

1732appeal expires. The agency whose rule has

1739been declared invalid in whole or part shall

1747give notice of the decision in the Florida

1755Administrative Weekly in the first available

1761issue after the rule has become void.

17689. It is clear from a reading of Section 120.56(3),

1778Florida Statutes, that it "does not authorize a rule challenge

1788to a rule that is no longer in existence, and [that] therefore,

1800DOAH [would be] acting in excess of its jurisdiction" were it to

1812consider the merits of such a challenge. Department of Revenue

1822v. Sheraton Bal Harbour Association , 864 So. 2d 454 (Fla. 1st

1833DCA 2003).

183510. "A rule that has no force or effect because it has

1847been . . . superseded by statute is, like a repealed rule, no

1860longer in existence in any meaningful sense." The Florida

1869Retail Federation, Inc. , 2004 Fla. Div. Adm. Hear. LEXIS 2018

1879*20; Yeoman v. Department of Business and Professional

1887Regulation, Construction Industry Licensing Board , No. 04-

18942414RX, 2004 Fla. Div. Adm. Hear. LEXIS 2507 *17 (Fla. DOAH

1905December 3, 2004)(Final Order)(same); see also Nicholas v.

1913Wainwright , 152 So. 2d 458, 460 (Fla. 1963)("When such conflicts

1924[between statutes and agency rules] appear, the Act of the

1934Legislature must control."); Florida Department of Revenue v.

1943A. Duda & Sons , 608 So. 2d 881, 884 (Fla. 5th DCA 1992), rev .

1958denied , 621 So. 2d 431 (Fla. 1993)("A regulation is operative

1969and binding from its effective date 'until it is modified or

1980superseded by subsequent legislation . . . .'"); Hulmes v.

1991Division of Retirement, Department of Administration , 418 So. 2d

2000269, 270 (Fla. 1st DCA 1982), rev . denied , 426 So. 2d 26 (Fla.

20141983)("An administrative rule or regulation is operative and

2023binding on those coming within its terms from its effective date

2034until it is modified or superseded by subsequent

2042legislation . . . ."); and MIC Development, LLC v. Department of

2055Transportation , No. 05-3815BID, 2006 Fla. Div. Adm. Hear. LEXIS

2064156 *17 (Fla. DOAH April 20, 2006)(Recommended Order)("When a

2074rule is superseded by legislation enacted after the rule's

2083effective date, the rule loses all force and effect immediately

2093upon such legislation's becoming law.").

209911. Because Florida Administrative Code 69B-220.201(5)(d)

2105has been superseded by Section 626.854(11), Florida Statutes,

2113effective October 1, 2008, it is no longer in "existence" and

2124therefore not subject to challenge as an "existing rule"

2133pursuant to Section 120.56(3), Florida Statutes, notwithstanding

2140that this now defunct rule provision may still appear in the

2151Florida Administrative Code and that there may be pending or

2161potential litigation involving allegations that fees charged

2168under certain pre-October 1, 2008, public adjuster contracts

2176exceeded the amount then allowed by Florida Administrative Code

218569B-220.201(5)(d). See Sheraton Bal Harbour Association , 864

2192So. 2d at 454; Pasco CWHIP Partners v. Florida Housing Finance

2203Corporation , No. 09-3330, slip op. at 43 n. 12 (Fla. DOAH

2214February 18, 2010)(Recommended Order)("This remedy [a rule

2222challenge pursuant to Section 120.56(3), Florida Statutes] was,

2230moreover, available only during the existence of the Emergency

2239Rules, which rules lasted just 180 days; then the remedy was

2250gone."); MDG Capital Corporation , slip op. at 2 ("Once the Rule

2263ceased to exist, the jurisdiction of the Division of

2272Administrative Hearings to entertain a challenge to the Rule

2281expired as well."); Indemnity Insurance Company of North America

2291v. Department of Financial Services , No. 08-1060RX, 2008 Fla.

2300Div. Adm. Hear. LEXIS 138 *4-5 (Fla. DOAH March 11, 2008)(Final

2311Order)(administrative law judge dismissed petition filed

2317pursuant to Section 120.56(3), Florida Statutes, challenging

2324rule provision that, as result of rule amendment, was no longer

2335in existence--notwithstanding that there was pending before

2342DOAH, at the time of the dismissal, a Section 120.57(1)

2352proceeding involving proposed agency action based upon the

2360challenged rule provision); The Florida Retail Federation, Inc. ,

23682004 Fla. Div. Adm. Hear. LEXIS 2018 **18-19 ("[T]he general

2379principle announced in Sheraton --that rules no longer in

2388existence cannot be challenged--extends beyond Section 120.56

2395proceedings involving rules that have been formally repealed.

2403Sheraton , in short, cannot be dismissed as inapposite simply

2412because the Reimbursement Rule has not been repealed

2420administratively."); and Yeoman , 2004 Fla. Div. Adm. Hear. LEXIS

24302507 **22-23 n.3 ("In the interest of clarity, it would probably

2442be in the best interest of all concerned for the Board to go

2455through the rule-making process to formally repeal Rule 61G4-

246412.006, citing as grounds for the repeal that the Board no

2475longer possesses the statutory authority it had when the rule

2485was adopted. But with or without such formal action, the rule

2496has expired and no longer exists in any meaningful way."); but

2508see Service Insurance Company v. Office of Insurance Regulation

2517and Financial Services Commission , No. 09-3042RX, 2009 Fla. Div.

2526Adm. Hear. LEXIS 792 (Fla. DOAH October 22, 2009)(Final

2535Order)(held that repeal of statute implemented by challenged

2543rule did not act as jurisdictional bar to DOAH's hearing rule

2554challenge, where the rule "still appear[ed] as an existing Rule

2564in the Florida Administrative Code" and the Office was seeking

2574to take disciplinary action against the challenger "based upon

2583[the challenged] rule" and was "still operating under the



2595Based on the foregoing, it is

2601ORDERED that:

2603The Petition filed by Petitioner pursuant to Section

2611120.56(3), Florida Statutes, seeking an administrative

2617determination that Florida Administrative Code Rule 69B-

2624220.201(5)(d) is an invalid exercise of delegated legislative

2632authority is hereby DISMISSED.

2636DONE AND ORDERED this 29th day of June, 2010, in

2646Tallahassee, Leon County, Florida.




2655Administrative Law Judge

2658Division of Administrative Hearings

2662The DeSoto Building

26651230 Apalachee Parkway

2668Tallahassee, Florida 32399-3060

2671(850) 488-9675 SUNCOM 278-9675

2675Fax Filing (850) 921-6847


2680Filed with the Clerk of the

2686Division of Administrative Hearings

2690this 29th day of June, 2010.


26971 On this issue, both Petitioner and Respondent agree.

27062 Section 120.56(3), Florida Statutes, then provided, in

2714pertinent part, as follows:

2718The hearing officer may declare all or part

2726of a rule invalid. The rules or part

2734thereof declared invalid shall become void

2740when the time for filing an appeal expires

2748or at a later date specified in the



2760Julie Jones, CP, FRP, Agency Clerk

2766Department of Financial Services

2770Division of Legal Services

2774200 East Gaines Street

2778Tallahassee, Florida 32399-0390

2781Benjamin Diamond, General Counsel

2785Department of Financial Services

2789The Capitol, Plaza Level 11

2794Tallahassee, Florida 32399-0307

2797Honorable Alex Sink, Chief Financial Officer

2803Department of Financial Services

2807The Capitol, Plaza Level 11

2812Tallahassee, Florida 32399-0300

2815Scott Boyd, Executive Director

2819and General Counsel

2822Administrative Procedures Committee

2825Holland Building, Room 120

2829Tallahassee, Florida 32399-1300

2832Liz Cloud, Program Administrator

2836Administrative Code

2838Department of State

2841R. A. Gray Building, Suite 101

2847Tallahassee, Florida 32399

2850Patrick K. Wiggins, Esquire

2854Stephanie Alexander, Esquire

2857Tripp Scott, P.A.

2860200 West College Avenue, Suite 216

2866Tallahassee, Florida 32301

2869William W. Tharpe, Esquire

2873Department of Financial Services

2877200 East Gaines Street

2881Tallahassee, Florida 32399-0333


2890A party who is adversely affected by this Final Order of

2901Dismissal is entitled to judicial review pursuant to Section

2910120.68, Florida Statutes. Review proceedings are governed by

2918the Florida Rules of Appellate Procedure. Such proceedings are

2927commenced by filing the original Notice of Appeal with the

2937agency clerk of the Division of Administrative Hearings and a

2947copy, accompanied by filing fees prescribed by law, with the

2957District Court of Appeal, First District, or with the District

2967Court of Appeal in the Appellate District where the party

2977resides. The notice of appeal must be filed within 30 days of

2989rendition of the order to be reviewed.

Select the PDF icon to view the document.
Date: 06/29/2010
Proceedings: DOAH Final Order
Date: 06/29/2010
Proceedings: Final Order of Dismissal. CASE CLOSED.
Date: 06/25/2010
Proceedings: CASE STATUS: Motion Hearing Held.
Date: 06/24/2010
Proceedings: Petitioner's Response in Opposition to Respondent's Motion to Dismiss filed.
Date: 06/21/2010
Proceedings: Order Granting Continuance and Re-scheduling Hearing (hearing set for August 16, 2010; 9:00 a.m.; Tallahassee, FL).
Date: 06/18/2010
Proceedings: Joint Motion for Continuance of Hearing filed.
Date: 06/18/2010
Proceedings: Order Directing Response.
Date: 06/17/2010
Proceedings: Motion to Dismiss Rule Challenge Petition filed.
Date: 05/21/2010
Proceedings: Order Granting Continuance and Re-scheduling Hearing (hearing set for June 29, 2010; 9:00 a.m.; Tallahassee, FL).
Date: 05/20/2010
Proceedings: Motion for Continuance of Hearing filed.
Date: 04/28/2010
Proceedings: Order of Pre-hearing Instructions.
Date: 04/28/2010
Proceedings: Notice of Hearing (hearing set for May 28, 2010; 9:00 a.m.; Tallahassee, FL).
Date: 04/28/2010
Proceedings: CASE STATUS: Pre-Hearing Conference Held.
Date: 04/20/2010
Proceedings: Order of Assignment.
Date: 04/19/2010
Proceedings: Rule Challenge transmittal letter to Liz Cloud from Claudia Llado copying Scott Boyd and the Agency General Counsel.
Date: 04/16/2010
Proceedings: Petition Seeking an Administrative Determination of the Invalidity of an Existing Rule filed.

Case Information

Date Filed:
Date Assignment:
Last Docket Entry:
Tallahassee, Florida
Department of Financial Services


Related DOAH Cases(s) (1):

Related Florida Statute(s) (6):

Related Florida Rule(s) (1):