94-003224RP Executive Risk Consultants, Inc. vs. Department Of Labor And Employment Security Status: Closed DOAH Final Order on Wednesday, December 7, 1994.

Summary: Challenge to prop rules on gd rules do not carry out statutory mandate that Div of Sfty approve employer's wplac safety program rejected.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EXECUTIVE RISK CONSULTANTS, INC., )

FLORIDA UNITED BUSINESSES SELF-INSURERS )

FUND, FLORIDA HOMEBUILDERS SELF- )

INSURERS FUND, and FLORIDA UNITED )

BUSINESSES ASSOCIATION, INC., )

)

Petitioners, )

)

vs. ) CASE NO. 94-3224RP

)

DEPARTMENT OF LABOR AND EMPLOYMENT )

SECURITY, DIVISION OF SAFETY, )

)

Respondent. )

________________________________________)

FINAL ORDER

Pursuant to notice, a formal hearing was conducted in this case on October

10, 1994, in Tallahassee, Florida, before Stuart M. Lerner, a duly designated

Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Thomas W. Stahl, Esquire

Eric D. Prutsman, Esquire

Newell & Stahl, P.A.

817 North Gadsen Street

Tallahassee, Florida 32303-6313

For Respondent: David C. Hawkins, Senior Attorney

John M. Carlson, Senior Attorney

Department of Labor and

Employment Security

2012 Capital Circle, Southeast

Hartman Building, Suite 307

Tallahassee, Florida 32399-2189

STATEMENT OF THE ISSUE

Whether the Department of Labor and Employment, Division of Safety's,

proposed adoption of Rule Chapter 38I-17, Florida Administrative Code, notice of

which was published on pages 3569 through 3576 of the May 20, 1994, edition of

Florida Administrative Weekly, constitutes an invalid exercise of delegated

legislative authority for the reasons asserted by Petitioners?

PRELIMINARY STATEMENT

On June 10, 1994, Petitioners filed a Petition to Determine Invalidity of

Proposed Rule with the Division of Administrative Hearings (hereinafter referred

to as the "Division") seeking an administrative determination that Rule Chapter

38I-17, Florida Administrative Code, proposed by the Department of Labor and

Employment, Division of Safety (hereinafter referred to as the "Department"), is

an invalid exercise of delegated legislative authority. By order issued June

14, 1994, the Division Director assigned the case to the undersigned Division

Hearing Officer, who, on June 16, 1994, issued a Notice of Hearing scheduling

the final hearing in this case for July 7 and 8, 1994.

On June 24, 1994, the parties filed a motion jointly requesting that "the

Hearing Officer continue the scheduled hearing for at least 45 days." In their

motion, the parties stated the following in support of their request:

As grounds for this Motion, the parties represent that they have begun good

faith efforts to narrow and resolve the issues of the controversy. Further, the

parties note that the Department is actively engaged in rulemaking and will hold

a public hearing on the proposed rule chapter on June 28, 1994 for the purpose

of accepting public comment.

By order issued June 29, 1994, the Hearing Officer granted the parties'

joint motion for continuance. In his order, the Hearing Officer directed the

parties, no later than 45 days from the date of the order, to "advise the

Hearing Officer in writing of the status of the case, whether a hearing [wa]s

necessary and, if so, the estimated length of the hearing and the dates on which

the parties w[ould] be unavailable for hearing."

On August 15 and 16, 1994, respectively, the Department and Petitioners

filed the written advisements required by the Hearing Officer's June 29, 1994,

order. Both the Department and Petitioners indicated in their advisements that

a hearing in this case was still necessary. Accordingly, on August 18, 1994,

the Hearing Officer issued an order rescheduling the final hearing in this case

to commence on October 10, 1994.

On September 23, 1994, the Department filed a motion requesting that the

Hearing Officer dismiss the Petition to Determine Invalidity of Proposed Rule

filed by Petitioners in the instant case "because Petitioners lack standing

under [S]ection 120.54[, Florida Statutes]" to seek such a determination. On

September 30, 1994, Petitioners filed a response in opposition to the motion. A

hearing on the motion was held by telephone conference call on October 3, 1994.

The Hearing Officer, on October 5, 1994, issued an order concerning the matter

in which he stated the following:

To the extent that Respondent's motion requests the entry of a prehearing

order of dismissal in the instant case, it is hereby DENIED. The Hearing

Officer, however, will give the parties the opportunity to present evidence at

the final hearing in this case, and to thereafter present additional argument in

their proposed final orders, on the issue of whether the instant petition should

be dismissed on the grounds alleged by Respondent in its motion to dismiss,

provided the parties comply with the requirements imposed by the Hearing

Officer's June 16, 1994, Order Requiring Prehearing Stipulation for doing so.

If the issue is further litigated in accordance with the requirements of the

Hearing Officer's June 16, 1994, order, the Hearing Officer will address the

issue in his final order.

The parties filed unilateral proposed prehearing stipulations on October 5,

1994. In their proposed prehearing stipulation, Petitioners described the legal

issues that remained for the Hearing Officer's resolution as follows:

Petitioners contend that the primary issue of

law to be determined by the Hearing Officer is

whether proposed Rule 38I-17 constitutes an

invalid delegation of legislative authority,

based upon:

a. Whether Section 627.0915, Fla. Stat.,

requires the Division of Safety to affirmatively

approve each individual employer's safety program

implemented for the purpose of obtaining a safety

program premium credit.

b. Whether Section 442.011, Fla. Stat., requires

the Division of Safety to affirmatively approve each

individual employer's safety program implemented for

the purpose of obtaining a safety program premium

credit and the proposed Rule contravene these

provisions.

c. Whether the proposed Rule fails to establish

any criteria by which carriers or their agents can

make determination[s] concerning the eligibility of

an employer for a workplace safety premium credit.

d. Whether the proposed Rule provides a mechanism

or procedure for the approval of an employer's safety

program by the Division of Safety as required by

Sections 442.011 and 627.0915, Fla. Stat.

e. Whether the proposed Rule fails to inform

employers of the certainty of receiving a safety

program premium credit if a safety program is

implemented,

f. Whether the proposed Rule enlarges, modifies,

or contravenes the specific provisions of law

implemented.

g. Whether the proposed Rule is vague, fails to

establish adequate standards for agency decisions,

or vests unbridled discretion in the agency. 1/

At the final hearing in this case, which was held on October 10, 1994,

Petitioners presented the testimony of Sandy Harley, John Koelemij, Jeffrey

Jennings and Karen Philips. The Department presented the testimony of one

witness, Richard Maiello, its Acting Director. In addition, the Department

offered three exhibits into evidence, all of which were admitted by the Hearing

Officer. The only other evidence offered at hearing was a certified copy of

pages 3569 through 3576 of the May 20, 1994, edition of the Florida

Administrative Weekly, which was offered as a joint exhibit. It too was

admitted by the Hearing Officer.

At the close of the evidentiary portion of the hearing on October 10, 1994,

the Hearing Officer advised the parties on the record that their post-hearing

submittals had to be filed no later than ten days following the Hearing

Officer's receipt of the hearing transcript. The hearing transcript was

received by the Hearing Officer on November 8, 1994. On November 16, 1994,

Petitioners filed a motion requesting an extension of the deadline for the

submission of post-hearing submittals. The motion was granted and the deadline

was extended to November 22, 1994.

On November 22, 1994, Petitioners and the Department filed proposed final

orders. The parties' proposed final orders contain, what are labelled as,

"findings of fact." These "findings of fact" have been carefully considered and

are specifically addressed in the Appendix to this Final Order.

FINDINGS OF FACT

Based upon the evidence adduced at hearing, and the record as a whole, the

following Findings of Fact are made:

1. Petitioner Executive Risk Consultants, Inc. (hereinafter referred to as

"ERC"), is a servicing carrier and third-party administrator for workers'

compensation self-insurance funds.

2. It has over six hundred employees in the State of Florida.

3. For its services, which include marketing, enrollment, premium billing

2/ and collection, claims handling and investigation, and safety counseling,

ERC is typically paid an agreed upon percentage 3/ of the total premiums it

bills and collects for the self-insurance funds it services.

4. The granting of premium credits therefore serves to decrease the amount

of compensation ERC receives for its services.

5. The Florida Homebuilders Self-Insurers Fund (hereinafter referred to as

"FHSIF") and the Florida United Businesses Self-Insurers Fund (hereinafter

referred to as "FUBSIF") are two of the workers' compensation self-insurance

funds for whom ERC provides services.

6. FHSIF and FUBSIF have approximately 12,300 and 10,000 participating

employer members/policyholders. 4/

7. In 1993, FHSIF's and FUBSIF's premium volumes were approximately 200

million dollars and 39 million dollars, respectively. 5/

8. The granting of premium credits serves to lower premium volume. Fund

members are subject to assessment if premium volume is lowered to such an extent

that it is insufficient to pay claims and expenses.

9. Florida United Businesses Association, Inc. (hereinafter referred to as

"FUBA"), is a general business trade association comprised of various types of

small to medium-sized Florida businesses.

10. It has just over 10,000 members, the vast majority of whom are also

members/policyholders of FUBSIF. 6/

11. FUBA's purpose, as stated in its articles of incorporation, is "to

represent the interests of Florida businesses, to educate Florida businesses,

and to perform all acts provided in the Florida Not-For-Profit Corporation Act."

7/

12. FUBA monitors all legislation, rules and regulations that affect the

Florida business community and advises its members concerning these matters.

13. Notice of the Department's intention to adopt proposed Rule Chapter

38I-17, Florida Administrative Code, was published in the May 20, 1994, edition

of Florida Administrative Weekly.

14. The notice described the "purpose and effect" of proposed Rule Chapter

38I-17, Florida Administrative Code, as follows:

The Florida Legislature authorized the granting

of "specific identifiable consideration" under a

rating plan approved by the Department of Insurance,

for each employer who implements a safety program

approved by the Division of Safety. Ch. 93-415, 94,

Laws of Fla. (amending 627.0915, Fla. Stat.) The

Division of Safety intends that this rule chapter

establish specifications for a safety program that

will enable employers to qualify for premium credits

authorized by law. The division anticipates that

this rule chapter will enable employers to become

eligible for reduced workers' compensation insurance

premiums and to promote occupational safety and health

with the implementation of a workplace safety program.

15. The notice also provided the following "summary" of the proposed rule

chapter:

This rule chapter establishes the requirements

for a workplace safety program that will enable

an employer to qualify voluntarily for a workers'

compensation insurance premium credit in an amount

determined by the Department of Insurance. Under

this rule chapter, a safety program must contain

the following elements: management commitment and

involvement, safety committee, safety and health

training, first aid procedures, accident investi-

gation, recordkeeping procedures, and safety rules,

policies, and procedures. The division further

delineates a typical safety program, designates

help supply services companies as the employer

for purposes of this rule chapter, identifies

dispute resolution procedures, and prescribes an

effective date.

16. Proposed Rule Chapter 38I-17, Florida Administrative Code, is

comprised of proposed Rules 38I-17.001 (Purpose and Scope), 38I-17.002

(Definitions), 38I-17.003 (Essential Requirements for a Safety Program), 38I-

17.004 (A Typical Written Safety Program), 38I-17.005 (Client Employer Training

Requirements of Help Supply Services Company Employees), 38I-17.006 (Disputes

Regarding Employer Eligibility) and Rule 38I-17.200 (Effective Date).

17. Proposed Rule 38I-17.001, Florida Administrative Code, provides as

follows:

(1) The purpose of this rule is to promote

safety and health in the workplace, thereby

decreasing the frequency and severity of work-

related injuries. Any employer who implements

a safety program that meets or exceeds the

requirements specified in this rule chapter

may be eligible for a premium credit under a

rating plan approved by the Department of

Insurance. Employers who implement the safety

program described in this rule chapter shall

contact their carrier or agent for the proper

procedure to apply for a premium credit.

(2) This rule chapter applies to Florida public

and private sector employers, except the federal

government.

18. Proposed Rule 38I-17.002, Florida Administrative Code, defines the

terms "Calendar year," "Division," "employee representative," "hazard,"

"illness," "premium credit," "safe," "safety," "safety committee," "safety-

related incident," "scheduled meeting," and "workplace." It further provides

that "the definition for 'accident,' 'carrier,' 'employee,' and 'injury'

contained in section 440.02, Florida Statutes, and the definition of

'occupational disease' contained in section 440.151(2), Florida Statutes," as

well as "the definition of 'employer' contained in section 440.02(14), Florida

Statutes," are "incorporate[d] by reference" in the proposed rule chapter.

19. Proposed Rule 38I-17.003, Florida Administrative Code, describes in

detail the required "elements" of a safety program. Among these required

elements is the "safety committee" element described in subsection (2)(h) of the

proposed rule, which reads as follows:

The safety committee shall:

1. Establish and communicate procedures by

which the employer shall conduct internal safety

inspections of the workplace. The procedures

shall be used to evaluate the effectiveness of

engineering, administrative, and personal

protective control measures provided by the

employer to protect employees from recognized

hazards in the work and work environment;

2. Establish and communicate procedures by

which the employer shall investigate all workplace

accidents, safety-related incidents, injuries,

illnesses, occupational diseases, and fatalities;

3. Evaluate the effectiveness of and recommend

improvements to the employer's safety rules,

policies, and procedures for accident and illness

prevention programs in the workplace and, when

approved by the employer, ensure that written

updates and changes to the safety program are

completed;

4. Establish and communicate procedures by which

the employer shall train committee members on the

requirements of this rule chapter;

5. Post the scheduled date, time, and location

of committee meetings in a conspicuous place where

employees normally gather;

6. Provide minutes of committee meetings in a

conspicuous place where employees normally gather

and provide a copy thereof to individual employees

upon written request; and

7. Retain all original written communications

between the employer and the committee, or true

copies thereof, in the workplace. Copies of these

written communications shall be made available to

the division upon request.

20. As stated in its introductory paragraph, Proposed Rule 38I-17.004,

Florida Administrative Code, "prescribes a typical written safety program that

conforms with [proposed] rule 38I-17.003[,] . . . show[ing] the level of detail

required for compliance and . . . language suitable for use by an employer."

The proposed rule states that "[a]n employer may enhance any subsection of the

typical written safety program to reflect actual operations and work practices,

provided that the enhancement comports with rule 38I-17.003."

21. Proposed Rule 38I-17.005, Florida Administrative Code, provides as

follows:

A help supply services company shall comply

with the responsibilities of employers under

this rule chapter, except that the client of

a help supply services company shall include

the employees of the help supply services company

in the client's safety and training program, as

prescribed in rule 38I-17.003(3), unless the

company and the client otherwise contract in

writing. No such contract shall alter the rights

and responsibilities of help supply service

companies provided in section 440.11, Florida

Statutes.

22. Proposed Rule 38I-17.006, Florida Administrative Code, provides as

follows:

(1) An employer should direct initially all

inquiries concerning eligibility for a premium

credit under section 627.0915, Florida Statutes,

to its carrier or agent.

(2) If the employer cannot resolve a complaint

or dispute concerning the employer's eligibility,

the employer should contact the Department of

Insurance by calling the consumer assistance line

at 1-800-342-2762, or writing to: Consumer Services,

200 E. Gaines Street, Tallahassee, Florida 32399.

The Department of Insurance should direct to the

division questions that ultimately ask whether a

workplace safety program conforms to this rule

chapter. 8/

23. Proposed Rule 38I-17.200, Florida Administrative Code, provides as

follows:

This rule chapter shall take effect twenty days

after the date the division files this rule chapter

for adoption, provided that an employer has imple-

mented or maintained a safety program between

January 1, 1994 and the effective date of this

rule chapter, which safety program complies with

the requirements of this rule chapter, may be

eligible for a premium credit under a rating plan

approved for the period of program operation that

precedes the effective date.

24. Such a rating plan, filed by the National Council on Compensation

Insurance, 9/ was approved by the Department of Insurance on July 1, 1994.

25. The filing memorandum submitted by the National Council on

Compensation Insurance provided as follows:

ITEM 05-FL-94 -- FLORIDA SAFETY PREMIUM CREDIT

(To be effective upon approval by the Florida

Department of Insurance applicable pro rata subject

to a policy anniversary rating date of January 1,

1994 or after).

PURPOSE:

The purpose is to comply with Section 94 of

Florida's workers compensation reform legislation,

Senate Bill 12C. Senate Bill 12C amended section

627.0915 of Florida Statutes to allow for a safety

premium credit for employers who implement approved

safety programs.

BACKGROUND:

Florida Senate Bill 12C, which was signed into law

effective January 1, 1994, provides that the Florida

Department of Insurance shall approve rating plans

for workers compensation insurance for employers who

implement a safety program approved by the Division

of Safety pursuant to rules adopted by the Department

of Labor and Employment Security.

IMPACT:

This filing makes a 2 percent safety premium credit

available to those employers who certify adoption of

an approved Workplace Safety Program developed by

the Florida Department of Labor and Employment

Security.

IMPLEMENTATION:

Attached is the Florida State Special Rule to

implement the Employer Safety Premium Credit Program

along with a proposed Application for Employer Safety

Program Premium Credit. 10/ Upon approval of this

filing, NCCI will notify all of its members and

subscribers by Circular and publish the rules in the

Basic Manual for Workers Compensation and Employers

Liability.

26. The "Florida State Special Rule to implement the Employer Safety

Premium Credit" appended to the filing memorandum read as follows:

1. The premium for a risk shall be reduced

by 2 percent for an insured which has certified

that it has established a Safety Program in

accordance with Rule 38I-17, as established

by the Division of Safety of the Florida Depart-

ment of Labor and Employment Security.

2. The premium credit shall be applied to the

insured's policy pro rata as of the date of

certification by the employer, but no earlier

than the date a final rule is adopted by the

Department of Labor and Employment Security,

subject to an anniversary rate date of January

1, 1994, or after. Self-certification by the

employer may be accomplished by completing Florida

Form- Safety 09-1 and is subject to physical

verification by the insurer and/or the Division

of Safety.

3. The premium credit shall be applied to a

risk in a multiplicative manner, after increased

limits factors and deductible credits, if applicable,

but before application of experience modification,

and before application or any other premium surcharges

(including Joint Underwriting Association Surcharges),

factors, the Florida Contracting Classification

Premium Adjustment Program (FCCPAP) and expense

accounts.

4. Expected losses used in the calculation of

the insured's experience modification factor will

be decreased by the policy credit percentage.

5. Standard earned premium figures reported to

the National Council on Compensation Insurance, Inc.

on the aggregate calls for experience (e.g., policy

year, calendar/accident year, etc.) must be net of

the effects of the credits (i.e., be after). The

net standard premium will then be the basis of any

adjustment (i.e., guaranteed cost or retro).

6. The Employer Safety Premium credits must be

reported under statistical code 9880 on unit

statistical reports submitted to the National Council

on Compensation Insurance, Inc.

7. Certification is required for each year in

which premium credit is permitted under this program

and is based upon evidence contained in the file of

the insurer at the time the credit is allowed.

8. The insured's policy is subject to reimbursement

of premium credit, and cancellation if it is

determined that the insured misrepresented its

compliance with Rule 38I-17 as promulgated by the

Division of Safety.

CONCLUSIONS OF LAW

27. Petitioners are challenging the Department's proposed adoption of Rule

Chapter 38I-17, Florida Administrative Code. They are making their challenge

pursuant to Section 120.54(4)(a), Florida Statutes, which provides that "[a]ny

substantially affected person may seek an administrative determination of the

invalidity of any proposed rule on the ground that the proposed rule is an

invalid exercise of delegated legislative authority."

28. The Department has questioned Petitioners' standing to bring such a

challenge.

29. With respect to this issue, Petitioners have the burden of proof. See

Department of Health and Rehabilitative Services v. Alice P., 367 So.2d 1045,

1052 (Fla. 1st DCA 1979).

30. A party challenging a proposed rule pursuant to Section 120.54(4)(a),

Florida Statutes, meets its burden of demonstrating its standing to initiate

such a challenge by showing that it would be "substantially affected," i.e.,

"affected in an important and significant way[,] if the proposed rule were

adopted by the agency." Department of Professional Regulation, Board of

Dentistry v. Florida Dental Hygienist Association, Inc., 612 So.2d 646, 652

(Fla. 1st DCA 1993).

31. Such a showing is made if the challenging party establishes that the

adoption of the proposed rule would cause it "injury in fact" and that the

interest it seeks to protect is within the "zone of interests" sought to be

protected by the statutory provision(s) being implemented by the rule. See

Florida Medical Association, Inc., v. Department of Professional Regulation, 426

So.2d 1112 (Fla. 1st DCA 1983).

32. "A trade or professional association [is] able to institute a rule

challenge even though it is acting solely as the representative of its members.

To do so the association must demonstrate that a substantial number of its

members, although not necessarily a majority, are substantially affected by the

challenged [proposed] rule, that the subject matter of the [proposed] rule is

within the association's general scope of interest and activities, and that the

relief requested is of the type appropriate for a trade [or professional]

association to receive on behalf of its members." Florida League of Cities,

Inc., v. Department of Environmental Regulation, 603 So.2d 1363, 1366 (Fla. 1st

DCA 1992).

33. Petitioners also bear the burden of proving that the proposed rule

chapter is "an invalid exercise of delegated legislative authority," within the

meaning of Section 120.54(4)(a), Florida Statutes. See Adam Smith Enterprises,

Inc., v. Department of Environmental Regulation, 553 So.2d 1260, 1274 n.24 (Fla.

1st DCA 1989); Humana, Inc., v. Department of Health and Rehabilitative

Services, 469 So.2d 889, 890 (Fla. 1st DCA 1985); Agrico Chemical Co. v.

Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1978),

cert. denied, 376 So.2d 74 (Fla. 1979).

34. "An invalid exercise of delegated legislative authority," as that

phrase is used in Section 120.54(4)(a), Florida Statutes, is defined in Section

120.52(8), Florida Statutes, as follows:

"Invalid exercise of delegated legislative

authority" means action which goes beyond the

powers, functions, and duties delegated by the

Legislature. A proposed or existing rule is an

invalid exercise of delegated legislative authority

if any one or more of the following apply:

(a) The agency has materially failed to follow

the applicable rulemaking procedures set forth in

s. 120.54;

(b) The agency has exceeded its grant of rule-

making authority, citation to which is required

by s. 120.54(7);

(c) The rule, enlarges, modifies, or contravenes

the specific provisions of law implemented, citation

to which is required by s. 120.54(7);

(d) The rule is vague, fails to establish adequate

standards for agency decisions, or vests unbridled

discretion in the agency; or

(e) The rule is arbitrary or capricious.

35. Among the "rulemaking procedures set forth in Section 120.54," Florida

Statutes, which, if not followed, may result in a finding that there has been

"an invalid exercise of delegated legislative authority," as contemplated by

subsection (8)(a) of Section 120.52, Florida Statutes, are those found in

subsection (3)(b) of Section 120.54, Florida Statutes, which provides as

follows:

If the agency determines that the proposed

action will affect small business as defined

by the agency as provided in paragraph (2)(a),

the agency shall send written notice of such

rule to the Small and Minority Business Advocate,

the Minority Business Enterprise Assistance Office,

and the Division of Economic Development of the

Department of Commerce not less than 21 days prior

to the intended action.

1. Within the 21-day period after written notice

has been sent and the day on which the intended

action is to take place, the agency shall give the

Small and Minority Business Advocate, the Minority

Business Enterprise Assistance Office, and the

Division of Economic Development of the Department

of Commerce an opportunity to present evidence and

argument and to offer alternatives regarding the

impact of the rule on small business.

2. Each agency shall adopt those alternatives

offered pursuant to this subsection which it finds

are feasible and consistent with the stated objectives

of the proposed rule and which would reduce the impact

on small business.

3. If an agency does not adopt all alternatives

offered pursuant to this subsection, it shall, prior

to rule adoption or amendment and pursuant to

subsection (11), file a detailed written statement

with the committee explaining the reasons for failure

to adopt such alternatives. Within 3 working days of

the filing of such notice, the agency shall send a

copy of such notice to the Small and Minority Business

Advocate, the Minority Business Enterprise Assistance

Office, and the Division of Economic Development of

the Department of Commerce.

36. To the extent that it addresses a proposed or existing rule's lack of

compliance with its enabling statute, the definition of "an invalid exercise of

delegated legislative authority" found in Section 120.52(8), Florida Statutes,

is a codification of the case law on the subject existing at the time of its

enactment, an observation that was made in Florida League of Cities v.

Department of Environmental Regulation, 603 So.2d 1363, 1367 (Fla. 1st DCA

1992), wherein it was stated:

Although the only explicitly stated ground under

section 120.54(4)(a) for challenging a proposed

rule is that the proposed rule constitutes an

invalid exercise of delegated legislative authority,

case law, beginning notably with Agrico Chemical Co.

v. Department of Environmental Regulation, 365 So.2d

759, 763 (Fla. 1st DCA 1978), cert. denied sub nom.

Askew v. Agrico Chemical Co., 376 So.2d 74 (Fla.

1979), has engrafted specific criteria that must be

applied in determining whether the rule or proposed

rule complies with the enabling statute. The

challenger, among other things, is required to show

that the requirements of the rule are inappropriate

to the ends specified in the legislative act, or that

the requirements proposed are not reasonably related

to the purpose of the enabling legislation, or that

the proposed rule is arbitrary and capricious.

[Citations omitted.] These criteria have since been

codified by the 1987 legislature, amending section

120.52 by adding subsection (8) thereto, defining the

term "invalid exercise of delegated legislative

authority." See Ch. 87-385, Section 2, Laws of Fla.

See also Sta[te] of Florida, House Committee on

Governmental Operations, "Staff Analysis of Proposed

Amendments to Chapter 120, F.S. for House Bill 710

and Senate Bill 608" (1987)(Florida State Archives),

explaining that Section 120.52(8)(e), Florida Statutes

(1987), relating to the term arbitrary or capricious,

"codifies the long established principle that

administrative rules cannot be arbitrary or capricious,

i.e., unsupported by logic, despotic or irrational."

In support of this statement the Staff Analysis refers

to the Agrico Chemical Co. 11/ and the General

Telephone Co. of Florida opinions.

37. In determining whether a proposed rule is noncompliant with its

enabling statute, it must be kept in mind that the agency's interpretation of

that statute need not be the sole possible interpretation, or even the most

desirable one, but must only be within the range of possible interpretations.

See Orange Park Kennel Club, Inc., v. Department of Business and Professional

Regulation, 19 FLW D2234 (Fla. 1st DCA October 17, 1994); Florida League of

Cities v. Department of Environmental Regulation, 603 So.2d at 1369; Escambia

County vans Pac, 584 So.2d 603, 605 (Fla. 1st DCA 1991); Department of

Professional Regulation v. Durrani, 455 So.2d 515, 517 (Fla. 1st DCA 1984).

Furthermore, the agency's interpretation must be viewed in light of the entire

statutory framework. If there are other related statutory provisions in the

same chapter or elsewhere in Florida Statutes, they should be examined. See

State v. Rodriguez, 365 So.2d 157, 159 (Fla. 1978); Florida Jai Alai, Inc., v.

Lake Howell Water and Reclamation District, 274 So.2d 522 (Fla. 1973); Cataract

Surgery Center v. Health Care Cost Containment Board, 581 So.2d 1359, 1361 (Fla.

1st DCA 1991); Escambia County Council on Aging v. Goldsmith, 465 So.2d 655,

656 (Fla. 1st DCA 1985). In addition, it may be helpful to review the

legislative history of the statute. See Asphalt Pavers, Inc., v. Department of

Revenue, 584 So.2d 55, 57 (Fla. 1st DCA 1991). In doing so, however, it is

important to recognize that "a mere change in the language of a statute does not

necessarily indicate an intent to change the law, because the intent may be to

clarify what was doubtful and to safeguard misapprehension as to existing law."

Asphalt Pavers, Inc., v. Department of Revenue, 584 So.2d at 58. Of course, it

is only necessary to resort to legislative history and other aids to statutory

construction if the statute is ambiguous. "Where the language of the statute is

clear and unambiguous on its face, it must be given its plain and ordinary

meaning." Mayo Clinic Jacksonville v. Department of Professional Regulation,

Board of Medicine, 625 So.2d 918, 919 (Fla. 1st DCA 1993).

38. To evaluate a claim that a proposed rule does not comply with its

enabling statute the Hearing Officer must ascertain the meaning, not only of the

enabling statute, but of the proposed rule as well. In doing so, the Hearing

Officer is obligated to accept the agency's interpretation of its own rule

unless the agency's interpretation is not within the range of possible

interpretations and therefore is clearly erroneous. See Falk v. Beard, 614

So.2d 1086, 1089 (Fla. 1993); South Miami Hospital, Inc., v. Department of

Health and Rehabilitative Services, 623 So.2d 510, 511 (Fla. 3d DCA 1993); Ball

v. Florida Podiatrist Trust, 620 So.2d 1018, 1022 (Fla. 1st DCA 1993); Kearse

v. Department of Health and Rehabilitative Services, 474 So.2d 819, 820 (Fla.

1st DCA 1985).

39. In their proposed final order, Petitioners complain that:

Proposed Rule Chapter 38I-17 fails to contain an

approval process, approval mechanism, or any

provisions that indicate to an employer how to

have a safety program approved by the Division

of Safety.

The proposed rule chapter fails to provide for any

review by the Division of an employer's safety

program and fails to advise employers as to whether

or not they will be eligible for safety credits as

set forth in Section 627.0915, Fla. Stat.

The absence of any mechanism for approval of safety

programs by the Division will result in servicing

carriers and self-insurance funds being unable to

determine whether or not an employer has adopted

and implemented an approved safety program prior

to an employer receiving a premium credit. The

proposed rule's lack of an approval process implies

that servicing carriers and self-insurance funds

should review and approve an employer's safety program

rather than the Division of Safety. The proposed rule

transfers and redirects the statutory obligation to

approve safety programs from the Division to carriers

and self-insurers funds.

Petitioners further argue in their proposed final order that "because the

proposed rule [chapter] fails to carry out the underlying statutory mandate,

fails to establish adequate standards for its implementation, is vague, and

vests unbridled discretion in the agency," it "is an invalid exercise of

delegated legislative authority." 12/

40. Servicing carriers like ERC, self-insurance funds like FUBSIF and

FHBSIF, and trade associations, such as FUBA, comprised of businesses, the vast

majority of which are also employer members/policyholders of workers'

compensation self-insurance funds, have standing to advance such a challenge in

a Section 120.54(4)(a) proceeding inasmuch as these servicing carriers and self-

insurance funds, as well as a substantial number of members of these trade

associations, meet both the "injury in fact" and "zone of interest" prongs of

the standing test and, in addition, with respect to the trade associations, the

subject matter of the proposed rule chapter is within their general scope of

interest and activities and the relief requested in a rule challenge proceeding

is of the type appropriate for the trade associations to receive on behalf of

their members.

41. In evaluating the merits of Petitioners' challenge, it is necessary to

first examine the language of Section 627.0195, Florida Statutes. 13/

42. Section 627.0195, Florida Statutes, as amended by Chapter 93-415, Laws

of Florida, provides as follows:

The Department of Insurance shall approve rating

plans for workers' compensation insurance that

give specific identifiable consideration in the

setting of rates to employers that either implement

a drug-free workplace program pursuant to rules

adopted by the Division of Workers' Compensation

of the Department of Labor and Employment Security

or implement a safety program approved by the Div-

ision of Safety pursuant to rules adopted by the

Division of Safety of the Department of Labor and

Employment Security or implement both a drug-free

workplace program and a safety program. The plans

must take effect January 1, 1994, must be actuarially

sound, and must state the savings anticipated to

result from such drug testing and safety programs.

43. Through Section 627.0915, Florida Statutes, the Legislature has

delegated to the Department not only the authority, but also the responsibility,

to approve, pursuant to rules adopted by the Department, employer workplace

safety programs for purposes of determining an employer's entitlement to a

workers' compensation insurance premium credit.

44. It is not entirely clear from a simple reading of Section 627.0915,

Florida Statutes, whether, in order to meet its responsibility under the

statute, the Department must individually review the safety program of each and

every employer seeking a premium credit, as Petitioners argue, or whether it may

fulfill its obligation by merely describing in its rules those safety programs

which meet its approval, as it has done, in a manner that is neither

unreasonable, illogical, vague, nor lacking in adequate standards, in proposed

Rule Chapter 38I-17, Florida Administrative Code. The language in the statute

is reasonably susceptible to both Petitioners' and the Department's

interpretations. Resorting to established aids to statutory construction yields

no more certainty concerning which of these constructions the Legislature

intended.

45. Because the Department's interpretation of Section 627.0915, Florida

Statutes, codified in proposed Rule Chapter 38I-17, Florida Administrative Code,

is within the range of possible interpretations of the statute, it may not be

rejected, even though it may not be the only possible interpretation or even the

most reasonable one. See Florida League of Cities v. Department of

Environmental Regulation, 603 So.2d at 1369; Escambia County vans Pac, 584

So.2d at 605; Department of Professional Regulation v. Durrani, 455 So.2d at

517.

46. Moreover, contrary to Petitioners' claim, an employer seeking a

premium credit for a workplace safety program it has devised, and that

employer's carrier, will have the opportunity to obtain directly from the

Department a statement as to whether the employer's safety program is an

approved program under proposed Rule Chapter 38I-17, Florida Administrative

Code. The procedure for obtaining such a statement is set forth in the

Department of Labor and Employment Security's existing Rule 38A-4.001, Florida

Administrative Code, 14/ which provides as follows:

(1) Any person may seek a declaratory state-

ment as to the applicability of a specific stat-

utory provision or of any rule or order of the

Agency as it applies to the Petitioner in his

particular set of circumstances only. The agency

shall give notice of each petition, briefly stating

the question presented, in the manner prescribed by

Section 120.565, F.S., 15/ and shall similarly

give notice of the disposition of each petition,

briefly explaining the agency's response. Copies

of each petition and disposition thereof shall also

be furnished to the Administrative Procedures

Committee.

(2) The petition seeking a declaratory statement

shall be filed in writing with the Agency and shall

provide substantially the following information:

(a) Name of Petitioner _____

(b) Address of Petitioner ____

(c) Name of Agency ____

(d) Agency rule, order or statutory provision on

which declaratory statement is sought ____

(e) Description of how this rule, order or statute

may or does affect the petitioner in his/her particular

set of circumstances only ____

_______________________

Signature of Petitioner

________________________

Address

________

Date

Given the existence of Rule 38A-4.001, Florida Administrative Code, employers

and carriers will not be without a means to ascertain with certainty whether the

safety program involved in their "particular set of circumstances" meets the

Department's approval. It is therefore apparent, when proposed Rule Chapter

38I-17, Florida Administrative Code, is read in conjunction with Rule 38A-4.001,

Florida Administrative Code, that, even assuming that Section 627.0915, Florida

Statutes, does impose upon the Department the obligation to provide a procedure

for Department review and assessment of individual workplace safety programs as

Petitioners contend, the Department has complied with, not deviated from, this

requirement.

47. In view of the foregoing, the Hearing Officer concludes that

Petitioners have not met their burden of establishing that proposed Rule Chapter

38I-17, Florida Administrative Code, is an "invalid exercise of delegated

legislative authority," as defined in Section 120.52(8), Florida Statutes.

Accordingly, it is hereby ORDERED that

Petitioners' petition challenging proposed Rule Chapter 38I-17, Florida

Administrative Code, pursuant to Section 120.54(4)(a), Florida Statutes, is

dismissed.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 7th day of

December, 1994.

___________________________________

STUART M. LERNER

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 7th day of December, 1994.

ENDNOTES

1/ Those legal issues raised in Petitioners' Petition to Determine Invalidity

of Proposed Rule but not referenced in Petitioners' proposed prehearing

stipulation must be deemed to have been abandoned by Petitioners. See Sanders

v. Bureau of Crimes Compensation, 474 So.2d 410, 411 (Fla. 5th DCA 1985)("both

the parties and the deputy commissioner are bound by the stipulation;" "a

finder of fact may not rule upon issues which are outside the record and beyond

the scope of the hearing"); Lotspeich Company v. Neogard Corporation, 416 So.2d

1163, 1165 (Fla. 3d DCA 1982)("[p]retrial stipulations prescribing the issues on

which a case is to be tried are binding upon the parties and the court, and

should be strictly enforced").

2/ To provide such premium billing services it is necessary for ERC to

determine which employer members/policyholders are entitled to premium credits.

3/ The amount of ERC's service fee, at least under the Indemnity Agreements

offered and received into evidence in the instant case, is subject to

renegotiation "from time to time."

4/ Most FHSIF members are homebuilders.

5/ It is estimated that FUBSIF's 1994 premium volume will be approximately 50

million dollars.

6/ As of August 31, 1994, FUBA had 9,979 members who were also

members/policyholders of FUBSIF.

7/ FUBA is nonprofit corporation.

8/ The Department has indicated in pleadings filed in the instant case that it

intends to construe the dispute resolution procedure identified in proposed Rule

38I-17.006, Florida Administrative Code, as discretionary, rather than

mandatory, in nature. Given the Department's use of the word "should" in the

proposed rule, such construction is not unreasonable. See State v. Thomas, 528

So.2d 1274, 1275 (Fla. 3d DCA 1988); University of South Florida v. Tucker, 374

So.2d 16, 17 (Fla. 2d DCA 1979).

9/ It appears that both FHSIF and FUBSIF are members and subscribers of the

National Council on Compensation Insurance.

10/ The Application for Employer Safety Program Premium Credit requires the

employer to certify that its "workplace safety program meets the requirements of

the Florida Occupational Safety and Health Act, Chapter 93-415, Section 52-74,

Laws of Florida, and Rule 38I-17 of the Florida Administrative Code," that its

"safety program has been implemented in [its] workplace and is being maintained

as submitted to [its] carrier," and that it understands that it is subject to

criminal prosecution for knowingly and willfully making any false or fraudulent

statement on the application.

11/ In Agrico, a "capricious action" was described as "one which is taken

without thought or reason or irrationally" and an "arbitrary decision" was

described as "one not supported by facts or logic, or despotic." Id. at 763.

12/ Petitioners raised other grounds of invalidity in their petition, which

they have not further pursued. Consequently, these other alleged grounds have

been deemed abandoned and are not addressed in this Final Order.

13/ Section 627.0915, Florida Statutes, is among the statutory provisions

listed under "Specific Authority" and "Law Implemented" in proposed Rule Chapter

38I-17, Florida Administrative Code. So is Section 442.011, Florida Statutes,

which provides as follows:

Each insurance carrier writing workers' compensation insurance in this

state, each employer qualifying as an individual self-insurer under 440.38, each

self-insurance fund under s. 624.461, and each mutual insurer under s. 628.6011

must provide safety consultations to each of its policyholders who requests such

consultations. Each such carrier or self-insurer must inform its policyholders

of the availability of such consultations and must report annually on its safety

and health programs and consultations to the division in such form and at such

time as the division prescribes. The division is responsible for approving all

safety and health programs. The division shall aid all insurance carriers and

self-insurers in establishing their safety and health programs by setting out

criteria in an appropriate format.

As the Department concedes in its proposed final order, its reliance on

Section 442.011, Florida Statutes, as authority for the proposed adoption of

Rule Chapter 38I-17, Florida Administrative Code, was misplaced inasmuch as the

safety programs referenced in the statute are those of insurance carriers and

self-insurers, not employers seeking a workplace safety premium credit. Because

it deals with latter type of safety programs, which Section 442.011, Florida

Statutes, does not address, proposed Rule Chapter 38I-17, Florida Administrative

Code, cannot be successfully challenged on the ground that it contravenes the

requirements of Section 442.011, Florida Statutes.

14/ Proposed Rule 38I-17.006, Florida Administrative Code, which deals with the

resolution of disputes concerning an employer's eligibility for a workplace

safety premium credit, would supplement, not supersede, the provisions of Rule

38A-4.001, Florida Administrative Code.

15/ Section 120.565, Florida Statutes, reads as follows:

Each agency shall provide by rule the procedure for the filing and prompt

disposition of petitions for declaratory statements. A declaratory statement

shall set out the agency's opinion as to the applicability of a specified

statutory provision or any rule or order of the agency as it applies to the

petitioner in his particular set of circumstances only. The agency shall give

notice of each petition and its disposition in the Florida Administrative

Weekly, except that educational units shall give notice in the same manner as

provided for rules in s. 120.54(1)(a), and transmit copies of each petition and

its disposition to the committee. Agency disposition of petitions shall be

final agency action.

APPENDIX TO FINAL ORDER

IN CASE NO. 94-3224RP

The following are the Hearing Officer's specific rulings on the "findings

of fact" proposed by the parties in their proposed final orders:

Petitioners' Proposed Findings

1-2. Accepted and incorporated in substance, although not necessarily

repeated verbatim, in this Final Order.

3. Not incorporated in this Final Order because it would add only

unnecessary detail.

4. Accepted and incorporated in substance.

5. Second and sixth sentences: Rejected as findings of fact because they

are more in the nature of legal argument than findings of fact; Remaining

sentences: Accepted and incorporated in substance.

6-7. Rejected as findings of fact because they are more in the nature of

legal argument than findings of fact.

8-9. Accepted and incorporated in substance.

10. Rejected as a finding of fact because it is more in the nature of

legal argument than a finding of fact.

11. First sentence: Rejected as a finding of fact because it is more in

the nature of legal argument than a finding of fact; Remaining sentences:

Accepted and incorporated in substance.

12. Rejected as a finding of fact because it is more in the nature of

legal argument than a finding of fact.

13-15. Accepted and incorporated in substance.

16. To the extent that this proposed finding recites the provisions of

Sections 442.011 and 627.0915, Florida Statutes, it has been rejected as a

finding of fact because it is more in the nature of a statement of the law than

a finding of fact. Otherwise, it has been accepted and incorporated in

substance.

17-22. Rejected as findings of fact because they are more in the nature of

legal argument than findings of fact.

The Department's Proposed Findings

1. Accepted and incorporated in substance.

2-3. Rejected as findings of fact because they are more in the nature of

legal argument than findings of fact.

4. First sentence: Accepted and incorporated in substance; Remaining

sentences: Not incorporated in this Final Order because they would add only

unnecessary detail.

5-18. Rejected as findings of fact because they are more in the nature of

legal argument than findings of fact.

19-22. Accepted and incorporated in substance.

23-34. Rejected as findings of fact because they are more in the nature of

legal argument than findings of fact.

35-38. Accepted and incorporated in substance.

39. Rejected as a finding of fact because it is more in the nature of

legal argument than a finding of fact.

40-41. Accepted and incorporated in substance.

42. Not incorporated in this Final Order because it would add only

unnecessary detail.

43. First and second sentences: Accepted and incorporated in substance;

Third sentence: Rejected because it is not supported by the record.

44. Rejected as a finding of fact because it is more in the nature of a

statement of legal position than a finding of fact.

45-46. Accepted and incorporated in substance.

47. Rejected as a finding of fact because it is more in the nature of

legal argument than a finding of fact.

COPIES FURNISHED:

Thomas W. Stahl, Esquire

Eric D. Prutsman, Esquire

NEWELL & STAHL, P.A.

817 North Gadsden Street

Tallahassee, Florida 32303-6313

Edward A. Dion, Esquire

David C. Hawkins, Esquire

John M. Carlson, Esquire

Office of the General Counsel

Department of Labor and

Employment Security

The Hartman Building, Suite 307

2012 Capital Circle, Southeast

Tallahassee, Florida 32399-2189

Liz Cloud, Chief

Bureau of Administrative Code

The Capitol, Room 1802

Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director

Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Summary 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 one copy of a notice of appeal with the

Agency Clerk of the Division of Administrative Hearings and a second 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.