03-002859RX Guido Perou vs. Department Of Financial Services Status: Closed DOAH Final Order on Friday, November 7, 2003.

Summary: Petitioner failed to show that Rule 4.211.042(8), Florida Administrative Code, enlarges, modifies, or contravenes Section 626.641(2), Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GUIDO PEROU, )

)

Petitioner, )

)

vs. ) Case No. 03 - 2859RX

)

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Respondent. )

______________________________)

FINAL ORDER

Robert E. Me ale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Tallahassee, Florida, on September 22, 2003. The sole witness

testified by videoconference from Miami where the court reporter

was located. The Admin istrative Law Judge and attorneys were in

Tallahassee.

APPEARANCES

For Petitioner: Steven M. Malono

Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

Post Office Box 10095

215 South Monroe Street, Second Floor

Tallahassee, Florida 32301

For Respondent: S. Marc Herskovitz

Terry Butler

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 4260

STATEMENT OF THE ISSUE

The issue is whether Rule 4 - 211.042(8), Florida

Administrative Code, co ntravenes Section 626.641(2), Florida

Statutes, by imposing a waiting period in excess of two years

for licensee whose license has been revoked to reapply for

licensure.

PRELIMINARY STATEMENT

By Petition for a Determination of the Invalidity of an

Existin g Rule filed August 5, 2003, Petitioner alleged that Rule

4 - 211.042(8), Florida Administrative Code, is an invalid

exercise of delegated legislative authority because the rule

"enlarges, modifies and contravenes" the specific provisions of

Section 626.641, Florida Statutes (2002), which is purportedly

implemented by the rule. Specifically, the petition alleges

that the rule imposes a 15 - year waiting period for reapplication

following the commission of a specified felony, but the statute

requires only a two - year waiting period. The petition also

states an additional issue is whether the rule is arbitrary or

capricious.

Respondent's Pre - Hearing Stipulation, which was filed

September 17, 2003, raises the issue of whether Petitioner has

standing to maintain t his rule challenge.

At the hearing, Petitioner called one witness, himself. He

testified solely on the issue of standing. Petitioner offered

into evidence four exhibits: Petitioner Exhibits 1 - 4.

Respondent called no witnesses and offered into evidence three

exhibits: Respondent Exhibits 1 - 3. All exhibits were admitted.

The court reporter filed the transcript on September 26,

2003. The parties filed their proposed final orders on

October 31, 2003.

FINDINGS OF FACT

1. From 1984 through November 28, 2 000, Petitioner was

licensed as a general lines insurance agent.

2. On May 15, 2000, the Miami - Dade County State Attorney

charged Petitioner with a felony violation of Section

817.034(3)(d), Florida Statutes (2003). The information alleged

that Petitione r had participated in an organized scheme to

defraud a person of less than $20,000 from December 1, 1997,

through January 31, 1999. (All references to Sections are to

Florida Statutes (2003), unless the context indicates

otherwise.)

3. On September 14, 200 0, Petitioner entered a plea of no

contest to the charge, and the court entered a finding of guilt,

but withheld adjudication. The court ordered that Petitioner

remain on probation and pay court costs. The period of

probation was specified in a separate order that is not part of

the present record.

4. On the same day, Petitioner entered into a Settlement

Stipulation for Consent Order with Respondent. The settlement

stipulation acknowledges that Respondent has alleged that

Petitioner misappropriated homeow ners and flood insurance

premiums and uttered forged insurance documents. The settlement

stipulation memorializes Petitioner's "voluntary return" to

Respondent of all licenses previously issued to him by

Respondent and Petitioner's understanding that the return of the

licenses has the same effect as a revocation of these licenses,

pursuant to Section 626.641, Florida Statutes (2000).

5. The final paragraph of the settlement stipulation

states:

No person whose licenses, appointments and

eligibility for licen sure have been revoked

by the Department shall have the right to

apply for another license or appointment

under the Insurance Code within two (2)

years from the date of the Consent Order to

be issued in this case. The Department

shall not, however, grant a new license or

appointment or reinstate eligibility to hold

such license or appointment if it finds that

the circumstance or circumstances for which

the eligibility was revoked or for which the

previous license or appointment was revoked

still exist or a re likely to recur.

6. After the Treasurer and Insurance Commissioner approved

the settlement stipulation, Respondent issued a Consent Order,

which incorporates the settlement stipulation and revokes

Petitioner's "licensure and eligibility for licensure as an

insurance agent . . . pursuant to Section 626.641(2), Florida

Statutes (2000)." The final paragraph of the Consent Order,

which was filed November 28, 2000, contains a paragraph

identical to the final paragraph, quoted above, of the

settlement stipula tion, except for minor rewording and the

addition of a citation in the second sentence to Section

626.641(1), Florida Statutes (2000).

7. Prior to the expiration of two years following the

issuance of the Consent Order, the Legislature passed Chapter

2002 - 2 06, Laws of Florida. Taking effect on October 1, 2002,

Section 11 adds Section 626.207 which provides:

(1) The department shall adopt rules

establishing specific waiting periods for

applicants to become eligible for licensure

following denial, suspension , or revocation

pursuant to s. 626.611, s. 626.621,

s. 626.8437, s. 626.844, s. 626.935,

s. 626.9917, s. 634.181, s. 634.191,

s. 634.320, s. 634.321, s. 634.422,

s. 634.423, s. 642.041, or s. 642.043. The

purpose of the waiting periods is to provide

suffi cient time to demonstrate reformation of

character and rehabilitation. The waiting

periods shall vary based on the type of

conduct and the length of time since the

conduct occurred and shall also be based on

the probability that the propensity to commit

i llegal conduct has been overcome. The

waiting periods may be adjusted based on

aggravating and mitigating factors

established by rule and consistent with this

purpose.

8. On October 17, 2002, Respondent adopted Rule 4 - 211.042,

Florida Administrative Code. (All references to Rules are to

the Florida Administrative Code.) Rule 4 - 211.042(8) provides:

(8) Required Waiting Periods for a Single

Felony Crime. The Department finds it

necessary for an applicant whose law

enforcement record includes a single fel ony

crime to wait the time period specified

below (subject to the mitigating factors set

forth elsewhere in this rule) before

licensure. All waiting periods run from the

trigger date.

(a) Class A Crime. The applicant will

not be granted licensure unt il 15 years have

passed since the trigger date.

(b) Class B Crime. The applicant will

not be granted licensure until 7 years have

passed since the trigger date.

(c) Class C Crime. The applicant will

not be granted licensure until 5 years have

pas sed since the trigger date.

(d) The Department shall not impose any

waiting period pursuant to this rule where

the only crime in an applicant’s law

enforcement record is a single felony crime

that results from the applicant’s passing of

a worthless che ck, or obtaining property in

return for a worthless check, and the amount

of the check or checks involved in the

single felony crime is $500 or less.

However, this subparagraph shall not apply

where a felony crime resulting from the

applicant’s passing of a worthless check, or

obtaining property in return for a worthless

check is not the only crime in an

applicant’s law enforcement record.

9. Rule 4 - 211.042(21) provides that Class A crimes include

64 felonies ranging from treason, murder, and air piracy, to

unlawful possession of a postal key and defrauding an innkeeper.

Rule 4 - 211.042(21)(2) includes fraud. Rule 4 - 211.041(11)

provides that the "trigger date" is the date on which the

applicant was found guilty, pleaded guilty, or pleaded no

contest. As is apparent from the Notice of Denial, described

below, the trigger date is the earliest of these three events.

10. Section 626.641(2) provides:

No person or appointee under any license or

appointment revoked by the department or

office, nor any person wh ose eligibility to

hold same has been revoked by the department

or office, shall have the right to apply for

another license or appointment under this

code within 2 years from the effective date

of such revocation or, if judicial review of

such revocation is sought, within 2 years

from the date of final court order or decree

affirming the revocation. The department or

office shall not, however, grant a new

license or appointment or reinstate

eligibility to hold such license or

appointment if it finds that the

circumstance or circumstances for which the

eligibility was revoked or for which the

previous license or appointment was revoked

still exist or are likely to recur; if an

individual's license as agent or customer

representative or eligibility to hold s ame

has been revoked upon the ground specified

in s. 626.611(12), the department or office

shall refuse to grant or issue any new

license or appointment so applied for.

11. On January 10, 2003, Petitioner filed an application

for licensure as a general l ines agent. On February 13, 2003,

Respondent issued a Notice of Denial. The Notice of Denial

explains that Section 626.611(14) provides that Respondent shall

deny an application for a license if it finds that the applicant

has been found guilty of, or pl eaded guilty or no contest to, a

felony involving moral turpitude, without regard to

adjudication, and that Section 626.621(8) provides that

Respondent may deny an application for a license if it finds

that the applicant has been found guilty of, or pleade d guilty

or no contest to, a felony. The Notice of Denial cites Rule

4 - 211.042(8) with respect to the waiting time before licensure

due to a record of a single felony. The Notice of Denial

concludes that Respondent is subject to a waiting period of 14

ye ars from when he was found guilty, pleaded guilty, or pleaded

no contest.

12. Petitioner is substantially affected by Rule

4 - 211.042(8)(a). The effect of this rule is to preclude

Petitioner's application from consideration for 14 years from

the trigger d ate. Given the resolution of this case, it is

unnecessary to determine if Petitioner has standing to contest

the remaining subsections of Rule 4 - 211.042(8).

CONCLUSIONS OF LAW

13. The Division of Administrative Hearings has

jurisdiction over the subjec t matter, pursuant to Section

120.56(3). Petitioner has standing, pursuant to Section

120.56(1)(a) and (3)(a).

14. Pursuant to Section 120.56(3)(a), Petitioner has the

burden of proving that Rule 4 - 211.042(8) is an invalid exercise

of delegated legisla tive authority.

15. Petitioner argues that the 15 - year waiting period in

Rule 4 - 211.042(8)(a) contravenes the two - year waiting period in

Section 626.641(2). However, there is no conflict between these

provisions. The statute deprives a licensee whose li cense has

been revoked of the right to reapply for two years. The rule

does nothing to change this statutory prohibition.

16. Petitioner finds a negative implication in the statute

that limits to two years the period during which the revoked -

licensee may not reapply. However, such a negative implication

results in a conflict between Section 626.641(2) and the newer

Section 626.207(1). A reasonable interpretation that avoids any

conflict between the older and newer statutes limits the older

statute to it s two - year term and finds no implication that,

after two years, previously revoked applicants may file

applications. By this interpretation, Section 626.207(1) merely

builds upon the two - year waiting period in the older statute by

specifying waiting perio ds of five, seven, and fifteen years,

depending on the type of felony.

17. Petitioner also relies on language in the second

sentence of Section 626.641(2) that prohibits Respondent from

issuing a license "if it finds that the circumstance or

circumstances for which the eligibility was revoked or for which

the previous license or appointment was revoked still exist or

are likely to recur." This provision imposes an additional

restriction upon Respondent that, when any statutory waiting

period has expired, Respondent may not issue a new license if

the factual basis for revocation still exists or the acts or

omissions on which revocation was based are likely to recur.

This provision applies even after the expiration of the longer

waiting periods authorized b y Section 626.207(1) and adopted by

Rule 4 - 211.042. The statute and rule establish these periods as

the minimum terms required for the applicant to demonstrate his

or her suitability for licensure and do not assure the applicant

that his or her applicant will be granted after the waiting

period has run.

18. Respondent contends that Petitioner has not adequately

raised the issue of whether Rule 4 - 211.042(8) is arbitrary or

capricious. The petition mentions this issue, but does not

provide any explanation of how the rule is arbitrary or

capricious. In his proposed final order, Petitioner argues only

that the rule is arbitrary and capricious due to the perceived

conflict between the rule's 15 - year waiting period and the two -

year waiting period in Section 62 6.641(2). However, for the

reasons set forth above, no such conflict exists, so Rule

4 - 211.042(8) is not arbitrary or capricious for the reason

advanced by Petitioner.

ORDER

It is

ORDERED that the Petition for a Determination of the

Invalidity of an E xisting Rule is dismissed.

DONE AND ORDERED this 7th day of November, 2003, in

Tallahassee, Leon County, Florida.

S

___________________________________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

D ivision of Administrative Hearings

this 7th day of November, 2003.

COPIES FURNISHED:

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Mark Casteel, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Scott Boyd, Acting Executive Director

General Counsel

Joint Administrative Procedures Committee

120 Holland Building

Tallahassee , Florida 32399 - 1300

Steven M. Malono

Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

Post Office Box 10095

215 South Monroe Street, Second Floor

Tallahassee, Florida 32301

S. Marc Herskovitz

Terry Butler

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 4260

NOTICE OF RIGHT TO JUDICIAL REVIEW

This decision is final unless an adversely affected party:

a) brings a civil action within 30 days in

the appropriate fede ral district court

pursuant to Section 1415( i )(2)(A) of the

Individuals with Disabilities Education Act

(IDEA); [Federal court relief is not

available under IDEA for students whose only

exceptionality is "gifted"] or

b) brings a civil action within 30 da ys in

the appropriate state circuit court pursuant

to Section 1415( i )(2)(A) of the IDEA and

Section 1003.57(5), Florida Statutes; or

c) files an appeal within 30 days in the

appropriate state district court of appeal

pursuant to Sections 1003.57(5) and 12 0.68,

Florida Statutes.