07-001443PL Department Of Financial Services, Division Of Funeral, Cemetery, And Consumer Services vs. Mark E. Davis Status: Closed Recommended Order on Thursday, July 26, 2007.

Summary: Preneed "Registration Forms" are "preneed contracts" pursuant to definition at 497.005(30), Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL ) )

SERVICES, DIVISION OF FUNERAL, )

CEMETERY, AND CONSUMER )

SERVICES, )

)

Petitioner, )

) Case No. 07-1442

vs. )

)

A CREMATION CENTER AT HORIZON )

FUNERAL HOME, )

)

Respondent. )

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF FUNERAL, ) )

CEMETERY, AND CONSUMER )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 07-1443PL

)

MARK E. DAVIS, )

)

Respondent. )

)

RECOMMENDED ORDER

On June 1, 2007, a formal administrative hearing in this

case was held in Tallahassee, Florida, before William F.

Quattlebaum, Administrative Law Judge, Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Casia R. Sinco, Esquire

Elizabeth Teegen, Esquire

Department of Financial Services

200 East Gaines Street, Room 612

Tallahassee, Florida 32399-0333

For Respondents: Garvin B. Bowden, Esquire

Gardner, Wadsworth, Duggar, Bist

& Wiener, P.A.

1300 Thomaswood Drive

Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

The issues are whether the allegations set forth in the

separate Amended Administrative Complaints filed by the

Department of Financial Services (Petitioner) against the

Respondents, A Cremation Center at Horizon Funeral Home

(Horizon) and Mark E. Davis, are correct, and, if so, what

penalty should be imposed.

PRELIMINARY STATEMENT

By Amended Administrative Complaint filed against Horizon

and dated February 23, 2007, the Petitioner alleged that Horizon

sold approximately 497 preneed funeral service contracts without

being properly licensed. Another Amended Administrative

Complaint dated February 23, 2007, containing essentially the

same allegations, was filed against Mr. Davis as the funeral

director in charge of Horizon. The Respondents disputed the

allegations and requested formal administrative hearings. The

complaints and requests were forwarded to the Division of

Administrative Hearings, where the cases were consolidated and

scheduled to be heard on June 1, 2007. The cases were

transferred to the undersigned Administrative Law Judge on

May 18, 2007.

On May 24, 2007, the Respondents filed a Motion for Order

to Direct Dismissal or to Quash Administrative Complaints and/or

Relinquish Jurisdiction and to Award Attorney Fees and Costs in

Favor of Respondents. On May 29, 2007, the Petitioner filed a

Motion to Amend the Administrative Complaints. On May 30, 2007,

the Petitioner filed a Motion to Strike the Respondents' Motion

and a Response in Opposition to the Respondents' Motion.

Hearing on the pending motions was held on May 30, 2007, at

which time the Petitioner's Motion to Amend was denied. Ruling

on the Motion for Order to Direct Dismissal or to Quash

Administrative Complaints was reserved until completion of the

evidentiary hearing and is hereby denied.

At the hearing, the Petitioner presented the testimony of

two witnesses and had Exhibits 1 through 4 admitted into

evidence. At the conclusion of the hearing, the Petitioner

requested and was granted leave to have a late-filed exhibit

admitted as Petitioner's Exhibit 5. The Respondents presented

the testimony of two witnesses and had exhibits identified as

A through D admitted into evidence.

A Transcript of the hearing was filed on June 13, 2007.

Both parties filed Proposed Recommended Orders, which have been

considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. The Petitioner is the state agency charged under

Chapter 497, Florida Statutes (2006), with regulation of funeral

establishments, director/embalmers, and the sale of preneed

funeral service contracts.

2. At all times material to this case, Horizon was a

funeral establishment holding Florida license FH2372, located at

1605 Colonial Boulevard, Fort Myers, Florida.

3. At all times material to this case, Mark E. Davis was a

funeral director and embalmer holding Florida license FE4335 and

was employed by Horizon in that capacity.

4. From 1999 through October of 2005, the Respondents

produced "Registration Forms" which were supplied to individuals

seeking to make preneed direct cremation arrangements. A

registrant would complete the form and return it to the

Respondents with a non-refundable fee of $48.00.

5. Registrants received no discount when services were

eventually purchased, but "locked in" the price being charged at

the time the registration form was completed and returned with

the $48 fee. The prices on the registration forms were the same

as those charged to customers in need of the services during the

time registrants submitted the forms and fees. The $48 fee was

not credited to the cost of the services chosen during

registration.

6. Although there was minor variation between some

versions of the document, the "Registration Form" generally

contained the following language:

I, the undersigned [sic] request Horizon

Funeral Home & Cremation Center to record

the following information. Enclosed is the

$48.00 Registration Fee which will cover

registration expenses, place the following

information on permanent file, and FREEZE

THE PRICE of the services and merchandise

selected below.

7. The form included space for the registrant to set forth

personal identifying information including name, address, date

of birth, social security number, occupation, and next of kin.

8. Following the personal identification information part

of the document, the form listed the prices of available

services and merchandise and directed a registrant to make

choices as follows:

DESIGNATE YOUR WISHES:

CHECK THE ITEMS YOU WISH TO RECORD.

Simple Cremation $495.____

Cremation with Memorial Service $795.____

Cremation with Rental Casket & Funeral

Service $2380____

ALTERNATIVE CONTAINERS (Required by law in

lieu of a casket)

Corrugated Cardboard $95.____

Pressed Wood $195.____

DISPOSITION OF CREMATED REMAINS

Scatter @ Sea $150.____

Pack & Ship $65.____

Cardboard Container, No Charge____

Family To Select An Urn, (Price Range $65 to

$1995)____

The above prices do not include the

following: Medical Examiner Cremation

Approval Fee, Certified Copies of death

certificate, classified obituary.

THE REGISTRATION FEE OF $48.00 IS NOT

REFUNDABLE.

9. The registrant made selections, and then signed and

dated the document. The form contained no area for Mr. Davis or

any other representative of Horizon to acknowledge receipt of

the form or to document any agreement to provide the services

selected by the registrant. There were approximately 500 forms

completed and submitted to the Respondents with the $48 fee.

10. At the hearing, Mr. Davis testified that although

there was no signature from the Respondent on the form, by his

act of accepting the registration form and fee, he was agreeing

to provide the services at the prices set forth on the form in

accordance with each registrant's wishes.

11. At no time have the Respondents been licensed or

authorized to sell preneed contracts for final disposition of

cremated human remains. Mr. Davis, an experienced funeral

director, was familiar with the requirements to sell preneed

contracts. He did not believe that the "Registration Forms"

were preneed contracts. There was no evidence that Mr. Davis

made any attempt to conceal the registration process from state

regulators at any time.

12. The use of the registration forms was observed during

an investigation of the Respondents in 2004. At that time, the

investigator believed that the forms were preneed contracts and

drafted a complaint related to alleged unlicensed preneed

contract sales, but for reasons unknown, persons who reviewed

his work apparently disagreed, and the complaint was not

pursued.

13. A second investigation was initiated in November 2006

based on a complaint related to signage. The signage complaint

raised concerns related to proposed transfer of Horizon

ownership to a hospice organization, which was a topic of some

controversy.

14. As an investigator (not the 2004 investigator) drove

to Horizon, he received a call from his supervisor which

directed him to review the registration issue while was at the

facility.

15. The signage issue was resolved without difficulty.

When the investigator inquired about the registration process,

Mr. Davis produced the registration forms for review. The

investigator believed that the forms were preneed contracts and

stated so in his investigative report. The Petitioner

apparently agreed and initiated the disciplinary process at

issue in these cases.

CONCLUSIONS OF LAW

16. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2006).

17. License revocations and discipline procedures are

penal in nature. The Petitioner must demonstrate the

truthfulness of the allegations in the Administrative Complaints

by clear and convincing evidence. Department of Banking and

Finance v. Osborne Stern and Company , 670 So. 2d 932 (Fla.

1996); Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987).

18. The "clear and convincing" standard requires:

[T]hat the evidence must be found to be

credible; the facts to which the

witnesses testify must be distinctly

remembered; the testimony must be

precise and explicit and the witnesses

must be lacking in confusion as to the

facts in issue. The evidence must be

of such weight that it produces in the

mind of the trier of fact a firm belief

or conviction, without hesitancy, as to

the truth of the allegations sought to

be established.

Slomowitz v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983).

As to the alleged violations of Subsections 497.152(1)(a) and

497.405(1)(a), Florida Statutes (2004), the burden has been met.

As to the alleged violation of Subsection 497.405(2)(a), Florida

Statutes (2004), the burden has not been met.

19. Section 497.005, Florida Statutes (2004), provides the

following relevant definitions:

(7) "Burial service," "funeral service," or

"service" means any service offered or

provided by any person in connection with

the final disposition, memorialization,

interment, entombment, or inurnment of human

remains.

* * *

(12) "Certificateholder" or "licensee"

means the person or entity that is

authorized under this chapter to sell

preneed funeral or burial services, preneed

funeral or burial merchandise, or burial

rights. Each term shall include the other,

as applicable, as the context requires. For

the purposes of chapter 120, all

certificateholders, licensees, and

registrants shall be considered licensees.

* * *

(15) "Cremation" includes any mechanical or

thermal process whereby a dead human body is

reduced to ashes. Cremation also includes

any other mechanical or thermal process

whereby human remains are pulverized,

burned, recremated, or otherwise further

reduced in size or quantity.

* * *

(18) "Final disposition" means the final

disposal of a dead human body whether by

interment, entombment, burial at sea,

cremation, or any other means and includes,

but is not limited to, any other disposition

of remains for which a segregated charge is

imposed.

(19) "Funeral director" means any person

licensed in this state to practice funeral

directing pursuant to the provisions of

chapter 470.

* * *

(30) "Preneed contract" means any

arrangement or method, of which the provider

of funeral merchandise or services has

actual knowledge, whereby any person agrees

to furnish funeral merchandise or service in

the future.

20. During the hearing, Mr. Davis testified that by

accepting the registration form, he was agreeing to provide the

services sought by the consumer at the price set forth on the

form.

21. The registration form clearly constitutes a "preneed

contract" as the term is statutorily defined, because the form

is an "arrangement or method" whereby Mr. Davis agreed to

furnish cremation and disposition services in the future. By

definition, "services" include any service offered in connection

with the final disposition of human remains. "Final

disposition" includes cremation.

22. The Administrative Complaints filed against the

Respondents allege that the Respondents violated Subsection

497.405(1)(a) Florida Statutes (2004), which provides as follows

497.405 Certificate of authority

required. --

(1)(a) No person, including any cemetery

exempt under s. 497.003, may sell a preneed

contract without first having a valid

certificate of authority.

23. Neither Horizon nor Mr. Davis held a valid certificate

of authority for the sale of preneed contracts at any time

material to this case. The evidence establishes that the

Respondents sold preneed contracts without proper certification.

24. The Administrative Complaints filed in these cases

allege that the Respondents violated Subsection 497.152(1)(a),

Florida Statutes (2004), which provides that violation of any

provision of Chapter 497, Florida Statutes, or any lawful order

of the board or department or of the statutory predecessors to

the board or department are grounds for discipline against a

licensee.

25. Florida Administrative Code Rule 61G8-21.007(3)

(2004), now renumbered as 69K-21.007(3), provides that the

funeral director at a funeral establishment is responsible for

assuring that the funeral establishment and persons employed

therein comply with applicable statutes and rules. The rule

also states that the funeral establishment itself is also

legally responsible for such compliance.

26. By engaging in the sale of preneed service contracts

without proper certification, the Respondents violated

Subsections 497.152(1)(a) and 497.405(1)(a), Florida Statutes

(2004).

27. The Administrative Complaints further allege that the

Respondents violated Subsection 497.405(2)(a), Florida Statutes

(2004), which provides as follows

(2)(a) No person may receive any funds for

payment on a preneed contract who does not

hold a valid certificate of authority.

28. The evidence fails to establish that the Respondents

received funds "for payment on a preneed contract." The fee

paid by consumers in connection with the registration form was

not credited in any way towards the payment for the services to

be provided under the form. The prices of the services listed

on the form were the same as those charged to persons who sought

the services at the time of need. The evidence fails to

establish that the registration fee constituted "payment on a

preneed contract."

29. Florida Administrative Code Rule 69K-30.001 sets forth

the range of penalties applicable in this case. The penalty

range for an intentional violation of Subsection 497.152(1)(a),

Florida Statutes (2004), for a first offense is "Reprimand, fine

of $1000-2500 costs, 6 mos-1 year Probation with usual

conditions."

30. The evidence fails to establish that the violation in

this case was intentional. Mr. Davis was familiar with the

statutes and rules related to the sale of preneed contracts,

having been involved in the industry for a period of time. He

made no attempt to conceal the registration process from

investigators because he did not believe that the registration

forms were preneed contracts. After the 2004 investigation

resulted in no disciplinary action, he assumed that the

Petitioner had determined that the forms were not preneed

contracts and continued the registration process.

31. Although the Petitioner indicated in the Motion to

Amend the Administrative Complaints, filed shortly prior to the

hearing, that at least one form was accepted after October 2005,

Mr. Davis testified that he believed the 2005 amendments

affected the legal status of the registration program, and he

essentially ceased the registration process at that time.

32. Florida Administrative Code Rule 69K-30.001(2)

provides that disciplinary action other than the recommended

penalties may be imposed based upon consideration of the

following factors:

(2) Based upon consideration of the

following factors, the Board may impose

disciplinary action other than the penalties

recommended in subsections (1) through (5):

(a) The danger to the public;

(b) The length of time since date of

violation;

(c) The number of complaints filed against

the licensee;

(d) The length of time licensee has

practiced;

(e) The actual damage, physical or

otherwise, caused by the violation;

(f) The deterrent effect of the penalty

imposed;

(g) The effect of the penalty upon the

licensee’s livelihood;

(h) Any efforts for rehabilitation;

(i) The actual knowledge of the licensee

pertaining to the violation;

(j) Attempts by licensee to correct or stop

violations or refusal by licensee to correct

or stop violations;

(k) Related violations against a license in

another state including findings of guilt or

innocence, penalties imposed and penalties

served;

(l) Actual negligence of the licensee

pertaining to any violation;

(m) Penalties imposed for related offenses

under subsections (1) through (5); and

(n) Any other mitigating or aggravating

circumstances.

33. The registration form process posed no danger to the

public. Other than the $48 registration fee, registrants were

under no obligation to use the Respondent's facilities or

services at time of need. Registrants were under no obligation

to make any additional payments until the time of need. There

is no evidence that any registrant was injured or damaged in any

manner. There is no evidence that any registrants were denied

the services chosen during the registration process or that any

registrants were ultimately charged more than the prices listed

on the registration forms.

34. There is no evidence that any registrant or funeral

service consumer filed any complaint against the Respondents.

35. The Respondents essentially halted the registration

process in October 2005, and there is no evidence that any other

funeral service provider is engaging in a similar practice. The

deterrent effect of a substantial penalty would be negligible.

36. The Respondents were not asked to stop the

registration process, and, therefore, there is no evidence that

the Respondents refused to correct or stop the practice.

37. There was no evidence that the Respondents had been

the subject of any prior disciplinary actions.

38. Based on the foregoing review of the penalty

guidelines and the mitigation factors, the recommended penalty

set forth below is minimal.

39. In the Motion for Order to Direct Dismissal or to

Quash Administrative Complaints, the Respondents have asserted

that the Petitioner should be estopped from prosecuting the

allegations in the Administrative Complaints because the

registration form practice was investigated by regulators in

2004, and no disciplinary action was taken at that time.

40. Although the investigator who conducted the 2004

review believed that the forms constituted preneed contracts,

regulators took no action against the Respondents. The

Respondents have asserted that they relied upon the lack of

disciplinary action to indicate that regulators had determined

that the forms were not preneed contracts and that the

registration did not violate the requirements of state law.

41. There was no credible evidence presented that

regulators affirmatively determined after the 2004 investigation

that the registration form process did not violate statutes

related to preneed contract sales. In any event, the Petitioner

utilized the registration form process from 1999 until 2004 with

no apparent attempt to obtain any regulatory clearance for the

document or the practice. Even were the Respondents' assertion

accepted, the pre-2004 registrations would have served as

grounds for these disciplinary proceedings.

42. The Respondents further suggested that the prosecution

of this case was the result of complaints in 2006 by competing

funeral establishment operators, which were opposed to the

proposed ownership of Horizon by a hospice organization.

Although there is some evidence that the ownership issue was

controversial, there is no evidence to support the Respondents'

assertion that this prosecution was based solely on such

controversy, and the underlying rationale behind the

Petitioner's prosecution does not excuse the Respondents'

unlicensed sales of preneed service contracts.

43. The Respondents have also asserted that the Probable

Cause Panel for the Board of Funeral and Cemetery Services erred

in consideration of this matter sufficiently to warrant

dismissal of the complaints. The Respondents correctly stated

that the Probable Cause Panel erroneously applied the amended

post-October 2005 statutes during consideration of the case

because counsel for the Petitioner incorrectly cited the law in

presenting the case to the Panel. The applicable 2004 law was

set forth in the Administrative Complaints filed in these cases

and has been cited herein.

44. Comparison of the 2004 statute with the 2005

amendments indicates that both versions of the statutes

specifically prohibited the sale of preneed contracts by

unlicensed persons. The 2005 statutory changes broadened the

scope of prohibited activities related to preneed funeral

contracts to include prohibitions against advertising to sell

preneed contracts and against making arrangements for preneed

contracts.

45. The additional prohibitions included as of October

2005 are not relevant to this proceeding. There was no evidence

presented that the Respondents advertised the availability of

the registration forms. There was no evidence presented that

the registration forms constituted an arrangement for a preneed

contract, because each registrant exercises the right to obtain

the services identified on the registration form at the time of

need.

46. The 2005 statutory amendments did not alter the

existing prohibition against the unlicensed sale of preneed

contracts. Review of the transcript of the Panel's meeting

establishes that the sale of preneed contracts was the focus of

the disciplinary inquiry. As set forth herein, the Respondents'

unlicensed sale of preneed contracts forms the basis for this

proceeding. The erroneous citation of applicable law before the

Probable Cause Panel was of no material effect.

47. Additionally, the Respondents asserted that the

Probable Cause Panel failed to make a factual determination of

whether probable cause existed because it merely "rubber-

stamped" the staff recommendation. Review of the Panel meeting

transcript indicates that the members received a package of

materials related to the case and considered the factual

allegations prior to determination that probable cause existed

to proceed with the disciplinary action.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Financial Services

enter a final order finding that the Respondents committed the

statutory violations identified herein and issuing a letter of

reprimand. The final order should additionally require that the

Respondents execute a document to be prepared by the Petitioner,

which specifically obligates the Respondents to provide to each

registrant the services selected at the prices stated on each

registrant's form, and providing a mechanism for enforcement of

the obligation.

DONE AND ENTERED this 26th day of July, 2007, in

Tallahassee, Leon County, Florida.

S

WILLIAM F. QUATTLEBAUM

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 26th day of July, 2007.

COPIES FURNISHED :

Garvin B. Bowden, Esquire

Gardner, Wadsworth, Duggar, Bist

& Wiener, P.A.

1300 Thomaswood Drive

Tallahassee, Florida 32308

Casia R. Sinco, Esquire

Elizabeth Teegen, Esquire

Department of Financial Services

200 East Gaines Street, Room 612

Tallahassee, Florida 32399-0333

Diana M. Evans, Director

Bureau of Funeral and Cemetery Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399-0350

Robert Beitler, General Counsel

Department of Financial Services

200 East Gaines Street, Suite 526

Tallahassee, Florida 32399-0350

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.