10-003779 Ficurma, Inc. vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Friday, July 8, 2011.

Summary: Petitioner's refund requests, filed more than 3 years after payments of unlawful assessments imposed by Respondent are barred by s. 215.26. Equitable estoppel not proven; Petitioner waived clear points of entry to challenge assessments.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FICURMA, INC. , )

)

Petitioner , )

)

vs. ) Case No. 10 - 3779

)

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION , )

)

Respondent . )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case

on March 10, 2011, in Tallahassee, Florida, before

Administrative Law Judge Elizabeth W. McArthur of the Division

of Administrative Hearings.

APPEARANCES

For Petitioner: Donovan A. Roper, Esquire

Roper & Roper, P.A.

116 North Park Avenue

Apopka, Florida 32703

For Respondent: Samuel Dean Bunton, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florid a 32399 - 4229

STATEMENT OF THE ISSUES

The issues in this case are as follows:

(1) Whether a refund request submitted by Petitioner,

FICURMA, Inc. (Petitioner or FICURMA), to Respondent, Department

of Financial Services, Division of Workers' Compensati on

(Respondent or Department), on January 21, 2010, requesting a

refund of assessments paid during 2005 and 2006, is barred

pursuant to section 215.26(2), Florida Statutes (2009), 1/ because

the refund request was not submitted within three years after

the assessment payments were made .

(2) Whether the doctrine of equitable estoppel can be

raised to allow a refund that would otherwise be time - barred by

section 215.26(2), and, if so, whether the facts show the sort

of rare circumstances that would justify application of that

doctrine against a state agency.

PRELIMINARY STATEMENT

The Department notified FICURMA in November 2004 that it

was required to pay assessments for the Special Disability Trust

Fund (SDTF) and for the Workers' Compensation Administra tive

Trust Fund (WCATF). FICURMA paid those quarterly assessments,

beginning in 2005, until sometime in 2009 , when the Department

determined that FICURMA was not subject to those assessments

after all.

In 2009, when the Department informed FICURMA that i t no

longer had to pay the SDTF and WCATF assessments, the Department

discussed with FICURMA how to go about requesting refunds of the

assessments, and the Department later sent FICURMA the forms for

applying for refunds pursuant to section 215.26. The De partment

informed FICURMA that section 215.26(2) could pose a problem

with respect to refund requests of payments made more than three

years ago and, therefore, suggested that FICURMA submit separate

refund requests for its payments made within the last th ree

years and for payments made more than three years ago. FICURMA

did so and , also , broke down its refund requests by the separate

assessment types. Accordingly, FICURMA completed and submitted

four different refund requests dated January 20, 2010, file d

with the Department on January 21, 2010: one for SDTF

assessments paid in 2005 and 2006; one for WCATF assessments

paid in 2005 and 2006; one for SDTF assessments paid in

2007 - 2009 ; and one for WCATF assessments paid in 2007 - 2009.

The Department proces sed the refund requests and approved

and authorized warrants, which were issued to refund the SDTF

and the WCATF assessments paid in 2007 - 2009 , totaling

$394,574.74. However, by letter dated May 12, 2010, the

Department issued a Notice of Intent to Deny A pplications for

Refund for the SDTF and WCATF assessments paid in 2005 and 2006,

a total of $351,772.02. The Department's notice asserted that

the refunds were barred by section 215.26(2), because the refund

requests were not made within three years of th e payments. The

notice included a clear point of entry to request an

administrative hearing.

FICURMA timely filed its petition for an administrative

hearing involving disputed issues of material fact. The

Department transmitted the petition to the Divis ion of

Administrative Hearings (DOAH) and requested DOAH to assign an

Administrative Law Judge to conduct the hearing requested by

Petitioner.

The final hearing was initially scheduled for September 22,

2010. On September 1, 2010, the Department filed a motion to

relinquish jurisdiction claiming that the issues presented in

the petition were not disputed issues of material fact.

Petitioner opposed the motion. By Order dated September 10,

2010, the undersigned denied the Department's motion.

Thereafter, two unopposed motions for continuance were filed,

the first by Petitioner and the next by Respondent. Both were

granted, and the final hearing was ultimately rescheduled for

March 10, 2011.

The parties filed separate unilateral prehearing

statements, but represented that a comparison of the separate

statements showed many actual joint stipulations. Upon request,

the parties presented a cross - reference summary of those

paragraphs which are identical and, thus, could be treated as

joint stipulations. The parties' joint stipulations are

incorporated in the Findings of Fact below to the extent

relevant.

At the final hearing, the parties offered their Joint

Exhibits 1 through 24, which were received into evidence.

Petitioner presented the testimony of Benja min Donatelli,

executive director of FICURMA; and David Hershel, managing

attorney for the Department's Workers' Compensation General

Issues Section, Division of Legal Services. Petitioner's

Exhibits 25 through 38 were received into evidence, subject to

s ome corrections made on the record to Exhibits 26 through 28

and 29 through 31. 2/ Respondent presented the testimony of Eric

Lloyd, program administrator of the Division of Workers'

Compensation , Office of Medical Services , since June 2009 and a

former ma nager of the SDTF. Respondent's Exhibits 1 through 6

were received into evidence.

The one - volume Transcript of the final hearing was filed on

March 25, 2011. The parties initially requested 30 days after

the transcript was filed in which to file their p roposed

recommended orders. Petitioner's subsequent two unopposed

motions for extension of that deadline were granted, and the

deadline was extended to May 31, 2011. Both parties timely

filed Proposed Recommended Orders, which have been considered by

the undersigned in the preparation of this Recommended Order.

Additional filings by Petitioner, however, have not been

considered. 3/

FINDINGS OF FACT

1. The Department is the agency that has been statutorily

designated as the administrator of the SDTF (§ 440.49,

Fla. Stat.) and as the administrator of the WCATF (§ 440.51).

2. The Department's administration of these two funds

includes making the requisite assessments to the entities

required to pay the assessments and ensuring payment by the

assessable e ntities for deposit into the state Treasury.

§§ 440.49 , 440.51.

3. As the state agency with the responsibility for the

collection of these assessments, the Department is charged with

the authority to accept applications for refunds pursuant to

section 2 15.26, for overpayments of assessments, for payment of

assessments when none are due, or for payments of assessments

made in error. The Department is responsible for making

determinations on applications for refunds of SDTF and WCATF

assessments.

4. "FI CURMA" stands for Florida Independent Colleges and

Universities Risk Management Association. FICURMA, Inc., is an

independent educational institution self - insurance fund that was

established in December 2003 , pursuant to the authority of

section 624.4623, Florida Statutes (2003). FICURMA was approved

as a Florida workers' compensation self - insurer meeting the

requirements of section 624.4623, effective December 10, 2003.

FICURMA's members self - insure their workers' compensation claims

under c hapter 440.

5. On November 16, 2004, Evelyn Vlasak, the assessments

coordinator for the SDTF and WCATF assessments, wrote to Ben

Donatelli, FICURMA's executive director, to advise that the

assessments unit of the Department's Division of Workers'

Compensation (Divis ion) received notice that FICURMA had been

approved to write workers' compensation insurance in Florida,

effective December 10, 2003. Therefore, Ms. Vlasak informed

FICURMA that it was required to register with the Division; it

was required to pay assessm ents to the WCATF and SDTF,

calculated on the basis of premiums paid to FICURMA by its

members; and it was required to submit quarterly premium reports

to the Division. Ms. Vlasak enclosed quarterly report forms for

FICURMA to catch up on its premium repo rts for the last quarter

of 2003 and the first three quarters of 2004. Ms. Vlasak also

enclosed Bulletin DFS - 03 - 002, dated June 26, 2003, which

attached two Orders Setting Assessment Rates, one for the WCATF

for calendar year 2004, and the other for the S DTF for fiscal

year 2003 - 2004. The two orders, issued by E. Tanner Holloman,

then - director of the Division, included a Notice of Rights.

This notice advised of the right to administrative review of the

agency action pursuant to sections 120.569 and 120.5 7, Florida

Statutes, by filing a petition for hearing within 21 days of

receipt of the orders. In bold, the Notice of Rights concluded

with the following warning: "FAILURE TO FILE A PETITION WITHIN

THE TWENTY - ONE (21) DAYS CONSTITUTES A WAIVER OF YOUR RI GHT TO

ADMINISTRATIVE REVIEW OF THIS ACTION."

6. Mr. Donatelli testified that Ms. Vlasak's letter came

as a surprise, because he and the others involved in lobbying

for the passage of section 624.4623 and setting up FICURMA,

pursuant to the new law, bel ieved that FICURMA was not subject

to SDTF and WCATF assessments. Mr. Donatelli said that he

called Ms. Vlasak to ask why FICURMA had to pay when according

to their interpretation of the statute authorizing FICURMA to be

created, FICURMA was not subject t o the assessment requirements.

7. Mr. Donatelli said that in response to his question,

Ms. Vlasak stated that it was her interpretation of the statute

that FICURMA was required to pay assessments. She stated that

she would have that confirmed by "Lega l," but that FICURMA

should be prepared to start paying in order to avoid penalties

for late payment.

8. Mr. Donatelli testified that "obviously with her

response, then we started to think hard about reading [section

624.4623] again, and we did, and d idn't see any reason that we

needed to pay this." But he also testified that when Ms. Vlasak

said she would confirm her interpretation with the legal

department, he began calculating what the assessments might

cost, because they had not been collecting fu nds to cover the

assessments from its members, since they did not know they had

to pay the assessments.

9. The next communication received by FICURMA from

Ms. Vlasak came by way of a December 20, 2004, memorandum to all

carriers and self - insurance fund s, providing information to

assist with computation of premiums to be reported for the

fourth quarter 2004 SDTF and WCATF assessments. At around the

same time, FICURMA received Bulletin DFS 04 - 044B. This bulletin

attached copies of the two Orders Setting Assessment Rates

signed by Tom Gallagher, then - Chief Financial Officer. One

order was for the WCATF for calendar year 2005 and the other

order was for the SDTF for fiscal year 2004 - 2005. As with the

previous bulletin attaching two orders for the prior y ear, this

mailing included a Notice of Rights, which provided a clear

point of entry to contest the action by filing a petition for

administrative hearing within 21 days of receipt.

10. Mr. Donatelli acknowledged that the two Holloman

orders and the two G allagher orders all ordered FICURMA to pay

the SDTF and WCATF assessments. Mr. Donatelli testified that

after reviewing the second set of orders received, FICURMA did

not believe it had any alternative but to pay the assessments.

However, because there w as a reference to some "legal stuff," he

"asked the legals" to take a second look, because this was not

an insignificant payment. In fact, the calculation of

assessments to catch up for the prior quarters of missed

payments was more than $104,000.

11. Wh en asked why, if he believed FICURMA was not

assessable, Mr. Donatelli did not direct "the legals" to file a

petition for an administrative hearing on FICURMA's behalf to

contest the assessment rate orders, Mr. Donatelli's response

was: "Basically, it was our respect of the opinion of the

Office Of Insurance Regulations [sic: Division of Workers'

Compensation] that said that we had to pay that. I mean -- we

were basically trying to -- being good citizens."

12. Accordingly, FICURMA chose to not challenge the

assessments, or otherwise object to paying the assessments.

Instead, FICURMA transmitted payment on December 26, 2004, for

SDTF and WCATF assessments calculated to be due for the fourth

quarter of 2003 and the first three quarters of 2004, totaling

$104,2 82.11. Neither this payment, nor subsequent FICURMA

assessment payments were made "under protest."

13. Mr. Donatelli's question to Ms. Vlasak sometime in

late 2004 -- whether FICURMA was assessable under either

section 440.49 (for the SDTF) or section 440. 51 (for the

WCATF) - - was never put in writing. However, FICURMA's general

counsel wrote to Ms. Vlasak on January 7, 2005, to raise a

different assessment question: "whether [FICURMA] is assessed

and therefore required to pay into the [SDTF] as it was

esta blished within the past year and as such none of the group's

claims would be eligible for reimbursement from the Fund." This

question, limited to the SDTF assessments, was not based on the

status of FICURMA as an entity authorized by section 624.4623

but, rather, was based on the fact that the SDTF had been closed

for certain new claims before FICURMA was established. After no

response was received, FICURMA's general counsel wrote a second

time on February 14, 2005, attaching another copy of the

January 7 , 2005, letter. Neither of these letters asked about

Mr. Donatelli's prior telephonic inquiry regarding whether

FICURMA was assessable at all because of its status as an entity

formed under section 624.4623.

14. Ms. Vlasak responded in writing after the second

written inquiry by FICURMA's general counsel that addressed the

propriety of the SDTF assessments. Ms. Vlasak stated the

Department's position that assessments were to continue to all

assessable entities, even though the SDTF was being

prospectivel y abolished. Ms. Vlasak concluded, therefore, that

FICURMA "is not exempt" from the SDTF assessments. Ms. Vlasak's

letter dated February 16, 200[5], 4/ responded only to the written

inquiry in the January 7, 2005, letter and February 14, 2005,

reminder le tter and, thus, addressed only the limited question

about SDTF assessments.

15. Thereafter, until 2009, FICURMA had no further

telephonic or written communications with the Division about

FICURMA's assessability. Instead, FICURMA fell into the pattern

of making quarterly premium reports and assessment payments,

pursuant to notice by the Department. In total, FICURMA's

payments received by the Department in 2005 and 2006 add up to

$288,607.32 in SDTF assessments and $63,164.70 in WCATF

assessments. The b reakdown of assessment payments credited by

quarter is as follows:

2003, Q 4 (received 1 - 11 - 05) 2004, Q 1 (received 1 - 11 - 05)

SDTF: $7,652.36 SDTF: $22,957.34

WCATF: $2,962.75 WCATF: $ 7,618.49

2004, Q 2 (received 1 - 11 - 05) 2004, Q 3 (received 1 - 11 - 05)

SDTF: $23,685.39 SDTF: $23,685.39

WCATF: $ 7,8 60.20 WCATF: $ 7,860.19

2004, Q 4 (received 2 - 10 - 05) 2005, Q 1 (received 5 - 2 - 05)

SDTF: $25,543.10 SDTF: $29,258.54

WCATF: $ 8,476.00 WCATF: $ 4,854.45

2005, Q 2 (received 7 - 29 - 05) 2005, Q 3 (received 11 - 1 - 05)

SDTF: $29,258.54 SDTF: $29,350.54

WCA TF: $ 4,854.45 WCATF: $ 4,854.85

2005, Q 4 (received 2 - 2 - 06) 2006, Q 1 (received 5 - 1 - 06)

SDTF: $27,193.93 SDTF: $23,340.73

WCATF: $ 4,527.53 WCATF: $ 3,098.33

2006, Q 2 (received 7 - 26 - 06) 2006, Q 3 (received 10 - 27 - 06)

SDTF: $23 ,340.73 SDTF: $23,340.73

WCATF: $ 3,098.33 WCATF: $ 3,098.33

16. In 2007, 2008, and part of 2009, FICURMA continued

these quarterly payments pursuant to notice by the Department,

paying quarterly assessments to the SDTF t otaling $363,441.86

and to the WCATF totaling $31,132.88.

17. In the 2009 legislative session, the adoption of a new

law authorizing another type of self - insurance fund contained

language that caused Ms. Vlasak to question whether certain

other self - insur ance funds authorized under different statutes

were assessable under sections 440.49 and 440.51.

18. The 2009 law, codified in section 624.4626, Florida

Statutes (2009), specifically provided that a "self - insurance

fund that meets the requirements of th is section is subject to

the assessments set forth in ss. 440.49(9), 440.51(1), and

624.4621(7), but is not subject to any other provision of

s. 624.4621 and is not required to file any report with the

department under s. 440.38(2)(b) which is uniquely req uired of

group self - insurer funds qualified under s. 624.4621."

(Emphasis added).

19. In contrast, section 624.4623, the statute under which

FICURMA was formed, contained the following language: "An

independent education institution self - insurance fund that meets

the requirements of this section is not subject to s. 624.4621

and is not required to file any report with the department under

s. 440.38(2)(b) which is uniquely required of group self - insurer

funds qualified under s. 624.4621." (Emphasis added ).

20. Ms. Vlasak asked the Division's legal office to

analyze the legal question and give advice. Meanwhile,

Ms. Vlasak and her supervisor, Mr. Lloyd, agreed that the

standard quarterly assessment notices would not be sent to

FICURMA, so that the Depart ment could consider the question of

its assessability after receiving advice from its legal office.

By not sending the notices, the clock would not start on the

deadlines for FICURMA to pay the assessments without imposition

of a statutory penalty for lat e payment.

21. FICURMA, however, had been well - conditioned to expect

those quarterly notices and became concerned when the expected

notices did not arrive. Mr. Donatelli and his assistant, Joanne

Hansen, called Ms. Vlasak several times to ask why nothing had

been received yet. They ultimately spoke with Ms. Vlasak, who

advised that the Department was reviewing whether FICURMA was

assessable, and it did not have to worry about not receiving the

notices because payments would not be due until after the

not ices were received.

22. On October 1, 2009, the Department's legal staff

issued a Memorandum of Opinion regarding independent education

institution self - insurance funds (like FICURMA), authorized by

section 624.4623. This opinion analyzed section 624.462 3, as

well as the statutory terms used to identify which entities are

subject to assessments in section 440.49 (for the SDTF) and

section 440.51 (for the WCATF). Based on that analysis, the

opinion concluded that self - insurance funds qualifying under

sect ion 624.4623 (like FICURMA), are not subject to SDTF or

WCATF assessments. Although the analysis was prompted by a

different self - insurance fund statute adopted in 2009, the

conclusion reached as to section 624.4623 entities would apply

to the entire time period since the adoption of section 624.4623

in 2003.

23. The Department witnesses testified unequivocally that

the legal opinion was advisory only, and it was up to the

administration to make the policy decision to follow the advice

given. However, it is difficult to discern any "policy" choice

to be made, since the plain import of the opinion was that the

statutes were not susceptible to any different interpretation

other than that section 624.4623 entities were not subject to

SDTF or WCATF assessme nts.

24. Nonetheless, the legal opinion was reviewed, and ,

ultimately , the Department agreed with the advice. On

November 14, 2009, Ms. Vlasak and Mr. Lloyd called Mr. Donatelli

to advise that FICURMA was not required to pay SDTF or WCATF

assessments any more. In addition, they discussed how FICURMA

could go about requesting refunds of assessments previously

paid. However, they alerted FICURMA to the fact that section

215.26 could present a problem with respect to requests for

refunds of payments made mo re than three years ago. At the time

of this conversation, all of the assessments paid in 2005 and

2006 had been made more than three years ago, while the payments

made in 2007 - 2009 were within the three - year window.

25. On January 12, 2010, Ms. Vlasak w rote to FICURMA,

sending the forms for applying for refunds. In the letter, she

reiterated the potential problem for refund requests of payments

made more than three years ago. Accordingly, she recommended

that FICURMA submit separate requests for paymen ts made within

the last three years versus those made more than three years

ago, as the former would be able to go through more easily .

26. FICURMA completed four separate refund application

forms: one for SDTF payments made in 2005 and 2006; one for

WCA TF payments made in 2005 and 2006; one for SDTF payments made

in 2007 - 2009 ; and one for WCATF payments made in 2007 - 2009 . The

refund forms state that the refund requests are submitted

pursuant to section 215.26; FICURMA did not fill in the blank

that is r equired to be filled in if the refund requests were

being submitted under any other statute besides section 215.26.

The applications were dated January 20, 2010, and were received

by the Department on January 21, 2010.

27. The Department approved the ref und applications for

payments made in 2007 - 2009 and caused warrants to be issued to

FICURMA to refund $363,441.86 for SDTF assessments and

$31,132.88 for WCATF assessments. By authorizing refunds of

assessments paid in 2007, 2008, and 2009, the Department has

acknowledged that FICURMA should never have been assessed under

sections 440.49 and 440.51 and should never have been served

annually with the Orders Setting Assessment Rates or quarterly

with assessment notices. The Department acknowledged FICURMA's

entitlement to refunds despite FICURMA's failure to challenge

the assessments in 2007, 2008, and 2009 pursuant to the Notice

of Rights provided annually.

28. However, as warned, on May 12, 2010, the Department

issued a Notice of Intent to Deny Applicatio ns for refund of the

2005 and 2006 payments to the SDTF and the WCATF. The sole

reason for the denial was that section 215.26(2) required that

refund applications be filed within three years after the right

to the refund accrued "or else the right is barr ed." The

Department noted -- as stated on the refund application form -- that

the three - year period normally commences when the payments are

made.

29. No evidence was presented regarding what are

considered "normal" circumstances or what sort of not - normal

c ircumstances would have to be shown to establish that the

three - year period in section 215.26(2) would commence at some

other point in time, rather than when payments are made.

CONCLUSIONS OF LAW

30. The Division of Administrative Hearings has

jurisdictio n over the parties and the subject matter of this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2010).

31. At issue in this case is whether Petitioner's

applications for refunds of assessments that Petitioner was

never required to pay should be approv ed or denied. As the

applicant, Petitioner is asserting the affirmative of the issue

and, therefore, bears the burden of proof. See Fla. Dep't of

Transp. v. J.W.C. Co., Inc. , 396 So. 2d 778 (Fla. 1st DCA 1981)

(burden of proof is generally on the party a sserting the

affirmative of the issue). The parties are in agreement with

this allocation of the burden of proof.

32. FICURMA has not argued that section 215.26 is

inapplicable to this case. In pertinent part, that statute

provides:

(1) The Chief Fina ncial Officer may

refund to the person who paid same, or his

or her heirs, personal representatives, or

assigns, any moneys paid into the State

Treasury which constitute:

(a) An overpayment of any tax, license,

or account due;

(b) A payment where no tax, license, or

account is due; and

(c) Any payment made into the State

Treasury in error;

and if any such payment has been credited to

an appropriation, such appropriation shall

at the time of making any such refund, be

charged therewith. The re are appropriated

from the proper respective funds from time

to time such sums as may be necessary for

such refunds.

(2) Application for refunds as provided

by this section must be filed with the Chief

Financial Officer, except as otherwise

provided in this subsection, within 3 years

after the right to the refund has accrued or

else the right is barred. . . . The Chief

Financial Officer may delegate the authority

to accept an application for refund to any

state agency, or the judicial branch, vested

by law with the responsibility for the

collection of any tax, license, or account

due. The application for refund must be on

a form approved by the Chief Financial

Officer and must be supplemented with

additional proof the Chief Financial Officer

deems n ecessary to establish the claim;

provided, the claim is not otherwise barred

under the laws of this state. Upon receipt

of an application for refund, the judicial

branch or the state agency to which the

funds were paid shall make a determination

of the am ount due. If an application for

refund is denied, in whole or in part, the

judicial branch or such state agency shall

notify the applicant stating the reasons

therefor. Upon approval of an application

for refund, the judicial branch or such

state agency shall furnish the Chief

Financial Officer with a properly executed

voucher authorizing payment.

33. FICURMA admits that its refund requests for

assessments received in 2005 and 2006 were not made within three

years after those payments were made. 5/ Howe ver, FICURMA

contends that the Department should be equitably estopped from

denying those refunds. FICURMA bears the burden of proving the

elements of equitable estoppel by clear and convincing evidence.

See , e.g. , Hoffman v. Fla. Dep't of Mgmt. Servs ., 964 So. 2d

163, 166 (Fla. 1st DCA 2007).

34. As a threshold matter, the Department argues that

because section 215.26 is a non - claim statute, and not merely a

statute of limitations, equitable estoppel cannot apply. The

Department relies on State ex. rel . Victor Chemical Works

v. Gay , 74 So. 2d 560, 562 (Fla. 1954), in which the Florida

Supreme Court determined that section 215.26 "is not, strictly

speaking, a statute of limitations but is more in the nature of

a statute of nonclaim." As such, the Court held:

A refund is a matter of grace and if the

statute of non - claim is not complied with,

the statute becomes an effective bar in law

and in equity.

The Court quoted with approval the following from an earlier

Florida Supreme Court case discussing non - cl aim statutes:

[T]he Court is powerless to change the

words and clear meaning of the nonclaim

statute . . . The contention then that

equity and good conscience require that the

appellant not lose his claim, while very

appealing, does not authorize us to ch ange

the statute . . . .

Id. at 563.

35. The Victor Chemical Works case did not involve a claim

of equitable estoppel; the "equity" argument raised there was

that the claimant's refund request should not be barred because

taxes were paid under a stat ute later held to be

unconstitutional in a lawsuit brought by a different taxpayer.

The claimant argued that the time period in section 215.26

should run from when the statute was declared unconstitutional

and not from the time the claimant paid the taxes , because the

claimant did not know then that it had a right to a refund.

36. Equitable estoppel was squarely raised in Hardy, Hardy

& Assoc., Inc. v. State, Dep't of Revenue , 308 So. 2d 187 (Fla.

1st DCA 1975). In that case, the court described a disa greement

between the appellant taxpayer and the Comptroller's Office

regarding whether the appellant was required to pay intangible

taxes. The Comptroller's Office advised the taxpayer to pay the

tax bill in order to avoid payment of interest penalties. The

appellant paid the taxes in question in 1968 and 1969, but later

filed suit in circuit court to resolve the dispute over whether

the taxes were lawful and to obtain a refund of taxes it claimed

were unlawfully paid. The litigation languished for years . In

1973, the Department of Revenue filed an answer and raised as an

affirmative defense that the taxpayer had not requested a refund

pursuant to section 215.26, hence the claim for refund of taxes

paid four and five years earlier was barred. The trial court

entered a final judgment determining that the taxes were

illegal, but that the taxpayer's refund claim was barred because

the taxpayer did not timely request a refund. On appeal, the

First District Court of Appeal reversed:

The trial court applied t he holding of the

Supreme Court of Florida in State ex rel.

Tampa Electric Company v. Gay , 40 So.2d 225

(Fla. 1949)[applying section 215.26 to bar

refunds of taxes paid more than one year

before refund requests were filed] as

controlling on the question. . . . We take

a different slant on the facts of the case

sub judice, and without flying in the face

of the Tampa Electric case supra, we

determine that the conduct of the employees

or agents of the State of Florida, as

contained in the filed letters betwee n the

taxpayer and the State Agencies amounted to

a complete estoppel for the State or any of

its agencies, to claim as an affirmative

defense the lack of a formal or timely

application for refund.

Id. at 189.

37. The Hardy decision is binding appellate l aw, at least

within the First District , 6/ on the question of whether equitable

estoppel can apply to permit a refund that would otherwise be

time - barred under section 215.26(2). Therefore, the elements of

equitable estoppel will be examined.

38. The eleme nts of equitable estoppel, which must be

proven by clear and convincing evidence, are: (1) a

representation as to a material fact that is contrary to a later

asserted position; (2) reliance on that representation; and

(3) a change in position detrimental t o the party claiming

estoppel, caused by the representation and reliance thereon.

State Dep't of Rev. v. Anderson , 403 So. 2d 397, 400 (Fla.

1981); Associated Indus. Ins. Co. v. State, Dep't of Labor and

Emp. Sec. , 923 So. 2d 1252, 1255 (Fla. 1st DCA 2006 ). In

addition, equitable estoppel may only be successfully invoked

against a governmental agency in rare and exceptional

circumstances, as shown by two additional elements: (4) conduct

by the government that goes beyond mere negligence and that will

cau se serious injustice; and (5) proof that application of

estoppel will not unduly harm the public interest. Id.

39. As the court acknowledged in Associated Industries ,

supra , "Equitable estoppel has been most frequently invoked

against government agencies in cases in which the government has

either made affirmative representations or knowingly acquiesced

in plaintiff's conduct." Id. Among other cases cited as

authority for this statement was the First District's earlier

decision in Hardy , supra .

40. In th is case, Petitioner met its burden of proving by

clear and convincing evidence that the Department made

"affirmative representations." The Department represented its

position that all self - insurers were subject to assessments and

demonstrated its leap to the conclusion that FICURMA was an

assessable self - insurer by sending FICURMA letters requiring

registration, orders establishing the assessment rates, and

notices that FICURMA was required to submit reports, calculate

assessments, and pay them, subject to penalty.

41. However, the Department's affirmative representations

that FICURMA was an assessable self - insurer, as well as the

Department's subsequent retreat from those affirmative

representations to conclude that FICURMA was not an assessable

self - insur er, were representations of law, not of fact.

42. This is most evident from the analysis done when the

Department focused on the actual legal question of whether an

entity, such as FICURMA, formed under section 624.4623, was a

"self - insurer" as that term i s used in sections 440.49 and

440.51, the assessment statutes. The analysis is a

straightforward statutory interpretation of the terms used in

the assessment statutes and the definitions provided for those

terms.

43. The Department's prior position, thou gh not

analytical, was a legal position, nonetheless. Certainly the

Department should not have concluded that all "self - insurers,"

as that term is commonly understood, were subject to assessments

under section s 440.49 and 440.51. Certainly, the Departmen t

should have considered the specific, narrower meaning codified

in the statutory definition of "self - insurer" in section

440.02(24) in formulating its legal position. Once the

Department analyzed its position, it acted reasonably quickly 7/

to announce it s retreat from its prior position and to assist

FICURMA with refund requests to the extent permitted by section

215.26(3). While it would have been far preferable if this

analysis occurred sooner, the Department at least deserves

credit for undertaking th e analysis when it did in 2009 and then

volunteering its change of position to FICURMA.

44. FICURMA's proof also fails with respect to "reliance,"

the second estoppel element. As described in Associated

Industries , the estoppel element of reliance include s an

examination of whether the party asserting estoppels had the

right to rely on the representations made. Associated Indus. ,

923 So. 2d at 1256. In this case, the Department's

representations were conditional in that each time FICURMA was

served with the Department's Orders Establishing Assessment

Rates and notices directing payment of assessments, FICURMA was

given a Notice of Rights, offering it the right to petition for

an administrative hearing to challenge the Department's action.

45. In this reg ard, Hardy is distinguishable. There is no

hint in the Hardy opinion that the taxpayer was ever given

notice of the right to administratively challenge its "tax bill"

or that the taxpayer was ever given notice that its failure to

file such a challenge wit hin a specific window of time would

result in waiver of the right to challenge the agency action.

There was no hint that the taxpayer there waived multiple clear

points of entry; indeed, that case predated the modern

Administrative Procedure Act (APA). I n contrast, FICURMA was

given multiple clear points of entry to challenge the intended

agency action to require payment of the assessments in 2005 and

2006. Thus, the Department's representations that FICURMA was

subject to SDTF and WCATF assessments and was required to pay

were expressly subject to the caveat that if FICURMA disagreed,

it had 21 days in which to file a petition for an administrative

hearing. FICURMA had the right to challenge the Department's

conditional representations, but FICURMA did not have the right

to rely on those conditional representations without challenging

them.

46. Thus, even if Hardy stands for the proposition, at

least in the first appellate district, that equitable estoppel

may in a rare case defeat the bar that would ot herwise apply

from failure to timely apply for a refund pursuant to section

215.256; FICURMA has failed to show that the circumstances here

constitute such a rare case. On this particular point, this

case is more like Associated Industries , where the cour t noted

that one reason why the appellant's reliance on claimed

representations did not satisfy the reliance element of

equitable estoppel was because the appellant never sought to

confirm (or challenge) the agency's representations by using the

modern APA 's "impressive arsenal of varied and abundant remedies

for administrative error." Associated Indus. , 923 So. 2d at

1258, quoting State ex rel. Dep't of Gen. Servs. v. Willis , 344

So. 2d 580, 590 (Fla. 1st DCA 1977).

47. FICURMA did prove, clearly and co nvincingly, that it

changed its position to its detriment, as required for the third

element of estoppel. Surely, FICURMA acted to its detriment by

paying SDTF assessments and WCATF assessments when FICURMA never

had the legal obligation to do so under a proper analysis of the

assessment statutes and FICURMA's authorizing statute. Just as

plainly, FICURMA's 2005 and 2006 payments cannot be recouped,

because of the erroneous representations made by the Department.

Though FICURMA's right to rely on the Dep artment's

misrepresentations of law has not been established, FICURMA's

change of position to its detriment cannot be seriously

questioned.

48. For similar reasons, the undersigned is compelled to

conclude that the Department's actions go beyond mere negl igence

and do result in serious injustice. It is beyond negligent for

a state agency to superficially apply its statutes without any

examination or analysis of the statutory definitions of terms

used in those statutes. The Department does a serious

injus tice, as the administrator of trust funds whose costs are

supposed to be borne by specific entities, by cavalierly

ignoring the legislative directives as to which specific

entities are to bear those costs via assessments. FICURMA, as

an entity that was su pposed to be excluded from those

assessments, but was not because of the Department's actions, is

the bearer of that serious injustice.

49. Finally, the undersigned rejects the Department's

suggestion that the public interest would not be served by

corr ecting the serious injustice wrought by the Department's

prior position that ignored the statutes the Department was

supposed to faithfully administer. The Department waxes poetic

about the strong public interest served by the SDTF and the

WCATF, but in s o doing, the Department completely misses the

point. The SDTF and the WCATF are creatures of statute. The

Legislature directed the Department to levy assessments on

specific entities to bear the costs of these two trust funds.

It is contrary to the publ ic interest of these two funds, as

defined by the Legislature, for the Department to impose

assessments on entities that the Legislature chose to exclude

from bearing the costs of the trust funds.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is hereby

RECOMMENDED that Respondent, Department of Financial

Services , Division of Workers' Compensation , enter a final order

denying the requests for refunds of SDTF and WCATF assessments

paid by Petitioner, FICURMA, Inc., i n 2005 and 2006, because

Petitioner's requests are time - barred by section 215.26(2) and

because Petitioner has not met its burden of proving that

equitable estoppel should be applied against Respondent.

DONE AND ENT ERED this 8th day of July , 2011 , in

Talla hassee, Leon County, Florida.

S

ELIZABETH W. MCARTHUR

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850 ) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 8th day of July , 2011 .

ENDNOTES

1/ Unless otherwise indicated, all references to the Florida

Statutes are to the 2009 version, the law in effect when FICURMA

filed its refund requests. There were no material changes to

section 215.26 over the years in which FICURMA was paying

assessments.

2/ The parties stipulated that Petitioner's Exhibits 26 through

28 were part of a single mailing from the Departm ent to FICURMA

and that a Notice of Rights identical to the last page of Joint

Exhibit 20 was included with this mailing, but was inadvertently

omitted from the tendered exhibits. Similarly, the parties

stipulated that Petitioner's Exhibits 29 through 31 were part of

a single mailing from the Department to FICURMA and that a

Notice of Rights identical to the last page of Joint Exhibit 20

was included with this mailing, but was inadvertently omitted

from the tendered exhibits. Therefore, the parties stipul ated

that the undersigned should find that these two mailings each

included a Notice of Rights in the form shown in Joint

Exhibit 20.

3/ On May 31, 2011, Petitioner filed a Request for Judicial

Notice of FICURMA's Articles of Incorporation and Bylaws, w hich

were attached. This request is denied, although it is noted

that the Articles of Incorporation are already in the record as

part of Petitioner's Exhibit 33. FICURMA's corporate bylaws

would not be appropriate for official recognition , even if the

re quest were timely. Petitioner's request is a belated attempt

to add a new exhibit long after the evidentiary record in this

proceeding has closed . The general rule is that the record

should not be reopened after the final hearing to receive

additional ev idence. Collier Med. Ctr. v. Dep't of HRS , 462

So. 2d 83, 86 (Fla. 1st DCA 1985). Further, this rule may not

be circumvented by using the device of official recognition,

because under the Administrative Procedure Act, matters

officially recognized become part of the record from which

findings of fact may be made. See § 120.57(1)(j), Fla. Stat.

(2010)("Findings of fact . . . shall be based exclusively on the

evidence of record and on matters officially recognized"); cf.

Lawnwood Med. Ctr., Inc. v. Ag. for Health Care Admin. , 678 So.

2d 421, 425 (Fla. 1st DCA 1996). Petitioner claimed no

compelling, extraordinary circumstances to support its belated

request to reopen the record for official recognition of

material that should have been presented before or at the final

hearing.

In addition, on June 14, 2011, Petitioner filed exceptions

to Respondent's Proposed Recommended Order, relying on Florida

Administrative Code Rule 28 - 106.217. However, that rule

authorizes parties to file exceptions to recommend ed orders, to

be filed with the agency with final order authority, and not

with DOAH; this rule does not authorize parties to file

exceptions with DOAH to proposed recommended orders. The

undersigned entered an order, sua sponte , striking that filing

as a n unauthorized pleading that would not be reviewed or

considered.

4/ The parties stipulated that Ms. Vlasak's response letter

contained a typographical error in the date, in that it was

dated February 16, 2004, but the actual date of the letter was

Febru ary 16, 2005, as is obvious from the context.

5/ Section 215.26(2) provides that application for refund must

be made "within 3 years after the right to the refund has

accrued or else the right is barred." FICURMA did not argue

that its right to refund a ccrued at any time other than the time

it made its payments such that the three - year period began to

run from the date of each quarterly payment. In a dissenting

opinion in State ex rel. Victor Chemical Works v . Gay , 74 So. 2d

560, 567 (Fla. 1954), Justic e Hobson, joined by Justice Drew,

opined that if the legislature intended that the time period

(then one year, instead of three years) begins to run from the

date of payment, it could have said so, suggesting some other

meaning was intended for when "the r ight to the refund has

accrued , " such as when the claimant knows it has the right to a

refund. Nonetheless, that argument did not carry the day in

that case. More recent decisions interpreting section 215.26

follow the holding of Victor Chemical Works th at the right to a

refund accrues on the date of payment. See , e.g. , Dep't of Rev .

v. Nemeth , 733 So. 2d 970, 972 (Fla. 1999) ("Under Victor

Chemical , the right to the refund accrued on the date the

Nemeths paid the tax.").

6/ The Fourth District Court o f Appeal, in Continental Fl a.

Partners, Ltd. v. Dep't of Revenue , 732 So. 2d 470 (Fla. 4th DCA

1999), affirmed, per curiam , a Department of Revenue final order

on the authority of State ex rel. Victor Chemical Works v. Gay ,

74 So. 2d 560 (Fla. 1954), and c ertified conflict with Hardy ,

Hardy & Assoc . , Inc. v. State, Dep't of Revenue , 308 So. 2d 187

(Fla. 1st DCA 1975). While no facts are stated, it seems likely

that the conflict certified was whether equitable estoppel was

available to permit a refund of a claim that otherwise would be

time - barred pursuant to section 215.26(2). However, the

certified conflict was not resolved by the Florida Supreme

Court.

7/ FICURMA seems to take the position that the legal opinion by

Division attorneys, issued on October 7, 2009, either was self -

executing or should have been instantly adopted by the

Department and communicated to FICURMA, so that FICURMA could

have immediately filed refund requests. However, no evidence

was presented that the Department was acting in bad faith or

purposely dragged its heels in accepting and acting on the legal

advice given in the October 7, 2009, memorandum. While as noted

in the Findings of Fact above, there did not appear to be any

real "policy decision" to be made, it would not be unr easonable

for the Department to take the time to assess the legal

memorandum and to confer with its attorneys, before accepting

the legal advice as correct. Thus, it cannot be concluded that

the Department took an unreasonably long time before calling

FIC URMA on November 14, 2009, to announce the Department's

changed position. FICURMA would have had to file its refund

requests by October 27, 2009, in order to be entitled to refunds

of the next most recent assessment payments, $26,439.06, made

and received on October 27, 2006.

COPIES FURNISHED :

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

Samuel Dean Bunton, Esquire

Department of Financial Servi ces

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

Donovan A. Roper, Esquire

Roper and Roper, P.A.

116 North Park Avenue

Apopka, Florida 32703

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.