13-002097F Herbert R. Slavin, M.D. vs. Department Of Health, Board Of Medicine Status: Closed DOAH Final Order on Friday, September 27, 2013.

Summary: Petition for attorney's fees denied where applicant failed to demonstrate status as a small business party.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HERBERT R. SLAVIN, M.D. ,

Petitioner ,

vs. Case No. 13 - 2097F

DEPARTMENT OF HEALTH, BOARD OF

MEDICINE ,

Respondent .

/

FINAL ORDER

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

before Edward T. Bauer, an Administrative Law Judge of the

Division of Administrative Hearings, on August 14, 2013, by video

teleconference at sites in Tallahassee and Lauderdale Lakes,

Florida.

APPEARANCES

For Petitioner: An drea L. Wolfson, Esquire

Wolfson & Konigsburg, P.A.

4491 South State Road 7, Suite 314

Davie, Florida 33314

For Respondent: Sharmin R. Hibbert, Esquire

Lealand L. Mc Charen, Esquire

Department of Health

4052 Bald Cypress Way, Bin C65

Tallahassee, Florida 32399 - 3265

STATEMENT OF THE ISSUE

Whether Petitioner, Dr. Herbert R. Slavin, is entitled to an

awa rd of attorney's fees and costs in an amount not exceeding

$50,000 pursuant to section 57.111, Florida Statutes (2011).

PRELIMINARY STATEMENT

On October 31, 2011, the Department of Health ("the

Department") filed a two - count Administrative Complaint

("Comp laint") against Dr. Herbert R. Slavin. In Count I of the

Complaint, the Department alleged that Dr. Slavin violated

section 458.331(1)(t), Florida Statutes, in that his treatment of

a patient fell below the appropriate standard of care. The

Department fu rther alleged, in Count II of the Complaint, that

Dr. Slavin failed to supervise properly the activities of his

physician assistant, contrary to section 458.331(1)(dd).

Respondent timely requested a formal hearing to contest the

allegations, and, on Janua ry 6, 2012, the cause was referred to

the Division of Administrative Hearings ("DOAH") and assigned

Case No. 12 - 0079PL. The matter was subsequently transferred to

the undersigned, who conducted a final hearing on June 22 and

September 14, 2012.

In a Recom mended Order dated January 7, 2013, the

undersigned concluded that Counts I and II of the Complaint

should be dismissed. See Dep't of Health v. Slavin , Case

No. 12 - 0079PL (Fla. DOAH Jan. 7, 2013)(finding, with respect to

Count I, that the Department faile d to adduce clear and

convincing evidence that Dr. Slavin violated the standard of

care; concluding that the Department had abandoned Count II). On

April 19, 2013, the Board of Medicine entered Final Order

No. 2010 - 06064, which adopted the Findings of Fac t and

Conclusions of Law contained in the Recommended Order.

On June 11, 2013, Dr. Slavin filed, through counsel, a

"Motion for Attorney's Fee[s] and Costs Pursuant to [the] Equal

Access to Justice Act, [section] 57.111[,] [Florida Statutes]

(2011)," which alleged: that Dr. Slavin prevailed in the

underlying administrative proceeding (DOAH Case No. 12 - 0079PL);

that Dr. Slavin qualifies as a "small business party," as that

term is defined by section 57.111; and that the underlying

proceeding lacked substant ial justification at the time it was

initiated. In its "Response to Initial Order," filed on July 1,

2013, the Department disputed Dr. Slavin's status as a small

business party and asserted, further, that the underlying action

was substantially justified. The Department conceded, however,

that an award of $50,000.00 (the statutory maximum) would be

reasonable if the underlying action were found to lack

substantial justification, and if Dr. Slavin proved his status as

a small business party.

The final hear ing commenced on August 14, 2013, during which

Dr. Slavin testified on his own behalf and introduced five

exhibits, numbered 1 through 5. The Department, which called no

witnesses, introduced two exhibits, numbered 1 and 2. At the

conclusion of the heari ng, the undersigned granted Dr. Slavin's

request to extend the deadline for the submission of proposed

final orders to 20 days from the filing of the transcript.

The final hearing Transcript was filed with DOAH on

August 29, 2013. Both parties submitted p roposed final orders,

which the undersigned has considered in the preparation of this

Final Order.

Unless otherwise noted, all references to the Florida

Statutes are to the 2011 codification.

FINDING S OF FACT

1. Dr. Slavin, a licensed physician who specia lizes in

internal medicine, has practiced in the state of Florida since

1981. In or around 2008, Dr. Slavin formed, and is the sole

shareholder of, "Ageless Medicine Associates," a subchapter

S corporation 1 / under which he practices medicine.

2. On Octob er 31, 2011, the Department filed an

Administrative Complaint that charged Dr. Slavin with two

statutory violations, both of which were ultimately dismissed by

the Board of Medicine. In connection with that proceeding,

Dr. Slavin now seeks an award of att orney's fees and costs

pursuant to section 57.111.

3. As explained later in this Final Order, a party seeking

fees and costs pursuant to section 57.111 must demonstrate that

he or she was a "small business party" at the time the underlying

action was init iated by the state ÏÏ in this instance, October 31,

2011. Section 57.111(3)(d) contemplates that a small business

party can take four alternative forms, only two of which require

discussion here: a partnership or corporation, including a

professional pract ice, that, during the relevant timeframe, had

25 or fewer full - time employees or a net worth of not more than

$2,000,000 (section 57.111(3)(d)1.b . ); or an individual whose net

worth did not exceed $2,000,000 during the relevant period

(section 57.111(3)(d) 1.c . ).

4. The evidence establishes that, as of October 2011,

Ageless Medicine Associates had fewer than 25 employees and a net

worth that did not exceed $2,000,000. The problem, though, and

as discussed elsewhere in this Order, is that section

57.111(3)( d)1.b . has no application where, as in this case, the

underlying complaint was filed against a licensee individually,

rather than the partnership or corporation under which the

licensee conducts business.

5. As for Dr. Slavin's personal finances, his 2011 tax

return reflects income of $171,810, virtually all of which

comprises wages and business income derived from Ageless Medicine

Associates, and an adjusted gross income of $161,400. The

remainder of Dr. Slavin's financial picture (including, for

example , any assets on hand that did not generate taxable income)

during October 2011 is nebulous, however, for nearly all of his

testimony focused incorrectly on his finances at the time of the

final hearing :

Q. Are you, doctor, currently worth

$2,000,000?

A. No.

* * *

Q. Dr. Slavin, do you own a home?

A. Yes.

Q. How much, if you know, is that home

worth?

A. Probably around $300,000 to $350,000.

Q. And do you have a mortgage on that home?

A. Yes.

Q. How much is the mortgage; do you know?

A. $1 45,000.

Q. And do you have any cash in the bank?

A. Yes.

Q. How much?

A. Around $10,000 . . . .

* * *

Q. Do you own any boats?

A. No.

Q. Do you own any vacation homes?

A. No.

Q. Do you own any interest in any other

businesses?

A. No.

Q. Do you have a lot of stock accounts?

A. No.

* * *

Q. Okay. Is there any other asset that you

have that has not been mentioned; your home,

your business? Do you own your vehicles?

A. No, they're leased.

Q. Do you own any other stocks or bonds that

provide you with an income or that are worth

money, that you know of?

A. No.

* * *

Q. Dr. Slavin, you testified that -- You

were asked by counsel whether or not you had

a lot of stocks or bonds as assets and you

stated no. Do you -- what does a lot mean?

A. Well, I have -- I don't have any direct

ownership of stocks or bonds. There are some

annuities I have that have, I guess,

investments and mutual funds or something.

You know, I'm not - Î

* * *

Q. Dr. Slavin, have you presented any

info rmation or any documentation as to what

items are within your home?

A. Not that I'm aware of. I have a

television, --

Q. Do you have --

A. -- a refrigerator and --

Q. Do you have furniture in your home?

A. Yeah. I have furniture, a refrigerator ,

stove, microwave. I have --

Q. Do you have computer equipment in your

home?

A. I have laptop computers in the home.

Q. Do you have any personal items; jewelry,

watches in your home?

A. I have - Î Yes, I have watches.

Final Hearing Transcript, pp . 23; 25 - 28; 30 - 31 (emphasis added).

6. Even assuming, arguendo, that Dr. Slavin's testimony had

been properly oriented to the relevant time period (which it was

not, in nearly all instances), his overall evidentiary

presentation was simply too fragmentar y to permit the undersigned

to independently determine the value of his net worth ÏÏ a figure

derived 2 / by subtracting total liabilities from total assets. For

example, Dr. Slavin provided: no information concerning his

annuities and mutual funds, the valu e of which could be non -

trivial due to the remunerative nature his profession and his

length of time in practice; no details regarding the value of his

household assets; and no credible evidence regarding the value of

his home. 3 / In light of these gaping holes in the evidence, which

preclude anything more than rank speculation concerning the value

of Dr. Slavin's personal net worth, it is determined that status

as a small business party has not been proven. 4 /

7. Because Dr. Slavin's failure to establish h is status as

a small business party is fatal to his application for attorney's

fees, it is unnecessary to determine whether the underlying

proceeding was substantially justified.

CONCLUSIONS OF LAW

8 . The Division of Administrative Hearings has personal a nd

subject matter jurisdiction in this proceeding pursuant to

sections 57.111(4), 120.569, and 120.57(1), Florida Statutes.

9. Section 57.111, also known as the Florida Equal Access

to Justice Act ("FEAJA"), provides, in relevant part, as follows:

Unless otherwise provided by law, an award of

attorney's fees and costs shall be made to a

prevailing small business party in any

adjudicatory proceeding or administrative

proceeding pursuant to chapter 120 initiated

by a state agency, unless the actions of the

a gency were substantially justified or

special circumstances exist which would make

the award unjust.

§ 57.111(4)(a), Fla. Stat.

10. In proceedings to establish entitlement to an award of

attorney's fees and costs pursuant to section 57.111, the initial

b urden of proof is on the party requesting the award to

demonstrate by a preponderance of the evidence that he or she :

(1) prevailed in the underlying action; and (2) was a small

business party at the time the underlying cause was initiated.

Should the pa rty seeking the award satisfy these elements, the

burden shifts to the agency to prove that it was substantially

justified in initiating the underlying action or that special

circumstances exist that would make an award unjust. See Dep't

of HRS v. S. Beac h Pharmacy , 635 So. 2d 117, 121 (Fla. 1st DCA

1994)(" [ O ] nce a prevailing small business party proves that it

qualifies as such under section 57.111, the agency that initiated

the . . . underlying proceeding has the burden to show

substantial justification or special circumstances"); Dep't of

Prof'l Reg., Div. of Real Estate v. Toledo Realty, Inc. , 549 So.

2d 715, 718 (Fla. 1st DCA 1989).

11. It is undisputed that Dr. Slavin prevailed in the

underlying proceeding; the issue, therefore, is whether he

qualifi es as a small business party pursuant to

section 57.111(3)(d), which reads:

(d) The term "small business party" means:

1.a. A sole proprietor of an unincorporated

business, including a professional practice,

whose principal office is in this state, who

is domiciled in this state, and whose

business or professional practice has, at the

time the action is initiated by a state

agency, not more than 25 full - time employees

or a net worth of not more than $2 million,

including both personal and business

invest ments;

b. A partnership or corporation, including a

professional practice, which has its

principal office in this state and has at the

time the action is initiated by a state

agency not more than 25 full - time employees

or a net worth of not more than $2 million;

o r

c. An individual whose net worth did not

exceed $2 million at the time the action is

initiated by a state agency when the action

is brought against that individual's license

to engage in the practice or operation of a

business, profession, or trade; or

2. Any small business party as defined in

subparagraph 1., without regard to the number

of its employees or its net worth, in any

action under s. 72.011 or in any

administrative proceeding under that section

to contest the legality of any assessment of

tax imposed for the sale or use of services

as provided in chapter 212, or interest

thereon, or penalty therefor .

( e mphasis added).

12. As Dr. Slavin is not the sole proprietor of an

unincorporated business and the underlying proceeding did not

relate to the legality of a tax assessment, two of the four

alternatives (specifically, sections 57.111(3)(d)1.a .

and 5 7.111(3)(d)2.) for establishing status as a small business

party are plainly inapplicable here. 5 / This leaves but two

possibilities: section 57.111(3)(d)1.b . , which involves

partnerships and corporations that, at the time the underlying

proceeding was in itiated, employed 25 or fewer employees or

had a net worth not exceeding $2 ,000,000 ; and/or

section 57.111(3)(d)1.c . , which relates to the holder of a

professional license whose net worth did not exceed $2 ,000,000 at

the time the underlying action was brou ght against the

individual's license.

13. Beginning with the first of the two remaining options,

it is concluded that section 57.111(3)(d)1.b . does not apply in

instances where, as here, the underlying action was filed against

the licensee individually ÏÏ a s opposed to the partnership or

corporation within which the licensee conducts business. See

Daniels v. Dep't of Health , 898 So. 2d 61, 66 (Fla. 2005). In

Daniels , the Department filed an administrative complaint against

a licensed midwife in her individ ual capacity. The complaint

stemmed from questionable treatment furnished to a patient at

"South Beach Maternity Associates, Inc.," a business organized as

a s ubchapter S corporation, and one that the licensee solely

owned. See id. at 63 - 64. Upon the De partment's subsequent

dismissal of the complaint, the licensee filed a petition for

attorney's fees and costs pursuant to section 57.111. During the

proceedings before the administrative law judge (ALJ), the

licensee argued that her corporation, which emp loyed fewer than

25 persons and had a net worth of less than $2 ,000,000 , qualified

as a small business party pursuant to section 57.111(3)(d)1.b.

In denying the request for fees, the ALJ concluded, inter alia,

that section 57.111(3)(d)1.b. was inapplicabl e because the

Department had filed the complaint against the licensee

individually. See id. at 64. The ALJ's reasoning in this regard

was ultimately adopted by the Supreme Court of Florida. Id. at

66, 68 (holding that the licensee was not included withi n section

57.111(3)(d)1.b. where the agency filed a complaint against her

as an individual and not against her corporation, notwithstanding

the fact that the licensee and the corporation were "one and the

same entity").

14. During the final hearing in thi s cause, Dr. Slavin's

counsel questioned the extent to which Daniels remains good law

in light of the 2006 revision to section 57.111, which added

subsection (3)(d) 1.c. (As noted previously, subsection

(3)(d)1.c. defines small business party to include an individual

whose net worth did not exceed $2 ,000,000 at the time the state

initiated the action against his or her license.) This revision,

however, simply amended section 57.111 to add an additional,

alternative means by which a party may attempt to est ablish small

business party status; the amendment did nothing to alter the

holding in Daniels that subsection (3)(d) 1.b. (the subsection

dealing with partnerships or corporations) is inapplicable where

the underlying action was filed against a person in h i s or her

individual capacity.

15. Accordingly, to demonstrate his status as a small

business party, Dr. Slavin's only available option was to prove,

consistent with section 57.111(3)(d)1.c., that his individual net

worth did not exceed $2,000,000 at the t ime the Department filed

its Complaint. However, and for the reasons explained

previously, Dr. Slavin failed to meet this burden. See Fields v.

United States , 29 Fed. Cl. 376, 383 (Fed. Cl. 1993)(denying

application for attorney's fees under federal anal og to section

57.111 where evidence concerning plaintiff's net worth was

incomplete and lacked specificity), aff'd , 1995 U.S. App. LEXIS

22609 (Fed. Cir. 1995); Scherr Constr. Co. v. United States ,

26 Cl. Ct. 248, 250 - 51 (Fed. Cl. 1992)(denying application for

attorney's fees where the record evidence did "not enable the

court to ascertain plaintiff's net worth, which plaintiff must

establish as a predicate for an award"); Monzon v. Dep't of Bus.

& Prof'l Reg. , Case No. 11 - 6007F, 2012 Fla. Div. Adm. Hear.

L EXIS 654 , *10 - 11 (Fla. DOAH Mar. 30, 2012)(denying application

for attorney's fees and costs pursuant to section 57.111 where

petitioner's evidence incorrectly focused on his net worth at t he

time of the final hearing).

16. As Dr. Slavin has failed to es tablish his status as a

small business party, the instant application for attorney's fees

and costs must be denied. See Fields , 29 Fed. Cl. at 384 n.6

("Because plaintiff's deficiency in proof is fatal respecting

whether he is a 'party' . . . it is, there fore, unnecessary to

reach [the issue of substantial justification]").

ORDER

It is ORDERED that Dr. Slavin shall recover nothing in this

action. The file of the Division of Administrative Hearings is

closed.

DONE AND ORDERED this 2 7 th day of September , 2 013 , in

Tallahassee, Leon County, Florida.

S

EDWARD T. BAUER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Fili ng (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 2 7 th day of September , 2013 .

ENDNOTE S

1/ As explained by the Supreme Court:

Subchapter S of the Internal Revenue Code

. . . was enacted in 19 58 to eliminate tax

disadvantages that might dissuade small

businesses from adopting the corporate form

and to lessen the tax burden on such

businesses. The statute accomplishes these

goals by means of a pass - through system under

which corporate income, l osses, deductions,

and credits are attributed to individual

shareholders in a manner akin to the tax

treatment of partnerships.

Bufferd v. Comm'r , 506 U.S. 523, 524 - 25 (1993).

2 / Although "net worth" is neither defined by section 57.111 nor

any cases applying that statute, courts interpreting the federal

counterpart to section 57.111 have held that "net worth is

calculated by subtracting total liabilities from total assets."

Broaddus v. United States Army Corps of Eng'rs , 380 F.3d 162, 167

(4th Cir. 2 004).

3 / On cross - examination by the Department's counsel, Dr. Slavin

offered an unpersuasive "guess" as to the value of his home in

October 2011:

Q. Doctor, you said that your home varies in

price from $300,000 to $350,000. Do you have

an e xact value as to how much your home is

worth?

A. It depends on what year you're talking

about.

Q. In October of 2011 . . . specifically,

how much was your home valued at?

A. Like I said -- You know, nobody's buying

it. But, if I were to guess it wou ld be

$300,000 to $350,000. . . .

Final Hearing Transcript, p. 29 (emphasis added).

4 / With respect to the question of small business party status,

Dr. Slavin's Proposed Final Order includes the following

footnote:

[I]f this Court determines that D r. Slavin

should have provided more evidence to

establish that he did not have a net worth of

less than $2,000,000, Dr. Slavin maintains

that he relied upon the representations made

by the Department of Health in its Response

to Motion for Attorney[']s Fee s . . . to his

detriment.

To the extent the foregoing passage can be read to suggest that

the Department lulled Dr. Slavin into a state of unpreparedness,

such contention is not borne out by the record. First, the

Department's Response explicitly denie d Dr. Slavin's allegation

concerning small business party status, albeit with a caveat that

the Department's position could change in the future. See

July 1, 2013, Response to Initial Order, p. 2. In any event, the

Joint Pre - hearing Stipulation (filed ne arly five weeks after the

Department submitted its Response to the Motion for Attorney's

Fees) clearly identifies, as an issue of law and fact that

remained to be litigated, Petitioner's status as a small business

party. See August 5, 2013, Joint Pre - hear ing Stipulation, p. 6.

Dr. Slavin's argument is also refuted by an exchange that

occurred at the outset of the final hearing, during which his

counsel acknowledged, without any hesitancy or qualification,

Dr. Slavin's burden to prove his status as a small business

party:

THE HEARING OFFICER: Okay. All right. So,

the parties agree that Dr. Slavin was a

prevailing party.

So, the issues are, number one, does he

qualify as a small business party. That

would be his burden to demonstrate. And, if

he can m eet that burden then the State would

need to prove that their actions were

substantially justified at the time they were

taken, I guess; more or less.

Is that -- Are we . . . all on the same page?

MS. WOLFSON: Yes, sir.

MS. HIBBERT: Yes, Your Honor.

THE HEARING OFFICER: All right. Well -- So,

I guess, issue one is small business party

and that's on the [P]etitioner.

So, any testimony on that, Ms. Wolfson?

MS. WOLFSON: Yes, I do, Your Honor . . . .

Final Hearing Transcript, p. 12.

5 / See Danie ls v. Dep't of Health , 898 So. 2d 61, 66 (Fla. 2005)

(holding section 57.111(3)(d)1.a. did not apply where licensee

practiced under a "subchapter - S corporation, and not as a sole

proprietor.").

COPIES FURNISHED:

Andrea L. Wolfson, Esquire

Wolfson and K onigsburg, P.A.

4491 South State Road 7 , Suite 314

Davie, Florida 33314

Sharmin R. Hibbert, Esquire

Lealand L. McCharen, Esquire

Department of Health

4052 Bald Cypress Way , Bin C65

Tallahassee, Florida 32399 - 3265

Allison M. Dudley, Executive Director

B oard of Medicine

Department of Health

4052 Bald Cypress Way

Tallahassee, Florida 32399

Jennifer Tschetter , General Counsel

Department of Health

4052 Bald Cypress Way, Bin A 02

Tallahassee, Florida 32399 - 1701

Edward A. Tellechea, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to section 120.68, Florida Statu tes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing the original

notice of administrative appeal with the agency clerk of the

Division of Administrative Hearings within 30 days of ren dition

of the order to be reviewed, and a copy of the notice,

accompanied by any filing fees prescribed by law, with the clerk

of the District Court of Appeal in the appellate district where

the agency maintains its headquarters or where a party resides or

as otherwise provided by law.