19-001304 Department Of Health, Board Of Massage Therapy vs. Kai Xin Spa, Inc. Status: Closed Recommended Order on Wednesday, August 21, 2019.

Summary: The doctrine of equitable tolling applies to excuse Respondent's late filing of its Election of Rights. Recommend proceeding to final heaing on the merits of the allegations against Respondent for improper advertising of massage therapy.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF HEALTH, BOARD OF

MASSAGE THERAPY,

Petitioner,

vs. Case No. 19 - 1304

KAI XIN SPA, INC.,

Respondent.

_______________________________/

RECOMMENDED ORDER

Pursuant to n otice, a formal administrative hearing was

conducted before Administrative Law Judge Mary Li Creasy by

video teleconference , with locations in Miami and Tallahassee,

Florida, on June 7 , 2019 .

APPEARANCES

For Petitioner: Gerald C. Henley, Esquire

Kristen M. Summers, Esquire

Department of Health

Prosecution Services Unit

4052 Bald Cypress Way , Bin C - 65

Tallahassee, Florida 32399

For Respondent: W. Samuel Holland, Esquire

12700 Biscayne Boulevard , Suite 402

North Miami, Florida 33181

STATEMENT OF THE ISSUE

Whether the doctrine of equitable tolling applies to excuse

the late filing of Respondent's Election of Rights form.

PRELIMINARY STA TEMENT

On June 28, 2018, Petitioner, Department of Health ("the

Department"), filed an Administrative Complaint seeking

disciplinary sanction of the massage establishment license of

Respondent, Kai Xin Spa, Inc. The Department served Respondent

the Compla int along with a cover letter and an Election of

Rights form ("EOR") on July 14, 2018, via certified U.S. mail at

Respondent's address of record.

On August 20, 2018, the Department received Respondent's

executed EOR , disputing the material facts in the A dministrative

Complaint and requesting a formal hearing. The Department

received Respondent's EOR 37 days after Respondent received the

Complaint.

O n or about September 12, 2018, t he Department denied

Respondent's request for an administrative hearing, due to

Respondent's untimely reque st, pursuant to Florida

Administrative Code Rule 28 - 106.111 .

On or about October 9, 2018, Respondent disputed that the

request for a formal hearing was untimely. On Marc h 14, 2019,

t he Department referred the case to the Division of

Administrative Hearings for a limited evidentiary hearing to

determine whether Respondent's pe tition was timely, pursuant to

r ule 28 - 106.111.

The final hearing was held on June 7, 2019. At the

hearing, the parties offered Joint Exhibits A through K which

were admitted.

The Department's Exhibit A and Respondent's Exhibit A were

both admitted into evidence. Respondent offered the live

testimony of Jing Hui Gou, the former owner of Respondent 's

establishment, and retired attorney, Jule Pau lk. The one - volume

Transcript of the proceeding was filed on July 2, 2019.

Responde nt requested and was granted an extension of time within

which to file its proposed recommended order. The parties'

proposed recommended orders were given due considerati on in the

preparation of the Recommended Order.

Unless otherwise indicated, all statutory references are to

the versions in effect at the time of the alleged violations.

FINDING S OF FACT

1 . The Department is the state agency charged with

regulating massag e establishments pursuant to chapter 20 and

s ection 20.43, Florida Statutes.

2 . Respondent is licensed as a massage establishment in

the State of Florida, havin g been issued license number

MM 33902 .

3 . Respondent ' s address of record is 440 South Militar y

Trail, West Palm Beach, Florida 33415 .

The August 5 , 2016, Letter and First Response

4 . On or about August 5, 2016, the Department issued a

letter to Respondent at its address of record ( " August 5

Letter " ), advising Respondent that the Department was conducting

an investigation based on a n internally generated complaint that

on July 24 and August 1, 2016, Respondent ran an advertisement

on www . backpage . com ("Backpage") with images "of Asia women

dressed in swim wear and lingere , " which was conside red by the

Department as designed to " induce sexual misconduct ." The

August 5 L etter also alleges that Respondent failed to include a

license number in the advertisement. The advertisement in

question was not provided to Respondent by the Department.

5 . The August 5 Letter advised Respondent that it could

submit a written response within 20 days of receiving the letter

and that it was not possible to estimate how long it would take

to complete the in vestigation.

6 . Respondent, who at that time was owned by Ms. Jing Hui

Guo , contacted a retired attorney, Jule Paulk, regarding the

corr espondence from the Department. Ms. Guo only reads and

speaks Mandarin. Ms. Guo had purchased the business, formerly

known as " Ocean Spa ," about 15 months prior. She was not

familiar with the advertising content of Ocean Spa. When she

purchased the business, Ms. Guo changed the name to Kai Xin Spa,

Inc. , and she kept paying the invoice from the prior advertising

agency.

7. After receipt of the August 5 L ett er, Ms. Guo provided

a copy of it to her advertising agency and directed that they

remove and/or stop running the offending advertisements.

According to her testimony, she approved new advertisement

content with the business license number and with none o f the

cited offending content. That new advertisement ran as of

August 8, 2016.

8. On August 15, 2016, Mr . Paulk draft ed a written

response to the August 5 Letter ( " First Response L etter " ) on

behalf of Respondent. The First Response Letter was

elec tronically signed by Ms . Guo and it contained the new

advertisement which included the business license number and

removed the women in bathing suits and lingerie.

9. The First Response Letter states:

We have taken immediate steps to address the

is sues in the letter mentioned above. We

will continue to do so until all issues are

resolved . We hope this letter will show our

sincere efforts to bring our business into

compliance. (Emphasis added).

10. Ms. Guo sold the business in the beginning of 2017 to

Mr. Haibing Wang. Hearing nothing further from the Department

prior to sale, she reasonably assumed the Department approved of

her new advertising and that matter was closed.

The April 12 , 2018, Letter and Second Response

11. Despite rec eipt of the First Response Letter, t he

Department continued to " investigate " Resp ondent's alleged

misconduct. O n April 12, 2018, 20 months after its original

notification to Respondent, the Department issued a second

letter to Respondent ( " April 12 Letter " ), advising Responde nt

that the matter was still on going .

12. The Department 's April 12 Letter was identical to the

August 5 L etter except for the date.

13. When it was received by the new business owner,

Mr. Wang, he forwarded it to Ms. Guo telling her that it was her

problem because she did not tell him about the investigation at

the time of the sale. Ms . Guo provided the letter to Mr . Paulk .

14. Mr. Paulk recognized the lette r as identical to the

August 5 L etter , but noted there was a new document included ,

dated Au gust 1, 2016, which was styled " Health Care Provider

Complaint Form ." This form states, " [w] e will send a copy of

the Complaint to the health care provider if the complaint is

assigned for investigation ." The C omplaint w ith the Depart ment

of Health was certainly assign ed for investigation in 2016 , but

this form was not given to Respondent until 2018.

15. Mr. Paulk also n oted the following additional

discrepancies in the Health Care Prov id er Complaint form:

a. It was dated August 16 , 2016, but attached to a letter

dated April 12, 2018 .

b. The form identified the reason for the complaint to be

that of advertising .

c. The box for sexual contact was not checked .

d. Attached to the Health Care Provider Complai nt Form was

a document signed by Mr . Kevin Lapham dated August 1, 2016 .

Such document identified the same advertisement s , which were the

subject of the prior investigation which w ere published on

August 1 and June 24, 2016 , and which he thought was resolv ed .

16. Further, the initial August 5 Letter included an

attachment which specifically references advertising to induce

sexual misconduct and identifies specific Florida Statutes .

However, t he Department's April 12 Letter , nor the attachments

theret o , r eference sexual misconduct or a statute dealing with

sexual misconduct.

17. On or about April 16, 2018, Mr . Paulk submitted a

written response to the Department ' s April 12 Letter ( " Second

Response Letter " ), on behalf of Respondent . The letter wa s

electronically signed by Ms . Guo.

18. The Second Response L etter states:

Your letter of April 12, 2018 refers to 2016

Case Number 2016 - 20171. By our letter of

August 15, 2016 (copy enclosed), we

responded to this Case, assuring your office

that we had taken steps to correct the

concerns you had listed. We are not sure

why you are still addressing this same Case.

We assumed that our August 15, 2016 letter

had satisfied the concerns.

In addition, the concerns expressed in your

August, 2016 letter involved a Backpage ad.

We corrected those issues at that time.

Now, Backpage has been removed from the

internet.

We hope this information resolved this

matter. Please contact us if otherwise.

19. Ms. Guo received no response from the Department to

her Second Response Letter.

The Administrative Complaint

20. On June 28, 2018, the Department filed an

Administrative Complaint against Respondent, alleging that

Respondent inappropriately advertised to induce sexual

misconduct and failed to incl ude its license number in its

advertising.

21. The cover letter included with the Administrative

Complaint stated:

Please review the attached documents and

return the Election of Rights form to my

attention . You must sign the Election of

Rights form and return the completed form to

my office within twenty - one (21) days of the

date you receive it . Failure to return this

form within twenty - one (21) days may result

on the entry of a default judgement against

you without hearing your side of the case .

(Emphasis added).

22. The cover letter also referenced an enclosed Voluntary

Relinquishment form for consideration described as "an offer to

resolve this matter without the necessity of further proceedings

and the expense of further proceedings."

23. The Administrative Complaint contained a Notice of

Rights section, which informed Respondent that " [a] request or

petition for an administrative hearing must be in writing and

must be received by the Department within 21 days from the day

Responden t received the Administrative Complaint, pursuant to

Rule 28 - 106 . 111(2 ), Florida Administrative Code."

24. The E OR form included with the Complaint stated:

In the event that you fail to make an

election in this matter within twenty - one

(21) days from receipt of the Administrative

Complaint, your failure to do so may be

considered a waiver of your right to elect a

hearing i n this matter, pursuant to

Rule 28 - 106 . 111(4), Florida Administrative

Code, and the Board may proceed to hear your

case . (Emphasi s added).

25. The Department mailed the Administrative Complai nt, a

Notice of Rights, and an EOR form via certified U . S . mail to

Respondent ' s address of record .

26. On July 14, 2018, Mr. Wang receiv ed the Administrative

Complaint and gave the Administratve Complaint and EOR to

Ms . Guo , who prov ided the documents to Mr. Paulk. Mr . Paulk

consulted with counsel for Respondent, Mr . Sam uel Holland,

Esquire, about the EOR .

27. Mr . Holland completed and signed the EOR on August 8,

2018 . Howev er, neither Mr . Paulk nor Mr . Holland returned the

completed EOR to the Department until August 17, 2018, nine days

later .

28. Mr . Paulk testified that this nine - day delay was

because he and Mr . Holland were " confused, " " not quite sure how

to proceed the best way, " that he " needed to collect [his]

thoughts , " and that he needed to " do a little more looking into

[the] matter " in order to decide the " best approach ."

29. This confusion is understandable and in large part

created by the Department's own doing.

30. At no time did the Department supply Respondent with a

copy of the alleged offending advertisement. In fact, even the

Administrative Complaint does not attach the advertisement at

issue.

31. The allegations in the Administrati ve Complaint

deviate from the matters of which Respondent was provi ded notice

were under investigation. For the first time, the Department

indicates a concern that the advertisement contained hearts with

arrows going through them, women i n "sexually sugge stive poses,"

and massage therapists described as "hot," "beautiful," and

"young."

32 . The EOR and the penalty for failure to return such was

not stated in absolute terms . The EOR form states, " [f] ailure

to return this form within twenty - one days ma y result in the

entry of a default judgment against you without hearing your

side of the case . " The use of the word " may " detracts from any

finality to the consequences of failure to return the signed

E OR. This sentence also suggests that a hearing will be

conducted with or without the return of the EOR.

33 . Eventually, Mr . Paulk and Mr . Holland decided the best

course of action would be to submit the EOR because " any further

delay might be harmful ."

34 . Twenty - one days from July 14, 2018, w as August 3,

2018 . The Department ultimately received the EOR via regular

mail on August 20, 2018; 16 days after it was due .

35 . On or about September 12, 2018, the Department sent a

letter to Mr . Holland ( " Denial Letter " ), denying Respondent ' s

requ est for a formal administrative hearing . On October 15,

2018, the Department received a letter from Respondent

( "October 9 Letter " ) contesting the Denial Letter . In the

October 9 L etter, counsel for Respondent, Mr. Holland, explained

the reason for the u ntimely filing and asked for a hearing.

CONCLUSIONS OF LAW

36 . The Division of Administrative Hearings has

jurisdiction over the subject m atter and the parties to this

proceeding in accordance with sections 120.569 and 120.57(1),

Florida Statutes (2019).

37 . The Administrative Complaint alleges that Respondent

violated provisions of the Florida Statutes and administrative

rules that would subject it to the imposition of penalties.

Respondent has standing to request a hearing on whether its

request for hea ring was made within the 21 - day period or

equitable tolling should apply to extend the time for filing,

and, if either is shown, on the allegations of the

Administrative Complaint. Nicks v. Dep't of Bus. & Prof'l Reg. ,

957 So. 2d 65, 68 (Fla. 5th DCA 2007 ); Phillip v. Univ. of Fla. ,

680 So. 2d 508, 509 (Fla. 1st DCA 1996).

38 . The Department has the burden to show that notice of

intended action was received and that Respondent's request for

hearing was untimely. Respondent, as the party seeking

equi table tolling, has the burden of proof as to that issue.

Menominee Indian Tribe of Wis. v. U. S . , 136 S. Ct. 750, 755 - 56

(2016). The standard of proof for each of the parties is a

preponderance of the evidence. § 120.57(1)(j), Fla. Stat.

39 . The re quirement that a hearing must be requested

within 21 days of receipt of the notice of agency action is

clear. Rule 28 - 106.111 provides in relevant part:

(2) Unless otherwise provided by law,

persons seeking a hearing on an agency

decision which does or m ay determine their

substantial interests shall file a petition

for hearing with the agency within 21 days

of receipt of written notice of the

decision.

* * *

(4) Any person who receives written notice

of an agency decision and who fails to fi le

a written request for a hearing within 21

days waives the right to request a hearing

on such matters. This provision does not

eliminate the availability of equitable

tolling as a defense.

40 . Section 120.569(2)(c) provides that a request for

hea ring "shall be dismissed . . . if it has been untimely

filed." (Emphasis added). The statute goes on to expressly

note that this does not eliminate the availability of equitable

tolling as a defense.

41 . In this case, it is undisputed that the EOR was

returned more than 21 days after receipt. However, Respondent

asserts that the doctrine of equitable tolling applies to excuse

the late filing and permit Respondent a hearing on the merits.

42 . In Machules v. Department of Administration , 523 So .

2d 1132, 1134 (Fla. 1988), the Florida Supreme Court stated,

"[g] enerally, the tolling doctrine has been applied when the

plaintiff has been misled or lulled into inaction, has in some

extraordinary way been prevented from asserting his rights, or

has ti mely asserted his rights mistakenly in the wrong forum."

43 . There was no argument or evidence presented to suggest

that Respondent was prevented from asserting its rights, or

timely asserted them in the wrong forum. Respondent argues that

it was mi sled or lulled into inaction by the Department.

44 . The Administrative Complaint was filed agains t

Respondent on June 28, 2018 -- almost 23 months after Respondent

initiated its investigation and received not one, but two,

written responses on behalf o f Respondent indicating its

immediate efforts, in August 2016, to come into compliance with

applicable regulations concerning advertising.

45 . The Department does not have free reign to open an

investigation and keep it open as long as it wants prior to

making a determination and issuing a complaint. Section

456.073(2) , Florida Statutes, provides:

The department shall allocate sufficient and

adequately trained staff to expeditiously

and thoroughly determine legal sufficiency

and investigate all legal ly sufficient

complaints. For purposes of this section,

it is the intent of the Legislature that the

term "expeditiously" means that the

department complete the report of its

initial investigative findings and

recommendations concerning the existence of

p robable cause within 6 months after its

receipt of the complaint . The failure of

the department, for disciplinary cases under

its jurisdiction, to comply with the time

limits of this section while investigating a

complaint against a licensee constitutes

h armless error in any subsequent

disciplinary action unless a court finds

that either the fairness of the proceeding

or the correctness of the action may have

been impaired by a material error in

procedure or a failure to follow prescribed

procedure . (Emph asis added).

46 . Respondent was clearly lulled into inaction by the

Department's failure to expeditiously investigate this matter.

The extraordinary delay in filing the Administrat ive Complaint

reasonably led the business owner to assume the matter was

closed and sell the business without providing notice to the new

owner. This is not harmless error.

47 . The fairness of the proceeding is also compromised by

this delay because the Backpage advertisement at issue was never

produced to Responde nt prior to, or with, the filing of the

Administrative Complaint, nor can they be reproduced because

Backpage was removed from the Internet.

48 . It is specious at best to suggest that the Department

was conducting an on going "investigation" dur ing th is 23 - month

period. The gravamen of the Administrative Complaint is one

advertisement that ran on two dates in the summer of 2016.

Other than the advertisement itsel f, and the response of the

then owner, Ms. Guo, what was left to investigate?

49 . The Department offered no witness or evidence to

explain why the investigator never responded to eithe r the First

or Second Response L etters. No explanation was provided why it

took 23 months for the Department to prepare an Administrative

Complaint whic h included allegations which were never previously

brought to the attention of Respondent. Instead, the Department

wants to use the capital punishment of discipline, license

revocation of Respondent, against a new owner who has no

connection to the advert isements at issue, in a game of "gotcha"

because Respondent filed its EOR 16 days late.

50 . Regarding the use of equitable tolling in

administrative proceedings, the Machules Court explained,

The tolling doctrine is used in the

interests of justice to accommodate both a

defendant's right not to be called upon to

defend a stale claim and a plaintiff's right

to assert a meritorious claim when equitable

circumstances have prevented a timely

filing. Equitable tolling is a type of

equitable modification which "'focuses on

the plaintiff's excusable ignorance of the

limitations period and on [the] lack of

prejudice to the defendant.'" Cocke v.

Merrill Lynch & Co. , 817 F.2d 1559, 1561

(11th Cir. 1987)( quoting Naton v. Bank of

California , 649 F.2d 691, 696 ( 9th Cir.

1981)). . . The doctrine [of equitable

tolling] serves to ameliorate harsh results

that sometimes flow from a strict,

literalistic construction and application of

administrative time limits contained in

statutes and rules.

Id. at 1134 .

5 1 . The Department's failure to respond to the First and

Second Respon se Letters; the confusing inclusion of the Health

C are Provider Complai nt form with the April 12 Letter of

investigation; the 23 - month delay in fil ing an Administrative

Complaint; and al legations in the A dministrative Complaint that

were never raised to Respondent during the investigation,

coupled with the contradictory language of "may" versus "shall"

in the N otice of Rights and EOR , create a situation ripe for

equitable tolling. 1/ Resp ondent was lulled into inaction by the

Department's own actions described above. 2/ The principles of

due process and equity would be violated in this case without

the application of equitable tolling.

52 . There is no prejudice to the Department in t his case

to permit Respondent a hearing on the merits of the

Administrative Complaint. The offending advertisement was

modified immediately upon notice of the Department's concerns

three years ago. The Department was aware by the First Response

Letter th at Respondent intended to do anything necessary to come

into compliance. License revocation by default as punishment

for a late filing is exactly the type of result equitable

tolling is designed to prevent. Equity and the interests of

justice demand reli ef from the 21 - day filing period in this

case.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Respondent ' s request for a formal

hearing under section 120.57(1) , Florida Statutes, be permitted

in accord ance with the doctrine of equitable tolling.

DONE AND ENTERED this 21st day of August , 2019 , in

Tallahassee, Leon County, Florida.

S

MARY LI CREASY

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 21st day of August , 2019 .

ENDNOTE S

1/ The Department c ites to Department of Health v. Tito , Case

No. 18 - 3636PL ( Fla. DOAH Nov. 9, 2018; Fla. DOH June 7, 2019), a

case in which the confusion created by the language in the EOR

was discussed and rejected as a basis for equitable tolling of a

late filing. Tito i s distinguishable because it does not

involve a situation where the Department failed to timely

conclude its investigation resulting in hardship to the entity

being investigated.

2/ The cases cited by the Department regarding attorney

misconduct are not persuasive. Mr. Paulk is retired and was not

a practicing attorney when contacted to assist Ms. Guo as a

favor to a mutual friend. Attorney Holland was contacted after

receipt of the Administrative Complaint and arguably should have

returned the EOR with in the 21 - day period. However, as

discussed in detail above, the Department's own actions caused

significant confusion and resulte d in the comparatively short

delay . The Department's criticism of Respondent's lack of

diligence in ensuring that its repres entatives were meeting the

deadline, is similarly misplaced. Ms. Guo, the prior owner

tasked to respond to the Administrative Complaint, does not

read, write, or speak English.

COPIES FURNISHED:

Gerald C. Henley, Esquire

Department of Health

Prosecution Services Unit

4052 Bald Cypress Way , Bin C - 65

Tallahassee, Florida 32399

(eServed)

W. Samuel Holland, Esquire

12700 Biscayne Boulevard , Suite 402

North Miami, Florida 33181

(eServed)

Kristen M. Summers, Esquire

Department of Health

Prosecution Services Unit

4052 Bald Cypress Way , Bin C - 65

Tallahassee, Florida 32399

(eServed)

Kama Monroe, Executive Director

Board of Massage Therapy

Department of Health

4052 Bald Cypress Way, Bin C - 06

Tallahassee, Florida 32399 - 3257

(eServed)

Louise Wilhite - St Lauren t, General Counsel

D epartment of H ealth

4052 Bald Cypress Way, Bin C - 65

Tallahassee, Florida 32399

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended O rder. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.