Amerisure Mutual Insurance Co. v. Florida Department of Financial Services, Division of Workers' Compensation

IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
AMERISURE MUTUAL
INSURANCE COMPANY, NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
Appellant, DISPOSITION THEREOF IF FILED
v. CASE NO. 1D14-0873
FLORIDA DEPARTMENT OF
FINANCIAL SERVICES,
DIVISION OF WORKERS’
COMPENSATION,
Appellee.
_____________________________/
Opinion filed January 2, 2015.
An appeal from an order of the Department of Financial Services.
Maria Elena Abate and Sharlee Hobbs Edwards of Colodny, Fass, Talenfeld,
Karlinsky, Abate & Webb, P.A., Fort Lauderdale, for Appellant.
Richard T. Donelan, Jr., Chief Counsel, Michael H. Davidson, Assistant General
Counsel, and David Hershel, Assistant General Counsel, Tallahassee, for Appellee.
BENTON, J.
Amerisure Mutual Insurance Company (Amerisure) appeals a final order of
the Florida Department of Financial Services, Division of Workers’ Compensation
(Department). We affirm. We reject appellant’s contention that the Department
ignored the findings of fact the administrative law judge (ALJ) made and
improperly substituted its conclusions of law for those of the ALJ. The
Department correctly applied the governing statute.
As an insurance carrier authorized to transact a workers’ compensation line
of business in Florida, Amerisure is subject to certain assessments: Amerisure is
required to pay quarterly assessments to the Special Disability Trust Fund (SDTF)
pursuant to section 440.49(9), Florida Statutes (2008), which provides in part:
(9) SPECIAL DISABILITY TRUST FUND.—
....
(b)1. The Special Disability Trust Fund shall be
maintained by annual assessments upon the insurance
companies writing compensation insurance in the state, . .
. which assessments shall become due and be paid
quarterly at the same time and in addition to the
assessments provided in s. 440.51. . . .
....
3. The net premiums written by the companies for
workers’ compensation in this state . . . are the basis for
computing the amount to be assessed as a percentage of
net premiums. Such payments shall be made by each
carrier and self-insurer to the department for the Special
Disability Trust Fund in accordance with such
regulations as the department prescribes.
Amerisure is also required to pay quarterly assessments to the Workers’
Compensation Administration Trust Fund (WCATF) pursuant to section 440.51(1),
Florida Statutes (2008), which provides in part:
Expenses of administration.—
2
(1) The department shall estimate annually in
advance the amounts necessary for the administration of
this chapter . . . .
(a) The department shall, by July 1 of each year,
notify carriers and self-insurers of the assessment rate . . .
.
(b) The total expenses of administration shall be
prorated among the carriers writing compensation
insurance in the state and self-insurers. The net
premiums collected by carriers and the amount of
premiums calculated by the department for self-insured
employers are the basis for computing the amount to be
assessed. . . .
....
(5) Any amount so assessed against and paid by
an insurance carrier . . . shall be allowed as a deduction
against the amount of any other tax levied by the state
upon the premiums, assessments, or deposits for workers’
compensation insurance on contracts or policies of said
insurance carrier . . . . Because deductions under this
subsection are available to insurance carriers, s. 624.5091
does not limit such deductions in any manner.
(Boldface omitted.) Also applicable and pertinent to determination of a carrier’s
assessments for these trust funds is section 624.5094, Florida Statutes (2008),
which provides:
Casualty insurance premiums.—Notwithstanding
any statutory provision to the contrary, for the purposes
of calculating the annual assessments for the Special
Disability Trust Fund under s. 440.49 and expenses of
administration under s. 440.51, any amount paid or
credited as dividends or premium refunds in the same
calendar year by the insurer to its policyholders must be
deducted from “net premium,” “net premiums written,”
“direct premium,” and “net premium collected” for the
calendar year. Such offset for dividends or premium
refunds paid or credited for the current year must be
3
applied against the current year’s net premium for that
year’s assessment regardless of the policy year for which
the dividends or premium refunds are being reimbursed.
(Boldface omitted.) The Division of Workers’ Compensation (Division) generated
a one-page form (never promulgated as a rule) for carriers’ use in reporting net
premiums and calculating quarterly assessments for the two trust funds. The form
provided a space for the carrier to indicate whether net premium was positive or
negative for the quarter and in what amount.
The form also had a space for carrying forward “debits” or “credits” from
prior quarters and aggregating them with the current quarter’s net premium and
assessment due. The initial premium for a workers’ compensation policy is based
on an estimate of what the insured’s payroll and the classification of its employees
will be during the coverage period, typically a year. Because assessments for the
two trust funds must be paid quarterly, an insurer may overpay an annual
assessment when positive net premiums in one or more early quarters are exceeded
by negative net premium in subsequent quarter(s) in the same calendar year.
Amerisure’s SDTF Assessments
In 2008, Amerisure reported positive net premium totaling $32,934,173 for
the first two quarters of the calendar year and paid SDTF assessments totaling
$1,488,624. For the third quarter of 2008, Amerisure reported negative net
premium (<$923,750>), and paid no assessment. Based on Amerisure’s reported
4
negative net premium for the third quarter, the Division’s form for the fourth
quarter of 2008 indicated Amerisure had a “credit” of $41,745.36 for SDTF
assessment purposes (determined by multiplying the reported negative net
premium for the third quarter by the assessment rate of 0.0452). For the fourth
quarter of 2008, Amerisure reported negative net premium (<$1,269,343>) and
again paid no assessment. An additional credit of $57,374.30 was calculated for
the fourth quarter (the fourth-quarter negative net premium multiplied by the
assessment rate of 0.0452).
In this way, Amerisure paid $99,119.66 more in estimated payments (for the
first two quarters of 2008) than it owed for its 2008 SDTF annual assessment, and
ended the year with a credit reflecting the overpayment. In 2009, Amerisure
reported negative net premiums all four quarters and paid no SDTF assessments
for any quarter.1 The form the Division provided Amerisure with which to report
1
On each quarterly form for 2009, the Division indicated increasing
“credit” amounts for Amerisure’s SDTF assessment. On the form provided
Amerisure for the first quarter of 2009, the Division indicated Amerisure had a
credit of $99,119.66 (the combined credit for the third and fourth quarters, which
equaled the actual amount overpaid during 2008). The form for the second quarter
of 2009 indicated Amerisure had a credit for SDTF purposes of $163,401.20. The
form for the third quarter of 2009 indicated Amerisure had a credit of $271,089.48.
The form for the fourth quarter of 2009 indicated Amerisure had a credit of
$379,235.27 (the sum of the $99,119.66 credit based on the 2008 overpayment and
the total negative net premium reported for 2009 multiplied by the assessment rate
of 0.0452). Amerisure reported negative net premium of $3,237,419 for the fourth
quarter of 2009, and takes the position that its “credit” balance should be increased
5
its SDTF assessment for the first quarter of 2010, reflected a credit of $99,119.66,
based on Amerisure’s actual overpayment of the 2008 annual assessment, but
carried forward nothing for 2009 in which no assessments had been paid.
In 2010, Amerisure reported positive net premium of $828,566 for the first
quarter of 2010, resulting in an SDTF assessment of $37,451.18 for the quarter.
The Division reduced the $99,119.66 credit by that amount, so that the Division’s
form for the second quarter of 2010 indicated Amerisure had a credit of
$61,668.48. Amerisure reported a positive net premium of $1,282,179 for the
second quarter of 2010, resulting in an assessment of $57,954.49 for that quarter.
The Division again reduced the (remaining) credit by the amount of the
assessment, so the Division’s form for the third quarter of 2010 reflected a “Prior
Balance Carried Forward” of $3,713.99. Amerisure reported a positive net
premium of $937,504.00 for the third quarter, resulting in an assessment of
$13,688.00 for the third quarter. Reducing this by the “prior balance carried
forward” resulted in an amount due of $9,974.01.2
Amerisure’s WCATF Assessments
Similarly, in 2008, Amerisure reported positive net premiums for the first
three quarters of the calendar year totaling $37,925,003 and paid WCATF
by $146,331, for a total “credit” of $525,566 in 2009, even though it paid no
assessments that year.
2
Amerisure continued to report positive net premiums for purposes of the
SDTF assessment through June 30, 2012.
6
assessments totaling $94,813. For the fourth quarter of 2008, Amerisure reported a
negative net premium of $1,271,387, and paid no assessment. In this way,
Amerisure paid $3,178.47 more (in estimated payments during the first three
quarters of 2008) than it owed for its 2008 WCATF annual assessment. In 2009,
Amerisure reported negative net premiums in each quarter and paid no WCATF
assessments.3
On the form provided for Amerisure to report net premium and the
assessment for the first quarter of 2010, the Division indicated Amerisure had a
credit of $3,178.47 for WCATF purposes—the amount actually overpaid in 2008.
Amerisure reported positive net premium of $225,027 for the first quarter of 2010,
resulting in an assessment of $1,800 for the first quarter. Accordingly, the
3
On each quarterly form for 2009, the Division indicated increasing “credit”
amounts. On the form provided for reporting the first quarter of 2009, the Division
indicated Amerisure had a credit of $3,178.47 for WCATF purposes (the amount
actually overpaid in 2008 based on annual net premium), and Amerisure reported
negative net premium (<$1,321,194>). The Division’s form for the second quarter
of 2009 indicated Amerisure had a “credit” of $6,481.46. Amerisure reported
negative net premium for the second quarter of 2009 (<$2,990,876>). The
Division’s form for the third quarter of 2009 indicated Amerisure had a “credit” of
$13,958.65. Amerisure reported negative net premium for the third quarter of
2009 (<$2,176,521>). The Division’s form for the fourth quarter of 2009 indicated
Amerisure had a “credit” of $19,399.95 (the sum of the $3,178.47 2008
overpayment and the total negative net premium reported for the first three
quarters of 2009 multiplied by the WCATF assessment rate). Amerisure again
reported a negative net premium for the fourth quarter of 2009 (<$3,549,615>),
and takes the position that its “credit” balance should be increased by $8,874, for a
total “credit” balance of $28,273.95, even though Amerisure paid no WCATF
assessments for the 2009 calendar year.
7
Division reduced the $3,178.47 credit by $1,800.22, so that the Division’s form for
the second quarter of 2010 indicated Amerisure had a credit of $1,378.25. For the
second quarter of 2010, Amerisure reported positive net premium of $2,011,533,
and a corresponding quarterly WCATF assessment of $16,092.26. Amerisure
made no payment to the Division with this report, and the Division’s form for the
third quarter of 2010 indicated Amerisure had a “Prior Balance Carried Forward”
of $14,714.01 (the $16,092.26 second-quarter assessment reduced by the
remaining credit of $1,378.25). 4
Procedural History
On September 16, 2012, Amerisure submitted an application for refunds of
monies paid to the SDTF and the WCATF from October 26, 2010 through July 26,
2012. 5,6 On January 28, 2013, the Department issued a Notice of Intent to Deny
Applications for Refund, saying that “Amerisure received credit totaling
4
Amerisure continued to report positive net premiums for purposes of the
WCATF assessments each quarter through June 30, 2012.
5
Amerisure asserted that as of December 31, 2009, it had $525,566 in
“credits” due from the SDTF. Amerisure asserted it was only allowed to apply
$99,119.66 of its “credit,” and had subsequently paid $236,663.25 “in assessments
to the SDTF that the company should not have been required to pay since it had
credits that should have been applied against its assessment liability.” Amerisure
also asserted the “right to apply” $189,783.75 of remaining SDTF “credits” against
future assessment liability.
6
Amerisure alleged it should not have been required to pay the assessments
in light of the amount of “credit” it had accrued in 2008 and 2009. Amerisure
asserted that as of December 31, 2009, it had $28,273.95 in “credits” due from the
WCATF, which “should have been applied against its assessment liability.”
8
$99,119.66 for its overpayments to the SDTF in year 2008. Amerisure to date has
received, and has been allowed to apply to its subsequent payment obligations, full
credit for all overpayments made by it to the SDTF;” and that “Amerisure received
credit totaling $3,178.47 for its overpayments to the WCATF in year 2008.
Amerisure to date has received, and has been allowed to apply to its subsequent
payment obligations, full credit for all overpayments made by it to the WCATF.”
The Department took the position that to allow Amerisure to obtain in
addition the cash refunds Amerisure requested “would be inconsistent with the
provisions” of Sections 440.49(9)(b) and 440.51(1), Florida Statutes. The
Department concluded Amerisure was not entitled to any money from the State
Treasury or to any “credits” based on the negative net premiums reported during
2009 because it paid no assessments into either the WCATF or the SDTF in 2009.
Amerisure then filed a petition for a formal administrative hearing,
challenging the notice of intent to deny its applications for refund, and alleging that
unadopted rules were the basis of the notice of intent to deny. Amerisure
contended the Department treated “credit balances” accrued in 2009 as “excess
credits,” which had to be forfeited at the end of the calendar year, and argued
section 624.5094 did “not authorize the Department to eliminate accrued credits”
or “support the Department’s interpretation that no credit can be accrued during a
year when no monies are due and paid into the fund(s).”
9
Recommended Order
The administrative law judge (ALJ) rejected the Department’s position that
“credits” based on negative net premiums in 2009 never actually assumed any
legal significance. The ALJ cited the entries on the reporting forms sent to
Amerisure each quarter and reasoned in her recommended order that the forms
indicated “credits” had accrued in 2009. The recommended order recited that
Department staff acknowledged “eliminating” the 2009 “credits” when the 2010
quarterly reporting forms were sent to Amerisure.
In the recommended order, the ALJ attributed the Department’s denial of
refunds to the first of two putative, unadopted rules. The recommended order
identified two statements as agency policies that met the definition of a rule but
had not been adopted through the rulemaking process: (1) any credits accruing in a
calendar year in which net premiums are negative for each quarter are excess
credits that are eliminated at year end and cannot be carried over to the next
calendar year; and (2) credits can be carried forward for a three-year period from
one calendar year to the next as long as the insurer had at least one quarter per
calendar year with positive net premium; although after three years the credits are
eliminated unless the insurer requests a refund. Finding the Department had not
demonstrated circumstances excusing a lack of rulemaking as contemplated by
10
section 120.57(1)(e), the ALJ determined Amerisure was entitled to recover fees
and costs pursuant to section 120.595(4)(a), Florida Statutes.
The ALJ determined that a “credit” was created “by Amerisure paying more
out in refunds and dividends than it wrote or collected in premium. . . . The
Department implicitly acknowledged that reality when it calculated a credit for
each quarter in 2009 and included that credit on the forms it forwarded to
Amerisure for its quarterly reports.” The ALJ recommended that the “Department
enter a final order . . . reinstating Amerisure’s 2009 credits as credits toward future
assessments due to the Trust Funds.” But, as the recommended order itself
acknowledges, the governing statutes say nothing whatsoever about credits for
“paying more out in refunds and dividends” than premiums received in a calendar
year or carrying any such putative credits forward.
The ALJ determined the Department’s position was “not a simple
application of the law to the information provided, because no statute referenced
by the Department makes any mention of excess credits and how they are to be
treated.” The statute makes no mention of “credits,” excess or otherwise. Indeed,
the ALJ concluded that the Department’s elimination of the 2009 “credits” was
based on an erroneous interpretation of section 624.5094 on grounds that the
provision “does not address credits in any way, and certainly does not mandate that
credits be eliminated should a carrier have four quarters in a year where negative
11
premiums were reported.” That the statute does not “address credits in any way”
led the Department to different conclusions.
Final Order
The Department rejected the ALJ’s view that Amerisure accrued credits that
could be applied against subsequent years’ SDTF and WCATF assessments as a
result of negative net premium in the year 2009. Focusing on the statutes, not the
forms, the final order ruled the ALJ had attached “undue significance to the fact
that for the 2009 assessment year only, Division employees, acting without
statutory authority . . . , supplied Amerisure with a quarterly assessment form that
was never promulgated as a rule and that purported to identify ‘credits’ to which
the carrier was entitled. Thus, the ALJ in her Recommended Order makes findings
of fact that are technically accurate, but then draws legally erroneous legal
conclusions from those facts.”
The Department’s final order stated the ALJ’s legal conclusions were in
error because “there is neither statutory nor constitutional authority for the
Division to create free-standing tax credits redeemable from the State Treasury for
the benefit of a private insurance carrier that paid nothing [for the year 2009] in
assessments to the Division.” The final order concluded instead:
Section 624.5094 makes clear that, for annual assessment
purposes, all statutory deductions from a carrier’s “net”
premium base must be taken in the assessment year in
which they occur “regardless of the policy year” to which
12
the deductions relate. . . . If . . . a carrier must return
more premiums than remain in force during an
assessment year, it is entirely foreseeable that a carrier, as
did Amerisure in 2009, will have no positive cash flow
from which an annual assessment can be paid. The only
logical resolution of this situation is for the regulator, as
the statute clearly authorizes, to excuse the carrier from
its obligation to pay an assessment for the assessment
year in question. That is exactly what happened here.
The reason it happened was not based upon so-called
“credits” issued by the Department, however. The
assessment was not imposed because Amerisure had no
“net premium” for 2009 that could be assessed.
. . . No action by the Department “eliminates” a
carrier’s “credits” against its assessment liability for
dividends paid and premiums returned when its annual
assessment is finalized at [or below] zero. Section
624.5094, Florida Statutes, by operation of law,
forecloses a carrier’s ability to apply its “excess credits”
– that is, the carrier’s having made more expenditures for
dividends and return premium than were needed to offset
the carrier’s entire assessment obligations for that year –
to reduce a future year’s tax liability. This statute simply
does not grant the Department independent, extra-
statutory discretion to devise and declare additional
deductions from a carrier’s current or future annual
assessment bases, and thereby reduce the amount of tax it
owes to the State.
Regarding the purportedly dispositive, unadopted rule, the Department again
emphasized that there was no statutory authority for calculating “credits” on the
basis asserted by Amerisure, given the plain meaning of section 624.5094:
“Simply put, an insurer that has not paid an assessment is not entitled to a refund of
a portion of that ‘non-assessment’ just because it has experienced a ‘negative net
premium’ for an entire assessment year. . . . What the Recommended Order brands
13
as an illicit non-rule policy of ‘eliminating’ the ‘excess credits’ ignores that the
supposed ‘policy’ is merely . . . the plain meaning of the applicable statutes.”
Analysis
In rejecting the ALJ’s conclusions of law, the final order did not ignore or
reject any finding of fact the ALJ made. An agency may not reject an ALJ’s
findings of fact “without first finding, after a review of the entire record, that the
ALJ’s factual findings were not supported by competent, substantial evidence.”
Viering v. Fla. Comm’n on Human Relations ex rel. Watson, 109 So. 3d 296, 298
(Fla. 1st DCA 2013). Nor may an agency avoid the obligation “‘to honor the
[ALJ’s] findings of fact . . . by categorizing a contrary finding as a conclusion of
law.’” Id. (quoting Pillsbury v. State, Dep’t of Health & Rehabilitative Servs., 744
So. 2d 1040, 1041 (Fla. 2d DCA 1999)). But the record in the present case reveals
no violation of this “cardinal tenet of administrative law.” Id.
The final order discussed the various forms filled out by Amerisure and the
Department in the present case in some detail. The fact that the credit based on
reported negative net premium in 2008 was carried forward while the “credit”
based on 2009 reported negative net premium was not carried forward was
addressed head on in the final order:
Because Amerisure had already paid its 1Q and 2Q 2008
estimated assessments, its total 2008 assessment
payments exceeded the revised final assessments for that
year, resulting in Department recognition of a $99,119.66
14
overpayment to the SDTF by Amerisure and a $3,178.47
overpayment to the WCATF. Amerisure could have
elected to obtain a cash refund of its 2008 overpayment,
but elected instead to apply the balance to reduce a future
assessment liability, which it ultimately did, by applying
its 2008 overpayment to its 2010 assessment.
Amerisure, however, had no assessment liability for
2009 against which Amerisure’s overpayment “credit
balance” could apply, and no assessment was levied. Put
another way, Amerisure had no tax obligation for
calendar [year] 2009 that could be offset, in part, by
means of its overpayment balance. The record shows
that the balance was applied and extinguished the next
time Amerisure did have a tax liability to the
Department: its calendar [year] 2010 assessments. Thus,
Amerisure’s actual 2008 tax overpayment was refunded
in 2010 in the form of cash equivalent credits redeemable
against its pending assessment obligations for 2010. This
refund transaction falls squarely within the ambit of
Section 215.26, Florida Statutes.
(Internal citations omitted.) That the quarterly forms indicated increasing “credits”
during 2009 based on the quarterly reports of negative net premium is not disputed
by the Department. The ALJ’s statement that the forms “clearly indicated accrued
credits,” to the extent this references the increasing amount of the “credit”
indicated in each succeeding quarter, is a factual finding supported by competent,
substantial evidence, a factual finding the Department accepted.
To the extent the ALJ determined Amerisure had “accrued credits” that had
“come into existence as an enforceable claim or right” under any set of facts,
15
however, such a determination must necessarily have been a legal conclusion.7
See Black’s Law Dictionary 21 (7th ed. 1999) (defining “accrue”). At issue here is
not what Amerisure reported each quarter in 2009. Instead, as the Department
maintains, at issue is the legal significance of Amerisure’s negative net premiums
in all four quarters of the 2009 calendar year, and its consequent failure to pay
assessments that year.
At issue finally is a question of statutory interpretation, as to which the
standard of review is de novo. An agency
“is afforded wide discretion in the interpretation of a
statute which it is given the power and duty to
administer,” Office of Fire Code Official of Collier
County Fire Control & Rescue Dists. v. Fla. Dep’t of Fin.
Servs., 869 So. 2d 1233, 1237 (Fla. 2d DCA 2004)
(citation omitted), but nothing requires “that we defer to
an implausible and unreasonable statutory interpretation
adopted by an administrative agency.” Id. “If the
agency’s interpretation is within the range of possible
and reasonable interpretations, it is not clearly erroneous
and should be affirmed,” Fla. Dep’t of Educ. v. Cooper,
858 So. 2d 394, 396 (Fla. 1st DCA 2003), but “judicial
adherence to the agency’s view is not demanded when it
is contrary to the statute’s plain meaning.” Werner v.
Dep’t of Ins. & Treasurer, 689 So. 2d 1211, 1214 (Fla.
7
The Department argues that the “credits” indicated on the quarterly forms
for 2009 (in excess of the credits based on actual overpayments of assessments in
2008) were simply staff “notations, for bookkeeping purposes . . . to recognize
‘potential credits’ that could be applied as tax assessment offsets in the event
[Amerisure] resumed reporting taxable positive net premiums in 2009. Because, in
2009, Amerisure had no positive earnings and therefore no tax liability from which
‘potential credits’ could be deducted, the ‘potential credits’ indicated on the forms
had no purpose and were not applied.”
16
1st DCA 1997) (quoting PAC for Equal. v. Dep’t of
State, Fla. Elections Comm’n, 542 So. 2d 459, 460 (Fla.
2d DCA 1989)).
Sullivan v. Fla. Dep’t of Envtl. Prot., 890 So. 2d 417, 420 (Fla. 1st DCA 2004).
Amerisure’s contention that a carryforward of a “credit” from a year in
which it paid no assessment is necessary in order for it to be made “whole”
overlooks the basic fact that the governing statutes levy an assessment on
carriers—not on policyholders. See §§ 440.49(9)(b)1., Fla. Stat. (2008) (“The
Special Disability Trust Fund shall be maintained by annual assessments upon the
insurance companies writing compensation insurance in the state. . . .”) (emphasis
supplied); 440.51(1)(b), Fla. Stat. (2008) (“The total expenses of administration
shall be prorated among the carriers writing compensation insurance in the state
and self-insurers. The net premiums collected by carriers . . . are the basis for
computing the amount to be assessed.”) (emphasis supplied); 440.51(5), Fla. Stat.
(2008) (“Any amount so assessed against and paid by an insurance carrier . . . shall
be allowed as a deduction against the amount of any other tax levied by the state
upon the premiums, assessments, or deposits for workers’ compensation insurance
on contracts or policies of said insurance carrier . . . .”) (emphasis supplied).
The insurance carrier does not act as an agent of the state to collect and remit
assessments levied on the employers it insures in the way retailers collect sales
17
taxes their customers owe.8 The carrier is itself liable for the assessments.
Amerisure contends it has been “unjustly divested” of “over $400,000” that the
state had “no legal right to claim,” and that the issuance of a legally enforceable
“credit” is “necessary to make the carrier whole for having returned the assessment
amounts that the carrier paid into the Trust Funds to policyholders.” But, even
assuming Amerisure paid assessments based on premiums which were
subsequently returned to policyholders, Amerisure has not demonstrated that it
paid more in assessments than the law requires.
The applicable statutory provisions call for calculating assessments one year
at a time. Section 624.5094 only authorizes deductions or offsets “against the
current year’s net premium” for dividends or premium refunds “in the same
calendar year” or “current year” in calculating “that year’s assessment” –
“regardless of the policy year for which the dividends or premium refunds are
being reimbursed.” There is no statutory authority for carrying one year’s negative
net premium forward as an offset against a subsequent year’s positive net
8
See, e.g., § 212.12(1)(a)1., Fla. Stat. (2014) (“[F]or the purpose of
compensating remitters of any taxes or fees reported on the same documents
utilized for the sales and use tax, as compensation for the keeping of prescribed
records, filing timely tax returns, and the proper accounting and remitting of taxes
by them, such seller, person, lessor, dealer, owner, and remitter . . . shall be
allowed 2.5 percent of the amount of the tax due . . . .”).
18
premium. 9 There is no statutory authority for “credits” against future years’
assessments simply because no assessment was paid during a prior year in which
9
Other statutory schemes take different approaches. See, for example,
section 624.5105, Florida Statutes (2014):
Community contribution tax credit . . .
(1) AUTHORIZATION TO GRANT TAX
CREDITS; LIMITATIONS.—
(a) There shall be allowed a credit of 50 percent
of a community contribution against any tax due for a
calendar year under s. 624.509 or s. 624.510.
(b) No insurer shall receive more than $200,000
in annual tax credits for all approved community
contributions made in any one year.
....
(e) If the credit granted pursuant to this section is
not fully used in any one year because of insufficient tax
liability on the part of the insurer, the unused amount
may be carried forward for a period not to exceed 5
years. The carryover credit may be used in a subsequent
year when the tax imposed by s. 624.509 or s. 624.510
for such year exceeds the credit under this section for
such year.
(Boldface omitted.) See also § 212.17, Florida Statutes (2014):
[Sales] Tax credits or refunds.—
(1)(a) If purchases are returned to a dealer by the
purchaser or consumer after the tax imposed by this
chapter has been collected from or charged to the account
of the consumer or user, the dealer is entitled to
reimbursement of the amount of tax collected or charged
by the dealer, in the manner prescribed by the
department.
....
(c) If the tax has not been remitted by a dealer to the
department, the dealer may deduct the same in submitting
his or her return upon receipt of a signed statement by the
dealer as to the gross amount of such refunds during the
period covered by the signed statement, which may not
19
net premium was negative. Absent statutory authority, the Department has no
discretion to allow a reduction in the annual total subject to the assessments.
For all the same reasons, the Department did not err in rejecting the ALJ’s
conclusion that the Department improperly applied unadopted rules to “eliminate”
Amerisure’s 2009 “excess credits.” An “unadopted rule” is “an agency statement
that meets the definition of the term ‘rule,’ but that has not been adopted pursuant
to the requirements of” section 120.54, Florida Statutes. § 120.52(20), Fla. Stat.
(2014). “Rule” means “each agency statement of general applicability that
be longer than 90 days. The department shall issue to the
dealer an official credit memorandum equal to the net
amount remitted by the dealer for such tax collected or
paid. Such memorandum shall be accepted by the
department at full face value from the dealer to whom it
is issued upon the remittance of subsequent taxes accrued
under this chapter. If a dealer has retired from business
and filed a final return, a refund of tax may be made if it
can be established to the satisfaction of the department
that the tax was not due.
(2) A dealer who has paid the tax imposed by this
chapter on tangible personal property sold under a
retained title, conditional sale, or similar contract, or
under a contract in which the dealer retains a security
interest in the property pursuant to chapter 679, may take
credit or obtain a refund for the tax paid by the dealer on
the unpaid balance due him or her when he or she
repossesses the property, with or without judicial process,
within 12 months after the month in which the property
was repossessed. If such repossessed property is resold,
the sale is subject in all respects to the tax imposed by
this chapter.
(Boldface omitted.)
20
implements, interprets, or prescribes law or policy or describes the procedure or
practice requirements of an agency and includes any form which imposes any
requirement or solicits any information not specifically required by statute or by an
existing rule.” § 120.52(16), Fla. Stat. (2014). The term “rule” does not include
“[i]nternal management memoranda which do not affect either the private interests
of any person or any plan or procedure important to the public and which have no
application outside the agency issuing the memorandum.” § 120.52(16), (16)(a).
See State Bd. of Admin. v. Huberty, 46 So. 3d 1144, 1147 (Fla. 1st DCA 2010)
(“We have held that “‘[a]n agency statement that either requires compliance,
creates certain rights while adversely affecting others, or otherwise has the direct
and consistent effect of law is a rule.’” (quoting Fla. Dep’t of Fin. Servs. v. Capital
Collateral Reg’l Counsel-Middle Region, 969 So. 2d 527, 530 (Fla. 1st DCA
2007))).
“An agency . . . may not base agency action that determines the substantial
interests of a party on an unadopted rule.” § 120.57(1)(e)1., Fla. Stat. (2014). The
Department did not do so here.10 The Department simply applied the governing
10
We note, however, the Department’s subsequent adoption of Rule 69L-
4.002, Florida Administrative Code, during the pendency of the appeal, which
provides:
(1) For purposes of its quarterly WCATF
assessments under this rule, a carrier or self-insurance
fund may offset from its total of premiums collected
during the quarter all amounts actually paid or credited to
21
statute to the information Amerisure reported. As the Department said in its final
order, pursuant to section 624.5094, “annual assessments are, indeed, annual and
are the product of a carrier’s premium experience for that year, and that year only.
The ALJ fails to accord any meaning to the statutory phrase ‘against the current
year’s net premium for that year’s assessment’ . . . . No action by the Department
‘eliminates’ a carrier’s ‘credits’ against its assessment liability for dividends paid
and premiums returned when its annual assessment is finalized at zero. Section
624.5094, Florida Statutes, by operation of law, forecloses a carrier’s ability to
policyholders for dividends and returned premiums
during the quarter regardless of the calendar year the
policies incepted for which the dividends or returned
premiums apply. For purposes of its quarterly SDTF
assessments under this rule, a carrier or self-insurance
fund may offset from its total amount of premiums
written during the quarter, all amounts actually paid or
credited to policyholders for dividends and returned
premiums during the quarter regardless of the calendar
year the policies incepted for which the dividends or
premiums apply.
(2) In the event a carrier or self-insurance fund is
determined by the division to have overpaid its annual
WCATF or SDTF assessment, the amount of any actual
overpayment deposited into the State Treasury may, at
the option of the carrier or fund, be carried forward as a
dollar-for-dollar credit against future assessment
liabilities; or be refunded by the division. No carrier or
self-insurance fund shall be entitled to credits that exceed
the assessment amounts actually paid for the specific
calendar year to which the assessments apply.
22
apply its ‘excess credits’ . . . to reduce a future year’s tax liability.” 11
Statements in the proposed draft rules and draft policy and procedures
manual 12 do not require compliance by anybody outside the agency, do not create
11
The Department’s position is also consistent with the plain language of
section 215.26, Florida Statutes (2008), regulating refunds. Section 215.26
provides, in part:
(1) The Chief Financial Officer may refund . . .
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 . . . .
(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. . . .
12
A Division employee drafted proposed rules for the Division’s
Assessment Unit, which addressed “excess credits” based on negative net
premium. One draft of the proposed rules provided that if a carrier owes no
assessment for a quarter as a result of offsets for dividends paid and premium
refunds, the carrier will be able to apply the “unused premium offset to reduce
assessments owed in any of the other three quarters of the same calendar year,” but
after the last quarterly report is filed for a calendar year the Division would “adjust
the Carrier’s records to remove any credits due to these premium offsets that were
not used in that year” and the credit pre-printed on the quarterly report for the first
quarter of the following year would “reflect only overpayment of assessment(s).”
This draft of the proposed rules also provided that when an assessment for either
the WCATF or SDTF was overpaid, the carrier could elect either to apply the
overpayment against future assessments owed to the same fund or submit a refund
request under section 215.26, Florida Statutes, within three years of the date the
alleged overpaid amount was initially deposited into the State Treasury; after the
end of the three-year window, any unused portion of an overpayment would no
23
certain rights while adversely affecting others, or otherwise have the direct and
consistent effect of law, or add anything whatsoever to the plain meaning of
section 624.5094. Similarly, the Division’s forms, which indicated increasing
“credits” throughout the year 2009, also did not “adversely affect any . . .
substantive rights; [did] not constitute a denial or withdrawal of a right an
[insurance carrier] might have; [did] not impose any new or additional
requirements on an [insurance carrier]; and [did] not have ‘the direct and consistent
effect of law.’” Huberty, 46 So. 3d at 1147. “‘[A]n agency interpretation of a
statute which simply reiterates the legislature’s statutory mandate and does not
longer be available as an offset against future assessments or for the issuance of a
refund.
In explanation of the conclusion that these findings established statements of
policy that constituted unadopted rules, the ALJ stated only that the Department
had held the stated position “at least since 2004” and “the Department’s position is
not a simple application of the law to the information provided, because no statute
referenced by the Department makes any mention of excess credits and how they
are to be treated.” The fundamental problem with the ALJ’s conclusion is that
section 624.5094 precludes carrying forward negative net premium from one
calendar year to a subsequent calendar year, thereby precluding the “credits” at
issue in the first place.
The fact that “credit” calculations based on Amerisure’s 2009 quarterly
reports of negative net premium appeared on the quarterly assessment forms was
not sufficient to establish that Amerisure had a statutorily authorized entitlement to
such “credits” so that the Department was required to establish authority (by
statute or rule) to “eliminate” the credits. The notation of credits (or debits) on the
Division’s pre-printed forms appears to be a bookkeeping device to carry forward
information from one quarter to the next, a result of the fact that the assessments at
issue are actually annual assessments even though the statutes set forth quarterly
reporting requirements. It is therefore both irrelevant and completely
understandable that nothing in section 624.5094 “mandates that credits be
eliminated under any circumstances.”
24
place upon the statute an interpretation that is not readily apparent from its literal
reading, nor in and of itself purport to create certain rights, or require compliance,
or to otherwise have the direct and consistent effect of the law, is not an
unpromulgated rule, and actions based upon such an interpretation are permissible
without requiring an agency to go through rulemaking.’” Id. (quoting St. Francis
Hosp., Inc. v. Dep’t of Health & Rehabilitative Servs., 553 So. 2d 1351, 1354 (Fla.
1st DCA 1989)).
The Department’s construction and application of section 624.5094 in the
present case is consistent with and required by the statute. No unadopted rule need
be conjured up to explain the Department’s denial of refunds to Amerisure, and the
final order did not err in concluding as much.
Affirmed.
LEWIS, C.J. and RAY, J., CONCUR.
25