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The 21-day battle in administrative actions.

In its recent revisions to the Uniform Rules of Procedure, the Administration Commission made significant improvements to F.A.C. Rule Ch. 28-106. (1) These include changes to accommodate facsimile transmission and publication on an agency's Web site, as well as amendments relating to notice and disposition of agency declaratory statements, the procedure for emergency action against a licensee, and modifications for bid protest petitions and procedures. The commission also incorporated into the rules recent case law interpreting the limitation period under the Administrative Procedure Act (APA) within which a party may exercise the right to hearing.

Streamlining the Code

One issue at the forefront of the rule involves the responsive pleading to an administrative complaint. An "election of rights" notice normally accompanies an agency's notice of intended action or administrative complaint. This statement informs the affected party of his or her right to request either a formal or informal proceeding under the APA. The notice may also specify the timeframe for a response and the penalty for the party's failure to respond timely. The APA outlines two avenues through which agency action may be contested--proceedings that involve disputed issues of material fact (commonly "formal proceedings") and proceedings that do not involve disputed issues of material fact (commonly "informal proceedings").

The rules on initiation of proceedings presume the petitioner in an action is the person or entity contesting the agency action. (2) However, in cases involving an agency's complaint against a license holder, the agency is the petitioner. Newly adopted Rule 28-106.2015 rectifies this confusion by creating a unique section relating specifically to disciplinary actions against a licensee.

The new rule defines an administrative complaint in the context of actions against a license as an exercise in the agency's enforcement authority which prompts disciplinary action against a licensee. In clearly defining an administrative complaint and creating requirements for the petition, the rule notifies affected parties of their obligations and focuses on the requirements of the administrative complaint and the written information necessary for a response. In its request for an administrative hearing, the respondent is required to file a statement identifying those material facts that are in dispute or indicating that there are no facts in dispute. The respondent is also required to state when the administrative complaint was served, a matter of significance when considering a limitation period and the consequences against an affected party for failure to file a response timely with the agency.

In establishing the applicability of a limitation period, proper service of the notice of agency action or administrative complaint must be accomplished against the affected party. Pursuant to F.S. [section] 120.569(1), agency action notices "shall inform the recipient of any administrative hearing or judicial review that is available under [the APA and] shall indicate the procedure which must be followed to obtain the hearing or judicial review; and shall state the time limits which apply." The requirement of proper service entails giving the affected parties notice which on its face is "readily apparent [that if they fail] to exercise [their] rights to seek administrative review within the time specified in the notice, the consequence [is] that such relief [will be] considered waived." (3)

The First District has looked at whether delivery by certified mail was sufficient to initiate the administrative process in Shelley v. Dep't of Financial Svs., 846 So. 2d 577 (Fla. 1st DCA 2003). In finding that the mailed notice met state and federal due process requirements, the court stated that the "[s]tate must attempt to provide actual notice, not that it must provide actual notice," and that "the notice [should be] reasonably calculated, under all the circumstances, to apprise interested parties of the action and afford them an opportunity to present their objections." (4) Consistent with this methodology, F.S. [section] 120.60(5) states that service of an administrative complaint against a licensee must be accomplished by personal service or certified mail. In the event this is ineffectual, then service may be accomplished constructively by publication over a four-week period.

Limitation Time Frame

Another significant issue that the rule changes address is the limitation period in which to respond to intended agency action or an administrative complaint. Under F.A.C. Rule 28-106.111(4), "[a]ny person who receives written notice of an agency decision and who fails to file a written request for a hearing within 21 days waives the right to request a hearing on such matters."

Unless another more specific rule or statute applies, an affected party has this 21-day period in which to respond to the intended agency action or administrative complaint. After proper service, the agency may verify whether a response was filed within the limitation period. (5) In the event of an untimely response, agencies often regarded the party's failure to respond as a waiver and proceeded with a final order or an informal hearing by default.

The demonstration of waiver of an affected party's rights based on its failure to comply with the limitation period is not governed by the Rules of Civil Procedure and likewise is not treated in the same manner as a civil default and is not considered a jurisdictional issue. (6) Rather, the interpretation of the limitation period is currently principally controlled by F.S. [section] 120.569 (7) and F.A.C. Rule 28-106.111. "The application of a waiver is not a concept favored in the law, and must be clearly demonstrated by the agency or other party claiming the benefit." (8) In Giordano v. Dep't of Banking and Fin., 596 So. 2d 712 (Fla. 1st DCA 1992), appellant licensee was charged with selling securities without a license. The appellant failed to respond to the administrative complaint within 21 days and the department issued a default final order against him, imposing a $5,000 fine. The First District held that the department did not err in entering the order without considering any reasons for the appellant's failure to respond.

[I]f it is clearly established that a party has received notice informing him or her the requirement of taking certain action within a specified period of time, and such party delays for a protracted length of time in taking the required action, [the] party may be deemed to have waived his or her right to so act. (9)

The reasoning of Giordano presupposes that once a party waives its right to request a hearing it is vested with the affirmative duty to elaborate its reasons for the failure to timely respond. The Florida Supreme Court explained this duty by its finding that the responsive period is equivalent to a statute of limitation and is, therefore, integrated with a form of equitable tolling. "The doctrine of equitable tolling serves to ameliorate the harsh results that sometimes flow from a strict, literalistic construction and application of administrative time limits contained in statutes and rules." (10)

The court subscribed to the idea that the tolling doctrine focuses on two aspects, namely the excusable ignorance of the limitation period by the affected party and the lack of prejudice to the moving party. In short, the court would ask:

1) Whether the affected party was "misled or lulled into inaction,"

2) Whether the affected party was in some extraordinary way prevented from asserting his or her rights, or

3) Whether the affected party had asserted his or her rights mistakenly in the wrong forum. (11)

In order to ascertain the existence of facts meeting one of these criteria, an affected party may have the opportunity to present evidence as part of a separate evidentiary hearing (similar to a Williams rule hearing in a criminal proceeding for a discovery violation). In the event one of these criteria is established, and there is otherwise no prejudice to the agency, then the limitation period may be tolled to accept a response after expiration of the 21 days. (12)

Application of Equitable Tolling

The district courts have typically ruled that the importance of applying the Machules standard implicitly entails access to an evidentiary hearing upon request prior to entry of a default order. In Philip v. Univ. of Florida, 680 So. 2d 508 (Fla. 1st DCA 1996), the First District found that appellant's affidavits that he was terminated from a university were enough to excuse the untimely filing of his petition and entitle him to a hearing. The court relied on a Second District opinion with similar facts in which the appellant had mailed his petition 20 days after service, but it was not received by the agency until after the limitation period had elapsed. (13) The appellant attached affidavits to his brief alleging that he had communicated with the agency and the agency informed him that mailing the petition before the deadline would suffice. Although these affidavits were not presented to the agency when it initially dismissed the petition as untimely, the court found that equity in the law required an evidentiary proceeding and remanded the matter. (14) Similarly, the appellant in Envtl. Resource Ass'n of Florida, Inc. v. Dep't of Gen. Svs., 624 So. 2d 330 (Fla. 1st DCA 1993), argued that principles of equity should have lengthened the limitation period. The First District concluded, however, that there was nothing extraordinary in the facts of the case to warrant equitably tolling the limitation period. (15) "Quite to the contrary, the problem in this case [was] the too ordinary occurrence of a party's attorney failing to meet a filing deadline." (16)

The Machules principle of "excusable ignorance" has also been distinguished from the familiar and common concept of "excusable neglect," which is not considered a justification for a party's failure to respond within the limitation period. The Second District denied the request of an appellant on the basis that its request was one day late as a result of excusable neglect in Cann v. Dep't of Children and Family Svs., 813 So. 2d 237 (Fla. 2d DCA 2002). The court noted in dicta, however, that public policy may favor allowing excusable neglect as a defense in such cases, even though the court was without the authority to grant it.

In administrative matters affecting substantial interests, adopting an excusable neglect standard or a time schedule based on the date of service of requests for hearing would promote legitimate public policies .... In light of the Supreme Court's ruling in Machules, [it] can be argued that a service requirement is more appropriate than a filing requirement to fulfill the public policies relevant to administrative appeals and to allow citizens a review of administrative decisions on their merits. However, the legislature [is] the decision maker to which these policy arguments should be directed. (17)

The Third District in Patz v. Dep't of Health, 864 So. 2d 79 (Fla 3d DCA 2003), agreed with the Cann decision, where the appellant filed its election of rights 43 days late. In finding no authority to equitably toll the limitation period, the court noted that overriding the procedural process at the judicial level may be tantamount to a violation of due process. (18) The appellant had failed to demonstrate that he was misled or lulled into inaction, that he was in some extraordinary way prevented from asserting his rights, or that he mistakenly asserted his rights in the wrong forum. Thus, equitable tolling [did] not apply [as t]here was no showing that [he] relied to his detriment on anything the department said or did in not timely filing his election of rights. (19)

Effectively with these decisions, excusable neglect is not contemplated as part of the Machules criteria.

The notion of equitable tolling had resulted in ambiguity in its procedural application, but does not appear to create a slippery slope otherwise granting affected parties unlimited access to the administrative process. The case law seems to suggest that the evidentiary hearing should be conducted with regard to both the agency and affected party and can be restricted to good faith defenses where the affected party may have a meritorious claim. The operational outcome of these appellate decisions is facilitated with the new addition to the rules. Specifically, the following sentence is added to Rule 28-106.111(4): "This provision does not eliminate the availability of equitable tolling as a defense."

Limitation Effect on the Informal Proceeding

An informal hearing by default is usually conducted by an agency solely as the result of an affected party's waiver of rights. The amended rules have repealed F.A.C. Rule 28-106.305(2), (20) which provided that when a dispute of material fact arises in an informal proceeding, a formal hearing can be convened. This rule was an embodiment of the Third District's decision in Village Saloon, Inc. v. Dep't of Bus. & Prof. Reg., 463 So. 2d 278 (Fla. 1st DCA 1984). The courts have not, however, clarified the timeframe for when an affected party is barred from claiming a defense of failure to timely respond. Many parties have argued that during informal proceedings by default the affected party continues to be afforded the opportunity to dispute a material fact at any time. In other instances where an affected party files a general denial of an administrative complaint, the agency may contend that there are no disputed issues of material fact. (21) The affected party may thereafter have the opportunity to clarify its dispute and seek redress in a formal proceeding. The current contention normally relies on this predicate as well as the inference that a waiver should not constitute a bar to the administrative process in the event there is a dispute of fact.

The issue was addressed by the Third District in Jowhal v. Dep't of Bus. & Prof. Reg., 17 Fla. L. Weekly D147 (Fla. 3d DCA 1991), appeal dism., 594 So. 2d 747 (Fla. 1992), which dealt with [section] 455.225(5). This statute, also a codification of Village Saloon, provides that "[i]f any party raises an issue of disputed fact during an informal hearing, the hearing shall be terminated and a formal hearing pursuant to Chapter 120, F.S. shall be held." The appellant in Jowhal failed to respond and the regulatory board treated the case as a proceeding by default. Appellant licensee argued that the statute allowed him to dispute a material fact at any stage of the proceeding, but the court concluded that the appellant had "misapprehended the thrust of the quoted statute." (22) In order for an affected party to utilize the benefit of this statute, the court confirmed that "there must be a request for a hearing pursuant to subsection 120.60(7) in order to trigger the rights under subsection 455.225(5)." (23) "The statute must be interpreted in pari materia with the remainder of the statutory scheme." (24) The court further asserted that the statute did not require "an adversary hearing before an administrative hearing officer be scheduled in every case, regardless of whether the respondent desire[d] a hearing...." (25)

According to the decision in Jowhal, an affected party who fails to timely respond to the administrative complaint may not be "cloaked" with the remedies otherwise afforded an affected party who timely responded. Therefore, the party may not dispute any facts during an informal proceeding by default; but, if allowed, may only offer evidence of mitigation if the agency or regulating board otherwise pronounces the party in violation based on the allegations made in the complaint. In contrast, a party who filed a general denial would have already been cloaked with the remedies afforded under the APA and could raise a disputed issue of fact without having to prequalify under Machules. (26)

Entry and Limitation Conclusion

The APA and the Uniform Rules of Procedure govern access and disposition of administrative cases and provide for due process rights. The accountability of an agency in its decision-making capacity or the accountability of a respondent who violates professional licensing laws requires adherence to a clear framework of the administrative process. State agencies normally undertake resolving disputes according to the most efficient method possible. (27) This may require the promulgation of a rule which delineates the rights of an affected party and the power of the agency to timely prosecute violations. The notion of equity in a limitation period or right of entry sustains equal access to the process, but it should be applied cautiously while contemplating the practical ramifications. Each action, whether initiated by an agency or undertaken by an affected party, should have a foreseeable procedural consequence.

(1) Final rules effective Jan. 15, 2007, www.flrules.org.

(2) F.A.C. Rules 28-106.201 and 28-106.301.

(3) Lamar Advertising Co. v. Dep't of Transp., 523 So. 2d 712, 713 (Fla. 1st D.C.A. 1988).

(4) Shelley v. Dep't of Financial Svs., 846 So. 2d 577 (Fla. 1st D.C.A. 2003) (citations omitted).

(5) The concurring opinion in Envtl. Resource Ass'n of Florida, Inc. v. Dep't of Gen. Svs., 624 So. 2d 330 (Fla. 1st D.C.A. 1993), clarified this issue as a distinction between the "filing" of a response to an administrative complaint versus "serving" a response. The opinion stated that "[b]y using the term 'filed' rather than 'served,' the [election of rights advises an] appellant that any request for hearing must be received by the agency within the time specified following the appellant's receipt . ... The term 'filed,' when used to denote a limitation period, is a legal term generally understood to mean that the agency must receive the matter required no later than the date stated." Id. at 332.

(6) See Patz v. Dep't of Health, 864 So. 2d 79 (Fla 3d D.C.A. 2003).

(7) Fla. Stat. [section] 120.569(1) states that "[e]ach notice shall inform the recipient of any administrative hearing or judicial review that is available under this section, s. 120.57, or s. 120.68; shall indicate the procedure which must be followed to obtain the hearing or judicial review; and shall state the time limits which apply."

(8) Dep't of Environ. Reg. v. Puckett Oil Co., 577 So. 2d 988, 993 (Fla. 1st D.C.A. 1988); see also Symons v. Dep't of Banking and Fin., 490 So. 2d 1322, 1323 (Fla. 1st D.C.A. 1986) (the agency seeking to establish a waiver must show that the affected parties received sufficient notice).

(9) Giordano v. Dep't of Banking and Fin., 596 So. 2d 712 (Fla. 1st D.C.A. 1992).

(10) Machules v. Dep't of Admin., 523 So. 2d 1132 (Fla. 1988) (citations omitted).

(11) Id. at 1132.

(12) Prior to Machules, the Fourth District dealt with the time delay issue between the waiver of the limitation period and the filing of a default order. See Inland Capital Corp. v. Lewis, 362 So. 2d 676 (Fla. 4th D.C.A. 1977). In Inland, the appellants sought review of a cancellation of their respective licensure by arguing that the election of rights contained a statement effectively stating that before the Department of Banking and Finance revoked or suspended their licensure, they had the opportunity to show compliance with all the requirements for retention of the licenses. Id. The appellants argued that they had mailed a response to the notice 21 days later and alleged a meritorious defense, which was not received until after the limitation period. Id. Because of this separate statement in the notice, the court found that the department could not enter a default order canceling the licenses because it had advised the appellants of their right to respond to the complaint before any action was taken and that appellants had done so by asserting a meritorious defense, similar to being "lulled into inaction" according to Machules.

(13) Castillo v. Dep't of Admin., 593 So. 2d 1116, 1117 (Fla. 2d D.C.A. 1992).

(14) On remand, the hearing officer found that there was competent substantial evidence to believe the appellant and apply the doctrine of equitable tolling to accept the petition. However, the department rejected the hearing officer's finding by claiming the affidavits were not dated and that the consideration of testimony on behalf of the appellant was beyond the scope of the directions given by the court. The Second District found that since the rules governing the admissibility of evidence in administrative proceedings were not as stringent, the affidavits had in fact been properly received into evidence and supported the hearing officer's findings. The matter was again remanded based on this additional finding. See Castillo v. Dep't of Management Svs., 633 So. 2d 531 (Fla. 2d D.C.A. 1994).

(15) Envtl. Resource Ass'n of Florida, Inc. v. Dep't of Gen. Svs., 624 So. 2d 330, 331 (Fla. 1st D.C.A. 1993).

(16) Id.

(17) Cann v. Dep't of Children and Family Svs., 813 So. 2d 237, 239-40 (Fla. 2d D.C.A. 2002).

(18) Patz v. Dep't of Health, 864 So. 2d 79 (Fla 3d D.C.A. 2003).

(19) Id. at 80, fn. 3.

(20) This rule states that, "If during the course of the proceeding a disputed issue of material fact arises [the proceeding] shall be terminated and [an informal proceeding] conducted."

(21) See Weiss v. Dep't of Bus. & Prof. Reg., 677 So. 2d 98, 99 (Fla 5th D.C.A. 1996).

(22) Jowhal v. Dep't of Bus. & Prof. Reg., 17 Fla. L. Weekly D147 (Fla. 3d D.C.A. 1991), appeal dism., 594 So. 2d 747 (Fla. 1992).

(23) Id. Fla. Stat. [section] 120.60(7) has been renumbered as Fla. Stat. [section] 120.60(5).

(24) Id.

(25) Id.

(26) Distinguishing Weiss in which the appellant timely filed an election of rights.

(27) "Not every dispute between an agency and an affected person requires formal proceedings for its resolution. Many disputes ... can as readily be determined and made ready for judicial review under Section 120.57(2), which in proper application will afford full relief faster and more conveniently." See U. S. Service Industries v. Dep't. of Health and Rehab. Svs., 383 So. 2d 728, 729 (Fla 1st D.C.A. 1980).

Shiv Narayan Persaud is a senior attorney for the Department of Business and Professional Regulation, prosecuting real estate licensees. His prior state administrative law experience includes practicing with the Department of Transportation and the Office of Insurance Regulation. He received his J.D. from Florida State University in 1997.

This column is submitted on behalf of the Administrative Law Section, Patrick L. Imhof, chair, and Deborah K. Kearney, editor.
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Author:Persaud, Shiv Narayan
Publication:Florida Bar Journal
Date:Jun 1, 2007
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