November 4, 2011

Florida Capital Update: November 2011

Holland & Knight Update
Kevin Cox | Eddie Williams III

Capital Policy Making

“Your Voice” for Florida Businesses Unveiled

As part of ongoing efforts to improve Florida’s business climate, the Florida Legislature recently announced the availability of “Your Voice” – an online tool that will survey current and potential business owners and stakeholders to collect feedback on any potential burdensome rules and regulations for businesses. This tool is part of the Legislature’s effort to discover how rules and regulations may hinder productivity and job growth.

Office of Insurance Regulation Approves Workers’ Compensation Rate Increase

On October 24, 2011, Florida Insurance Commissioner Kevin McCarty approved a proposed 8.9 percent rate hike requested by the National Council on Compensation Insurance. The rate increase will take effect on January 1, 2012. Florida’s workers’ compensation rates remain among the lowest in the country and the lowest among large states – about 59 percent lower than in 2003.

Associated Industries of Florida (AIF) recently announced that it will seek legislation during the 2012 session to close a loophole in the workers’ compensation law that allows physicians to dispense drugs rather than pharmacies. The repackaging practice involves doctors dispensing drugs to injured workers rather than pharmacists filling the prescription. Supporters of physician dispensing, including the Florida Medical Association, argue that the practice encourages patient compliance. AIF contends that the prices for repackaged drugs are inflated and account for a 2.5 percent increase in the proposed workers’ compensation rate increase.

Capital Courts

Court Says Legislature’s 2009 Amendment on Machine Gaming Is Constitutional

In Florida Gaming Centers, Inc. v. Fla. Dep’t of Bus, and Prof. Reg., Case No. 1D10-6780 (Fla. 1st DCA Oct. 6, 2011), the court determined that the Legislature’s 2009 amendment to section 551.102(4), Florida Statutes, enabling machine gaming in Florida beyond the scope of Article X, Section 23 to the Florida Constitution, was constitutional. As background, on November 2, 2004, Florida voters approved a ballot initiative adding Article X, section 23 to the Florida Constitution, which authorized the governing bodies of Miami-Date and Broward Counties to hold countywide referendums in their respective counties on whether to authorize slot machines within existing, licensed pari-mutuel facilities (thoroughbred and harness racing, greyhound racing and jai-alai). In 2009, the Legislature amended the definition of “eligible facility” in section 551.102(4), Florida Statutes, allowing slot machine gaming at certain pari-mutuel facilities not authorized by Article X, Section 23 to the Florida Constitution.

When the holders of pari-mutuel wagering permits in Miami-Dade County filed suit for a declaratory judgment that this statutory amendment was unconstitutional, the court disagreed that the purpose of Article X, section 23 was to limit slot machine gaming in Florida to certain facilities in Miami-Dade and Broward Counties. The court noted that the Legislature has broad discretion in regulating and controlling pari-mutuel wagering and gambling under its police powers. It stated that the only thing that Article X, section 23 limited was the Legislature’s authority to prohibit slot machine gaming in certain facilities in the two counties. The court concluded that Article X, section 23 provided no indication that Florida voters intended to forever prohibit the Legislature from exercising its authority to expand slot machine gaming beyond those facilities in Miami-Dade and Broward Counties. Furthermore, the court found no indication that the Florida voters intended to grant the seven entities who met the criteria a constitutionally-protected monopoly over slot machine gaming in the state.

Court Holds That the Florida Constitution Vests Exclusively in the Legislature the Authority to Set and Appropriate Tuition and Fees

In Graham v. Haridopolos, Case No. 1D11-384 (Fla. 1st DCA Oct. 12, 2011), certain citizens and taxpayers with various roles and interests in the state university system brought a declaratory action against the presiding officers of the Legislature, challenging the constitutionality of several statutes and a provision of the 2007-08 General Appropriations Act that restricted the universities’ expenditure of tuition and fees and conditioned the appropriation of funds to each university upon compliance with the tuition and fee policies established by the Legislature. The complainants alleged that these provisions contravened the Board of Governors’ exclusive authority under Article IX, section 7(d) of the Florida Constitution to establish and expend tuition and fees.

The court agreed with the Legislature that the subject statutes were constitutional, because the Florida Constitution vests the “power of the purse” in the Legislature by granting it exclusive and plenary power to raise and appropriate state funds. Furthermore, the court held that this legislative authority includes the power to impose fees necessary to offset the costs of using state government services, and that the power of appropriation extends to all funds in the State Treasury from whatever source. In addition, the appropriation power includes the authority to attach contingencies to the appropriation of funds that are reasonably related to the appropriation. Therefore, the court held that the Florida Constitution does not grant the Board the power to set and appropriate tuition and fees.

Assisted Living Facility Arbitration Agreement Was Not Unconscionable

In Tampa HCP, LLC v. Bachor, Case No. 2D11-505 (Fla. 2nd DCA Oct. 26, 2011), the court determined that an arbitration agreement executed by the personal representative of an assisted living facility resident was not unconscionable and that the personal representative had knowingly and voluntarily waived the right to trial by jury. The personal representative executed the two-page arbitration agreement as part of the assisted living facility’s admission packet. The agreement did not contain any limitations on damages, discovery, appellate rights or any other limitations. It provided that the personal representative had the right to review the agreement with a lawyer, and that signing the agreement was not a precondition to admission to the facility. Furthermore, the personal representative had the right to rescind the agreement within three days of executing it.

The court concluded there was no evidence that the personal representative was tricked into signing the agreement or that the agreement had to be signed in order for the facility to grant admission to the individual. In addition, the personal representative could have rescinded the agreement within three days of signing it, but failed to do so. Thus, the court held that the totality of the circumstances reflected that the personal representative had a meaningful opportunity to review the arbitration agreement, to obtain guidance, and to accept or reject the terms of the arbitration agreement.

Requiring TANF Applicants to Submit to a Drug Test to Apply for Benefits Likely Violates the Fourth Amendment

During the 2011 Session, the Legislature adopted House Bill 353, which requires individuals who apply for TANF (Temporary Assistance for Needy Families) benefits to submit to a drug test. Ch. 2011-81, Laws of Fla., codified at § 414.0652(1), Fla. Stat. (2010)). Luis W. Lebron, a single father with prior military service who has sole custody of his four-year-old son, challenged the law. Mr. Lebron, who otherwise qualified for TANF benefits, refused to submit to a drug test, arguing that it violates his Fourth Amendment right to be free from unreasonable searches. The court agreed, granting a preliminary injunction that bars the state from requiring applicants for TANF benefits to submit to suspicionless drug searches.

In so holding, the court found that the Mr. Lebron was likely to prevail on his challenge to the drug testing requirement. Under the Fourth Amendment, the general rule is that a search must be based on the “individualized suspicion of wrongdoing” in order to be reasonable. The state argued that there are “exceptional circumstances” that make the Fourth Amendment’s traditional probable cause requirement impractical for TANF applicants, but the court rejected this argument, finding that the state’s own prior study failed to substantiate a special need for mandatory drug testing.

Capital News

Drug and Device Regulators Move to New Agency

As of Oct. 1, 2011, Florida’s Drugs, Devices and Cosmetics Program moved from the Department of Health to the Department of Business and Professional Regulation (DBPR). The Drug Wholesale Distributor Council will meet at DBPR in Tallahassee on Dec. 6, 2011.

Seminole Tribe Appeals Gas-Tax Decision to Florida Supreme Court

The Seminole Tribe of Florida has filed an appeal with the Florida Supreme Court regarding the Fourth District Court of Appeals’ decision in Florida Dep’t of Revenue v. Seminole Tribe of Florida, 65 So. 2d 1094 (Fla. 4th DCA 2011). The issue at the heart of the controversy is whether Florida may lawfully impose motor fuel taxes on the Tribe’s purchases of fuel when such purchases are made off the reservation and tribal lands, but are used for the performance of the Tribe’s functions as a sovereign government. The Fourth District Court of Appeals concluded that such off-reservation purchases were taxable even though the legal incidence of the tax was on the Tribe.

Senate Proposing Juvenile Justice Reform

SPB 7016 proposes various reforms affecting juvenile justice providers and students enrolled in juvenile justice programs by, inter alia, introducing provider accountability measures.

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