State, Dept. of Health and Rehabilitative Services v. South Beach Pharmacy, Inc.

• Decision Date: 12 April 1994
• Docket Number: No. 92-4332,92-4332
• Citation: 635 So.2d 117
• Parties: 19 Fla. L. Weekly D844 STATE, DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Appellant, v. SOUTH BEACH PHARMACY, INC., d/b/a Southpointe Pharmacy, Appellee.
• Court: Florida District Court of Appeals

Page 117

635 So.2d 117

19 Fla. L. Weekly D844

STATE, DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Appellant, v. SOUTH BEACH PHARMACY, INC., d/b/a Southpointe Pharmacy, Appellee.

No. 92-4332.

District Court of Appeal of Florida,

First District.

April 12, 1994.

David G. Pius, Sr. Atty., Dept. of Health and Rehabilitative Services, Tallahassee, for appellant.

William M. Furlow and Alan Harrison Brents of Katz, Kutter, Haigler, Alderman, Davis, Marks & Bryant, P.A., Tallahassee, for appellee.

BENTON, Judge.

The Department of Health and Rehabilitative Services (HRS) urges reversal of a hearing officer's final order requiring HRS to reimburse South Beach Pharmacy, Inc. (Southpointe) for attorney's fees and costs that Southpointe incurred in successfully defending HRS' claims against it. HRS maintains that the fee petition was filed out of time, and argues that the hearing officer erred in finding that HRS lacked substantial justification to initiate the main case. We reject both contentions and affirm.

In proceedings under the Florida Equal Access to Justice Act (Act), section 57.111, Florida Statutes, small business parties who have prevailed in civil actions ¹ or administrative proceedings initiated by a state agency are entitled to recover attorney's fees and costs (up to a statutory limit), "unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust." Sec. 57.111(4)(a), Fla.Stat. (1993).

Time for Filing Limited

In order to recover when the predicate proceeding is administrative, ² a small business party must initiate a separate administrative proceeding, by filing a petition with the Division of Administrative Hearings in conformity with Florida Administrative Code Rule 60Q-2.035, "within 60 days after the date that the small business party becomes a prevailing small business party." Sec. 57.111(4)(b)2., Fla.Stat. (1993). In its final order in the main or underlying case, HRS fined Southpointe, suspended Southpointe from the Medicaid program, and ordered a refund of claimed overpayments. Only after it succeeded in overturning HRS' final order on appeal, Southpointe Pharmacy v. Department of Health and Rehabilitative Services, 596 So.2d 106 (Fla. 1st DCA 1992), could Southpointe be said to have prevailed. (Although the hearing officer's recommended order in the main case was favorable, HRS entered a final order in that case adverse to Southpointe "reject[ing] in part certain findings of fact made by the hearing officer, as well as the hearing officer's conclusions of law drawn therefrom." 596 So.2d at 107.)

Where a lower tribunal enters a favorable final order or judgment in the first instance and an appeal is taken, ³ section 57.111(3)(c), Florida Statutes (1993), does not treat the small business party as having prevailed, while the appeal is pending. Otherwise, absent a stay, a small business party could recover fees and costs before the ultimate outcome was clear. If a favorable judgment or order is reversed, section 57.111, Florida Statutes (1993), authorizes no award. During the pendency of the appeal, the favorable "judgment or order has not [yet] been reversed on appeal," but it is not clear whether it will eventually be reversed, ⁴ and "the time for seeking judicial review of the judgment or order has" not expired, within the meaning of the statute.

Adverse Order Reversed

Here, of course, HRS' original order was unfavorable. Our decision in Southpointe Pharmacy v. Department of Health and Rehabilitative Services, 596 So.2d 106 (Fla. 1st DCA 1992), reversing HRS' final order in the main case, was filed on March 11, 1992. Even though no petition for rehearing, clarification or certification had been filed in the interim, the mandate did not issue until April 13, 1992. In its amended initial brief, HRS asserts that

Southpointe became the prevailing party on March 27, 1992, when "the time for judicial review of the judgment or order [had] expired." Sec. 57.111(c)1, Florida Statutes.... The only remaining action was the issuance of a mandate by the [appellate] clerk.... [which] is clearly a ministerial act by the [appellate] court's clerk....

Citing Florida Rule of Appellate Procedure 9.340, ⁵ HRS goes on to argue that Southpointe's section 57.111 petition was untimely because it was not filed with the clerk of the Division of Administrative Hearings until June 1, 1992, more than sixty days after the mandate "should have issued," albeit within sixty days of its actual issuance.

We view the significance of the mandate in a very different light, and do not, in any event, believe it is incumbent on a prevailing small business party to second guess an appellate court as to the proper time for its issuance. Florida Rule of Appellate Procedure 9.340 prescribes the time for issuance of the mandate "[u]nless otherwise ordered." It is within the discretion of an appellate court when a mandate issues, Jacksonville, T. & K.W. Ry. Co. v. Adams, 28 Fla. 631, 10 So. 465 (1891), although this discretion must be exercised, if not earlier, then "during the 15-day mandate period." City of Miami v. Arostegui, 616 So.2d 1117, 1119 (Fla. 1st DCA 1993) (citing State ex rel. Price v. McCord, 380 So.2d 1037 (Fla.1980)). "The power of the court to expedite as well as delay the issuance of the mandate, with or without motion, has been made express." Committee Notes, 1977 Amendment, Fla.R.App.P. 9.340. Only upon issuance of the mandate does the appellate court's decision become final. State ex rel. Davis v. Clearwater, 108 Fla. 635, 146 So. 836 (1933).

But the favorable judgment or order section 57.111 makes prerequisite to an award of fees and costs is not the judgment or order of an appellate court. The statute contemplates the judgment or order of a trial court or, as here, the final order of an administrative agency. Section 57.111(3)(c), Florida Statutes (1993), provides:

A small business party is a "prevailing small business party" when:

1. A final judgment or order has been entered in favor of the small business party and such judgment or order has not been reversed on appeal or the time for seeking judicial review of the judgment or order has expired;

The favorable "final judgment or order" is the judgment or final order of the lower tribunal, whether never appealed, affirmed on appeal, or entered pursuant to mandate, after an appeal has concluded. In the event of an appeal, the lower tribunal is without jurisdiction until the appeals court's mandate issues. See McGurn v. Scott, 596 So.2d 1042, 1045 (Fla.1992) (citing Willey v. W.J. Hoggson Corp., 89 Fla. 446, 105 So. 126 (Fla.1925)).

Favorable Order Imputed

HRS had a duty in the main proceeding to enter an order favorable to Southpointe in accordance with the mandate, once the original final order adverse to Southpointe was reversed; as soon as the mandate issued, HRS had jurisdiction to act. "When the mandate was received by ... [HRS, it] should have carried out and placed into effect the order and judgment of this [c]ourt." Blackhawk Heating & Plumbing Co., Inc. v. Data Lease Financial Corp., 328 So.2d 825, 827 (Fla.1975) (citation omitted). An administrative agency "is without authority to alter or evade the mandate of an appellate court absent permission to do so," 328 So.2d at 827 (citation omitted), permission HRS did not have here.

The original, adverse order nevertheless remains the only final order HRS has ever entered in the main case. HRS did not enter an order on remand dismissing with prejudice. But HRS' omission cannot be allowed to defeat Southpointe's right to recover fees and costs. "[I]n the absence of an order in the main case on remand, an order in conformity with the mandate must be imputed, if necessary to prevent [an agency's] taking unfair advantage by withholding what an appellate court has clearly required." Sun Coast International, Inc. v. Department of Business Regulation, No. 92-3576F (DOAH Nov. 13, 1992). See Robbins v. Pfeiffer, 407 So.2d 1016 (Fla. 5th DCA 1981) (compliance with mandate "is a purely ministerial act" At 1017).

Southpointe's petition for fees and costs was timely, and HRS' failure to enter a favorable final order on remand, when the reviewing court mandated reversal, is no bar to proceedings under section 57.111, Florida Statutes (1993). Settlement or voluntary dismissal aside, the sixty-day period in which section 57.111(4)(b)2, Florida Statutes (1993), contemplates that a small business party will file its fee petition does not begin before entry of a favorable order or judgment. Here the time never began running, because HRS never entered an order on the mandate. ⁶ But Southpointe's fee petition was in no sense premature, because a small business party has the right to insist that an order conforming to the mandate be imputed, at any time after the mandate issues.

Substantial Justification Not Proven

"The Act is designed to discourage unreasonable governmental action, not to paralyze agencies doing the necessary and beneficial work of government." Rudloe v. Department of Environmental Regulation, 33 Fla.Supp.2d 203 (DOAH 1987). But, once a prevailing small business party proves that it qualifies as such under section 57.111, the agency that initiated the main or underlying proceeding has the burden to show substantial justification or special circumstances, Department of Health and Rehabilitative Services v. S.G., 613 So.2d 1380, 1386-7 (Fla. 1st DCA 1993); Department of Professional Regulation, Div. of Real Estate v. Toledo Realty, Inc., 549 So.2d 715 (Fla. 1st DCA 1989); Ray v. Department of Transportation, 9 F.A.L.R. 1537 (DOAH 1990); Gentele v. Department of Professional Regulation, 9 F.A.L.R. 310 (DOAH 1986) aff'd 513 So.2d 672 (Fla. 1st DCA), in order to avoid liability for fees and costs.

HRS initiated the original, unsuccessful administrative proceeding at issue here, seeking to recover a refund of Medicaid...