Shari DANIELS, Petitioner,
v.
FLORIDA DEPARTMENT OF HEALTH, Respondent.
Supreme Court of Florida.
*62 Cоlleen M. Greene and Max R. Price of the Law Offices of Max R. Price, Miami, FL, for Petitioner.
Pamela H. Page, Section Head, Appellate Section and Dana Baird, Assistant General Counsel, Florida Department of *63 Health Bureau of Health Care, Tallahassee, FL, for Respondent.
QUINCE, J.
We have for review the decision in Daniels v. State Department of Health,
STATEMENT OF THE FACTS AND CASE
On September 20, 2001, the Florida Department of Health (Department) issued an administrative complaint against Shari Daniels, alleging that she had violated section 467.203(1)(f), Florida Statutes (2001).[1] Daniels disputed the allegations in the Department's complaint and requested a formal administrative hearing. On March 13, 2002, the Department referred the matter to the Division of Administrative Hеarings (DOAH). On June 28, 2002, the Department filed a notice of voluntary dismissal. Consequently, an order was entered on July 3, 2002, closing the Department's file, canceling the scheduled final hearing, and closing the DOAH file.
On August 5, 2002, Daniels filed a petition for attorney's fees under the Florida Equal Access to Justice Act (FEAJA), section 57.111, Florida Statutes (2002), seeking an award of attorney's fees and costs. On August 26, 2002, the Department filed a motion to dismiss Daniels' pеtition. Daniels did not file a response to the Department's motion to dismiss, and on November 20, 2002, the administrative law judge entered an order granting the motion to dismiss with leave to file an amended petition on or before December 6, 2002. The motion to dismiss was granted because Daniels failed to allege sufficient facts to support her argument that she was a "small business party" as defined in FEAJA.
On December 2, 2002, Daniels filed an amended petition for attorney's fees under FEAJA. In support of her assertion that she is a "small business party," Daniels stated that (1) at the time the underlying action was initiated, her net worth (including both personal and business investments) did not exceed $2 million and she did not employ more than twenty-five full-time employees; (2) she is the sole shareholder of South Beach Maternity Associates, Inc., d/b/a Miami Beach Maternity *64 Center, a subchapter-S corporation;[2] (3) she and South Bеach Maternity are one and the same entity; and (4) the administrative action stemmed solely from her treatment of a patient of South Beach Maternity. On December 11, 2002, the Department filed a motion to dismiss, and Daniels filed a response to the motion. Nonetheless, on January 2, 2003, the judge entered an order granting the motion to dismiss the amended petition for attorney's fees and providing a date for the filing of the proposed final order. The administrative law judge granted the motion, finding that Daniels had failed to allege sufficient facts to support her argument that she was a "small business party" within the definition of FEAJA.
In the final order, the administrative law judge, relying on Florida Real Estate Commission v. Shealy,
ANALYSIS
The key issue in this case is whether Daniels, the sole owner of a subchapter-S corporation, qualifies as a small business party as defined in section 57.111, Florida Statutes (2002), when suit is brought against her individually and not against the corporation. If she qualifies as a small business party, she is entitled to fees and costs under FEAJA. The question before us is a matter of statutory interpretation and is a question of law subject to de novo review. See State v. Glatzmayer,
The statute at issue in this case, section 57.111, Florida Statutes (2002), is clear and unambiguous. It provides in relevant part:
57.111 Civil actions and administrative proceedings initiated by state agencies; attorneys' feеs and costs.
(1) This section may be cited as the "Florida Equal Access to Justice Act."
(2) The Legislature finds that certain persons may be deterred from seeking review of, or defending against, unreasonable governmental action because of the expense of civil actions and administrative proceedings. Because of the greater resources of the state, the standard for an award of attorney's fees and costs against the state should be different from the stаndard for an award against a private litigant. The purpose of this section is to diminish the deterrent effect of seeking review of, or defending against, governmental action by providing in certain situations an award of attorney's fees and costs against the state.
(3) As used in this section:
(a) The term "attorney's fees and costs" means the reasonable and necessary attorney's fees and costs incurred for all prepаrations, motions, hearings, trials, and appeals in a proceeding.
(b) The term "initiated by a state agency" means that the state agency:
. . . .
2. Filed a request for an administrative hearing pursuant to chapter 120;....
. . . .
(c) A small business party is a "prevailing small business party" when:
. . . .
3. The state agency has sought a voluntary dismissal of its complaint.
(d) The term "small business party" means:
1.a. A sole proprietor of an unincorporated business, including a professional practice, whose principal office is in this state, who is dоmiciled in this state, and whose business or professional practice has, at the time the action is initiated by a state agency, not more than 25 full-time employees or a net worth of not more than $2 million, including both personal and business investments; or
b. A partnership or corporation, including a professional practice, which has its principal office in this state and has at the time the action is initiated by a state agency not more than 25 full-time employees or a net worth of not more than $2 million;....
(4). . . .
. . . .
(d) The court, or the administrative law judge in the case of a proceeding under chapter 120, shall promptly conduct an evidentiary hearing on the application for an award of attorney's fees and shall issue a judgment, or a final order in the case of an administrative law judge. The final order of an administrative law judge is reviewable in accordance with the provisions of s. 120.68. If the court affirms the award of attorney's fees and costs in whole or in part, it may, in its *66 discretion, award additional attorney's fees and costs for the appeal.
§ 57.111, Fla. Stat. (2002) (emphasis added). In essence, a person who has requested review of a state agency action and is the prevailing party in the matter is entitled to attorney's fees and costs if the persоn fits the statutory criteria of a small business party.
The Department's complaint was filed against Daniels individually. Thus the question before this Court is whether she is included within the statutory definition of a "small business party"? Section 57.111(3)(d)(1)(a) defines a small business party as an entity that is a sole proprietor of an unincorporated business. Daniels does not fit this definition because she practices under South Beach Maternity, a subchapter-S corporation, and not as a sole proprietor. Additionally, she is not included within section 57.111(3)(d)(1)(b) because the agency filed a complaint against her as an individual and not against her corporation, South Beach Maternity. If the complaint had been filed against South Beach Maternity, fees might have been awarded under FEAJA.
A number of Florida cases have interpreted FEAJA on this issue consistent with the result reached by the court in this case. In Shealy, a case virtually identical to the instant matter, the First District Court of Appeal reversed an attorney's fees award made under FEAJA, finding that Shealy was not a small business party as required by the statute.
Section 57.111 authorizes an attorney's fee for a qualifying small business party, which must be a corporation, a partnership, or a sole proprietor of an unincorporated business. See § 57.111(3)(d)1.a and b, Fla.Stat. This does not encompаss individual employees. Department of Professional Regulation v. Toledo Realty,549 So.2d 715 (Fla. 1st DCA 1989); Thompson v. Department of Health and Rehabilitative Services,533 So.2d 840 (Fla. 1st DCA 1988). Although the appellee and the corporation were found to be "one and the same entity" based on the appellee's control of the business, the statute does not permit such disregard of the corporate form. The appellee was not a small business party as defined by the statute, and hе thus should not have been awarded a section 57.111 attorney's fee.
Id. at 152 (footnote omitted). The First District distinguished Shealy from Ann & Jan Retirement Villa, stating that Ann & Jan Retirement Villa involved a situation where the attorney's fees were awarded to the corporation rather than to the individual. See Shealy,
The First District reached a similar conclusion in Department of Professional Regulation v. Toledo Realty, Inc.,
*67 In Thompson v. Department of Health & Rehabilitative Services,
We recognize the apparent unfairness in permitting the limited class of persons falling within the definition of "small business party" to recover attorney fees and costs while excluding other persons such as employees of private and governmental entities who are forced to litigate with state agencies. However, Thompson makes no attack on the constitutional validity of the statute; and whether to extend the act's protection beyond the limitations presently imposed by the statute is a matter for legislative, not judicial, action.
Id. at 841. There have been, however, no legislative changes made to the statute.
Despite this line of cases limiting fees to the literal language of the statute, other courts have found FEAJA fees awardable in individual cаses. For example, in Albert, one of the conflict cases, Albert was subject to a disciplinary proceeding in which it was alleged that he had improperly refused to furnish copies of dental records to a patient.
Although we must agree with the Department that a literal interpretation of subsections (a) and (b) would not include the appellant, this interpretation would lead to an absurd result which the legislature could not have intended. Amente v. Newman,653 So.2d 1030 (Fla.1995). It is clear from the language of subsections (a) and (b), which both contain the term "including a professional practice," that the legislature intended for the statute to apply to professionals, regardless of whether they practice as sole proprietorships or professional service corporations. What the legislature overlooked is that the license to operate, which is generally the subject of the administrative proceedings, is issued to the individual, not the professional service corporation. The Department's interpretation would mean that professionals who have incorporated are not *68 covered by subsection (b), and would render subsection (b) meaningless.
Id. at 1131-32.
In Ann & Jan Retirement Villa, the Department had issued a license to Sophie DeRuiter, who owned all the stock in an adult congregate living facility, Ann & Jan Retirement Villa, Inc. When DeRuiter tried to renew the license for the facility, the Department conducted a search through the Florida Protective Services System Control Abuse Registry and discovered that an investigation by Aging and Adult Services indicated that DeRuiter had been a perpetrator of medical neglect. Therefore, the Department denied DeRuiter's request to renew the license for Ann & Jan and also revoked her individual license until she could prove herself not guilty of the medical neglect charge. Ann & Jan appealed the deniаl of the license to the Division of Administrative Hearings. Ann & Jan filed a motion for summary judgment on the issues of the Department's revocation of DeRuiter's license and the denial of the license renewal. Thereafter, the Department filed a notice of dismissal. DOAH conducted a hearing on entitlement to attorney's fees and costs under FEAJA and denied the request for attorney's fees and costs. On appeal, thе Fourth District reversed, finding that Ann & Jan, the entity that brought the appeal, and Sophie DeRuiter were "one and the same entity" and thus qualified as a "small business party" as defined by section 57.111(3)(d) a sole proprietor of an unincorporated business. It is clear from the face of the opinion that the action was styled in the name of the business entity and not in the name of the individual owner/employee.
In reviewing these cases, it is clear that Shealy is more analogous to the instant case. As in Shealy, the administrative complaint in this instance was brought against the individual owner as an employee of the corporation and not against the corporation itself. Although Daniels and South Beach Maternity are one and the same entity in that Daniels controls South Beach Maternity and owns 100% of its stock, strict adherence to the language of section 57.111(3)(d) compels us to reach the conclusion that Daniels is not a smаll business party, because she is not a sole proprietor of an unincorporated business and because South Beach Maternity was not a party to any of these proceedings. Like Shealy, the First District's decisions in Thompson and Toledo Realty espouse the principle that an employee of a partnership or corporation is not entitled to recover attorney's fees and costs under FEAJA (even if that employee is also the owner) if the proceedings initiated by the State were brought against the employee individually, rather than the partnership or corporation.
The history of FEAJA is also instructive on this issue. Prior to the creation of FEAJA, the federal Equal Access to Justice Act, 5 U.S.C § 504 (2000), was passed on October 21, 1980. While it was amended twice, the portion of that federal statute central to the issue here has remained unchanged. It provides as follows:
(B) "party" means a party, as defined in section 551(3) of this title, who is (i) an individual whose net worth did not exceed $2,000,000 at the time the adversary adjudication was initiated, or (ii) any owner of an unincorporated business, or any partnership, corporation, association, unit of local government, or organization, the net worth of which did not exceed $7,000,000 at the time the adversary adjudication was initiated, and which had not more than 500 employees at the time the adversary adjudication was initiated....
*69 5 U.S.C. § 504(b)(1)(B) (emphasis added). Thus, the federal act specifically provides for the award of fees to qualifying individuals.
After its federal counterpart was created, the Florida Legislature enacted section 57.111, Florida Statutes, in 1984.[3] The portion of FEAJA which is at issue here, section 57.111(3)(d), was included in the original 1984 act and remains unсhanged. It does not include individuals within the definition of "small business party" as its federal counterpart does in 5 U.S.C. § 504(b)(1)(B)(i). Thus, it can be inferred that the Legislature did not intend to permit individual owners of partnerships or corporations, such as Daniels, to recover attorney's fees and costs under FEAJA when the State initiates an administrative complaint against them individually. As the First District in Thompson appropriately commented, "[W]hether to extеnd the act's protection beyond the limitations presently imposed by the statute is a matter for legislative, not judicial, action."
CONCLUSION
Because the Department's complaint was filed against Daniels individually, she does not fall within either definition of a "small business party" contained in section 57.111(3)(d)1. Therefore, she is not entitled to attorney's fees and costs under the Florida Equal Access to Justice Act. We approve the decision of the Third District in this case and disapprove the Fourth District decisions in Albert and Ann & Jan Retirement Villa to the extent that they are inconsistent with this opinion.
It is so ordered.
PARIENTE, C.J., and WELLS, ANSTEAD, CANTERO, and BELL, JJ., concur.
LEWIS, J., concurs in result only.
NOTES
Notes
[1] 467.203 Disciplinary actions; penalties.
(1) The following acts constitute grounds for denial of a license or disciplinary action, as specified in s. 456.072(2):
. . . .
(f) Engaging in unprofessional conduct, which includеs, but is not limited to, any departure from, or the failure to conform to, the standards of practice of midwifery as established by the department, in which case actual injury need not be established.
§ 467.203(1)(f), Fla. Stat. (2001).
[2] A subchapter-S corporation, or simply S corporation, is one which does not have more than 75 shareholders (all of whom are persons and not entities), which does not have a resident alien as a shаreholder, and which does not have more than one class of stock. 26 U.S.C. § 1361(b)(1) (2000). Shareholders of S corporations receive pass-through taxation (i.e., the S corporation's income is passed through to its shareholders so that they are taxed at the end of the year but the S corporation is not), unlike C corporations which have double taxation (i.e., the C corporation is taxed on its income and its shareholders are taxed on the income which they receive through dividends). Black's Law Dictionary 341, 344 (7th ed.1999).
[3] See ch. 84-78, Laws of Fla.