Opinion
Case No. 5D20-2201
02-11-2022
Philip DENNISON, Appellant, v. HALIFAX STAFFING, INC., Appellee.
Thomas L. Dickens, III, and Jolie Pavlos, of Morgan & Morgan, P.A., Orlando, C. Ryan Morgan, of Morgan & Morgan, P.A., Atlanta, GA, for Appellant. Richard C. McCrea, Jr., Jennifer W. Corinis, and Cayla M. Page, of Greenberg Traurig, LLP, Tampa, for Appellee.
Thomas L. Dickens, III, and Jolie Pavlos, of Morgan & Morgan, P.A., Orlando, C. Ryan Morgan, of Morgan & Morgan, P.A., Atlanta, GA, for Appellant.
Richard C. McCrea, Jr., Jennifer W. Corinis, and Cayla M. Page, of Greenberg Traurig, LLP, Tampa, for Appellee.
SASSO, J.
Philip Dennison appeals a final summary judgment entered in favor of Halifax Staffing, Inc., arguing the trial court erred in determining that Halifax Staffing is not a private entity subject to Florida's private sector whistle-blower act. Because we agree that Halifax Staffing does not fall within the act's definition of a private employer, we affirm.
BACKGROUND AND FACTS
On February 28, 2019, Dennison filed this action asserting a single claim for violation of section 448.102, Florida Statutes (2019) ("Florida's Private Whistle-blower's Act"), against his former employer, Halifax Staffing. The allegations in the complaint arose out of Dennison's claim that, during the course of his employment, he allegedly discovered billing discrepancies with respect to services rendered to Medicare/Medicaid patients. Dennison believed the discrepancies were intended to defraud the government and, thus, reported his discovery to his superiors. Dennison alleged that after his report, he was suspended and ultimately terminated. Dennison claimed that by terminating him, Halifax Staffing was retaliating against him for objecting to the billing practices, in violation of Florida's Private Whistle-blower's Act.
In an amended answer, Halifax Staffing denied that it was an employer as defined under Florida's Private Whistle-blower's Act and, thus, not subject to suit thereunder. Subsequently, Halifax Staffing moved for summary judgment, arguing that it is not a private company and was thus entitled to judgment in its favor.
In support of its summary judgment motion, Halifax Staffing filed the affidavit of the General Counsel of Halifax Hospital Medical Center, who also served as the General Counsel for Halifax Staffing. The affidavit summarized Halifax Staffing's history, purpose, structure, and operation as follows:
The Legislature created the Halifax Hospital Medical Center, a special taxing district ("the District"), by special act, which provided:
The district may establish, construct, operate, and maintain such hospitals, medical facilities clinics, and out-patient facilities and services as are necessary. The hospitals, medical facilities or clinics, and out-patient facilities and services shall be established, constructed, operated, and maintained by the district for the preservation of the public health, for the public good and for the use of the public of the district; and maintenance of such hospitals, medical facilities, clinics, and out-patient facilities and services in the district are hereby found and declared to be a public purpose and necessary for the general welfare of the residents of the district....
Ch. 79-577, § 5, Laws of Fla.
The special act was amended to provide the District with the authority to establish corporations pursuant to Chapter 617, Florida Statutes , which would be controlled by the District. This authority was subsequently amended to provide the District with the ability to create, in relevant part, not-for-profit corporations, which could be capitalized and financially supported by the District.
In 1993, the District sought an opinion from the Florida Attorney General about whether it could establish a not-for-profit corporation to provide employee staffing and management services and whether the employees of the not-for-profit corporation could participate in the Florida Retirement System ("FRS"). The Florida Attorney General responded to the first question in the affirmative and to the second question in the negative, explaining that employees of the not-for-profit corporation would be unable to participate in the FRS pursuant to the plain language governing that system.
In apparent reliance on the Florida Attorney General's opinion, the District created Halifax Staffing in 1994. Halifax Staffing's operative Articles of Incorporation, which have been in effect since October 24, 2017, define its purpose as leasing, operating, managing, and/or providing individuals to staff and/or managing some or all of the medical facilities, hospitals, and related support facilities and health care entities that are owned or controlled, directly or indirectly, or may be owned or controlled, directly or indirectly, in the future by the District. The Articles of Incorporation further provided that "[i]n that manner, the Corporation will serve to promote the general health of the citizens of the District."
The affidavit explained that Halifax Staffing continues to serve its original purpose—providing staffing and management services to the medical facilities owned and operated by the District. It does so as a wholly-owned affiliate of the District, which provides 100% of Halifax Staffing's funding. Halifax Staffing is also administered by public officials as its Board of Directors is identical to the District's Board of Commissioners, who are appointed by the Governor of the State of Florida. No part of the net earnings of Halifax Staffing inure to the benefit of any director or officer of Halifax Staffing or other private person, except as reasonable compensation for services rendered.
In response to Halifax Staffing's motion for summary judgment, Dennison argued that Halifax Staffing cannot be considered a public entity primarily because it was not created by the Legislature and, therefore, it must be a private entity subject to suit under the Private Whistle-blower's Act, section 448.102, Florida Statutes (2019). Ultimately, the trial court granted Halifax Staffing's motion, entering final summary judgment in its favor.
STANDARD OF REVIEW
This Court conducts a de novo review of an order granting summary judgment. Skelton v. Real Est. Sols. Home Sellers, LLC , 202 So. 3d 960, 961 (Fla. 5th DCA 2016).
ANALYSIS
This appeal presents a narrow issue for our review: whether Halifax Staffing falls into the definition of an employer, as provided by section 448.101(3), Florida Statutes (2019). And section 448.101(3) defines "employer" as "any private individual, firm, partnership, institution, corporation, or association that employs ten or more persons."
Dennison contends that Halifax Staffing falls within the statutory definition because it is a private corporation, relying primarily on Citrus County Hospital Board v. Citrus Memorial Health Foundation, Inc. , 150 So. 3d 1102 (Fla. 2014), a case which we now address in detail.
Florida Supreme Court Precedent
In Citrus County , the Citrus County Hospital Board turned over operation and management of the hospital, pursuant to section 155.40, Florida Statutes, to the Citrus Memorial Health Foundation, Inc., a Florida not-for-profit corporation. Id. at 1104. Section 155.40 permits a public hospital to sell or lease the hospital to a for-profit or not-for-profit entity for the purpose of operating the hospital and facilities.
After the transfer, the Hospital Board had been involved in the Foundation's activities and held a majority position on the Foundation's governing board. Id. But, in a development the Florida Supreme Court characterized as "significant," the Foundation later amended its articles to eliminate the Hospital Board's majority position on the Foundation's board. Id.
When disputes arose among the Hospital Board and the Foundation, the Legislature passed a special law intended to provide "meaningful oversight by the hospital board." Id. Among other things, that legislation restored the Hospital Board's majority position on the Foundation's board and required that certain operating decisions be approved by the Hospital Board. Id. at 1105. The Foundation filed suit against the Hospital Board, challenging the special law on the ground that it impaired the Foundation's contract with the Hospital Board. Id.
The issue ultimately presented to the Florida Supreme Court was whether the contract clause protects a corporation that has contracted with a hospital district under section 155.40, Florida Statutes, to operate and manage a public hospital. Id. Thus, a threshold matter the Florida Supreme Court was required to address was whether the Foundation was a public or quasi-public corporation, such that it should not be heard to complain about the special law's alleged impairment of contracts. Id. at 1105–06. In addressing this issue, the Florida Supreme Court was therefore evaluating the application of a settled rule that state officers and agencies must presume legislation affecting their duties to be valid and do not have standing to initiate litigation for the purpose of determining otherwise. See, e.g. , Dep't of Educ. v. Lewis , 416 So. 2d 455, 458 (Fla. 1982).
In addressing the threshold issue, the Florida Supreme Court recognized its prior jurisprudence regarding the distinctions between private and public corporations, such as in O'Malley v. Florida Insurance Guaranty Ass'n , 257 So. 2d 9 (Fla. 1971). E.g. , Citrus Cnty. , 150 So. 3d at 1106. However, the majority distinguished these cases, noting those decisions "did not address a corporation's standing to allege a contract clause violation." Id. at 1107.
The Florida Supreme Court then observed that the Foundation was not a state agency or local government. Id. It further observed that the Foundation was used by the Hospital Board for the express purpose of avoiding statutory and constitutional limitations which would apply to the board as public entities. Id. The Florida Supreme Court then focused on the purpose of section 155.40, the statute permitting public hospitals to contractually transfer control to entities like the Foundation, and concluded that its prior precedent should not be applied in a way which would render the contract entered into pursuant to section 155.40 meaningless. Id. While never explicitly characterizing the Foundation as a private corporation, the Florida Supreme Court ultimately concluded "the contract clause applies to the Foundation's contracts." Id. at 1107.
Prior to the Florida Supreme Court's decision in Citrus County , it had examined the characteristics of private corporations on at least two occasions. For example, in O'Malley , the Florida Supreme Court defined "private corporations" as those "which have no official duties or concern with the affairs of government, are voluntarily organized and are not bound to perform any act solely for government benefit, but the primary object of which is the personal emolument of its stockholders." 257 So. 2d at 11. Similarly, in Forbes Pioneer Boat Line v. Board of Commissioners of Everglades Drainage District , 77 Fla. 742, 82 So. 346 (1919), the court defined a "private corporation" as one that is formed for the benefit of its stockholders exclusively. Id. at 350. The Pioneer Boat court further observed that when a corporation is invested with certain powers of a public nature to permit it to discharge duties to the public, it loses its strictly private character and becomes quasi-public. Id.
Application to this Case
Although Dennison contends a review of Florida Supreme Court precedent compels the conclusion that Halifax Staffing is a private employer, we disagree. And after carefully reviewing Citrus County , we conclude that decision does not control the outcome of this case for several reasons.
First, the issue presented here is different from the issue the Florida Supreme Court addressed in Citrus County . There, the court considered application of the rule prohibiting "state agencies and local governments" from bringing a claim based on the contracts clause. In contrast, the issue here is whether Halifax Staffing meets a statutory definition of "employer" as defined by section 448.102. Second, the disposition of Citrus County appeared to turn primarily on the purpose of section 155.40, a statute that has no relevance to the dispute here. Third, there are factual differences, and significant ones, between the Foundation in Citrus County and Halifax Staffing. For example, the special act in Citrus County that created the Hospital Board did not grant the Hospital Board authority to create corporations under its control. Instead, in 1990, pursuant to section 155.40, Florida Statutes, the Hospital Board contracted with the Foundation, which had been separately incorporated in 1987, to operate its hospitals. Moreover, the Articles of Incorporation for the Foundation expressly stated that it was "not in any way an agency of the Citrus County Hospital Board." In addition, the Foundation amended its Articles of Incorporation to eliminate the Hospital Board's majority position on the Foundation's board.
In contrast to the facts in Citrus County , Halifax Staffing is under the direct control of the District, a public body. Further, while not created by the Legislature directly, Halifax Staffing was established by a public entity and pursuant to authorization contained within a legislative act. What's more, the board of Halifax Staffing is composed of public members—members appointed by the Governor to the District's board, unlike the Foundation's transfer to private control.
Because we find Citrus County distinguishable, we evaluate the plain language of section 448.101(3) as informed by the Florida Supreme Court's prior interpretations of "private corporation," such as in O'Malley and Pioneer Boat . We emphasize that the only issue presented in this appeal is whether Halifax Staffing meets the definition of a "private" employer, and thus do not opine as to whether Halifax Staffing may instead fall into the definition of a "public" or "quasi-public" employer.
We recognize that neither O'Malley nor Pioneer Boat examined the statutory provision applicable here and are thus not binding. O'Malley examined the meaning of "private corporation" as contemplated by section 11 of Article 3 of the Florida Constitution while Pioneer Boat discussed the status of the defendant in analyzing its source of authority. See O'Malley , 257 So. 2d at 11 ; Pioneer Boat , 82 So. at 350.
And in evaluating the plain meaning of "private corporation" as contemplated by the statute, and as informed by O'Malley and Pioneer Boat , we conclude that the trial court properly determined Halifax Staffing does not fall within this category. Halifax Staffing was created by a public entity and for a public purpose. Halifax Staffing is controlled and fully funded by a public entity. Halifax Staffing is governed by gubernatorial appointees and its profits do not inure for the benefit of any private person. Dennison would have us overlook these several facts in favor of a single factor: whether or not Halifax Staffing was created by the Legislature. But Dennison's proposed rule finds no support in the plain language of section 448.101, nor is it required by Florida Supreme Court precedent. Accordingly, we decline to adopt such a standard.
We also do not find the 1993 Attorney General Opinion persuasive to the issue presented. See Op. Att'y Gen. Fla. 93-83 (1993). That opinion considered whether staffing employees were required to participate in the FRS based on the application section 121.021, Florida Statutes, which employs a different definition of "employer" than the definition at issue here.
CONCLUSION
In conclusion, we agree with the trial court that Halifax Staffing does not fall within the Florida Private Whistle-blower Act's definition of "employer." As a result, the trial court properly granted final summary judgment in Halifax Staffing's favor. We decline to address the remainder of Dennison's arguments because they are unpreserved. Accordingly, we affirm.
AFFIRMED.
WOZNIAK, J., concur.
JACOBUS, B.W., Senior Judge, Dissents, with opinion.
JACOBUS, B.W., Senior Judge, dissents.
I, respectfully, dissent. I believe the matter is controlled by Citrus County Hospital Board v. Citrus Memorial Health Foundation, Inc., 150 So. 3d 1102 (Fla. 2014). Justice Polston was spot on in his finding that the test for determining whether a corporation is a public or private corporation is how it was created. If it is legislatively created it is a public corporation. If it is created as a nonprofit under Chapter 617 it is a private corporation. The test is simple, there can be no confusion as to whether a corporation is public or private. Halifax Staffing, Inc. was created as Chapter 617 nonprofit corporation. It is a private corporation. I would reverse and remand for further proceedings.