The Florida District Court of Appeal recently reversed a decision that awarded attorney’s fees to Louis Del Favero Orchids, Inc. The case, Florida Department of Health v. Louis Del Favero Orchids, Inc. (Docket No. 1D19-4598), centered on whether the Florida Department of Health acted reasonably in its rulemaking process related to medical marijuana treatment centers (MMTCs). This ruling affects the Department of Health and its future rulemaking efforts regarding MMTC licensing in Florida.
In 2016, Florida voters approved a constitutional amendment allowing medical marijuana use for individuals with specific medical conditions. Following this, the Florida Legislature enacted laws to guide the establishment of MMTCs, which are responsible for the cultivation and distribution of medical marijuana. The law required the Department of Health to issue licenses to ten applicants and included a provision that gave preference to certain applicants with a history in citrus processing.
The dispute arose when the Department of Health proposed a rule that included a scoring system for MMTC applicants, which allowed for a citrus preference based on ownership of “property” rather than the more specific term “facility” as outlined in the statute. Del Favero challenged this rule, arguing that the Department had overstepped its authority by broadening the eligibility criteria beyond what the law intended. An administrative law judge (ALJ) agreed with Del Favero, invalidating the rule and awarding the company $50,000 in attorney’s fees and $3,828.69 in costs.
The Department of Health appealed the ALJ's decision, arguing that its rulemaking actions were “substantially justified.” The court examined the Department's overall actions and found that they had a reasonable basis in law and fact. The ruling stated, “The Department acted reasonably in proposing rule 64-4.002 in response to its constitutional and statutory directives.”
Judge Osterhaus, writing for the majority, emphasized that the Department’s actions should be viewed in totality rather than focusing solely on the use of the term “property” instead of “facility.” The court noted that the Department had a working knowledge of the applicable statutes and had sought guidance from the Florida Department of Citrus before drafting the proposed rule. This demonstrated that the Department was acting within its authority and responsibilities.
In its analysis, the court pointed out that the ALJ had incorrectly narrowed the inquiry to the specific language of the proposed rule rather than considering the broader context of the Department's rulemaking efforts. The ruling highlighted that the Department's proposed rule was largely upheld, with only a minor adjustment needed regarding the terminology used. The court concluded that the Department's overall actions were justified and reversed the award of fees and costs to Del Favero.
The impact of this ruling is significant for the Florida Department of Health and its future rulemaking processes. It clarifies that agencies can be considered “substantially justified” in their actions even if they lose on specific points in a legal challenge. This ruling may set a precedent for how administrative agencies approach rulemaking and the legal standards they must meet to avoid paying attorney’s fees in similar cases.
Moving forward, the Department of Health can continue to refine its rulemaking processes without the burden of the fees awarded to Del Favero. The ruling allows the Department to maintain its focus on implementing the medical marijuana program in Florida while ensuring compliance with the statutory framework established by the legislature.
It remains to be seen if Del Favero will appeal this decision or if there are related cases pending that may address similar issues regarding administrative rulemaking and the interpretation of statutory language. For now, the ruling provides a clearer understanding of the standards that Florida agencies must meet in their rulemaking efforts.