STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KEN SHAIN, as personal ) representative of the Estate of ) WILLIAM E. SAUNDERS, )

)

Petitioner, )

)

vs. ) CASE NO. 81-1850

) DEPARTMENT OF ADMINISTRATION, ) DIVISION OF RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, R. L. Caleen, Jr., conducted a formal hearing in this case on November 4, 1981, in Fort Myers, Florida.

APPEARANCES

For Petitioner: Jack Pankow, Esquire

Post Office Box 580

Fort Myers, Florida 33902

For Respondent: Augustus D. Aikens, Jr., Esquire

Cedars Executive Center

2639 North Monroe Street, Suite 207C Box 81 Tallahassee, Florida 32302

ISSUE

Whether Josephine K. Saunders, the designated beneficiary, is entitled to the benefits payable on the teacher's retirement account of William E. Saunders, deceased, or whether she contractually waived her right to such benefits.

BACKGROUND

By petition for formal proceedings dated June 5, 1981, petitioner Ken Shain, personal representative of the Estate of William E. Saunders ("petitioner"), challenged respondent Department of Administration, Division of Retirement's ("Division") decision that the retirement death benefits of William

E. Saunders would be paid to Josephine K. Saunders, the designated beneficiary.

On July 20, 1981, the Division requested that a hearing officer be assigned to conduct the requested proceeding. Thereafter, hearing was set for November 4, 1981.

By order dated August 17, 1981, the Division was requested to notify Josephine K. Saunders of the pending proceeding and inform her that, upon request, she would be given an opportunity to be joined as a party. Although the Division so notified Ms. Saunders, she did not attend or seek to participate in the proceedings.

At hearing, Ken Shain testified and offered Petitioner's Exhibit 1/ Nos.

1 and 2 into evidence. The Division called Jean Ferguson, administrator of the Survival Benefits Section of the Florida Retirement System, as its only witness and offered Respondent's Exhibit /1 No. 1 into evidence.

The parties filed proposed findings of fact and conclusions of law by November 19, 1981; it was agreed that the recommended order would be submitted within 30 days thereafter. No transcript of the hearing was prepared.

Based on the evidence presented, the following facts are determined: FINDINGS OF FACT

1. Petitioner Kenneth Shain, a resident of Fort Myers, Florida, is the personal representative of the Estate of William Saunders, deceased. (Testimony of Shain.)

   
   

2. William E. Saunders died on June 11, 1980; he was a college instructor. From 1962 to 1967, he taught at Daytona Beach Junior College; from 1968 until his death, he taught at Edison Community College, Fort Myers, Florida. (Testimony of Shain, Ferguson.)

   
   

3. As an instructor at Daytona Beach Junior College, he joined the Teachers' Retirement System of Florida ("retirement system"). On August 24, 1962, he executed a retirement system form designating his then wife, Josephine

   K. Saunders, as the beneficiary of any benefits which might be payable from his retirement account in the event of his death. (R-1.)

   
   

4. On June 30, 1967, William and Josephine Saunders were divorced. The divorce decree approved and incorporated a property settlement agreement dated October 31, 1966, which provided in part:

   
   

   The Plaintiff, JOSEPHINE K. SAUNDERS

   . . . hereby waives any and all property rights which she may have against the Defendant [WILLIAM E. SAUNDERS] by virtue of the[ir] marriage (P-1.)

   
   

5. Although William Saunders subsequently remarried, he never changed his original designation of Josephine Saunders as his beneficiary under the Teachers' Retirement System. (Testimony of Ferguson.)

   
   

6. When William Saunders died, Josephine Saunders resided in Ormond Beach, Florida. She did not know that she was his designated beneficiary or entitled to his retirement benefits; it was only after petitioner's attorney contacted her that she became aware of her interest in the retirement account of William Saunders. (Testimony of Ferguson.)

7. The beneficiary of William Saunder's retirement account under the Teachers' Retirement System is entitled to a total payment of $14,804.55, consisting of accumulated contributions of $14,304.55 and a death benefit of

   $500. Petitioner's demand for payment was denied by the Division on the basis that Josephine Saunders was the designated beneficiary. (Testimony of Ferguson.)

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. s120.57, Fla. Stat. (1979).

   
   

9. Pursuant to Section 238.03(1), Florida Statutes (1979), the Division of Retirement administers the Teachers' Retirement System of Florida. Should a member of the retirement system die before his or her retirement--as happened in this case--the Division is required to pay the deceased member's accumulated contributions and death benefits to "such person, if any, as he shall have nominated by written designation duly executed and filed with the [D]ivision; otherwise to his executors or administrators." s238.07(13) and (16)(a) , Fla. Stat. (1979).

   
   

10. The benefits which a beneficiary designated under Section 238.07(13) receives are in the nature of the proceeds of an annuity or life insurance contract, Rogers v. Rogers, 152 So.2d 183, 186 (Fla. 1st DCA 1963). Thus, the rules governing annuity or life insurance contracts are applicable to the disposition of retirement system benefits 2/ . Such rules provide that the rights of a designated beneficiary are not affected by the fact that the parties are divorced subsequent to the making of the contract. Id.

    
    

11. Petitioner contends that the designated beneficiary, Josephine K. Saunders--by the property settlement agreement accompanying her divorce from William E. Saunders--relinquished her right to his retirement system benefits. See, O'Brien v. Elder, 250 F.2d 275 (5th Cir. 1957), Hoffman v. White, 277 So.2d

    290 (Fla. 4th DCA 1973), (both generally holding that a wife may relinquish, by property settlement agreement, her right, as a designated beneficiary, to proceeds of an insurance contract covering her then husband)

    
    

12. This contention is unpersuasive. Although the rules governing insurance proceeds may provide a useful guide, they cannot against clearly expressed legislative intent. Section 238.07 (13), Florida Statutes (1979), in unequivocal language, requires that the retirement benefits of a deceased member of the retirement system be paid to the designated beneficiary. To be effective, designation must be in writing and filed with the Division. Id. Persons may not, by contract, alter the Division's statutory duty.

    
    

13. Even if Rogers v. Rogers, supra, could be construed as allowing a designated beneficiary to relinquish, by property settlement agreement, her interest in her husband's retirement system benefits, it does not change the result in this case.

    
    

14. Here, the operative language in the property settlement agreement provides that Josephine K. Saunders (the designated beneficiary) waives all "property rights which she may have against William E. Saunders by virtue of the marriage of the parties." (e.s.) (P-1.) Since William Saunders had an absolute right to change the beneficiary at any time, Josephine Saunders' interest was only an expectancy, O'Brien, supra at 279, not a property right. In O'Brien, the court held that the wife's expectancy was "subsumed under the release in .

    . . [the] agreement by the wife of any claim [against the husband] . . . of any kind whatsoever." (e.s.) Here, Ms. Saunders waived only her "property rights" against Mr. Saunders; the waiver cannot be reasonably extended to include her mere expectancy as the designated beneficiary of his retirement system benefits.

    
    

15. The parties' proposed findings of fact are adopted to the extent they are incorporated in this recommended order; otherwise, they are rejected as unsupported by the evidence or irrelevant to resolution of the issues presented.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That the Division enter a final order denying the relief requested by petitioner and distributing the Teachers' Retirement System benefits of William

E. Saunders to Josephine K. Saunders, the designated beneficiary.

DONE AND RECOMMENDED this 15th day of December, 1981, in Tallahassee, Florida.

R. L. CALEEN, JR. Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of December, 1981.

ENDNOTES

1/ Petitioner's and Respondent's Exhibits will be referred to as "P- ," and "R- ," respectively.

2/ However, if a rule of construction conflicts with a statutory provision, the statute must prevail.

COPIES FURNISHED:

Jack Pankow, Esquire Post Office Box 580

Fort Myers, Florida 33902

Augustus D. Aikens, Jr., Esquire Suite 207C,- Box 81

Cedars Executive Center 2639 North Monroe Street Tallahassee, Florida 32302

Nevin G. Smith, Secretary Department of Administration

435 Carlton Building Tallahassee, Florida 32301

Josephine K. Saunders

69 Plaza Grande

Ormond Beach, Florida 32074

Docket for Case No: 81-001850

Orders for Case No: 81-001850