STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DORIS G. HUTCHINSON, )

)

Petitioner, )

)

vs. ) CASE NO. 91-3870

) DEPARTMENT OF ADMINISTRATION, ) DIVISION OF RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly-designated Hearing Officer of the Division of Administrative Hearings, on October 21, 1991, in Tallahassee, Florida.

APPEARANCES

FOR PETITIONER: Phillip H. Hutchinson

(as Qualified Representative) 4115 Tanglewood S., Apt. 570 Palm Beach Gardens, FL 33410

FOR RESPONDENT: Larry D. Scott, Esq.

Division of Retirement Cedars Executive Center 2639 North Monroe Street Tallahassee, FL 32399-1560

STATEMENT OF THE ISSUES

The general issue to be resolved in this proceeding concerns whether the Petitioner is entitled to modify her deceased husband's retirement benefit option by changing from "Option 1" to "Option 3". Embodied within that issue is the question of whether the Petitioner's deceased husband was competent to effect a change in his retirement option from service retirement "Option 3" to disability retirement "Option 1."

PRELIMINARY STATEMENT

This cause arose when the Petitioner made inquiry to the Respondent concerning the status of her recently deceased husband's retirement benefits. In response to that inquiry, the Respondent ("Division") issued a "final agency action letter" on May 21, 1991 advising the Petitioner that the Division's records showed that her deceased husband, Elijah B. Hutchinson (the "decedent"), had elected to receive "Option 1 retirement benefits" and had been added to the

retirement payroll as of September, 1983, as an "Option 1" retiree. This status meant that the decedent's retirement benefits lapsed and were cancelled upon his death. Additionally, the Petitioner was advised that in accordance with Rule

22B-4.002(3), Florida Administrative Code, once the retirement member, the decedent, had received a benefit payment and cashed the check, deposited it or otherwise negotiated the check, the selection of the retirement option could not be changed.

The Petitioner contended that the decedent had not been competent to make his option selection at the time he elected to receive "Option 1" benefits and, therefore, requested that his retirement option be changed to "Option 3", the retirement option he had initially selected approximately a month before he made the change.

The cause was duly transmitted to the undersigned Hearing Officer for formal proceeding. Prior to the scheduled final hearing, the Hearing Officer granted permission to Phillip H. Hutchinson, the Petitioner's son, to be the Petitioner's qualified representative for the proceeding.

The cause came on for hearing as noticed. The Petitioner presented the Petitioner's testimony and the testimony of Phillip H. Hutchinson. The Petitioner presented one exhibit, which was admitted into evidence. The Respondent presented the testimony of Ms. Stanley Colvin, a retirement administrator with the Division. The Respondent presented 10 exhibits, which were admitted into evidence. The parties announced their intent to file proposed findings of fact and conclusions of law in the form of Proposed Recommended Orders at the end of the hearing. The proposed findings of fact submitted by the parties are addressed in this Recommended Order and again in the Appendix attached hereto and incorporated by reference herein. No transcript was ordered by either party. The parties were allotted their requested time period for filing Proposed Recommended Orders, which amounted to a waiver of the requirement of Rule 28-5.402, Florida Administrative Code.

FINDINGS OF FACT

1. The decedent, Elijah B. Hutchinson, was a teacher of math and science for the Calhoun County school district for some 31 years. In the early 1980's, his health had deteriorated significantly due primarily to diabetes mellitus, which caused a number of associated complications necessitating several hospitalizations during the early 1980's. In consideration of his deteriorating health, the decedent elected to retire in the spring of 1983. He filed an application dated May 27, 1983, seeking regular retirement benefits from the Florida Retirement System. See Exhibit 1 in evidence.

   
   

2. In response to his application, the decedent received information from the Division advising him of his retirement benefits under the different retirement options he was entitled to select. On or about June 24, 1983, the decedent elected retirement Option 3. Option 3 retirement benefits include the retiree's entitlement to a reduced monthly retirement benefit during his lifetime with the same monthly retirement benefit being paid, after his death, to his "joint annuitant", in this case, his surviving spouse, the Petitioner.

   
   

3. Thereafter, and before he received any benefit check from his initially-selected Option 3 retirement, the decedent appeared at the Division's

   offices and requested to change his type of retirement or option. On August 12, 1983, therefore, the decedent requested to change his type of retirement benefit from regular retirement to disability retirement. On that date, he requested to change his option selection from Option 3 to Option 1. See Exhibit 4 in evidence. An explanation of the benefits to be provided and the differences in the two options as to his benefits was given to the decedent by an employee of

   the Division. See Exhibit 4 in evidence. The decedent thereupon changed his option selection from Option 3 to Option 1.

   
   

4. In 1983, a retirement system member receiving retirement benefits as the result of a disability could only receive benefits in accordance with either Option 1 or Option 2, if he chose to elect disability retirement. On September 16, 1983, the decedent was mailed a letter from the Division advising him that his application for disability retirement benefits had been approved by the State Retirement Director and acknowledging that he had elected Option 1 for disability retirement. Thereafter, the decedent received and cashed a number of State warrants representing payment of those retirement benefits under Option 1. See Exhibit 10 in evidence.

   
   

5. The decedent died on March 8, 1991. The Petitioner had been unaware that he had changed from Option 3 benefits to Option 1 benefits, as delineated above. Upon learning of this, after the decedent's death, the Petitioner, on April 30, 1991, requested the Division to modify the benefits option selected by the decedent to Option 3 benefits. Her basis for requesting this change was that the decedent had not been mentally or physically competent to make an informed selection at the time he changed his Option 3 retirement benefits election to Option 1 and that, therefore, she should be allowed to modify and reinstitute his retirement election to Option 3 benefits, which would provide her the death benefits permitted under the Option 3 election. This request was denied by the Division by its "final agency action letter" dated May 21, 1991, by which the Division advised the Petitioner that based upon its records, the decedent, who had requested Option 1 retirement benefits, was added to the retirement payroll in that category for September, 1983 and that he had received benefit payments and negotiated the checks, so that, under the provisions of Rule 22B-4.002(3), Florida Administrative Code, the selection of the option could no longer be altered.

   
   

6. The Petitioner's testimony and that of Phillip H. Hutchinson indicates that sometime in 1983, the decedent suffered a cerebral-vascular incident or "stroke". This testimony is borne out by the medical records in evidence as Petitioner's Exhibit 1, which, however, does not indicate when the stroke occurred. The Petitioner and her son maintain in their testimony that the stroke resulted in a deterioration in the decedent's mental faculties such that he could no longer manage his business affairs, pay bills, and handle financial matters in general. They maintain that this was evidenced also by a marked personality change whereby the decedent became extravagant with money, as evidenced by impulsively ordering and purchasing items which he observed advertised on television, sending money to television evangelists, and otherwise being free with donations.

   
   

7. This was entirely different from his character and personality before he suffered the stroke, whereby he was known to be miserly with the family funds and very careful about not spending money unnecessarily. As a result of his stroke, he was no longer able to handle his business affairs; and his spouse, the Petitioner, had to assume the duties of paying family bills and otherwise handling financial and business matters for the family.

   
   

8. When the decedent first decided to retire, he had explained to the Petitioner that he would select a retirement option which would give her something after he "passed"; and he showed her the retirement system booklet of allowable retirement options in discussing the matter with her. He never mentioned to her that he decided to or did change his option to Option 1 disability retirement.

9. Although the Petitioner may have established that due to the stroke he suffered, the decedent may have, indeed, had difficulty attending to financial matters and overseeing and managing the family finances, the Petitioner failed to establish that at the time he made the election to select Option 1 retirement benefit, he did not possess the mental capacity to make a knowing and intelligent selection of that option and to waive his previously-selected Option

   3 benefits. The evidence shows that he appeared at the Division's offices and, after an explanation of the option he chose to select, he freely and voluntarily selected that option and signed the pertinent documents attesting to it. It has simply not been demonstrated by substantial evidence that at the time the decedent made the second retirement option election, he did not understand the nature and consequences of that election, especially since it was not established by the Petitioner when he actually suffered the stroke, other than that it occurred sometime in 1983. As found above, the decedent made the election to chose Option 1 retirement benefits in August, 1983. Consequently, due to insufficient evidence, it cannot be found that the Petitioner's decedent was incompetent to knowingly and intelligently elect to receive Option 1 retirement benefits at the time he made the election.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57(1), Florida Statutes (1989).

    
    

11. Chapter 121, Florida Statutes (1989), also known as the Florida Retirement System Act, established the Florida Retirement System. Section 121.091(6), Florida Statutes (1989), provides that a member shall elect, prior to receipt of his first monthly retirement payment, one of four different retirement options. The relevant options in this case, which were also in effect at the time the decedent made the election in 1983, provide, as to Option 3, that the member can receive:

    
    

    3. A decreased retirement benefit payable during the joint lifetime of both the member and his joint annuitant and which, after the death of either, shall continue during the lifetime of the survivor in the same amount.

    
    

12. The Option 1 retirement option provides in relevant part:

    
    

    1. The maximum retirement benefit payable to the member *during his lifetime*. (emphasis supplied between *)

       
       

       See Section 121.09l(6)(a)3. and Section 12l.091(6)(a)1., Florida Statutes (1989).

       
       

13. Section 121.131(1), Florida Statutes (1989), grants the Division authority to promulgate rules for the efficient and effective operation of the system. Pursuant to that grant of authority, the Division has promulgated Rule 22B-4.002(3), Florida Administrative Code, which was in effect at all times pertinent hereto, and which reads as follows:

    
    

    After a retirement benefit payment has been cashed or deposited, no additional service

    may be purchased and the selection of an option may not be changed.

    
    

    Unless such a rule is challenged, in accordance with Section 120.56, Florida Statutes, which has not been done for the purposes of the instant proceeding, it is presumed valid in any 120.57 proceeding to which it applies. As established by the testimony of witness Stanley Colvin, Administrator with the Survivor Benefit Section of the Division, in 1983 a member who retired as a result of a disability could only retire under Option 1 or Option 2. The decedent chose to change from regular retirement under Option 3 entitlement to disability retirement under Option 1 entitlement. The change from Option 3 to Option 1 occurred prior to the decedent receiving any retirement warrants.

    
    

14. The Petitioner contends that the decedent was incompetent to make a knowing and intelligent election at the time he requested the change to Option 1 disability retirement benefits on August 12, 1983. Because of that alleged incompetency, the Petitioner requested a modification of the benefit option back to option 3 so that she will be able to receive survivor's benefits. Unfortunately, however, the record evidence cannot support a conclusion that the decedent was, indeed, incompetent at the time he applied for Option 1 disability benefits. It was not demonstrated that the stroke occurred prior to the decedent electing Option 1 disability retirement benefits; and, as delineated in the above Findings of Fact, substantial evidence which could support a conclusion that the decedent was actually incompetent to make a knowing and intelligent election at the time he voluntarily journeyed to the Division's offices to make the change on August 12, 1983, has not been presented. Since competent, substantial evidence in support of a finding of incompetency has not been provided, the Petitioner has not carried her burden of proof in this regard; and the evidence of record will not support a finding that the decedent was incompetent when the relevant retirement election was made. Because the retirement system member, the decedent, received retirement benefits from September, 1983 until his death on March 8, 1991, cashed, deposited or otherwise negotiated those retirement warrants, the option which he selected can no longer be changed; and, thus, the Petitioner's request should be denied.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore,

RECOMMENDED that a Final Order be entered by the Division denying the request of the Petitioner to modify the retirement benefits elected by the decedent from Option 1 retirement benefits entitlement to Option 3 retirement benefits entitlement.

DONE AND ENTERED this 24th day of December, 1991, in Tallahassee, Leon County, Florida.

P. MICHAEL RUFF Hearing Officer

Division of Administrativ Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24 day of December, 1991.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-3870

Petitioner's Proposed Findings of Fact:

1. Accepted.

   
   

2. Accepted, except that the evidence does not support that the stroke actually occurred in mid 1983.

3-4. Accepted.

1. Rejected, as not being demonstrated by the preponderant evidence of record.

   
   

2. Accepted.

Respondent's Proposed Findings of Fact: 1-14. Accepted.

COPIES FURNISHED:

A.J. McMullian, III, Director Division of Retirement

Cedars Executive Center, Bldg. C 2639 North Monroe Street Tallahassee, FL 32399-1560

John A. Pieno, Secretary Department of Administration

435 Carlton Building Tallahassee, FL 32399-1550

Phillip H. Hutchinson

4115 Tanglewood S., Apt. 570 Palm Beach Gardens, FL 33410

Larry D. Scott, Esq. Division of Retirement Cedars Executive Center 2639 North Monroe Street Tallahassee, FL 32399-1560

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 91-003870

Orders for Case No: 91-003870