STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LEONARD K. WILLIAMS, )

)

Petitioner, )

)

vs. ) CASE NO. 92-0692

) DEPARTMENT OF BANKING AND FINANCE,) DEPARTMENT OF EDUCATION and ) DEPARTMENT OF LOTTERY, )

)

Respondents. )

)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on August 10, 1992, in Tallahassee, Florida, before Ella Jane P. Davis, a duly assigned Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: No appearance. For Respondent: Charles S. Ruberg

Assistant General Counsel State Board of Education The Capitol, Suite PL 08 Tallahassee, Florida 32301

For Respondent Dept. Louisa Warren, Esquire of the Lottery: Department of Lottery

250 Marriott Drive Tallahassee, Florida 32301

For Respondent Dept. Scott C. Wright, Esquire of Banking & Finance Office of the Comptroller

The Capitol, Suite 1302 Tallahassee, Florida 32399-0350

STATEMENT OF THE ISSUE

Whether or not the Department of Banking and Finance is

required by law to transmit $2,159.41 to the State of Florida Department of Education or $2500.00 to the Petitioner.

PRELIMINARY STATEMENT

This matter arose when Petitioner purchased a winning Florida Lottery ticket for the Play 4 drawing of November 19, 1991. On November 26, 1991, Petitioner submitted his claim to the Department of the Lottery (DOL) to claim the prize of $2,500.00. On November 26, 1991, the Department of Education (DOE)

certified to the DOL that Petitioner owed $2,159.41 as a result of defaulted student loans with interest accrued as of December 11, 1991. On December 4, 1991, the DOL notified Petitioner of DOE's claim and transmitted the entire prize amount to the Department of Banking and Finance (DBF) in reliance upon its interpretationn of Section 24.115(4) F.S. On December 20, 1991, the DBF notified the Petitioner, by certified mail, of the DBF's intent to apply the amount of $2,159.41 to the defaulted student loan. Enclosed with the December 20, 1991 letter to Petitioner was State of Florida Warrant 1368127 in the amount of $340.59. On January 13, 1991, the DBF received a letter from the Petitioner requesting a hearing. The case was referred to the Division of Administrative Hearings. By Notice of Hearing dated June 5, 1992, formal hearing was scheduled for August 10, 1992,

Counsel for the respective state agencies appeared for formal hearing as duly noticed. Petitioner did not appear timely. The undersigned sounded the docket in all waiting areas and inquired of the Division of Administrative Hearings Clerk and her secretary and determined that there had been no emergency messages from Petitioner. The formal hearing thereafter went forward without Petitioner.

DOE presented the testimony of Rick Wells, who is a Program Specialist with DOE's Office of Student Financial Assistance and had admitted, without objection due to Petitioner's absence, a Composite Exhibit consisting of an affidavit and five attached documents. DBF had admitted, without objection, two exhibits.

DOL had admitted, without objection, one exhibit.

No transcript was filed. Petitioner submitted no post-hearing proposals. All proposed findings of fact submitted by the Respondents have been accepted pursuant to Section 120.59(2) F.S.

FINDINGS OF FACT

1. DOE, through its Office of Student Financial Assistance, functions as a guarantee agency for purposes of the guaranteed student loan programs. In this capacity, DOE issues a loan guarantee to a participating lender, such as a bank, when the lender has applied for the guarantee in connection with making a student loan to a student borrower.

   
   

2. If the student borrower defaults on repaying the loan to the lender, the lender submits to DOE a claim for DOE to repay the loan to the lender. When DOE repays the loan to the lender, the promissory note evidencing the debt is assigned to DOE which then pursues collection of the loan against the defaulting student borrower.

   
   

3. On or about November 18, 1988, Petitioner Leonard K. Williams applied for a guaranteed student loan to be made by the Florida National Bank. On or about December 11, 1988, DOE issued its guarantee and the loan was made by the bank to Petitioner.

   
   

4. Petitioner's first payment to repay the loan was due on February 1, 1990. He made no payments then or thereafter. On July 1, 1990 he was in default. DOE, as the guarantee agency, paid the bank's claim on December 27, 1990 and the bank assigned the promissory note evidencing Petitioner's indebtedness to DOE.

5. Petitioner purchased a winning Florida Lottery ticket for the Play 4 drawing of November 19, 1991. On November 26, 1991, Petitioner submitted his claim to DOL to claim the prize of $2,500.00.

   
   

6. On November 26, 1991, DOE certified to DOL that Petitioner had an outstanding defaulted student loan and requested that the lottery prize money won by Petitioner be transmitted to the Comptroller to be credited toward the Petitioner's student loan debt. The total principal and interest accrued on that debt as of December 11, 1991 was $2,159.41.

   
   

7. On December 4, 1991, Petitioner requested from DOE a form captioned, "Physician's Certification of Borrower's Total and Permanent Disability." On January 3, 1992, DOE received the completed form signed by Petitioner's physician, Anne L. Rottman, M.D.

   
   

8. Dr. Rottman treated Petitioner from August 18, 1986 through July 19, 1990, treating him for chronic cervical and lumbar spinal pain. She was unable to state when Petitioner's condition began or when he became unable to work, as the condition and disability commenced prior to the date she first saw him on August 18, 1986. Petitioner's condition was static during the time she treated him. Petitioner was unable to work during the time she treated him.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause pursuant to Section 120.57(1) F.S,

   
   

10. Section 24.115(4) F.S., provides as follows for the authority of the Comptroller to withhold lottery winnings:

    
    

    (4) It is the responsibility of the appropriate state agency and of the judicial branch to identify to the department, in the form and format prescribed by the department, persons owing an outstanding debt to any state agency or owing child support collected through a court. Prior to the payment of a prize of $600 or more to any claimant having such an outstanding obligation, the department may transmit the prize money to the Comptroller who may authorize payment of the balance to the prize winner after deduction of the debt. . . .

    
    

11. The regulations of the U.S. Department of Education pertaining to guaranteed student loans include 34 C.F.R. Section 682.402(c)(1), which states:

    
    

    (c) Total and permanent disability. (1) If the lender determines that an individual borrower is totally and permanently disabled, the borrower's obligation to make any further payments of principal and interest on the loan is cancelled. A borrower is not considered totally and permanently disabled on the basis of a condition that existed before he or she applied for the loan, unless the borrower's condition has substantially

    deteriorated since he or she submitted the loan application, so as to render the borrower totally and permanently disabled. [Emphasis supplied]

    
    

12. Dr. Anne L. Rottman's narrative nowhere states that Petitioner is totally and permanently disabled. Assuming, arguendo that the inference can be made that Petitioner is totally and permanently disabled due to "chronic cervical and lumbar spinal pain," it is clear that Petitioner's condition existed prior to his first being seen by Dr. Rottman on August 18, 1986 and his condition remained unchanged during the time Dr. Rottman treated him through July 19, 1990. Therefore, Petitioner has a condition that existed before he applied for the loan on November 18, 1988, which condition has not substantially deteriorated since he submitted the loan application.

    
    

13. Accordingly, it is concluded that 34 C.F.R. Section 682.402(c)(1), does not apply to Petitioner, and his obligation to make payments of principal and interest on his student loan was not cancelled pursuant thereto.

    
    

14. The uncontroverted evidence presented at formal hearing shows that Petitioner is indebted to the state in the amount of $2,159.41 and that he is entitled only to the balance of his $2500.00 lottery winnings.

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Banking and Finance enter a final order

which withholds $2,159.41 from Petitioner's lottery winnings and transmits that

sum to the Department of Education and which also transmits the balance of

$340.59 to Petitioner. Since the money has already been effectively transmitted as recommended, the Final Order could simply ratify those prior transmittals.

DONE and RECOMMENDED this 17th day of September, 1992, at Tallahassee, Florida.

COPIES FURNISHED:

Scott C. Wright

ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The De Soto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 17 day of September, 1992.

Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

Leonard K. Williams 1425 NE 13th Street

Gainesville, Florida 32601

Leonard K. Williams Post Office Box 490955

College Park, Georgia 30349

Louisa Warren, Esquire Department of Lottery

250 Marriott Drive Tallahassee, Florida 32301

Charles S. Ruberg Assistant General Counsel State Board of Education The Capitol, Suite PL-08

Tallahassee, Florida 32301

Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350

William G. Reeves General Counsel

The Capitol, Room 1302 Tallahassee, Florida 32399-0350

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 cleast 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: 92-000692

Orders for Case No: 92-000692