STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WALTRAUD E. PAEHLER, )

)

Petitioner, )

)

vs. ) CASE NO. 95-4841

) DIVISION OF RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its assigned Hearing Officer, Donald R. Alexander, on February 6, 1996, in Jacksonville, Florida.

APPEARANCES

For Petitioner: Mark S. Levine, Esquire

245 East Virginia Street Tallahassee, Florida 32301-1263

For Respondent: Stanley M. Danek, Esquire

Division of Retirement 2639-C North Monroe Street

Tallahassee, Florida 32399-1560 STATEMENT OF THE ISSUE

The issue in this case is whether petitioner was mentally incapacitated at the time she chose the early (service) retirement option from the state.

PRELIMINARY STATEMENT

This matter began on September 6, 1995, when respondent, Division of Retirement, advised petitioner, Waltraud E. Paehler, that her request to change from service retirement to disability retirement had been denied since she had already cashed or deposited a retirement benefit. Thereafter, petitioner requested a formal hearing to contest the agency's action. The matter was referred by respondent to the Division of Administrative Hearings on October 5, 1995, with a request that a Hearing Officer be assigned to conduct a hearing.

By notice of hearing dated November 13, 1995, a final hearing was scheduled on February 6, 1996, in Jacksonville, Florida.

At final hearing, petitioner testified on her own behalf and presented the testimony of her daughter, Gwendolyn R. Harvey. Also, she offered petitioner's exhibits 1-4. All exhibits were received in evidence. Exhibits 1-3 are the deposition testimony of Dr. Mark A. Hardin, a board certified general practictioner and accepted as an expert in the general practice of medicine; Dr.

Seabury D. Stoneburner, Jr., a nephrologist and internist and accepted as an expert in kidney disease and internal medicine; and Kristina Crenshaw, a licensed mental health counselor. Respondent presented the testimony of Patricia G. Brown, an employee at Middleburg High School in Middleburg, Florida; and Mark Sadler, its disability retirement administrator. Also, it offered respondent's exhibit 1 which was received in evidence.

The transcript of hearing was filed on March 20, 1996. By agreement of the parties the time for filing proposed findings of fact and conclusions of law was extended to May 3, 1996. The same were timely filed by the parties. A ruling on each proposed finding has been made in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. Petitioner, Waltraud E. Paehler, was a classroom teacher in the Clay County public school system until 1993, and says she had a total of nineteen years of service. During that time period, she participated in the Florida Retirement System, which is administered by respondent, Division of Retirement (Division).

   
   

2. In 1992, petitioner was suffering from a number of illnesses, including chronic kidney failure and congestive heart failure, which impaired her ability to continue working as a teacher. She also suffered from depression. These conditions continued into 1993. During this time period, she was hospitalized on at least two occasions.

   
   

3. Because her work was very stressful, and tended to exacerbate her medical condition, petitioner accepted her physician's advice and decided to resign her teaching position effective April 14, 1993. On April 21, 1993, or a week later, she executed her application for retirement and opted to take early retirement effective May 1, 1993, when she was fifty-four years of age.

   
   

4. Even though the local school board had periodically distributed information booklets to all teachers, including petitioner, concerning early, normal and disability types of retirement, and the various retirement options were discussed annually at each school's in-service training seminar, petitioner says she was still unaware of the disability retirement option. Thus, she elected to take early retirement on April 21, 1993. Because of her age, her retirement benefits were reduced by forty percent, or five percent for each year under the normal retirement age of sixty-two. Assuming she was qualified, had she elected to take disability retirement, there would have been no penalty because of her age.

   
   

5. At or about the time petitioner decided to resign her teaching position, her daughter, who was assisting petitioner in her personal affairs, telephoned the local school board in an effort to ascertain potential retirement options for her mother. She spoke with an unknown individual in the school personnel office who the daughter says was not "very knowledgeable." The two discussed "in general what (her) mother could do" with respect to retirement, but the daughter says she received no specifics other than the fact that her mother would be "entitled to partial pay." She also requested that an application for service retirement form be mailed to her mother. The daughter then relayed this sketchy information to her mother.

6. Because of financial constraints, and in order to receive her benefits immediately, petitioner decided to take early retirement rather than wait until normal retirement age. After selecting the option 1 benefit, which entitled her to benefits for her lifetime only, petitioner carried the form to her school's personnel office where she executed it on April 21, 1993, before the principal's secretary, a notary public. Although the secretary could not recall the specific event, she affirmed that she would not allow anyone to sign a document who did not appear to be competent.

   
   

7. In selecting option 1, which gave the highest monthly benefits for early retirement, petitioner acknowledged she understood the ramifications of making that choice when she did so on April 21, 1993. Thus, on that date she possessed sufficient mental capacity to know that these benefits would last only during her lifetime, and her daughters would not receive any benefits after her death. At final hearing she confirmed that, prior to executing the form, she had reviewed the various options under early retirement and selected the first option since she "figure(d) (she had) done enough for them all (of her) life, they can take care of themselves."

   
   

8. In June 1994, petitioner read an article in a teacher trade publication and learned that a number of states offered disability retirement as an option and did not penalize retirees for early retirement due to a disability. This article prompted petitioner the following month to write a letter to the Division.

   
   

9. When petitioner made inquiry with the Division in July 1994 concerning a change from early (service) to disability retirement, she was told that under Rule 60S-4.002(4), Florida Administrative Code, she could not do so after cashing her first check. By then, petitioner had long since cashed the first retirement check mailed to her at the end of May 1993. That advice prompted her to eventually challenge the Division's rejection of her claim on the theory that she was "incapacitated" when she made her decision to take early retirement.

   
   

10. In support of her contention that in 1993 she lacked the necessary mental capacity to make a reasoned decision concerning her retirement, petitioner presented the testimony of three health professionals from whom she was receiving care in 1993. Their deposition testimony is found in petitioner's exhibits 1-3 received in evidence.

    
    

11. Dr. Hardin, a family physician, was petitioner's primary treating physician from February 1992 until April 1993. In the spring of 1993, he recalled petitioner as being "confused," "in an imbalanced state," suffering "mental duress," dependent on explicit instructions for appointments, and taking a variety of prescribed medications for tobacco cessation, chronic renal failure, congestive cardiac condition, high blood pressure, cardiomyopathy, tremors, anxiety and migraine headaches. Because of these conditions, Dr. Hardin found it difficult to believe that she could "handle" a more complicated matter such as choosing a retirement option. Dr. Hardin acknowledged, however, that during the spring of 1993, he had little chance "to follow her" since another physician, Dr. Stoneburner, was managing petitioner's most important illness, renal failure.

    
    

12. Dr. Stoneburner, a nephrologist and internist who has treated petitioner for a kidney disease since 1985, felt that in the spring of 1993 she "was not in a very good position to make a competent decision based on her emotional state." Just prior to her retirement, he observed petitioner as

    having "significant depression" and "a lack of desire to work." She was also taking as many as six or seven medications at one time which could "possibly" cause "someone to be confused." Based on these circumstances, Dr. Stoneburner opined that petitioner was not competent to make a rational judgment. However, Dr. Stoneburner conceded that if petitioner had been given retirement options explained in layman's terms, and had someone to assist her in explaining the various options, she could have made an intelligent decision.

    
    

13. Kristina Crenshaw, a licensed mental health counselor, met with petitioner on four occasions between February 18 and April 12, 1993. Ms. Crenshaw found petitioner to have "significant difficulty with depression," in an "agitated, very stressed, (and) overwhelmed" condition, and with a "strong sense of uncertainty about her future." While the witness believed that petitioner would have understood a pamphlet describing her retirement options, she would not have "necessarily understood all the implications to her own personal life." The witness agreed, however, that once petitioner made a decision to resign her job, she seemed more "upbeat" and "positive." Further, petitioner had told her by telephone on April 15, 1993, that she felt "much better" after retiring from her job. The counselor did not know if petitioner was mentally competent when she opted for early retirement a week later.

    
    

14. Nothwithstanding the testimony of the health professionals, the findings in paragraph 7 are deemed to be more compelling on the critical issue of competency, and it is found that on April 21, 1993, petitioner understood the nature and consequences of her acts, and she was capable of binding herself by the retirement application. Therefore, her request to have rule 60S-4.002(4) waived, or to have her "contract" with the Division set aside, should be denied.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Section 120.57(1), Florida Statutes.

    
    

16. As the party seeking a change in her retirement status, petitioner must prove by the preponderance of the evidence that she is entitled to the requested relief. See, e. g., Fla. Dep't of Transp. v. J.W.C. Co., Inc., 396 So.2d 778, 788 (Fla. 1st DCA 1981). In this case, she seeks to prove that she was mentally incapacitated at the time she elected to take early retirement, a most difficult task.

    
    

17. Rule 60S-4.002(4), Florida Administrative Code, is the rule which gave rise to this dispute. It provides in relevant part as follows:

    
    

    (4) After a retirement benefit payment has been cashed or deposited:

    * * *

    (c) The type of retirement, i.e. normal, early, or disability, may not be changed . . .

    
    

    Under the foregoing rule, once a retiree receives and cashes a benefit payment, the retiree cannot change his or her retirement option. The rule is consistent with the holding in Arnow v. Williams, 343 So.2d 1309, 1310 (Fla. 1st DCA 1977), where the court determined that retirement benefits vest at the time of retirement when the retiree receives his or her first retirement warrant.

18. Petitioner acknowledges receiving a retirement benefit payment and cashing the same but contends that when she elected to participate in early retirement in April 1993, she was not of sound mind and capacity to make an intelligent decision. More specifically, she contends that the application for service retirement executed on April 21, 1993, was a contract between the parties, and she lacked the necessary capacity to understand the nature of the transaction. She asks that the contract be set aside under the rationale found in Wheat v. Montgomery, 202 S.E. 664 (Ga. App. 1973) and Putnam Lumber Co. et al

    v. Berry, 2 So.2d 133 (Fla. 1941). In the latter case, which holds more precedential value than an out-of-state decision, the court affirmed a finding by a jury that an injured employee was not bound by a release of liability executed while heavily addicted to pain killers.

    
    

19. The Division takes the position that Rule 60S-4.002(4), Florida Administrative Code, is controlling, and absent an adjudication of incompetency, it cannot be waived under any circumstances. Alternatively, it suggests that the record does not support an administrative determination that petitioner was legally incompetent, but at best it supports only a finding that in April 1993 she was "medically or emotionally incompetent," a condition not rendering her incapable of understanding the nature and consequences of her acts.

    
    

20. Although there is no judicial precedent on this issue, there are a number of agency final orders which involve claims by retirees that they were incompetent when selecting their retirement option. See, e.g., Burns v. Dept. of Admin., Div. of Retirement, Case No. 91-4652 (Div. of Ret., April 17, 1992); Day v. Div. of Retirement, Case No. 90-2085 (Div. of Ret., March 18, 1991); Hutchinson v. Dept. of Admin., Div. of Retirement, Case No. 91-3870 (Div. of Ret., January 29, 1992); Grantham v. Dept. of Admin., Div. of Retirement, Case No. 89-2455 (Div. of Ret., January 22, 1990). In each case, the Division has followed the practice of strictly enforcing rule 60S-4.002(4) unless there was sufficient proof to make an administrative determination that the retiree was mentally incompetent when he or she executed the retirement application.

    
    

21. In making the foregoing determination, the Division has consistently followed the well-established rule that in order to make a transaction voidable, it must be shown that the person was incapable of understanding the character of the transaction in question. This principle has been described in the following manner:

    
    

    A reasonable test for the purpose of deter- mining whether an infirmity operates to render a person incapable of binding himself abso- lutely by a contract is whether his mind has been so affected as to render him incapable

    of understanding the nature and consequences of his acts, or, more exactly whether his mental powers have become so far affected as to make him unable to understand the character of the transaction in question.

    In the determination of whether a person's mental illness or weakness is sufficient in itself to render his contracts and conveyances voidable, a distinction is made between actual insanity and a weakness of the mind unaccom- panied by an infirmity overthrowing reason.

    The fact that a person is physically incapable to look after his property, or that his mind

    is enfeebled because of age or disease, is not sufficient to affect the validity of his con- tract or conveyance, where he still retains a full comprehension of the meaning, design,

    and effect of his acts at the time of its execution. However, mental weakness, even though not amounting to incapacity, is mat- erial where the question arises whether a fraud has been perpetrated on, or an undue advantage taken of, one contracting party by the other.

    29 Fla. Jur.2d, Incompetent Persons, s. 158

    
    

22. The more credible and persuasive evidence supports a conclusion that petitioner understood the nature of her retirement decision on April 21, 1993, and thus she cannot prevail on her claim. In reaching this conclusion, the undersigned has considered the evidence, as reflected in finding of fact 7, that when petitioner took early retirement in April 1993, she had the capacity to recognize the distinction between the various options available under that form of retirement. More specifically, she clearly understood that by taking option 1, her monthly benefits would be maximized, and her daughters would receive no benefits after her death. The regrettable fact that petitioner had no knowledge of, or failed to inquire about, a disability retirement option does not alter this conclusion.

    
    

23. At the same time, the undersigned has considered the deposition testimony presented by the three health professionals. While it supports a finding that petitioner was extremely sick, and she was in a confused, stressed and agitated state of mind due to a number of medications being injested at the same time and a documented diagnosis of depression, as noted in paragraphs 11- 13, it did not support a finding that she was incapable of understanding the nature and consequences of her acts. Unfortunately, therefore, petitioner's requested relief must be denied.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Division of Retirement enter a Final Order determining

that petitioner was mentally competent when she elected to take early retirement

and that her request to have rule 60S-4.0002(4) waived so as to permit her to file a request for disability retirement be denied.

DONE AND ENTERED this 20th day of May, 1996, in Tallahassee, Florida.

DONALD R. ALEXANDER, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of May, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-4841

Petitioner:

1. Partially accepted in finding of fact 1.

2. Rejected as being unnecessary.

3. Partially accepted in finding of fact 12. 4-5. Partially accepted in finding of fact 2. 6-7. Partially accepted in finding of fact 3. 8-9. Partially accepted in finding of fact 4. 10-11. Partially accepted in finding of fact 8.

1. Partially accepted in finding of fact 9.

2. Covered in preliminary statement.

14-20. Partially accepted in finding of fact 12. 21-24. Partially accepted in finding of fact 11. 25-31. Partially accepted in finding of fact 13. 32-37. Partially accepted in finding of fact 6. 38-39. Partially accepted in finding of fact 5.

40. Covered in preliminary statement. 41-43. Rejected as being unnecessary.

Respondent:

1. Rejected since the evidence shows that petitioner was employed by the Clay County School Board and not the Duval County School Board. Also, the only evidence of record as to years of service is the testimony of petitioner that she had nineteen years of service. However, this fact is not necessary to resolve the dispute.

2. Partially accepted in finding of fact 8.

3. Partially accepted in findings of fact 8 and 9.

4. Partially accepted in finding of fact 9.

5. Partially accepted in finding of fact 10. 6-7. Partially accepted in finding of fact 12. 8-9. Partially accepted in finding of fact 11. 10-12. Partially accepted in finding of fact 13.

1. Partially accepted in finding of fact 5.

2. Partially accepted in finding of fact 6.

3. Rejected as being unnecessary.

Note - Where a proposed finding of fact has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary for the resolution of the issues, not supported by the evidence, cumulative, or a conclusion of law.

COPIES FURNISHED:

Mark H. Levine, Esquire

245 East Virginia Street Tallahassee, Florida 32301-1263

Stanley M. Danek, Esquire Division of Retirement 2639-C North Monroe Street

Tallahassee, Florida 32399-1560

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

2639-C North Monroe Street Tallahassee, Florida 32399-1560

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the agency written exceptions to this Recommended Order. All agencies allow each party at least ten 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: 95-004841

Orders for Case No: 95-004841