STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ENRIQUE BENITEZ, )

)

Petitioner, )

)

vs. ) Case No. 97-4432

)

DEPARTMENT OF EDUCATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Administrative Law Judge, William J. Kendrick, held a formal hearing in the above-styled case on January 6, 1998, by video teleconference.

APPEARANCES

For Petitioner: Enrique Benitez, pro se

12525 Northeast 13th Avenue, No. 305 North Miami, Florida 33161

For Respondent: Ronald G. Stowers, Esquire

Department of Education The Capitol, Suite 1701

Tallahassee, Florida 32399-0400 STATEMENT OF THE ISSUE

At issue in this proceeding is whether Petitioner's lottery prize is subject to an outstanding debt to a state agency.

PRELIMINARY STATEMENT

By letter of June 10, 1997, the Department of Education (Department) notified Petitioner that the Department of the Lottery had transmitted his prize of $24,781.66, less Federal

income tax withheld, to the Department to be applied against an existing indebtedness Petitioner owed the agency. In response, Petitioner filed a request for formal hearing to contest the Department's action, and the matter was referred to the Division of Administrative Hearings to conduct a formal hearing.

At hearing, the Department called Margarita Pilkinton as a witness, and it offered Exhibits 1 through 7, which have been received into evidence.1 Respondent testified on his own behalf, but offered no additional exhibits.

The transcript of the hearing was not ordered.

Consequently, the parties were accorded ten days from the date of hearing to file proposed recommended orders. Respondent elected to file such a proposal and it has been duly considered in the preparation of this recommended order.

FINDINGS OF FACT

1. By letter of June 9, 1997, the Department of Education, Office of Student Financial Assistance (Department), notified the Department of the Lottery (Lottery) that Petitioner owed the Department $26,356.28, as of June 9, 1997, as a consequence of outstanding defaulted student loans. Thereafter, pursuant to Section 24.115(4), Florida Statutes, the Lottery transmitted the prize amount ($24,781.66), less Federal income tax withheld ($6,938.86), to the Department.

2. By letter of June 10, 1997, the Department notified Petitioner that it was in receipt of his prize money, less

   Federal income tax withheld, and that, since the amount owed the Department exceeded the amount of the prize, it planned to apply the entire sum it had received ($17,842.80) to the outstanding indebtedness. The Department's letter also advised Petitioner of his right to request a formal hearing pursuant to Section 120.57, Florida Statutes, to contest the Department's decision.

3. Petitioner filed a timely request for a formal hearing to contest the Department's decision, and the matter was referred to the Division of Administrative Hearings for the assignment of an administrative law judge to conduct the formal hearing Petitioner had requested.

4. At hearing, the proof demonstrated that Petitioner was the recipient of three student loans, each of which was funded by Centrust Savings Bank (Centrust) and guaranteed by the Department.

5. The first loan (No. 7701) was in the amount of $3,000, which was disbursed on December 19, 1986. The second loan (No. 557720) was in the sum of $5,000, which was disbursed on January 29, 1987. The third loan (No. 631534) was for $5,000;

   however, only $2,500 was disbursed. That disbursement occurred on November 26, 1987.

6. Petitioner defaulted on the student loans, and Centrust filed a claim with the Department. The Department, as guarantor, paid the lender the amounts due on the loans as follows:

   A.) On August 12, 1993, the Department paid the claim on

   Loan No. 557720. At the time, the principal due was $5,021.562 and interest due was $1,942.59, for a total of $6,964.15.

   B.) Also on August 12, 1993, the Department paid the claim on Loan No. 631534. At the time, the principal due was

   $2,510.78, and interest due was $971.29, for a total of

   
   

   $3,482.07.

   
   

   C.) Finally, on January 20, 1994, the Department paid the claim on Loan No. 7701. At the time, the principal due was

   $3,118.28, and interest due was $2,458.40, for a total of

   
   

   $5,576.68.

   
   

7. As of June 9, 1997, the date the Department received the proceeds of Petitioner's lottery prize, the balance due on the defaulted loans, with accrued interest, was as follows: Loan No. 7701, $7,842.80; Loan No. 557720, $9,096.52; and Loan No. 631534,

   $4,548.25. In total, as of June 9, 1997, Petitioner owed the Department $21,487.57, as principal and accrued interest owing on the defaulted loans.3

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings. Sections 120.569 and 120.57(1), Florida Statutes.

9. Pertinent to this case, Section 24.115(4), Florida Statutes, provides:

   (4) It is the responsibility of the appropriate state agency and of the judicial branch to identify to the department [Lottery], 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 shall transmit the amount of the debt to the agency claiming the debt and shall authorize payment of the balance to the prize winner after deduction of the debt. If a prize winner owes multiple debts subject to offset under this subsection and the prize is insufficient to cover all such debts, the amount of the prize shall be transmitted first to the agency claiming that past due child support is owed. If a balance of lottery prize remains after payment of past due child support, the remaining lottery prize amount shall be transmitted to other agencies claiming debts owned to the state, pro rata, based upon the ratio of the individual debt to the remaining debt owed to the state.

10. Here, the uncontroverted proof at hearing demonstrated that Petitioner owed the Department a minimum of $21,487.57. Since the amount owing the Department exceeded the proceeds of Petitioner's lottery prize received by the Department ($17,842.80), the Department was authorized to apply the full amount it received toward the satisfaction of Petitioner's outstanding debt.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered which approves the application of the $17,842.80 of Petitioner's lottery prize the Department received toward the partial satisfaction of the debt owing the Department.

DONE AND ENTERED this 21st day of January, 1998, in Tallahassee, Leon County, Florida.

WILLIAM J. KENDRICK

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 21st day of January, 1998.

ENDNOTES

1/ At hearing, the Department had marked for identification its Exhibits 1 through 7. Exhibits 1 through 5 were received into evidence. As for Exhibits 6 and 7, the Department was directed to provide a copy of those exhibits to Petitioner, and Petitioner was accorded ten days from the date of service to review the exhibits and, if he was so advised, to submit any written objection.

Petitioner was further advised that if no objection was raised, the Department's Exhibits 6 and 7 would be received into evidence.

Pursuant to the undersigned's direction at hearing, the Department has filed of record a notice attesting to the fact it mailed copies of the Department's Exhibits 6 and 7 to the Petitioner on January 7, 1998. To date, Petitioner has raised no objection to the exhibits and they have been received into evidence.

2/ The difference between the $5,000 face amount of the note and the amount reflected here as principal due ($5,021.56) is capitalized interest on disbursed principal. The same explanation regarding the dichotomy between the face amount of the note and the principal due, applies to the other two loans.

3/ The amount owing at the time would have apparently been greater because the Department was, under the terms of the loan agreements, entitled to recover its costs of collection. Given that the principal and interest owing to the Department at the time ($21,487.57) alone exceeded the amount of Petitioner's lottery prize transmitted to the Department ($17,842.80), it is unnecessary in this case to address those costs.

COPIES FURNISHED:

Ronald G. Stowers, Esquire Department of Education The Capitol, Suite 1701

Tallahassee, Florida 32399-0400

Enrique Benitez, pro se

12525 Northeast 13th Avenue, No. 305 North Miami, Florida 33161

Frank T. Brogan Commissioner of Education The Capitol, Plaza Level 08

Tallahassee, Florida 32399-0400

Michael H. Olenick, General Counsel Department of Education

The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 97-004432

Orders for Case No: 97-004432