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FAX No. 85092263!2
P. 00l
STATE OF FLORIDA
DMSION OF ADMINISTRATIVE HEARINGS
MARTHA L. KENERSON and DAVID R. KENERSON, JR.,
Petitioners,
v.
DEPARTMENT OF MANAGEMENT SERVICES, DIVISION OF STATE GROUP INSURANCE,
L""' Oro No. DMS- 11-0003
DOAH CASE NO.: 09-4187
Respondent.
...,:!
FINAL ORDER
TIDS MATTER has come before the undersigned for the purpose of issuing a final·· order, in accordance with section 120.569 (]), Florida Statutes.
DOAH PROCEEDINGS
At the time of his death on March 31, 2009, David R. Kenerson (Mr. Kenerson) was covered by the state life insurance plan as a retired employee of the State of Florida. The Petitioners, as beneficiaries of their deceased father's life insurance policy, petitioned for payment of$ 7,500.00 in addition to the $2,500.00 benefit paid by the State. The Respondent maintained that the Petitioners we,e paid all benefits to which they were entitled.
No transcript of the hearing was ordered, and the parties timely filed their respective Proposed Recommended Orders. On November 10, 2010, Administrative Law Judge Robert S. Cohen issued a Recommended Order recommending the Department enter a final order dismissing the petition in its entirety. No exceptions were filed by either party.
Prior to the final hearing, the Respondent filed Respondent's Motion for Recommended Order Granting Partial Sunnnary Judgment and Memorandum of Law in Support. On June 16,
2010, a Recoll1ll1ended Order Granting Respondent's Motion for Recommended Order of Partial
Summary Judgment was issued.
Section 110.123, Florida Statutes, established Florida's State Group fosurance Program (Program). The Program offers a wide variety of insurance plans to state officers, employees, retirees, and their dependents, including life insurance. Administrative rules applicable to the basic state life insurance plan are found in Florida Administrative Code Chapter 60P. The Division of State Group Insurance (OSGI) is designated by statute as the agency responsible for the administration of the Progrant. The life insurance program at issue in these proceedings.is a part of the Program.
Petitioners maintain they are entitled to $10,000 in life insurance benefits as beneficiaries of David R. Kenerson, the retiree. Respondent maintains that Petitioners have received alLthe life insurance benefits to which they are entitled, $2,500.
Effective January 1, 2000, the life insurance coverage for all active employees and retirees who paid $4.20 per month in premium was increased to $10,000.00. The premium paid by the retirees did not cover the entire antount of coverage provided to the retirees by the insurer. Through year 2006, funds from the Advanced Premium Account augmented the premium paid by retirees. In 2006, the Division of State Group Insurance (OSGI) determined that after March 2007 the Advance Premium Account would be depleted, and, therefore, would be no longer available to augment the premiums paid by retirees.
By letter dated July 31, 2006, DSGI notified the retirees of the changes in life insurance to be effec;tive January 1, 2007, and instructed that those who wished to remain at the $10,000 level of coverage would be required to pay a higher premium. The letter also informed the
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retirees that ifno selection was made by January 19, 2007, the premium would remain the same, but the benefit would decrease to $2,500. The same information was provided to retirees in their Open Enrollment packages for benefits beginning January 1, 2007.
The letter dated July 31, 2006, and the Open Enrollment package for benefits beginning January 1, 2007, were mailed to Mr. Kenerson at his address of record, on file with the Division
of State Group Insurance (DSG!)·. Petitioners alleged that since Mr. Kenerson no longer lived at
the address to which the notices were sent, the Respondent did not provide Mr. Kenerson proper notice of the change in the life insurance coverage; thereby depriving Mr. Kenerson the opportunity to increase hls premium payments so as maintain the benefit of$10,000.00.
Respondent maintains that by mailing the notices to the address of record on.file. with the Division of State Group Insurance, it fulfilled its legal duty to notify Mr. Kenerson of, any changes in life insurance benefits for retirees.
l'ARl' I
RECOMMENDED ORDER GRANTING RESPONDENT'S MOTION FOR RECOMMENDED ORDER GRANTING PARTIAL SUMMARY JUDGMENT (ISSUED JUNE 16, 2010)
FINOlNGS OF FACT
l. The Findings of Fact set forth in the Order Granting Respondent's Motion for Recommended Order Granting Partial Summary Judgment (issued June 16, 2010) (Attachment
is adopted in its entirety and is incorporated by reference herein.
The State of Florida provides life insurance to its employees and retirees through a commercial insurer. By means of competitive procurement, the State purchases life insurance coverage from commercial insurers based upon a cost per $1,000.00 of coverage. Each month, the State determines how much coverage (how many thousands of dollars) is required and
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submits payment to the insurer based upon the rate as agreed between the State and the insurer. Coverage requfrement change monthly based upon new hires, terminations and other events.
In their Petition for Administrative Hearing filed August 4, 2009, the Petitioners' requests for relief included claims based upon the following:
Denial of equal protection and property without due process under the Fourteenth Amendment of the U.S. Constitution and Article 1, Section 9 of the Florida Constitution.
b. Title 42 U.S.C. § 1983.
Sections 626.951-.99, Florida Statutes (2009), Unfair Insurance Trade Practices Act (UITPA).
Section 627.4133(2), Florida Statutes (2009), governing notice of cancellation, i, nonrenewal, or renewal premium of for policies covering workers' compensation and employer's liability insurance, property, casualty, except mortgage guaranty, surety, or marine insurance, other than vehicle insurance subject to section 627.728, Florida Statutes.
Sections 626.901-.939, Florida Statutes (2009),"Unauthorized Insurers and Surplus Lines."
CONCLUSIONS OF LAW
The Conclusions of Law set forth in the Order Granting Respondent's Motion for Recommended Order of Partial Surmnary Judgment (issued June 16, 2010) (Attachment A) is adopted in its entirety and is incorporated by reference herein.
DOAH is an administrative agency and therefore only derives the powers specified in the creating statute. See Felder v. State, Dq,t. of Management Services, Div. of
Retirement, 993 So.2d 1031, 1035 (Fla. 1st DCA 2008). The Petitioners have attempted to use
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DOAH as an avenue to r seek relief for legal and equitable claims that are within the sole jurisdiction of separate judiciary, or simply inappropriate given the undisputed facts of the case.
An order of summary judgment pursuant to Model Rule 28-106.204 (4), f AC, is appropriate when there is sufficient undisputed factual information to pennit the entry of a
Recommended Order of Dismissal, without the taking of additional evidence. See Merritt v.
Department of Business and Professional Regulations, 654 So. 2d 1051 (Fla. 1st DCA 1995); and Weaver v. Leon County School Board, DOAH Case No. 02-2295 (August 23, 2002). In this case, even though the Petitioners claim there are "disputed facts," none of these are material to the determination of jurisdiction issues or allow for a claim of attorney's fees, interestr or equitable relief.
Adequate notice and a fair playing field are essential elements of due process and · equal protection. Tbis means providing notice with xeasonable certainty of the nature and cause of the agency action and providing an opportunity to protect one's interest. The notices provided by the July 31, 2006 letter and the 2006 Open Enrollment Package were constitutionally sufficient in that they provided notice of the new coverage tiers, the increase in premium and provided a reasonable opportunity within to make a selection of the level of coverage. See,
Hadley v. Dep't. of Admin.. 411 So.2d 184, 187 (1982); Florida Ass'n of Professional Lobbyists,
Inc. v. Division of Legislative Information Services of the Florida Office of Legislative Services 431 F.Supp.2d 1228, 1237 (N.D.F!a.,2006}.
Providing the notice to the last address of record did not affect the sufficiency of
the notice. See. Best Meridian Ins. Co. v. Tauty. 752 So. 2d 733 (ftn. 3 )(Fla. 3d DCA 2000);
also see Lily-Scott Formato, D/B/A Tender Loving Chlldbirth, Petitioner v. Agency for Health
Care Administration, DOAH 03-1920MPI, paragraph 9, 2003 WL 22279676, (service of the
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notice of hearing at the last address of record was sufficient although the agency providing notice believed the Petitioner had relocated to an unknown address. )
Constitutional claims brought pursuantto 42 U.S.C. § 1983 are against persons as defined in the statute. DSGl is not a ''person" for the purposes of that statute. See Pierce v.
Delta County Dept. of Social Services 119 F.Supp.2d 1139, 1147 (D.Colo.,2000) (holding "[l]ocal governmental bodies which are considered "arms of the State" for Eleventh Amendment immunity purposes are not "persons" within the meaning of§ 1983."). Civil rights actions under
this section cannot .be brought against state agencies. Alexander v. California Court Director of
Correction, Adult Authority. 433 F.2d 360 (C.A. Cal. 1970). Therefore bringing this action against the State is improper.
Further, DOAH cannot exercise powers which are basically and fundamentally judicial, such as the detennination of the constitutionality of an action, as that power is reserved
for the Article V courts. See Biltmore Constr. Co. v. Fla. Dep't of Gen. Servs., 363 So. 2d.851,
853 (Fla. 1st DCA 1978); See Gulf Pines Memorial Park, Inc. v. Oaklawn Memorial Park, Inc., 361 So.2d 695, 699 (Fla. 1978) ("the administrative hearing officer lacksjurisdiction to consider constitutional issues").
The Petitioners have requested relief based on Part IX Unfair Insurance Trade Practices Act (UlTPA), consisting of Florida Statutes §626.951 - §626.99. (Fla. Stat. 2009). UITPA claims are aimed at insurance companies and those conducting the business of insurance who take advantage of members of the public. Section 626.9511, Florida Statutes, the definition section for the UITPA, establishes that the act applies only to persons who are "in the business of insurance." The Division of State Group Insurance is not in the business of insurance," either
under the federal standard applicable to UITPA cases in Group Life & Health Insurance Co. v.
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Royal Drug Co., 440 U.S. 205,211 (1978), rehearing denied 441 U.S. 917 (1979), nor under the
standards established for the State of Florida as enunciated in Professional Lens Plan. Inc. v. Department ofinsurance, 387 So. 2d 548, 550 (Fla. 1't DCA 1980).
In Group Life & Health Insurance, supra, the U.S. Supreme Court recognized that one of the indispensible elements of being in the "business of insurance," is the transferring
and distribution of risk. Id. at 212. Further, Florida Statutes, § 624.02 (2009), defines insurance as follows:
"Insurance" is a contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon detenninable contingencies.
In Professional Lens Plan, Inc., §!!11!11, the Florida First District Court of Appeal; has identified five elements that are normally present in an insurance contract: (1) an insurable risk; (2) a risk ofloss; (3) an assumption of risk by the insurer; (4) a general scheme to distribute the loss among the larger group of persons bearing similar risks; and (5) the payment of a premium for the assumption of risk. In the case of the life insurance in question, there is no distribution or assumption of risk by DSGI. Rather, 100% of the risk is on the commercial. insurer, Minnesota Life (prior to January I, 2008, the insurer was the Prudential Insurance Company of America).
The Florida UITPA does not provide a civil remedy for violations of section
626.9541(l)(a)(6), Florida Statutes. See Buell v. Direct General Ins. Agency. Inc., 488 F. Supp. 2d 1215 (M.D. Fla.2007), affirmed 267 Fed. Appx. 907, 2008 WL 598281 (holding that there was no private right of action under Florida's UlTPA, which is a regulatory statute designed to protect public welfare, unless the legislature expressly provided for it.)
The Petitioners also make a claim for relief based on section 627.4133(2). This section applies to insurers and governs policies for "worker's compensation, employer liability insurance, property, casualty, except mortgage guaranty, surety, or marine insurance, other than motor vehicle insurance ...." The referenced section makes no mention oflife insurance, which is the only insurance at issue in this case.
Moreover, the claim brought pursuant to Section 627.4133(2), Florida Statutes (2009), is not appropriate for this administrative forum since Respondent is not an "insurer'' as explained in paragraphs 10 and 11 above.
Sections 626.901-.939, Florida Statutes (2009), regulate "Unauthorized Insurers and Surplus Lines," and, among other things, prohibit persons from acting as agents for,.. or. • otherwise represent or aid, directly or indirectly, any insurer not then authorized to transact such business in the State.
The insurers that provided.the insurance coverage in question, Minnesota Life,and previously Prudential, are commercial insurers authorized to conduct business in the State and are regulated by the Florida Department of Financial Services, Office of Insurance Regulation: · Both are authorized to transact business in Florida.
Further, Respondent neither acts as representative or agent of the life insurance insurers. Respondent procures benefits through its competitive procurement procedures and offers it to eligible active employees and retirees who wish to participate in the State J.usurance Program.
The Petitioners have requested prejudgment interest.
Sovereign immunity, with limited exceptions, precludes the award of prejudgment
interest in the absence of a statutory wavier. See Dept. of Revenue v. Nicks, 815, So. 2d 779,
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780 (2nd DCA Fla. 2002). (See also State v. Family Bank of Hallendale, 623 So. 2d 474, 479 (Fla. 1993) holding "that the general immunity from interest is an attribute of sovereignty, implied by law for the benefit of the state", (citations omitted)).
On limited occasions, cow:1:s have held that there can be an implied waiver where the state has a contractual relationship with the petitioner. See generally Chiles v. United
Faculty of Florid,\, 615 So.2d 671, 678 (Fla.,1993) (acknowledging "that elsewhere [the court has held] that an award of interest may be appropriate in suits by public employees based on
violation of a contract with a public employer.) Broward County v. Finlayson, 555 So-2d.1211 (Fla.1990)).
In this case, the life insurance contract is not with DSGI , but between .the . insurer, Minnesota Life, and Mr. Kenerson. Compare Broward County v. Finlayson, 555 So.2d 1211 (1990).
Toe Petitioners did not bring this action on behalf of Mr. Kenerson's estate;. but as his beneficiaries.
Further, the State was never in receipt of the $7,500.00, which the Petitioners are·· now claiming is due with interest. Therefore, the exaction of this interest would be grossly · inequitable due to fact it would burden the State, and thereby the public. See, Mailman v.
Green, 111 So.2d 267,268 (Fla.1959), and Flack v. Graham, 461 So.2d 82, 84 (Fla.,1984).
Finally, Petitioners' claim for attorney's fees was addressed in an Order dated October 16, 2009, which held that an administrative law judge cannot award attorney's fees absent specific authority, and that no specific authority has been cited by Petitioners. That order is attached hereto (Attachment B) and incorporated herein in its entirety.
Recommended Order (hearing held June 29-30, 2010)
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FINDINGS OF FACT
The Findings of Fact set forth in the Recommended Order (hearing held June 29- 30, 2010) (Exhibit C) is adopted in its entirety and is incorporated by reference herein.
Additionally, based upon a review of the record the undersigned has detennined
that DSGI maintains its database of addresses for the benefit of the all insured generally as a group, not for individual insured employees or retirees.
CONCLUSIONS OF LAW
The Conclusions of Law set forth in the Recommended Order (hearing held June 29-30, 2010) (Exhibit C) is adopted in its entirety and is incorporated by reference herein.
Additionally, the undersigned finds DSGI did not owe Mr. Kenerson or any
individual a duty to maintain an "accurate" record of his address. (See Layton v. Florida Dept.
of Highway Safety & Motor Vehicles, 676 So.2d 1038, 1040 (Fla. 1st DCA 1996) holding that an agency has no duty to an individual to maintain accurate records).
There has been no proof presented that DSGI has any statutorily created duty to an individual retiree to maintain records, nor that records must be updated in a certain way. If a governmental entity is to be responsible for maintaining records that it is the province of the legislature to create that responsibility. Layton v. Florida Dept. of Highway Safety & Motor
Vehicles, supra.
Based upon the foregoing, it is ORDERED AND ADJUDGED:
A final order of partial summary judgment is granted and the Petitioners' claims
as to the following are dismissed:
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a. Den.ial of equal protection and den.ial of property without due process under the Fourteenth Amendment of the U.S. Constitution and Article 1, Section 9 of the Florida Constitution.
b. Title 42 U.S.C. § 1983.
Sections 626.951-.99, Florida Statutes (2009), Unfair Insurance Trade Practices Act (UITPA).
Section 627.4133(2), Florida Statutes (2009), governing notice of cancellation, nonrenewal, or renewal premium of for policies covering workers' compensation and employer's liability insurance, property, casualty, except mortgage guaranty, surety, or marine insurance, other than vehicle insurance subject to section 627.728, Florida Statutes.
Sections 626.901-.939, Florida Statutes (2009), "Unauthorized Insurers. and Surplus Lines."
The Petitioners' request for payment of additional life insurance benefits is den.ied, and the appeal is dismissed in its entirety.
This Final Order shall become effective on the date of filing with the
Agency Clerk of the Department of Management Services.
V· /ebp.JR"(
DONE and ORDERED this - -/---day ofJtmml'fy2011, Tallahassee, Florida.
LES, Secretary
D partment of Management Services 50 Esplanade Way
Tallahassee, Florida 32399-0950
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FAX No. 85092263!2 P. 0 l 2
Copies furnished to:
William B. Bierce Representative of Petitioners Bierce & Kenerson, P.C. .
420 Lexington Ave., #2920 (at 43'd ST), New York, NY 10170
Sonja P. Mathews Assistant General Counsel
Office of the General Counsel 4050 Esplanade Way
Tallahassee, Florida 32399-0950
Michelle Robleto Director
Division of State Group Insurance
4050 Esplanade Way
Tallahassee, Florida 32399-0950
NOTICE OF RIGHT TO APPEAL
Unless expressly waived by a party such as in a stipulation or in other·similar fonns of settlement, any party substantially affected by this frnal order may seek judicial review by filing an original Notice of Appeal with the Agency Clerk of the Department of Management Services, and a copy, accompanied by filing fe,:,s prescribed by law, with th,:, Clerk of the appropriate District Court of Appeal. The Notice of Appeal must be filed within thirty (30) days of rendition of this order, in accordance with Rule 9.110, Fla. R App. P., and section 120.68, Florida Statutes.
Certificate of Clerk:
Filed in the offic,:, of the Clerk of the Department of Management Services
onthis /St dayof ,2011.
Af.1!!£r Mmip
Issue Date | Document | Summary |
---|---|---|
Feb. 01, 2011 | Agency Final Order | |
Nov. 10, 2010 | Recommended Order | Petitioners' father, a deceased former State of Florida employee, did not update his address of record with the DSGI and was, therefore, not notified of a change in life insurance benefits, through no fault of DSGI. The Petition for Relief is dismissed. |