BRYAN W. HENRY, )
vs. ) CASE NO. 81-2032
Respondent. )
A formal administrative hearing was conducted in this matter on February 12, 1982, in Tallahassee, Florida. The following appearances were entered:
For Petitioner: James R. English
For Respondent: Augustus D. Aikens, Jr.
By letter dated June 20, 1978, the Division of Retirement advised the Petitioner, Bryan W. Henry, that he was ineligible to participate in the Florida Retirement System on the basis of his employment arrangement with the Tallahassee Memorial Hospital. On August 11, 1981, Petitioner filed a Petition for Formal Proceeding. By notice filed August 14, 1981, the Division of Retirement forwarded the matter to the office of the Division of Administrative Hearings for the assignment of a hearing officer and the scheduling of a hearing. The final hearing was originally scheduled to be conducted on November 24, 1981, but was continued and rescheduled as set out above upon motion of the Petitioner.
At the final hearing Petitioner testified as a witness on his own behalf and called Tom Wooten, the Bureau Chief of the Bureau of Enrollment and Contributions of the Division of Retirement as an additional witness. The Division of Retirement called Robert L. Kennedy, Jr., the former Director of the Division of Retirement as its only witness. Petitioner's Exhibits 1 through 15 and Respondent's Exhibits 1, 3, 4 and 5 were received into evidence.
Respondent's Exhibits 2 and 6 were offered into evidence and rejected. The parties have submitted post-hearing legal memoranda which include proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the findings of fact and conclusions of law which follow. They have been otherwise rejected as not supported by the evidence, contrary to the evidence, irrelevant to the issues, or legally erroneous.
The issues in this proceeding are whether Petitioner is entitled to a hearing, and, if he is, whether his removal from the Florida Retirement system should have been applied retroactively for the period January 1, 1974 through June 20, 1978.
The Petitioner is an attorney. He was admitted to practice law in Florida in 1949. During most of his career, the Petitioner was employed in legal capacities by agencies of the State of Florida. He has served as counsel to the State Road Department, the predecessor of the present Department of Transportation; the Legislative Reference Bureau; and the House of Representatives. While he was in these positions, Petitioner participated in various programs that preceded the present Florida Retirement System (FRS).
During 1970, Petitioner left state employment and opened an office in which he engaged in the private practice of law. Among Petitioner's clients were the City of Tallahassee and Tallahassee Memorial Hospital (TMH). Prior to January 1, 1974, Petitioner's representation of TMH was handled in the same manner as that of Petitioner's other clients. Petitioner would bill TMH on an hourly basis for legal work that he performed. Beginning January 1, 1974, Petitioner's relationship with TMH changed and became more in the nature of an employment relationship and less in the nature of a private legal representation. The position of General Counsel of TMH was regularly established. The General Counsel reported directly to the hospital board and provided legal assistance to the hospital. The arrangement was that Petitioner would be paid a monthly "salary" based upon fifty hours of legal representation. The salary was fifty hours times $37.50. This amount was paid directly to the Petitioner in the form of a payroll check which came from the hospital's regular payroll account. The Petitioner maintained his private law practice. The "salary" from the hospital, however, was deposited directly in the Petitioner's personal account and was not deposited in his law firm account. In 1975, the arrangement changed so that Petitioner would perform 65 hours per month of legal representation to the hospital and be compensated at a rate equivalent to 65 times $37.50. While the rate of compensation changed on several occasions, Petitioner's relationship with the hospital remained essentially the same until June, 1978. During this period Petitioner never spent less than the minimum number of hours working for TMH. When more than the minimum number of hours was required, Petitioner would bill the hospital as if it were a regular client of his firm at an hourly rate which was initially $37.50.
During this period, TMH was a municipal hospital. Its day-to-day activities were managed by a hospital board and an executive director, but the hospital's operations were controlled by the City Commission of the City of Tallahassee. When Petitioner negotiated with the hospital for changes in his hourly billing rate, or his salary, he negotiated with the City Commission. When he billed for hours over the minimum, the bill was sent to the City Commission.
When the Petitioner entered into the new arrangement with TMH on January 1, 1974, he enrolled in the Florida Retirement System by completing the appropriate enrollment forms. The forms were provided to him by TMH which participated in FRS. The forms were submitted to FRS by TMH. Petitioner thereafter negotiated directly with personnel at FRS concerning credits for his military service and for certain work that he had performed with the Legislative Reference Bureau for which he had not previously been credited. Petitioner was
enrolled in FRS, and no one at FRS questioned his eligibility. From January 1, 1974 until June 20, 1978, money was deducted from "salary" checks paid the Petitioner by TMH for participation in FRS. FRS accepted these contributions and annually sent Petitioner a statement of his account. Petitioner's credits with prior state retirement plans were accepted by FRS, and as of January 1, 1974, his participation in FRS vested.
As General Counsel of TMH, Petitioner was responsible for all of the hospital's legal work. His work included legal representation in the areas of general contract, contract litigation, personnel problems, Title VII Civil Rights Actions, malpractice actions, collection work and Worker's Compensation Claims. Petitioner was not free to reject any part of the hospital's legal work. Petitioner was allowed to maintain his outside law practice, but conflicts of time were to be resolved in favor of the hospital. Petitioner answered directly to the hospital board and his position was parallel to that of the hospital's executive director. Petitioner did not personally perform all of the hospital's legal work. He performed a majority of it, but he did from time to time assign hospital work to other members of his law firm. Whether work would be assigned to another member of his firm was a matter within Petitioner's discretion. While Petitioner testified that he accrued annual leave and sick leave in the manner of any other hospital employee, it does not appear that he ever took any. Petitioner testified that he never worked less than the minimum hours for which he was paid a "salary" in performing the hospital's legal representation.
Petitioner performed legal work for the hospital at the hospital, at his private law office, and at various other locations. While the hospital provided him with isolated volumes, he maintained his own law library and utilized his own materials and clerical assistance. The Petitioner treated his relationship with the hospital as if it were a private representation. It appears that the purpose for the change in his relationship with TMH which occurred on January 1, 1974, was to improve Petitioner's retirement status. On October 21, 1975, Petitioner wrote to the City Commission of the City of Tallahassee as follows:
"As you know, my compensation as
City Attorney is based on a formula by which I receive a salary for the first fifty (50) hours per month of time spent working on City business, with the remainder paid at an hourly rate. In no month have we spent less than 99 hours devoted to City business. I would like your permission to modify our arrangement to reflect the first 65 hours spent as salary and the remainder at an hourly rate. This would in no way affect the amounts being paid by the City to me, but would make a difference in my retirement benefits. Further, since I am not on City retirement, this would in no way affect the actuarial or fiscal soundness of the City's retirement program.
Let me reiterate that what I
desire is merely a bookkeeping change and will in no way increase the amount that the City is paying for representation.
If you have any questions, please advise."
This letter related to Petitioner's representation of TMH, and was written on Petitioner's law firm stationery. This letter and other correspondence between Petitioner and the administrator at TMH indicate that Petitioner's relationship was not directly with TMH, but rather was with the City Commission of the City of Tallahassee. It further appears that he viewed his arrangement with TMH as "merely a bookkeeping" arrangement that would favorably impact his retirement benefits.
Petitioner's relationship with TMH was in the nature of a private legal representation. While some aspects of the relationship were in the nature of an employment relationship, on balance it appears that that was arranged for the purpose of allowing Petitioner to participate in FRS, rather than for the purpose of changing the relationship.
The Division of Retirement conducted an audit of Petitioner's retirement status with FRS. On June 20, 1978, the Division advised Petitioner that he did not meet criteria for membership in FRS, and that he would not be entitled to retirement benefits from FRS based upon the work that he had performed for TMH. The Division has apparently returned contributions that were made on the Petitioner's behalf to the Petitioner or to TMH. In the last paragraph of his June 20 letter, the State Retirement Director stated:
"I am sure you are aware there are certain administrative proceedings available to you under Chapter 120,
Florida Statutes (1977) if you are dis- satisfied with my decision. I would be most appreciative if you would please notify me promptly if you decide to pursue one of those avenues."
Petitioner did not request an administrative hearing until August 11, 1981. He initially decided not to pursue the matter further, and he requested a hearing only after he became convinced that other persons in similar circumstances were allowed to participate in FRS. While Petitioner testified that he heard from several persons whose circumstances were the same as his that they were allowed to participate in FRS, there is no evidence in the record of this matter from which it could be determined that anyone has been treated differently than Petitioner.
Prior to 1979, there were no written memoranda or instructions issued by the Division of Retirement as guidelines for determining the eligibility of attorneys or other professionals for enrollment in FRS.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this proceeding. Section 120.57(1), Florida Statutes.
This proceeding was initiated through the filing of a Petition for Formal Proceeding more than three years after the Division of Retirement notified Petitioner that it was removing him from the Florida Retirement System retroactive to January 1, 1974. The Division contends that reinstatement should be denied because Petitioner did not request a hearing in a timely fashion.
This contention is meritorious. The Department's June 20, 1978 letter did not strictly comply with the requirements set out at Section 120.59 for final orders. In Krestview Nursing Home v. Department of Health and Rehabilitative Services, 381 So.2d 240, 241 (1 DCA Fla. 1979), the Court held that letters which do not strictly meet statutory requirements for final orders are final for practical purposes if the affected party does not timely take advantage of a clear point of entry to administrative proceedings. Petitioner did have a clear point of entry. He was in fact specifically advised that administrative proceedings were available and he was invited to initiate them promptly.
Neither the letter, nor any pertinent agency rule dealt specifically with what a timely request would be. The test for deciding timeliness under these circumstances was set out by the First District Court of Appeal in Capeletti Brothers, Inc. v. Department of Transportation, 362 So.2d 346 348 (1978) as follows:
"Without agency rules of procedure which are decisive on the question of time- liness of a request for Section 120.57
proceedings, we are left with the problematic task of ascertaining from the record whether the affected party clearly waived Section
120.57 benefits following free-form agency action. Absent waiver we must regard an agency's free-form action as only preliminary irrespective of its tenor."
The facts of this case establish such a waiver. In the first place, Petitioner waited more than three years before requesting a hearing despite the fact that he was urged to pursue his remedies promptly. The Petitioner did not wait three years because of any misunderstanding as to the remedies that were available to him. Rather, he initially made a conscious decision not to pursue those remedies. It was only later, when he came to the conclusion that he had been treated differently from other persons, a conclusion not established in the record of this case, that he decided to pursue the remedies. While Petitioner did not expressly waive his rights to pursue Section 120.57 remedies a waiver can be inferred from the passage of more than three years and the fact that the Petitioner made a conscious decision not to pursue those remedies.
The determination that Petitioner's request for hearing was not timely obviates the need to consider other points raised in this proceeding. Since a complete evidentiary hearing was conducted, however, it is appropriate that other issues be treated to obviate the need for further proceedings should the Division of Retirement, or the courts come to a contrary conclusion regarding the timeliness issue. Petitioner contends that he was an employee of TMH and that as such he was not only entitled to participate, but required to participate in FRS. The Division of Retirement contends that Petitioner was not an employee of TMH, but rather that TMH was simply one of Petitioner's clients.
Relevant statutory provisions, which have not been materially changed since 1970, governing membership in FRS are set out at Section 121.021, Florida Statutes. In order to be a member of FRS it is required that individuals be "officers or employees", and entitlement to membership is based upon "compensation". "Officer or employee" is defined at Section 121.021(11), Florida Statutes, as:
"... any person receiving salary payments for work performed in a regularly estab- lished position and, if employed by a city or special district, employed in a covered group."
Compensation is defined at Paragraph (22) of the Section as: ... the monthly salary paid a member Paragraph (22) includes the following exemption from the term "compensation":
"... Under no circumstances shall compensa- tion include fees paid professional persons for special or particular services."
The issue in this proceeding therefore is whether Petitioner was an employee of TMH who received a salary, or a professional person who charged fees for special or particular services. In the past, the Division of Retirement has viewed this question as a matter of determining whether the individual is an employee or an independent contractor. In its final order filed December 14, 1981, in In re: Declaratory Statement Concerning Whether Frank A. Howard, Jr., Dade County School Board Attorney was properly enrolled as a member of the Florida Retirement System, Chapter 121, Florida Statutes, while concurrently employed as the senior partner in a private law firm, DOAH Case No. 81-417, the Division of Retirement quoted following language from 41 AM.JUR. 2d, "Independent Contractors," s5 with approval:
"It has also been held that
commonly recognized tests of the independent contractor relationship, although not neces- sarily concurrent or each in itself control- ling, are the existence of a contract for the performance by a person of a certain piece or kind of work at a fixed price, the indepen- dent nature of his business or his distinct calling, his employment of assistants with the right to supervise their activities, his obligation to furnish necessary tools, sup- plies, and materials, his right to control the progress of the work except as to final results, the time for which the workman is employed, the method of payment, whether by time or by job, and whether the work is part of the regular business of the employer."
A similar test is set out at 2 FLA.JUR. 2d, "Agency and Employment," s107. Applying these tests to the instant case, it is evident that Petitioner was an independent contractor, and not an employee of TMH. He performed legal work at a fixed hourly rate. He maintained an independent distinct business, a law office. He employed assistants who were employees of his law firm, and not of TMH, and assigned TMH work to them. He furnished his own library and office.
While his compensation was in part designated a "salary" it was based upon a set number of hours of legal work at a set hourly rate. Legal work while a necessary adjunct to a hospital's activity, is not the regular business of a hospital. In the Frank A. Howard, Jr. case, the Division held that the Dade County School Board Attorney was an employee within the meaning of Chapter 121. Petitioner's relationship with TMH is different from the relationship of Howard to the Dade County School Board. These differences include the fact that Petitioner assigned TMH work to employees of his law firm, the fact that Petitioner maintained and staffed his own office, and the fact that the Petitioner himself regarded his arrangement as a "bookkeeping" change to improve his retirement position.
Petitioner contends that since he had "vested" in FRS, he could not properly be retroactively removed from the system. This contention is without merit. Petitioner has cited no authority to support a conclusion that a person cannot be removed from FRS retroactively when it is found that the participation was legally improper. Contributions made by Petitioner to FRS have been returned to him and he was not properly a member of FRS based upon his relationship with TMH. He has lost nothing that he was entitled to have.
That the Division of Retirement enter a final order dismissing the Petition for Formal Proceeding filed by Bryan W. Henry, and denying him reinstatement into the Florida Retirement System for the period January 1, 1974 through June, 1978.
RECOMMENDED this 5th day of April, 1982, in Tallahassee, Florida.
G. STEVEN PFEIFFER Assistant Director
Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 1982.
James M. Donohue, Esquire Henry, Buchanan, Mick
& English, P.A.
Stanley M. Danek, Esquire Assistant Division Attorney Division of Retirement Department of Administration 2639 North Monroe Street Suite 207C - Box 81 Tallahassee, Florida 32303
