STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROBIN A.C. AND MARY E. FEARN, )

)

Petitioner, )

)

vs. ) CASE NO. 93-5859

) STATE OF FLORIDA, DEPARTMENT OF ) MANAGEMENT SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on January 7, 1994 in Gainesville, Florida, before Ella Jane P. Davis, a duly assigned hearing officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Robin A. C. Fearn

3241 Northwest 41st Avenue Gainesville, Florida 32605

For Respondent: Augustus D. Aikens, Jr., Chief

Benefit Programs and Legal Services Division of State Employees' Insurance 2002 Old St. Augustine Road, B-12 Tallahassee, Florida 32301-4876

STATEMENT OF THE ISSUE

Whether or not Petitioners are entitled to add an above-the-age-limits child, who became handicapped after their initial enrollment in the state insurance program, as an eligible dependent.

PRELIMINARY STATEMENT

Petitioners, husband and wife, were represented at formal hearing by the husband, Robin A.C. Fearn, who was accepted, upon examination, as qualified representative for Mary E. Fearn, who did not appear.

Petitioners had nine exhibits admitted in evidence and Robin A.C. Fearn testified in their behalf.

Respondent presented the oral testimony of Verla Lawson, State Enrollment Administrator, and had three exhibits admitted.

The parties' Joint Prehearing Stipulation was received in evidence as Hearing Officer Exhibit A.

Appropriate provisions for official recognition of applicable rules and statutes were made on the record.

No transcript was filed, but all timely filed proposed findings of fact have been ruled upon in the appendix to this recommended order, pursuant to Section 120.59(2) F.S.

FINDINGS OF FACT

1. Petitioners are Robin A.C. Fearn, SSN 269-36-8341, an employee at the Marion County Correctional Institution since May 23, 1986, and his wife, Mary Fearn, SSN 273-36-8629, an employee of the University of Florida since September 5, 1978.

   
   

2. Effective June 1, 1986, Petitioners were enrolled in the Spouse Program under the State of Florida's Employees' Group Health Self Insurance Plan. Participants in the Spouse Program are entitled to family coverage for themselves and any eligible dependents.

   
   

3. Petitioners are the parents of a son, Lee A. Fearn, SSN 264-39-0713 who was born on February 27, 1961. At the time of Petitioners' initial enrollment in the health plan on June 1, 1986, Lee was 25 years of age and had exceeded the maximum dependent age limit of 23 years of age provided under the plan. Lee has not, at any time, been covered as a dependent under the State of Florida Employees' Group Health Insurance Plan.

   
   

4. Shortly after his 29th birthday, Lee Fearn was rendered disabled from injuries received in an automobile accident in March 1990. Since that accident, Lee has been dependent on Petitioners for support. The Federal Social Security Administration has accepted him as dependent on his parents, and Respondent does not dispute that Lee is "incapable of self-sustaining employment by reason of such mental or physical handicap and chiefly dependent upon the employee" as that term is used in Rules 60P-1.003(4)(c) and (d) F.A.C. [formerly Rule 22K- 1.103(4)(c) and (d) F.A.C.]

   
   

5. Petitioners attempted to secure health insurance coverage for Lee during the open enrollment periods in 1991 and 1992 by listing Lee as an eligible dependent in the space provided for adding dependents on the bottom half of their annual open enrollment form.

   
   

6. As a part of its insurance program, the Respondent permits State employees to enroll in the State of Florida Employees' Group Health Self Insurance Plan (Plan) within 31 days of employment or during an annual open enrollment period as described in its Rules 60P-2.002 and 60P-2.003 F.A.C.

   
   

7. The annual open enrollment form is titled, "Annual Benefit Selection Form." All state employees are asked to complete and return this form during each annual open enrollment period. It provides, in pertinent parts, as follows: "You must make a decision on each benefit. . . . Add only those dependents not currently covered by your health insurance. Eligible dependents are those outlined in Rule 22K-1 F.A.C." (Emphasis supplied)

   
   

8. Employees wishing to make changes in their current health insurance are permitted to do so during the open enrollment period by indicating those changes on the Annual Benefit Selection Form. No health examination or declarations, even of a preexisting condition, are required during this annual open enrollment period.

9. Employees are given five options regarding their health insurance on the Annual Benefits Election Form:

   
   

   1. Make no changes;

   2. Cancel

   3. Enroll

   4. Change from HMO Plan to State Self-Insured Plan or vice versa; and

   5. Change from individual coverage to family coverage or vice versa.

      
      

10. Petitioners separately completed their Annual Benefits Selection Forms during the 1992 open enrollment period by indicating they did not wish to make any changes in their health insurance coverage, that is, family PPC coverage.

    
    

11. At the bottom of the Annual Benefits Selection Form, Petitioners added Lee as a dependent and authorized payroll deductions and stated "I understand my enrollment or coverage changes will be effective January 1, 1993 . . ." (Emphasis supplied)

    
    

12. Petitioners claim they submitted a similar form in 1991 and never received notice from Respondent of the acceptance or denial of their 1991 open enrollment request to add Lee as their dependent.

    
    

13. Petitioners did receive back a denial in the form of two memos via the University of Florida personnel department, which employs Mrs. Fearn, for their 1992 open enrollment request.

    
    

14. Verla Lawson, Department of Management Services, [formerly Department of General Services] Division of State Employees Insurance, State Enrollment Administrator, testified as to how the open enrollment plan and applicable rules have been administered. She has been employed with the agency since 1986, but her involvement with the pertinent issues appears to have begun only with her assuming her present position in 1991.

    
    

15. Ms. Lawson testified that to accomplish Petitioners' goal of adding Lee to their coverage as a dependent they "should have" checked the box for "I wish to change" at the top of the form, filled out the dependent information at the bottom of the form and then made out another form for PPC coverage. From this portion of Ms. Lawson's testimony, it is inferred that the annual open enrollment form a/k/a the Annual Benefits Selection Form also constitutes the "Health Care Option Selection Form" referenced in Rule 60P-2.002 F.A.C.

    
    

16. Ms. Lawson also testified that even if Petitioners had made out both forms required, the agency would have denied coverage of Lee.

    
    

17. According to Ms. Lawson, employee participation in the Plan is considered continuous unless an employee elects to discontinue participation or to change to an HMO. She stated that although employees are asked to return open enrollment Annual Benefit Selection Forms each year for administrative purposes, they are not required to re-enroll in the Plan during each open enrollment period. If an employee indicates no changes on an Annual Benefit Selection Form, that form is not transmitted by an employee's local personnel office to the Department of Management Services in Tallahassee. Ms. Lawson conjectured that is what happened to Petitioners' 1991 attempts to add Lee to their coverage. However, Ms. Lawson consistently referred to the Annual Benefit

    Selection Form as "the enrollment form" for the Plan, and Mr. Fearn testified credibly that he was advised by his supervisor that his coverage would be terminated if he did not turn in his form timely. The language on the form reflects the same compulsory instruction. (See FOF 7). It is accepted, pursuant to Mr. Fearn's testimony and within the parameters of Section 120.58(1)(a) F.S.. that Mrs. Fearn was told that submission of the annual open enrollment form was necessary to prevent termination of her coverage.

    
    

18. Also, according to Ms. Lawson, the agency interprets its rules to permit employees to add additional eligible dependents within 31 days of the acquisition of that dependent or during the open enrollment period, and the Plan has been administered to permit above-the-age-limit handicapped children to be added only during the employee's or retiree's initial enrollment in the Plan. The agency interprets Rules 60P-2.001 and 60P-2.002 F.A.C. and Section 110.123(2)(b) F.S. to mean that only employees, retirees or spouses of deceased employees may apply for "enrollment" in the Plan, that eligible dependents merely "participate" in the Plan under an existing family coverage when added as dependents, and that consequently, dependents do not independently "enroll" in the Plan. The agency therefore decided that Petitioners' 1992 attempts to add Lee Fearn to his parents' existing family coverage as a dependent did not constitute an "enrollment" which by its own terms created the opportunity to enroll an above-the-age-limits handicapped child. Because under this interpretation Lee Fearn was not an eligible dependent, the agency felt he could not have been added to Petitioners' coverage.

    
    

19. Ms. Lawson was not familiar with any case with facts similar to this

    one.

    
    

20. According to Ms. Lawson, if Petitioners had been first employed in

    1992 and enrolled in the Plan within 31 days of that first employment, their handicapped over-age son could have been covered, and if they had been employed in 1986 but waited until 1992 to enroll for the first time in the Plan, their handicapped over-age son could have been enrolled at that time. Ms. Lawson specifically stated she could not say how the agency would proceed if the Petitioners herein dropped their coverage for one year and then tried to enroll both parent employees and the over-age handicapped child during a new employee

    31 day grace period or an annual open enrollment. Ms. Lawson was not clear on what the agency might do if one or both of Lee's parents accepted employment elsewhere and later returned to government service and applied for the Plan, except that state retirement rules possibly would govern the length of a permissible break in service. Ms. Lawson was not asked, and therefore the record is barren of any explanation of how, the agency would interpret its rules if one parent were employed without covering Lee and the other were later employed and wished to cover him as an over-age dependent handicapped child within the second parent's first 31 days of initial employment. However, the agency maintained that there is no provision in the Plan allowing an employee who is already enrolled in the Plan to add a handicapped over-age child and that its rules have never been interpreted to permit the adding of such a dependent at annual open enrollment.

    
    

21. Rule 60P-1.003(4)(c) F.A.C., as interpreted by the agency, applies to a handicapped dependent child already in the Plan who then turns nineteen.

    
    

22. Rule 60P-1.003(4)(d) F.A.C., as interpreted by the agency, applies only to a handicapped dependent child not in the Plan at the time of the parent- employee(s) initial enrollment.

23. The word "enroll" as used in Rule 60P-1.003(13) F.A.C. is interpreted by the agency to mean "change or transfer plans" under the program, if an employee is already enrolled in any state insurance program at all (PPC Plan or HMO). The agency interprets the same word to mean "enroll" if the employee has never before been enrolled in any state insurance program.

    
    

24. Under the provisions of Section 110.123(5), F.S. the Secretary of the Department of Management Services is given the responsibility for administering the state group insurance program. Inherent in that responsibility, but subject to prior legislative approval, is the authority to determine benefits and the contributions required therefor. Such determinations, whether for a contracted plan or a self-insurance plan, do not constitute "rules" within the meaning of Section 120.52(16) or "orders" within the meaning of Sections 120.52(11) F.S. The purpose of this exception to the Administrative Procedure Act is to afford the Department flexibility to make benefit changes or clarifications consistent with legislative approval. Respondent modified its January 1, 1993 edition of the Benefit Document to reinforce its interpretation that above-age-limits handicapped children could only be added during an initial enrollment, but this information was not provided to employee consumers until after the instant case was already in progress.

    
    

25. There was no actuarial or expert insurance evidence to show that the legislature by its statutes or the agency by its rules had made a conscious and reasonable decision to treat the over-age handicapped children of longtime employees differently than the over-age handicapped children of brand-new employees or employees who have had a significant interruption in government service or that there is any reason or purpose for such a distinction.

    
    

    CONCLUSIONS OF LAW

    
    

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

27. The pertinent statutes and rules provide as follows: 627.6615 F.S. Handicapped children; continuation

    of coverage under group policy.

    A group health insurance policy or health care services plan contract, delivered or issued for delivery in this state, which provides that coverage of a dependent child of an employee or other member of the covered group will terminate upon attainment of the limiting age for dependent children specified in the policy or contract shall also provide in substance that attainment of such limiting age will not operate to terminate the coverage of such child while the child is and continues to be both:

    1. Incapable of self-sustaining employment by reason of mental retardation or physical handicap; and

    2. Chiefly dependent upon the employee or member for support and maintenance.

    If a claim is denied under a policy or contract for the stated reason that the child has attained the limiting age for dependent children specified in the policy or contract, the burden is on the

    policyholder to establish that the child is and has continued to be handicapped as defined by subsections (1) and (2).

    110.123(2) F.S.

    (b) "Enrollee" means all state officers and employees, retired state officers and employees, and surviving spouses of deceased state officers and employees enrolled in an insurance plan offered by the state group insurance program.

    1. "State group health insurance plan" means the state self-insured health insurance plan offered to state officers and employees, retired

       state officers and employees, and surviving spouses of deceased state officers and employees pursuant to this section.

    2. "State group insurance program" or "programs" means the package of insurance plans offered to state officers and employees, retired state officers and employees, and surviving spouses of deceased state officers and employees pursuant to this section, including the state group health insurance plan, health maintenance organization plans, and other plans required or authorized by this section.

    . . .

    110.123(5) F.S. DEPARTMENT OF ADMINISTRATION; POWERS

    AND DUTIES. The Secretary of Administration shall be responsible for the administration of the state group insurance program. The Department of Administration shall initiate and supervise the program as established by this section and shall promulgate such rules as are necessary to perform its responsibilities. To implement this program, the department shall, with prior legislative approval:

    (a) Determine the benefits to be provided and the contributions to be required for the state group insurance program. Such determinations, whether for a contracted plan or a self-insurance plan pursuant to paragraph (c), do not constitute rules within the meaning of s. 120.52(16) or orders within the meaning of s. 120.52(11).

    . . .

    Rule 60P-2.001 Eligibility

    1. Employees and retirees are eligible to participate in the Health Plan with individual coverage or with family coverage if there are eligible dependents to be covered, in accordance with the provisions of this Chapter.

    2. Eligible dependents may only participate under a family coverage.

    Rule 60P-2.002 Enrollment

    1. An employee may apply for enrollment in the Health Plan with or without chiropractic coverage by completing and submitting the Health

       Care Option Selection form and a New Enrollee form to his or her personnel office during the first thirty-one (31) calendar days of State employment

       or, if a state officer, the first thirty-one (31) calendar days after such officer begins a new term of office.

    2. An employee may only apply for enrollment in the Health Plan with or without chiropractic coverage after the first thirty-one (31) calendar days of employment by completing and submitting the Health Care Option Selection form and a New Enrollee form

       to his or her personnel office during the open enrollment period.

       Rule 60P-2.003 Changes in Coverage

    3. An employee or retiree may begin family coverage prior to acquiring any eligible dependents. Since such coverage is effective the first day of any given month, employees who

       will acquire eligible dependents during the month and are desirous of having immediate coverage of such dependents must make application in time for a complete month's premium to be deducted prior to

       the first day of the month during which the dependent will be acquired. Otherwise, coverage cannot be effective on the actual date the dependent is acquired.

       Rule 60P-1.003 Definitions

    4. "Eligible Children" shall mean the employee' or retiree's own children, legally adopted children or children placed in the employee's or retiree's home for the purpose of adoption in accordance with Chapter 63, Florida Statutes, stepchildren for whom the employee or retiree is financially responsible,

    or any other children for whom the employee or retiree has established legal guardianship in accordance with Chapter 744, Florida Statutes. Such children are eligible for coverage as follows:

    1. From their date of birth to the end of the

       month in which their nineteenth (19th) birthday occurs;

    2. From their nineteenth (19th) birthday to th end of the month in which their twenty-third (23rd) birthday occurs, if they are enrolled in and regularly attending on a full-time basis any school, college or university which provides training or educational activities, and which is certified or licensed by

       a state or foreign country.

    3. Such children who are mentally or physically handicapped shall be eligible to continue coverage after attainment of the above age limits and while the employee's or retiree's family coverage is in effect provided such children are incapable of self- sustaining employment by reason of such mental or physical handicap and chiefly dependent upon the employee, retiree or surviving spouse for support and maintenance.

    4. Such children who are over the above age limits at the time of the employee's or retiree's enrollment in the Program, and who are mentally or

    physically handicapped, shall be eligible for coverage if they are incapable of self-sustaining employment

    by reason of such mental or physical handicap and

    chiefly dependent upon the employee or retiree for support and maintenance.

    (13) "Open enrollment period" shall mean a period designated by the Department of Management Services each calendar year during which time employees may enroll in the Health Plan; or, if residing in a qualified HMO's service area, employees may enroll

    in such HMO; or during which time employees, retirees or surviving spouses may transfer from their present plan to any other plan available for the area in which they reside without application of waiting periods or exclusions based on health status as conditions of enrollment or transfer.

    
    

28. The Respondent agency's position was that Section 627.6615 F.S. and Rule 60P-1.003(4)(c) F.A.C. [formerly Rule 22K-1.103(4) F.A.C.] provide "continuation" coverage to handicapped children already in the Plan beyond the Plan's usual limiting age of nineteen, if the child in question continues to be both: (1) incapable of self-sustaining employment by reason of mental retardation or physical handicap; and (2) chiefly dependent upon the employee or member for support and maintenance. Rule 60P-1.003(4)(d) F.A.C. [formerly Rule 22K-1.103(4)(d) F.A.C.] allows only new employees the opportunity to insure their handicapped dependents even if those dependents are above the limiting age at the time of their parent's initial enrollment. Respondent argued that no other provision for enrolling over-age handicapped children is provided under the Plan. In Respondent's view, once a dependent child turns nineteen, that child would not become a covered dependent again simply by subsequently becoming handicapped. Lee Fearn was a child who was over nineteen and not dependent on the date of his parents' initial enrollment, so he was never in the Plan. He became handicapped after he was already ineligible by age. Respondent urged that because Petitioners' son was neither an "eligible child" who was entitled to continuing coverage on the date of his disability in March 1990 nor a handicapped child at the parents' initial enrollment date of June 1, 1986, he could not be added later and is not now covered.

    
    

29. More simply, the Respondent contended that while there is open enrollment for employees, there is no open enrollment for their over-age handicapped children except during the 31 day period immediately following an employee-parent's initial employment enrollment. The agency's interpretation engrafts the word "initial" into Rule 60P-1.003(4)(d).

    
    

30. While conceding that neither the statutes, rules, nor informal benefit documents put Petitioners on notice of this agency interpretation by specifying that "initial" enrollments are different than "annual" enrollments, Respondent contended that the Plan has always been administered as such, that participation in the Plan is continuous unless the employee elects to discontinue participation or change to an HMO plan, and that although employees are asked to return open enrollment Annual Benefit Selection Forms for administrative purposes, they are not required to "re-enroll" in the Plan during each open enrollment period. Respondent maintained that Petitioners did not "enroll" on October 30, 1992 or at any other time because of the definitions of "enrollee" at Section 110.123(2)(b) F.S. and of "state group insurance plan" and "state group insurance program" at Sections 110.123(2)(h) and (i), F.S., respectively. Since eligible dependents do not apply for enrollment but participate by being added to the Plan by an employee, Respondent claimed Lee Fearn cannot be added to the Plan after the initial 31 days for his parents' enrollment.

31. On the other hand, Petitioners suggested that a clear reading of the rules shows that two different situations were intended to be covered by Rules 60P-1.003(4)(c) and (d) F.A.C. Petitioners urged that subsection (c) applies to dependent handicapped children who continue to be covered after age 19 and subsection (d) applies to over-age handicapped children who are subsequently enrolled. Petitioners asserted that any other interpretation renders (d) superfluous and that Respondent's interpretation which inserts the word "initial" before the word "enrollment" in subsection (d) is contrary to a clear reading of the duly promulgated rule, as evidenced by the agency's adding the word "initial" to its benefit document after this series of events.

    
    

32. Petitioners' position is straightforward and comports with a fair reading of the agency's duly promulgated rules. Although the agency's interpretation of its rules is possible and is entitled to great weight, its interpretation also is forced and creates disparate treatment of the handicapped adult children of longtime employee parents. Such disparate treatment is both unjust and has a chilling effect on the state retaining good employees. It is therefore contrary to good public policy. If the agency wishes to have a rule that prohibits the coverage of over-age handicapped children except by naming them at the initial enrollment of the parent-employee, it can promulgate one.

If it seeks to reach that result purely by a statement of policy, as here, it must show some clear prior legislative approval pursuant to Section 110.123(5) F.S.. That prior approval has not been demonstrated in this record. This record shows not capricious rules, but a capricious application of those rules.

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered enrolling Lee Allen Fearn SSN

264-39-0713 as an eligible dependent of Robin A.C. Fearn and Mary E. Fearn in the State Health Plan effective January 1, 1993 and that all eligible claims for his medical expenses after January 1, 1993 be paid.

RECOMMENDED this 1st day of April, 1994, at Tallahassee, Florida.

ELLA JANE P. DAVIS

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 1st day of April, 1994.

APPENDIX TO RECOMMENDED ORDER 93-5859

The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF).

Petitioners' PFOF:

Petitioners' proposed recommended order does not comply with the rules of the Division of Administrative Hearings as to designating proposed findings of fact and conclusions of law separately or numbering same. It appears to present only conclusions of law or a final recommendation. It is rejected as proposed findings of fact. As proposed conclusions of law and legal argument it has been covered but not necessarily adopted in the recommended order's conclusions of law.

Respondent's PFOF:

1-2 Accepted.

3 Accepted in part and rejected in part as legal argument or mere recitation of one person's testimony. Covered in FOF 17.

4-5 Accepted.

6-10 Rejected as legal argument or mere recitation of testimony, covered in FOF 17-25.

COPIES FURNISHED:

Robin A.C. & Mary E. Fearn 3241 NW 41st Avenue Gainesville, FL 32605

Augustus D. Aikens, Jr., Esquire DMS/Division of State Employees Insurance 2002 Old St. Augustine Road B-12 Tallahassee, FL 32301-4876

William H. Lindner, Secretary Department of Management Services Knight Building Suite 307

Koger Executive Center 2737 Centerview Drive

Tallahassee, FL 32399-0950

Sylvan Strickland General Counsel

Department of Management Services Knight Building Suite 309

Koger Executive Center 2737 Centerview Drive

Tallahassee, FL 32399-0950

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 least 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: 93-005859

Orders for Case No: 93-005859