STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN C. DEITER, )

)

Petitioner, )

)

vs. ) Case No. 96-1613

)

DIVISION OF RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on June 3, 1997, by video conference between Tampa and Tallahassee, Florida, before Carolyn S. Holifield, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Murray B. Silverstein, Esquire

POWELL, CARNEY, HAYES and SILVERSTEIN, P.A.

Barnett Tower

One Progress Plaza, Suite 1210 St. Petersburg, Florida 33701

For Respondent: Stanley M. Danek, Senior Attorney

Division of Retirement

Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399

STATEMENT OF THE ISSUES

The central issues in this case are (1) whether Petitioner is eligible for membership in and retirement benefits from the Teachers' Retirement System; and (2) whether Petitioner is entitled to receive as a refund contributions paid by his employing agency and, if so, how much and at what interest rate.

PRELIMINARY STATEMENT

In February 1996, Petitioner, John C. Deiter, requested commencement of monthly retirement benefits under the Teachers' Retirement System. By letter dated February 26, 1996, Respondent, Division of Retirement, denied the request, indicating that Petitioner was ineligible for benefits because, in 1981, Petitioner applied for and received a refund of his accumulated contributions and the interest earned on those contributions. The letter acknowledged that the $22,753.10 refund made to Petitioner did not include funds that were not posted to his account when the refund was made. However, Respondent offered to refund to Petitioner the $1,692.96, which remained in his account. Petitioner challenged the denial of benefits and timely requested a formal hearing. On or about April 4, 1996, Respondent filed a notice with the Division of Administrative Hearings requesting that the matter be assigned to an administrative law judge.

At the final hearing, Petitioner testified on his own behalf. Respondent presented the testimony of Doug Cherry, retirement administrator, Division of Retirement. The parties offered and had admitted into evidence eight joint exhibits. A transcript of the proceeding was filed on June 19, 1997. The time set for submitting proposed findings of fact and conclusions of law was ten days from the filing of the transcript. Prior to that date, the parties requested an extension of time in which to file proposed recommended orders. In response thereto, an order was issued extending the time for filing posthearing submittals. Proposed findings of fact and conclusions of law were filed by both parties.

FINDINGS OF FACT

1. Petitioner, currently sixty-six years old, was employed as a professor of economics and finance at the University of South Florida (USF), Tampa, Florida, from September 1965 through August 31, 1981, when he terminated employment.

   
   

2. As a member of the teaching faculty, Petitioner automatically became a compulsory member of the Teachers' Retirement System (TRS) and remained a member throughout his tenure at USE.

3. When Petitioner originally enrolled in the TRS in September 1965, he signed an enrollment form entitled "Teachers' Retirement System of Florida, Enrollment Blank New Teachers." The form provided general information concerning the TRS, and

   included information about contributions, service credit, and service retirement benefits under the TRS. The enrollment form provided in part the following:

   
   

   I understand that the full amount of deductions from my compensation for annuity purposes with compound interest will be returned to me if I leave the service without a retirement benefit or will be paid to my beneficiary if I die in active service.

   
   

4. At all times relevant hereto, the TRS required that members make contributions of six-quarter percent of their total salaries to their retirement accounts. Of this amount, six percent went into the TRS member's retirement account and the quarter percent was allocated to the Survivors' Benefits Fund. In addition to the contributions made by TRS members, employers were required to contribute matching funds to the TRS Retirement Fund.

   
   

5. While employed at USF, the prescribed six

   quarter percent of Petitioner's salary was deducted, with six percent appropriately posted to his TRS retirement account.

   
   

6. During the time Petitioner was employed at USF, the employer contribution paid by USF to match Petitioner's contribution was $23,846.06.

   
   

7. Had Petitioner remained a member of TRS, he would have been eligible to begin receiving benefits in February 1993.

   
   

8. While employed at USF, Petitioner was given the option to transfer from the TRS to the newly created Florida Retirement System on five different occasions: December 1970; June 1971; July 1972; January 1975; and January 1979. Through information disseminated by Respondent, TRS members were notified that by transferring to the "new" Florida Retirement System, they would become mandatory members of the federal Social Security System. Petitioner chose to remain in TRS rather than transfer to the Florida Retirement System, thereby foregoing membership in the federal Social Security System.

   
   

9. In August 1981, prior to his normal age of retirement, Petitioner terminated his employment with USF and requested that Respondent refund Petitioner's retirement contributions. In making the request, Petitioner completed and signed a form

   entitled, "Request for Refund," FRS M81. Completion of this form is a requisite for receiving retirement refunds and applies to members of any of the Florida retirement systems. The Request for Refund states:

   
   

   I hereby make application for refund of my accumulated contributions in the Florida Retirement Systems. I do waive for myself, my heirs and assignees all rights, title and interest in the Florida Retirement Systems.

   
   

10. On the reverse side of the Request for Refund card, is the following:

    
    

    1. Under the provision of the Florida Statutes, a member MUST terminate employment before he can obtain a refund.

       * * *

       1. The refund process may be started upon receipt of this application. It may be necessary to issue a second refund after all payrolls on which a member's name appears are received and audited by the Retirement System Office.

       2. A member who has ten or more years of creditable service has a vested interest in retirement and may leave his contributions on deposit indefinitely and qualify for deferred retirement.

       
       

11. Pursuant to Petitioner's request, the Division refunded $22,153.10 to Petitioner in October 1981. The refund, which was provided in three warrants, included all employee contributions and earned interest posted to Petitioner's retirement account as of the date of the refund. Petitioner's refund was provided in three separate warrants because the system in place, in 1981, was incapable of generating a single check for an amount in excess of $9,999.99.

    
    

12. In late 1995 or early 1996, Petitioner called the Division of Retirement to inquire about his benefits under the TRS. Petitioner made after this call after he reviewed his Social Security wage earning history and learned that no contributions had been posted to his Social Security account during the sixteen years he had been employed at USF.

13. Upon reviewing the Petitioner's request, Respondent discovered that $1,692.96 remained in Petitioner's TRS account. Of the amount remaining in Petitioner's account, $292.63 represented Petitioner's employee contributions, and $1,400.33 was earned interest.

    
    

14. Respondent's failure to refund Petitioner's $292.63 and the interest earned thereon as soon as these moneys were posted to Petitioner's account was the result of an unintentional accounting error. Under the procedures used by the Division at that time, Petitioner's most recent employee contributions were not posted to his account until November or December 1981. The interest earned on Petitioner's employee contributions were not posted to Petitioner's account until the end of the 1981/1982 fiscal year. This matter is addressed in the Request for Refund which notified members that "it may be necessary to issue a second refund" after all payrolls on which the member's name appears have been posted.

    
    

15. After discovering this inadvertent accounting error, Respondent initially agreed to refund Petitioner the outstanding

    $1,692.96. Subsequently, the Division of Retirement agreed to pay Petitioner $1,692.96 plus six a-half percent interest from October 1981, for a total amount of $4,088.31. The six and a- half percent interest rate is the current rate established by Respondent.

    
    

16. Pursuant to Petitioner's request, Respondent has not yet refunded Petitioner's outstanding employee contributions and interest, pending the culmination of this proceeding.

    
    

17. At the time Petitioner completed and signed the Request for Refund, it was his intention to obtain all of his contributions and interest. It was not until Petitioner's inquiry in 1995 or 1996 that he became aware that a small amount of his employee contributions and interest thereon had not been refunded.

    
    

18. Petitioner believes that because Respondent did not refund all moneys due him, some $1,692.96, he retained membership in the TRS and is now able to retire from that system with a partial benefit.

    
    

19. Alternatively, Petitioner asserts that he is entitled to receive as a refund, all contributions paid into his retirement fund, including the contributions paid by USF. According to Petitioner, his understanding and belief in this

    regard is based on an explanation provided to him by Dr. John Milliken, the Dean of the College of Business at USF. Petitioner's understanding in this regard was not correct.

    
    

20. At some point prior to Petitioner's terminating his employment at USF, he reviewed a Summary Plan Description (SPD) which was issued by the Division of Retirement in 1980. One section of the SPD, Refund of Contributions, provides in relevant part:

    
    

    If a member terminates employment he may elect to receive a refund of all the contributions he has made to the retirement system, except those made to the Survivors' Benefit Trust Fund.

    
    

21. Furthermore, the first paragraph of the Summary Plan Description states:

    
    

    This brochure contains basic information on the Teachers' Retirement System, established by Ch. 238, Florida Statutes. It is not intended to be a comprehensive review of the Teachers' Retirement System and should not be used in place of the law on questions of interpretation and appli-cation. Any question which are not answered by this brochure may be addressed to the Div. of Retirement, . . . .

    
    

22. Based on Petitioner's reading of the provision of the SPD quoted in paragraph 20 above, it was his "judgment" and "impression" that any refund prior to retirement, would include both employee and employer contributions and the interest on these contributions.

    
    

23. At no time did Petitioner verify his interpretation with the Division of Retirement or the USE Personnel Office.

    
    

    CONCLUSIONS OF LAW

    
    

24. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

25. The Division of Retirement is charged with the general administration and responsibility for the proper operation of

    the Teachers' Retirement System. Section 238.03, Florida Statutes (1995).

    
    

26. The membership and rights of individuals under TRS are prescribed by the Legislature, and the plain meaning of those provisions will control. Petitioner's subjective interpretation, based on his impressions and opinions, of what those rights are do not control. Likewise, Petitioner's reliance on statements made to him by his college dean concerning his rights under TRS was not well founded and can not alter Petitioner's rights under a retirement plan established and governed by statute.

    
    

27. With regard to termination of membership in the TRS, Section 238.05(3), Florida Statutes (1981), states in pertinent part the following:

    
    

    Except as otherwise provided in s.238.07(9), membership of any person in the retirement system will cease if he or she is continuously unemployed as a teacher for a period of more than 5 consecutive years, or upon withdrawal by the member of his accumulated contributions as provided in 238.07(13), or upon retirement, or upon death; Section 238.07(9), Florida Statutes, deals with a member leaving his or her contributions on deposit after termination of employment and is not applicable in this case.

    
    

28. The term "accumulated contributions" is defined in Section 238.01(13), Florida Statutes (1981) [currently Section 238.01(12), Florida Statutes], as follows:

    
    

    "Accumulated contributions" means the sum of all the amounts deducted from the salary of a member and credited to his individual account . . . together with regular interest on such account.

    
    

29. Pursuant to Section 238.05(3), Florida Statutes (1981), a person's membership in the TRS ceases if (1) the individual is not employed as a teacher for more than five consecutive years or (2) the member withdraws his accumulated contributions.

30. In the instant case, Petitioner is ineligible for a benefit from TRS for two reasons. First, Petitioner's membership has ceased because he has not been employed as a teacher for more than five years. Second, on August 31, 1981, Petitioner withdrew his accumulated contributions from the TRS shortly after he terminated his employment with the USF.

    
    

31. The Division of Retirement is authorized by law to establish interest rates and has done so. Regular interest as defined in Section 238.01(12), Florida Statutes (1981), [currently Section 238.07(11), Florida Statutes], "means interest at such rate as may be set from the time to time by the divisiont" of Retirement.

    
    

32. Notwithstanding his assertions to the contrary, Petitioner waived his right to retirement benefits under the TRS when he completed and signed the Request for Refund form. That form expressly stated that by doing so Petitioner waived for himself, his heirs, and assignees all rights, title, and interest in the Florida Retirement Systems.

    
    

33. The Division, through an inadvertent accounting error, failed to fully refund Petitioner's employee contributions,

    $292.63, and interest. However, this inadvertent error does not nullify or void Petitioner's waiver of any right to retirement benefits under the TRS. At the time Dr. Deiter withdrew his accumulated contributions of $22,153.10 from TRS, he ended his entitlement to a retirement benefit from TRS.

    
    

34. In the alternative, Petitioner asserts that if he is ineligible for retirement benefits under the TRS, his refund should have included the matching employer contributions made by USE plus interest on those contributions. This position has no basis in law. A review of the statutory provisions relevant to refunds makes it clear that refunds to members include only 10 accumulated contributions, that is, employee contributions and interest thereon.

    
    

35. In addition to the statutory provision cited in paragraph 27 above, Section 238.07(12), Florida Statutes (1981), provides the following:

    
    

    Should a member cease to be a teacher except by death or by retirement under the provisions of this chapter, he shall be paid the amount of his accumulated contributions.

36. The statute is clear regarding what contributions must be refunded to members who no longer teach. Pursuant to Section 238.07(12), Florida Statutes (1981), Respondent is authorized to refund to eligible individuals accumulated contributions, "amounts deducted from the salary of a member." The statutory definition of accumulated contributions does not include employer

    
    

37. Section 112.66, Florida Statutes, states that the SPD should provide information about the TRS "in a manner that is calculated to be understood by the average plan participant and contributions either directly or by implication.sufficiently accurate and comprehensive to apprise participants of their rights and obligations under the plan." This section went into effect in 1978.

    
    

38. Petitioner argues that the SPD supports his position that he is entitled to employee and employer contributions plus interest on those contributions. The part of the SPD upon which Petitioner relies states that a member who terminates employment may elect to "receive a refund of all the contributions he has made to the retirement system, except those made to the Survivors' Benefit Trust Fund." When read in pare materia with the law, the SDP does not support Petitioner's interpretation. Rather, the SDP simply states the statutory definition of accumulated contribution. Clearly, the law controls over the SPD, and if there is a conflict between the law and the SPD, the law will be the superior. The SPD itself recognizes this principle in the very first paragraph when it is stated that the SPD "should not be used in place of the law."

    
    

39. Notwithstanding Petitioner's beliefs, the benefits under the TRS are prescribed and controlled by law, Chapter 238, Florida Statutes. Based on the provisions therein, Petitioner ceased to be a member of the TRS when he requested and received his accumulated contributions in 1981. Thus, Petitioner is ineligible for benefits in the TRS.

    
    

40. Finally, Petitioner is not entitled to receive matching employer contributions and interest on such contributions, in that these are not included in accumulated contributions which Respondent is authorized to refund.

RECOMMENDATION

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

RECOMMENDED that the Division of Retirement enter a final order finding that Petitioner, John C. Deiter, is (1) ineligible for retirement benefits under the Teachers' Retirement System and (2) is not entitled to receive employer contributions and interest thereon.

DONE AND ENTERED this 3rd day of September, 1997, in Tallahassee, Leon County, Florida.

CAROLYN S. HOLIFIELDK

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 3rd day of September, 1997.

COPIES FURNISHED:

Murray B. Silverstein, Esquire POWELL, CARNEY, HAYES and SILVERSTEIN, P.A.

Barnett Tower

One Progress Plaza, Suite 1210 St. Petersburg, Florida 33701

Stanley M. Danek, Senior Attorney Division of Retirement

Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399

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

Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within fifteen (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: 96-001613

Orders for Case No: 96-001613