vs. ) Case No. 98-3548
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Administrative Law Judge, Mary Clark, held a formal hearing in the above-styled case on December 1, 1998, in Tallahassee, Florida, and Orlando, Florida, by videoconference.
For Petitioner: Julia E. Smith, Esquire
Rodolfo Nunez, Esquire Amundsen and Moore, P.A.
For Respondent: Harold D. Lewis, Senior Attorney
The issue in this case is whether Fred E. Hild (Colonel Hild), a deceased member of the Florida Retirement System, was incapacitated at the time he selected his retirement option and through the time that his first benefits check was cashed and, if
so, whether his retirement option should be amended retroactively to provide benefits for Petitioner, Lois Hild, his spouse.
After being formally notified of the Division of Retirement's (agency) intent to deny her benefits, Mrs. Hild timely filed a petition for hearing and the case was referred to the Division of Administrative Hearings.
At the formal proceeding, Mrs. Hild testified and presented the additional testimony of Dixie Borden; Vivian Martin; David Hild; Steve Hild; Michael Collins, MD (by Deposition); and Vicki Nelson (by deposition). Petitioner's Exhibits no. 1 and 2 were received in evidence without objection.
The agency presented testimony of Dixie Borden, Mary Ann Swenson, Michael Ward Break (erroneously referenced as "Dr.
Bright" in the transcript) and Stanley Caldon. Respondent's Exhibits nos. 1-10 were received in evidence without objection.
The transcript was filed on January 6, 1999; the parties filed their proposed recommended orders on February 3 and February 5, 1999. These, as well as Petitioner's Notice of Errata in the hearing transcript, have been considered in the preparation of this Recommended Order.
Colonel Fred Hild, late husband of Lois Hild, served in the Air Force for 25 years before retiring from that service.
After retirement from the Air Force and after Valencia Community College opened in Orlando, Florida, Colonel Hild joined the college staff, first as a teacher and then as an administrator. At the time of his retirement from the college, he was assistant to the provost. He worked at the college from 1978 until 1996. His employment at the college was covered by the Florida Retirement System (FRS).
With the exception of a year's employment in her family's business, Mrs. Hild never worked outside of her home. She and Colonel Hild were married over 50 years and had a full, active life together. Colonel Hild provided the financial support for the family and, except for routine household expenses when he was away in the Air Force, he handled all of the family's financial affairs.
Colonel Hild's family and co-workers acknowledge that he was a remarkable man in many ways, physically vigorous and mentally sharp. His work was always an important aspect of his life; he was well-respected and well-known on the college campus and, because of his long tenure, was very knowledgeable about the history and functioning of the college.
As he aged, Colonel Hild slowed down a bit; he had days at work when he was sleepy or grumpy. Most days, though, he was quite normal and sharp. He knew all of the regulations for the college and always went by the rules.
On October 12, 1995, at the age of 81 years, Colonel Hild suffered a major cerebrovascular accident (stroke) while at home. The stroke left lasting side effects. For a time after the stroke he lost all short-term memory and could neither read nor write. He became passive and frail. He underwent rehabilitation and improved quite a bit, according to Mrs. Hild, but he was never again the same man.
Colonel Hild's son, David, who lived in California, sold his car and possessions and moved in with his parents to help Mrs. Hild provide the care Colonel Hild then required. This care included driving and assistance ambulating in the home neighborhood, where he would sometimes get lost.
Colonel Hild was never again able to drive, as he lost part of his peripheral vision and would forget where he was going. He was unable at times to recognize friends or family members. He slept a lot and needed supervision in showering and dressing. He never again was able to assume responsibility for the financial affairs of the family. The Hild's son, Steve, an accountant in Miami, Florida, helped Mrs. Hild with financial planning and paperwork.
Before his stroke Colonel Hild had made some plans for retirement. He spoke to co-workers of investments in stocks and bonds, and when the Air Force brought in a survivor's benefit program, he took advantage of that so that his wife would have
some benefits when he died. He also spoke to Mrs. Hild of their having retirement benefits from Valencia for ten years.
Still, before the stroke Colonel Hild worried about having enough for retirement and his worries increased after the stroke. He insisted on returning to work at the college after his rehabilitation and some recovery.
Although they were worried about how he could function, Colonel Hild's wife and sons were reluctant to oppose him when he was so insistent. Dr. Collins, his personal physician for over
20 years, provided certificates authorizing Colonel Hild to return to the college part-time on April 8, 1996, and full time on June 1, 1996. Dr. Collins believed that the duties would be light and that the family and college staff would look out for Colonel Hild.
Colonel Hild's son, David, drove him to and from work and made sure Colonel Hild got in the building. The first time they made the drive, Colonel Hild directed his son to the wrong campus of the college.
Already thoroughly trained in the paperwork, the secretaries picked up much of the work that Colonel Hild had been doing. For example, they listened to students' problems and tried to work them out with the department chairpersons. For final decisions, the staff referred the problems to the provost, Dr. Kinzer. Colonel Hild's duties on his return to work were light.
Because Colonel Hild was very organized and knew so much about the college, he was able to function with the help of his staff. He could review documents prepared for him and would initial or sign the documents, as appropriate, sometimes changing something if it had not been prepared correctly. Some days were better than others; he slept more than he did before his stroke and would sometimes get lost on campus. Because he was so well- known, someone would always help him back to his office.
One of the annual responsibilities of Colonel Hild was organizing the graduation processions, making a list of the order of the march and placing posters or signs in the corridors for guidance. He performed this function without complaint in early May 1996. He refused assistance of his staff and, except for a couple of posters on the opposite wall, he managed to get everything done.
At the actual graduation night, however, Colonel's Hild's, son, David, had to help him find his way at the end of the ceremony and recessional march.
Colonel Hild retired from Valencia Community College on July 31, 1996. In preparation for that retirement he had several contacts with staff in the college's human resources office.
Initially, Colonel Hild signed a form on May 30, 1996, applying for retirement and leaving blank the benefit option selection since he had not yet received an estimate of the amounts he would receive under each option.
Vicki Nelson, a staff person in the human resources office, had approximately 4 or 5 contacts with Colonel Hild,
face-to-face or over the telephone, while preparing paperwork for his retirement. At one point she was concerned that she was having to explain things over again and she suggested to Colonel Hild and to his secretary that maybe he should bring Mrs. Hild in with him. The issue she was trying to explain had something to do with the need to obtain Mrs. Hild's birth certificate if he selected either option 3 or 4. The suggestion was never followed up and ultimately Mrs. Hild's birth certificate was unnecessary.
Michael Break is assistant vice-president of human resources at Valencia Community College. In his capacity as director of human resources Dr. Break was involved in preparing Colonel Hild's retirement documents. On June 19, 1996, Dr. Break, Vicki Nelson, and Colonel Hild met to discuss the benefit options and the monthly estimates of each amount.
The FRS provides four benefit options to its retirees. Option 1 yields the maximum monthly benefit, but when the retiree dies there is no survivor benefit. Option 2 yields a reduced monthly benefit for 10 years. If the retiree dies before the end of 10 years, the benefit is paid to the survivor for the balance of the 10 years. Option 3 provides a reduced benefit for the joint lifetimes of the member and beneficiary; Option 4 provides a reduced benefit for the lifetimes of the retiree and
beneficiary, which benefit is reduced by 33 1/3% upon the death of either.
As explained to Colonel Hild, his monthly benefit under option 1 was $2,569.64; under option 2, his benefit was
$1,692.72; under option 3 the benefit was $1,546.92; and under option 4, the benefit was $1,856.41, reduced to $1,237.61 upon the death of Colonel or Mrs. Hild.
In his discussion with Colonel Hild, Dr. Break pointed out the implications of the various options, including the need to consider such factors as one's health and financial arrangements for a dependent spouse. In response, Colonel Hild mentioned that he had other financial means and this was not the only retirement that he depended on.
Although Dr. Break was aware that some people were concerned about Colonel Hild's effectiveness after his return
to work, nothing in Colonel Hild's responses to the discussion in the meeting raised red flags to alert Dr. Break that Colonel Hild did not understand. Colonel Hild expressed his opinion that the difference between benefits under option 1 and the remaining options was excessive.
In Dr. Break's experience, and as he counsels pre- retirees, sometimes the selection of option 1, with the additional purchase of an annuity or life insurance policy, inures to the greater benefit of an individual's dependents than the other reduced-benefit options under the FRS.
When a retiree selects option 1 or 2, there is a section on the option selection form for the spouse to sign in acknowledgment of the option. Colonel Hild brought the form home and gave it to Mrs. Hild to sign one morning before he left for work. When she signed it the form was blank. All she knew was what he told her, that the form was something she had to sign for his retirement. She did not question her husband or even read enough of the form to know that there were 4 options.
Mary Ann Swenson has been employed at Valencia Community College for thirteen years, 8 of which have been in the human resources department. Ms. Swenson notarized Colonel Hild's signature on the benefits option form on June 24, 1996, and remembers the occasion.
Colonel Hild came to the human resources office to meet with Vicki Nelson, who called Ms. Swenson. At the time that Colonel Hild signed the form, Mrs. Hild's signature was already on it, but her signature did not require a notary. Likewise, option 1 had been checked on the form and, in response to a question by Colonel Hild, Vicki Nelson showed him that he marked option 1 and said, "Yes, you have marked option 1." Colonel Hild signed the form and then Ms. Swenson notarized it.
On June 24, 1996, during the approximately 10 minutes that Ms. Swenson spent with Colonel Hild and Vicki Nelson, she had no reason to believe that he was not in complete control
of his mental facilities or that he failed to understand and recognize what he was signing.
Colonel Hild retired, as planned, the end of July 1996, and his first retirement check arrived approximately
August 30, 1996.
Mrs. Hild saw the check and had her husband endorse it. She then cashed the check. She understood that by doing so, she was accepting the amount of the check. She saw no problem with this because she assumed that Colonel Hild had opted for what he and she had discussed as the "ten year" provision. Mrs. Hild assumed that the check reflected the number of years he was employed and the amount of money that he was making.
The Hild's son, Steve, made the same assumption, as he and Colonel Hild had discussed retirement sometime in the early 1990's and Steve understood that his father would take the 10- year plan with Valencia. Neither Steve nor Mrs. Hild had requested any information from the college or Division of Retirement about the option selected by Colonel Hild or the amount of benefits he would receive once he retired.
Colonel Hild died on September 28, 1997. He had received a total of approximately $37,000, or 14 months of benefits under FRS option 1 during his lifetime.
Mrs. Hild and Colonel Hild's sons learned of the option
1 selection when the checks stopped coming after Colonel Hild's
death and when Mrs. Hild called the college human resources office.
It is necessary to glean Colonel Hild's mental capacity and state of mind from the circumstances described by the witnesses in this case, all of whom were candid and credible. From those circumstances it is impossible to find that Colonel Hild was incompetent to make the decision to chose option 1 for his FRS benefits.
That decision was entirely consistent with his concern, described by his family and staff at the college, that there be enough money coming in when he retired. Although he plainly was concerned for making financial arrangements for his spouse, he had made some arrangements already with his Air Force retirement and with other assets or investments.
Described as strong-willed, disciplined and well- organized, Colonel Hild, in spite of his diminished capacity after his stroke, convinced his family, the college and his long time physician that he should return to work. And he did function in that work prior to retirement, performing by habit those tasks that he had mastered in his long tenure.
No one suggests that Colonel Hild was coerced, pressured or hurried into the decision he made. The various staff who met with him on several occasions regarding his retirement believed that he was capable of making his own decision and that he exercised the very option that he intended.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to Sections 120.569 and 120.57(1). Florida Statutes.
As the party seeking a change in retirement status, Petitioner must prove by a preponderance of the evidence that she is entitled to the requested relief. Florida Dep't of Transportation v. J.W.C. Co., 396 So. 2d 778, 788 (Fla. 1st DCA 1981). Findings of fact must be based on a preponderance of the evidence unless the proceeding involves licensure or penalties or a different standard is proscribed by statute. Section 120.57(1)(h), Florida Statutes.
Under the FRS a member may choose one of four retirement options. Section 121.091(6), Florida Statutes, in pertinent part, provides:
OPTIONAL FORMS OF RETIREMENT BENEFITS AND DISABILITY RETIREMENT BENEFITS.--
Prior to the receipt of the first monthly retirement payment, a member shall elect to receive the retirement benefits to which he or she is entitled under subsection (1), subsection (2), subsection (3), or subsection (4) in accordance with one of the following options:
The maximum retirement benefit payable to the member during his or her lifetime.
A decreased retirement benefit payable to the member during his or her lifetime and, in the event of his or her death within a period of 10 years after retirement, the same monthly amount payable for the balance of such 10-year
period to his or her beneficiary or, in case the beneficiary is deceased, in accordance with subsection (8) as though no beneficiary had been named.
A decreased retirement benefit payable during the joint lifetime of both the member and his or her joint annuitant and which, after the death of either, shall continue during the lifetime of the survivor in the same amount, subject to the provisions of subsection (12).
A decreased retirement benefit payable during the joint lifetime of the member and his or her joint annuitant and which, after the death of either, shall continue during the lifetime of the survivor in an amount equal to 66 2/3 percent of the amount that was payable during the joint lifetime of the member and his or her joint annuitant, subject to the provisions of subsection (12).
The spouse of any member who elects to receive the benefit provided under subparagraph 1. or subparagraph 2. shall be notified of and shall acknowledge any such election.
Petitioner's claim is based on principles of contractual incapacity that have long been recognized by Florida courts. See, for example, Waterman v. Higgins, 10 So. 97 (Fla. 1891). These principles are summarized in a very helpful recent article: Robert W. Lee, "Mental Illness and the Right to Contract", 72 Fla. Bar J. 48 (December 1998):
Today in Florida, in the absence of an adjudication of incompetency, the standard to determine incompetency is whether the party is "unable to understand in a reasonable manner the nature and consequences of the transaction."
See also, Donnelly v. Mann, 68 So. 2d 584, 586 (Fla. 1953):
Mere weakness of mind, unaccompanied by any other inequitable incident, if the person has sufficient intelligence to understand the nature of the transaction and is left to act upon his own free will, is not a sufficient ground to set aside an agreement.
In his article cited above, Judge Lee provides this further guidance based on his research:
To determine whether an individual is "unable to understand in a reasonable manner the nature and consequences of the transaction," a court must look at a wide range of factors: 1) the party's medical and psychiatric history (e.g., past records of medical treatment and hospitalization; use of drugs); 2) medical and psychiatric diagnosis and opinions; 3) behavior and conduct at the time of the transaction (e.g., irrational or unintelligent behavior, the party's conversations); and 4) circumstances sur- rounding the transaction (absence of independent advice; confidential or fiduciary relationship; undue influence; the departure from the normal pattern of similar transactions; the complexity of the transaction; and the fairness of the transaction). See, Supra, at 49.
As found above, consideration of those factors results in the conclusion that Colonel Hild understood the nature of the necessary preparations for his retirement. The consequences are unfortunate, as no one contests that under a different option the Hilds would have received substantially more benefits than those resulting from Colonel Hild's selection. However, the principles described above for setting aside a legal relationship do not countenance relief from a decision later proven infelicitious.
Respondent suggests that there is a statutory prohibition against ever considering a change of option after a benefit payment has been cashed or deposited. Section 121.091(6)(h), Florida Statutes, provides:
The option selected or determined for payment of benefits as provided in this Section shall be final and irrevocable at the time a benefit payment is cashed or deposited.
As countered by Petitioner, this presumes that a valid election was made. If the person making the election lacked sufficient capacity at the time, the election is voidable. A series of cases cited by both parties in which this issue was presented in a administrative proceeding bear witness to that proposition.
Significantly, not one of those cases cited by either party has found requisite lack of capacity.
THAT the Florida Division of Retirement issue its final order denying the relief sought by Petitioner, Lois Hild.
DONE AND ENTERED this 4th day of March, 1999, in Tallahassee, Leon County, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 1999.
Harold Lewis, Esquire Division of Retirement Cedars Executive Center 2639-C North Monroe Street
A. J. McMullian, III, Director Division of Retirement
Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560
