STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RONALD BEHNKE, )

)

Petitioner, )

)

vs. ) Case No. 00-0697

) DEPARTMENT OF MANAGEMENT SERVICES, ) DIVISION OF RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing in the above-styled case was conducted on May 9, 2000, by Daniel M. Kilbride, Administrative Law Judge, Division of Administrative Hearings, at Orlando, Florida.

APPEARANCES

For Petitioner: Jerry G. Traynham, Esquire

Patterson & Traynham Post Office Box 4289

Tallahassee, Florida 32315-4289

For Respondent: Thomas E. Wright, Esquire

Division of Retirement

Department of Management Services Cedars Executive Center, Suite C 2639 North Monroe Street Tallahassee, Florida 32399-1560

STATEMENT OF THE ISSUES

Whether Petitioner, Sergeant Ronald Behnke, should be allowed to withdraw from the Deferred Retirement Option Program (DROP) of the Florida Retirement System (FRS).

PRELIMINARY STATEMENT

On October 28, 1999, Respondent sent notice to Petitioner of final agency action denying his request that he be permitted to withdraw from DROP. On November 19, 1999, Petitioner filed a petition, pursuant to Sections 120.569 and 120.57(1), Florida Statutes, seeking a formal hearing. On February 9, 2000, Respondent forwarded the petition to the Division of Administrative Hearings for assignment of an Administrative Law Judge. Thereafter, a formal hearing was held.

At the hearing, Petitioner testified in his own behalf and offered the testimony of one witness, Corporal Dwight K. Wiles. Respondent offered the testimony of one witness, Ira L. Gaines, Benefits Administrator with Respondent. One joint exhibit was admitted. In addition, Petitioner submitted three exhibits, without objection. Official recognition was taken of Chapter 121, Florida Statutes (Supp. 1998).

The Transcript of the proceedings was filed on July 7, 2000. The time for filing proposed findings of fact and conclusions of law was extended at the request of the parties. Both parties filed their proposals on July 21, 2000. Each of the parties' proposals has been given careful consideration in the preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner is a trooper with the Florida Highway Patrol and participant in the Florida Retirement System for 27 years.

2. On January 26, 1999, the Division of Retirement (Respondent) received a "Florida Retirement System Application for Service Retirement and the Deferred Retirement Option Program" from Petitioner for entry into the DROP program, effective April 1999, the month of his 50th birthday.

3. Petitioner's application, a Special Risk Management Member, was acknowledged and accepted by Respondent on February 23, 1999, and Petitioner received his estimate of benefits shortly after that time.

4. The statute governing FRS at that time permitted Petitioner to defer his election of entry into the DROP program to a date within "twelve months immediately following the date the member attains 57, or age 50 for Special Risk Class members." Section 121.091(13)(a)2., Florida Statutes (Supp. 1998).

5. Respondent applied an internal policy requiring a member to elect to enter the DROP no later than the member's birth month at age 50.

6. The statute permitted actual entry into DROP to be deferred by the member to any point within the 60-month duration of DROP eligibility. However, late entry could not extend the 60-month period, which is measured from the "date to which he or she is eligible to defer his or her election to participate." Section 121.091(13)(b)1., Florida Statutes (Supp. 1998).

7. Petitioner's 50th birthday was April 9, 1999.

   
   

8. Shortly after filing his application for the DROP program, but before April 1999, Petitioner learned there was pending legislation, which, if passed by the Legislature and signed by the governor, would allow him to delay his entry into DROP until 12 months following his 52nd birthday.

9. He and other troopers closely watched and discussed legislation that could affect their positions.

10. On March 12, 1999, Petitioner communicated with staff of Respondent. Respondent's staff advised Petitioner to send a letter requesting a delay in the effective date of entry into the DROP program. The staff explained that Petitioner could repeatedly change the effective date of DROP entry, while watching the pending legislation.

11. Pursuant to these instructions, on March 12, 1999, Petitioner transmitted a letter, through personnel in the Department of Highway Safety and Motor Vehicles (DHSMV) to Respondent, modifying the DROP program entry date to commence on May 1, 1999.

12. Thereafter, Petitioner continued to monitor the progress of the pending legislation closely.

13. Shortly after April 23, 1999, Petitioner received a letter from Ira L. Gaines, Benefits Administrator, employed by Respondent, cautioning Petitioner about his letter delaying entry into the DROP program. The letter advised Petitioner that the

    month of April 1999, was the only month he could accomplish cancellation of his DROP application, and that if the pending legislation did not pass, he would not be able to establish a retroactive start date.

14. On April 26, 1999, Petitioner received a telephone call from Ira L. Gaines concerning his letter delaying his entry into the DROP program until May 1, 1999. Petitioner testified that Gaines represented to Petitioner that the pending legislation, which would have extended the time for entering the DROP program until age 52, was most likely "dead." He explained that Petitioner would, therefore, lose substantial benefits unless he withdrew his letter delaying entry until May 1999. He recommended that Petitioner enter the program effective April 1, 1999.

15. Although he understood that no Division employee could control the outcome of the legislation, Petitioner relied upon these representations by Respondent's benefits administrator and sent a letter to Respondent dated April 27, 1999, rescinding his March 12, 1999, letter and entered the DROP program, effective April 1, 1999.

16. Thereafter, Petitioner ceased efforts to follow actions by the Legislature.

17. On October 8, 1999, Petitioner learned the legislation had passed and become law permitting DROP entry at the age of 52. Petitioner immediately addressed the question of withdrawing from

    DROP until the age of 52 with the director of the Division of the Florida Highway Patrol (FHP).

18. Petitioner received a verbal assurances that it would benefit FHP if Petitioner were permitted to delay entry into DROP until the age of 52, since FHP expected to lose a great many experienced officers in a short period of time. The division director told Petitioner he would make inquiry and get back with Petitioner about his desire to withdraw from DROP until the age of 52.

19. When Petitioner had not heard from his chain of command by October 20, 1999, he again initiated contacts with benefits staff in the DHSMV and Respondent. DHSMV Human Resources Director, Ken Wilson, on behalf of the FHP Director, directed Petitioner to pursue the matter with Respondent and to notify him of Respondent's decision. Petitioner's employer, FHP, supported and approved Petitioner's request to withdraw from DROP, and notified Respondent of its approval and its commitment to repay retirement contributions.

20. On October 25, 1999, Petitioner contacted Maurice Helms with Respondent, and requested consideration of his desire to withdraw from DROP.

21. On November 3, 1999, Petitioner received a decision from Respondent notifying him that request to withdraw from DROP was denied. The decision was received by certified mail, return receipt requested. The decision recited that it constituted

    "final agency action" and notified Petitioner of his right to file a formal petition for review within 21 days of receipt of the final order.

22. Another trooper, Corporal Dwight Wiles, testified that he was allowed to cancel his DROP application after his first month of participation.

23. However, Corporal Wiles did not receive his estimate of benefits until after his first month of participation.

24. Ira L. Gaines testified on behalf of Respondent that the Division's policy allowed all participants to withdraw their application within the month of their eligibility, or within 30 days of receiving their estimate of benefits, whichever was later.

25. Mr. Gaines testified that it was an operational policy of the Division, as it was a new program and there were some 40,000 participants, the estimates of benefits could not always be accomplished by the DROP effective date.

26. Mr. Gaines testified that this was done for the benefit of the members, so that they would have an opportunity to decide if the benefits were enough or if they wanted to continue accruing retirement credits.

27. No formal rules have been adopted by the Division regarding the DROP program because it is still a new program.

28. Mr. Gaines testified that Respondent's DROP Question and Answer memoranda was an internal office operational policy

    that was necessary to deal with the new program and that the information was not given to members. In fact, the memoranda was marked "DO NOT DISTRIBUTE OUTSIDE THE DIVISION--FOR INTERNAL USE."

29. Mr. Gaines testified that allowing members to change their DROP effective date as they pleased would create a burden on the Division and that his section would be unable to handle the workload.

30. There is no provision in the statute which speaks to withdrawal from the DROP program once participation has begun.

31. Petitioner detrimentally relied upon misrepresentations of fact and/or law by staff of Respondent, who convinced him to withdraw the letter delaying entry into DROP. Respondent's staff had both the appearance of knowledge and authority to make representations on behalf of Respondent.

32. On learning of erroneous information, Petitioner did not sit on his rights. He immediately took action to mitigate his injury by seeking to withdraw from the DROP program.

33. Respondent has adopted policies of general applicability governing administration of DROP entry by members of the Florida Retirement System.

34. Although Respondent has rule-making authority, pursuant to Section 121.091(13)(k), Florida Statutes, these policies have not been adopted as administrative rule pursuant to Chapter 120, Florida Statutes. They have not been and are not otherwise

    distributed to members of the FRS or other agencies of Florida government. Rather, the policies are retained for internal use of Respondent.

35. Two of Respondent's unadopted policies adversely affected Petitioner: (1) that of requiring an election to participate in DROP in the month of a Special Risk member's 50th birthday, rather than within 12 months of reaching 50 years of age; and (2) that of restricting withdrawal of a DROP application to the last day of the month of a member's 50th birthday or 30 days following receipt of a DROP estimate.

    CONCLUSIONS OF LAW

    
    

36. The Division of Administrative Hearings jurisdiction over the subject matter of this proceeding and the parties thereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes (1999).

37. The FRS is codified in Chapter 121, Florida Statutes. Section 121.051, Florida Statutes (1999), provides for compulsory participation in the FRS for all employees hired after

    December 1, 1970, with certain exceptions not relevant in this proceeding.

38. Section 121.091(13), Florida Statutes (Supp. 1998), provides for the DROP, whereby, upon reaching normal retirement, a member may retire and continue working for up to 60 months without accruing additional retirement credit. Rather than receiving the retirement benefit during this time, the benefit is

    set aside and earns interest for the member until he resigns and enters regular retirement, at which time he may receive the lump sum of benefits accrued during participation in the DROP.

39. Section 121.091(13)(a)2., Florida Statutes (Supp. 1998), further provides that for special risk employees who have reached 25 years of service, their eligibility for the DROP begins at age 50, and they must enter the program within 12 months of eligibility in order to receive the full 60 months of benefit.

40. Section 121.091(13), Florida Statutes (1999), was amended, effective June 18, 1999, to increase the age of eligibility for special risk employees to age 52.

41. Petitioner was entitled to participate in DROP for a full 60 months if he elected to participate at any time in the 12-month period following his 50th birthday.

42. Section 121.091(13)(b)1., Florida Statutes (Supp. 1998), provides:

    An eligible member may elect to participate in the DROP for a period not to exceed a maximum of 60 calendar months immediately following the date on which the member first reaches his or her normal retirement date or the date to which he or she is eligible to defer his or her election to participate as provided in subparagraph (a)2.

43. Respondent incorrectly represented to Petitioner that he must elect to enter DROP no later than the end of his birth month, rather than within 12 months following his 50th birthday as provided by statute; and that if he delayed his entry date, he

    would lose benefits (months of participation). Both of these representations are policies of Respondent but are contrary to the express language of the statute.

44. In addition, Respondent maintained and operated under a policy of permitting withdrawal from DROP, after an election to participate was made, only through the longer of the end of the member's 50th birth month or 30 days following receipt of a DROP estimate. Neither of these limitations is expressed in the statute, although Section 121.091(13)(k), Florida Statutes, clearly grants rule-making authority to Respondent. This policy and the others stated above, however, are not made available to members, or even to other participating agencies.

45. All three of these policies of Respondent meet the definition of a "rule" within the meaning of Section 120.52(15), Florida Statutes. They are "agency statement(s) of general applicability that implement, interpret, or prescribe law or policy "

46. Mr. Gaines testified that the policies are of general applicability--that is, they are applied evenhandedly to all members of the FRS. The policies clearly implement and interpret Section 121.091(13), Florida Statutes, and otherwise prescribe the policy of Respondent. The policies also have a clear impact on the substantial rights of Petitioner and others.

47. In this case, Petitioner was first misled by Respondent's policy of requiring election to participate in DROP

    by the end of his 50th birth month. After he learned of the possibility of more favorable legislation, he was, thereafter, induced to remain in DROP by Respondent's statement and policy that he would lose benefits (months of participation) by delaying entry, and by Respondent's employee's statement that favorable legislation was "dead."

48. Finally, Petitioner was denied the option of withdrawing from DROP by reason of Respondent's unadopted rule requiring him to make such an election by the end of his 50th birth month.

49. At least two principles prevent such a result. First, Section 120.57(1)(e), Florida Statutes, requires that where "[a]ny agency action that determines the substantial interest of a party and that is based on an unadopted rule, . . . ." the agency must demonstrate in the hearing that the unadopted rule is within its delegated powers, does not enlarge, modify or contravene the implemented statute, is not vague, is not arbitrary or capricious, and is not being applied to a party without notice.

50. Respondent's policy prohibiting withdrawal from DROP after the expiration of the member's 50th birth month was clearly both applied to Petitioner without prior notice, and to the extent Respondent views any of its exchanges with Petitioner as notice, any such notice was clearly vague. Indeed, Respondent appeared to go out of its way to keep its policies from being

    generally known to members or other agencies, marking the policies "for internal use only."

51. At hearing, Respondent justified these unadopted rules on the basis that it would create a burden on Respondent if members were allowed to make changes.

52. First, this rationale is insufficient for these rules to be applied against Petitioner. Although the unadopted rules are within Respondent's delegated powers, they enlarge, modify, or contravene the implemented statutes.

53. Second, the principles of equitable tolling should be applied to Petitioner's failure to meet the time deadline for withdrawing from DROP. In Machules v. Department of Administration, 532 So. 2d 1132 (1988), the Supreme Court held the principles of equitable tolling applicable to administrative cases. The Court explained that the doctrine should apply when an applicant has been misled or lulled into inaction by an agency, and has been diligent in seeking to protect his rights after discovering the error. Here, Petitioner was first misled into filing his election early, by Respondent's policy that it must be filed prior to his 50th birth month. He was then induced to believe he would suffer a loss of benefits by delaying entry into DROP. Moreover, he was kept uninformed of his deadline for withdrawing from DROP by Respondent's policy of not disseminating its unadopted rules.

54. Finally, it must be noted that there is no harm to Respondent by tolling the time for Petitioner to elect to withdraw from DROP. His agency has indicated its belief that his withdrawal will best serve the agency's public purposes, such that the agency is prepared to repay any retirement contributions.

55. Respondent's unadopted rule should be tolled to allow Petitioner's withdrawal from DROP.

RECOMMENDATION

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

RECOMMENDED that the Division of Retirement enter a final order granting Petitioner's request to withdraw from the Deferred Retirement Option Program, without loss of eligibility upon repayment of any retirement contributions.

DONE AND ENTERED this 14th day of August, 2000, in Tallahassee, Leon County, Florida.

DANIEL M. KILBRIDE

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 14th day of August, 2000.

COPIES FURNISHED:

Jerry G. Traynham, Esquire Patterson & Traynham

Post Office Box 4289 Tallahassee, Florida 32315-4289

Thomas E. Wright, Esquire Division of Retirement

Department of Management Services Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560

Ron Poppell, Interim Director Division of Retirement

Department of Management Services Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560

Emily Moore, Chief Legal Counsel Division of Retirement

Department of Management Services Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560

Bruce Hoffmann, General Counsel Department of Management Services 4050 Esplanade Way

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 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: 00-000697

Orders for Case No: 00-000697