STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CHERYL WALKER,

Petitioner,

vs.

DEPARTMENT OF MANAGEMENT SERVICES, DIVISION OF RETIREMENT,

Respondent.

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) Case No. 02-0213

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RECOMMENDED ORDER

Upon due notice, William R. Cave, an Administrative Law Judge for the Division of Administrative Hearings, held a formal hearing in this matter on July 24, 2002, in Winter Haven, Florida.

APPEARANCES

For Petitioner: J. David Probjecky, Esquire

Post Office Drawer 7323

Winter Haven, Florida 33883-7323

For Respondent: Larry D. Scott, Esquire

Department of Management Services 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

STATEMENT OF THE ISSUE

Is Petitioner, Cheryl Walker, entitled to an Option Two retirement benefit from the account of the deceased member, Mary Fowler (Fowler), in the Florida Retirement System (FRS)?

PRELIMINARY STATEMENT

Fowler, a deceased member of the FRS, died on December 14, 1997, prior to her alleged termination date of December 31, 1997. Upon notification of Mary Fowler's death, The Division of Retirement (Division) notified Fowler's beneficiary, Cheryl Walker, that since Fowler's termination was due to her death, she had never effectively retired under the FRS and in the absence of a spouse or dependent beneficiary, no monthly benefits were payable. However, Cheryl Walker was advised by the Division that she was eligible to receive a return of the contributions made by Fowler to her account in the FRS. By a Formal Verified Petition for Review dated December 27, 2001, Petitioner challenged the Division's final agency decision served on Petitioner on December 8, 2001.

At the hearing, Petitioner testified in her own behalf and presented the testimony of Joyce Ann Pervis Kerce. Petitioner's Exhibits 1 through 11 were admitted in evidence. The Division presented the testimony of Stanley Colvin. The Division's Exhibits 1 through 12 were admitted in evidence. The parties jointly presented the depositions of Christopher Berchelmann, M.D., Victoria Spence, Robert S. Dezube, and Grace Burmeister in lieu of their live testimony at the hearing. The parties also jointly presented the deposition of Cheryl Walker. All of the above depositions were admitted in evidence.

The Transcript of this proceeding was filed with the Division of Administrative Hearings on August 19, 2002. By an agreed upon motion the parties requested an extension of time within which to file their Proposed Recommended Orders. By order dated September 5, 2002, the parties were granted an extension of time to file their Proposed Recommended Orders with the understanding that any time constraint imposed under Rule 28-106.216(1), Florida Administrative Code, was waived in accordance with Rule 28.106.216(2), Florida Administrative Code. The parties timely filed their Proposed Recommended Orders under

the extended time frame.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made:

1. On January 8, 1975, Fowler began employment with the Clerk of the Circuit Court of Hillsborough County, Florida (Clerk) as an Administrative Secretary.

2. On January 8, 1975, Fowler enrolled in the retirement plan (Plan) that was being offered by the Clerk for her position. Fowler made regular payments to the Plan and remained current until the Clerk offered the Plan as a benefit package and paid the premiums on behalf of his employees. Fowler

   purchased her previous years employment with the Neighborhood Service Center for retirement purposes.

3. On September 29, 1997, Fowler, due to a serious health condition took a medical leave of absence and went on no-pay status. While on no-pay status Fowler's salary was reported for creditable service in the FRS and the Clerk's office paid Fowler's life and health insurance premiums except for certain supplemental health and life insurance premiums.

4. On October 31, 1997, Dr. Greenberg advised Fowler that she was suffering from terminal lung cancer and prescribed certain pain medication.

5. At all times pertinent to this proceeding, Fowler was eligible for retirement with the FRS.

6. After Fowler was diagnosed as having terminal cancer, Petitioner moved in with Fowler and Petitioner became her caretaker.

7. Petitioner's testimony that she held a durable-family power of attorney for Fowler and made all business decisions for Fowler after she was diagnosed with terminal cancer lacks credibility based on Petitioner's own testimony and the testimony of Grace Burmeister (Burmeister) and Victoria Spence (Spence), both of whom worked with Fowler before her illness and consulted with Fowler during her illness concerning her retirement. Likewise, there is insufficient evidence to show

   that Fowler advised the Clerk's office that Petitioner held a durable-family power of attorney for her and that Petitioner would be taking care of Fowler's business and business affairs. Fowler was never declared incompetent, and there is no evidence that she was incompetent to handle her own business affairs, notwithstanding that she was taking treatment for the cancer and taking pain medication.

8. Sometime around November 3, 1997, Fowler notified the Clerk's office that she was terminally ill and would not be returning to work. At this time, Fowler was eligible for retirement under the FRS.

9. On November 18, 1997, Petitioner talked to Burmeister concerning Fowler making a change of beneficiary for FRS and for life insurance benefits. Certain information concerning the rights of joint annuitants and beneficiaries was provided to Fowler by letter dated November 19, 1997.

10. On November 19, 1997, Burmeister, Spence, and Neva Merckle, from the Clerk's office visited Fowler at her home and provided Fowler with certain forms to be completed for her retirement. Among those forms was a form to facilitate the change of beneficiary which Fowler completed and signed on November 19, 1997, naming Petitioner as beneficiary for her retirement benefits.

11. Also among the forms provided to Fowler by Burmeister on November 19, 1997, was an Application for Service Retirement (Application). The Application was not completed by Fowler on November 19, 1997, as she apparently had not decided on the exact date for her retirement. In fact, Fowler, according to Spence, did not appear be interested in retiring on November 19, 1997, but agreed to consider retiring.

12. Also at the meeting with Fowler at her residence on November 19, 1997, both Burmeister and Spence advised Fowler, among other things, that her date of retirement would occur on the first day of the month following her date of termination and that should her death occur before her date of retirement then there were serious consequences as far as the beneficiary was concerned. One of those consequences was that since Fowler did not have a joint annuitant, no one would receive the monthly benefit, except for monies Fowler had contributed to her retirement in the FRS. Both Burmeister and Spence advised Fowler to move forward immediately to set her date of termination so that her date of retirement would occur on December 1, 1997. Apparently, the comment expressed by Petitioner that the Clerk's office was attempting to push Fowler out the door had some impact on her decision not to fill out the retirement application until later.

13. By letter dated December 2, 1997, Fowler gave the Clerk formal notice of her intent to resign December 31, 1997, for the primary purpose of retirement effective January 1, 1998.

14. Although Burmeister could not remember going to Fowler's home but on one occasion, which was November 19, 1997, Spence was very clear in her testimony that she and Burmeister went to Fowler's home on two occasions to discuss Fowler's retirement. Although Spence could not remember the exact dates of their visits, apparently, the date of the second visit was on December 3, 1997, when Fowler completed and signed the Application in the presence of Burmeister, who notarized the Application, notwithstanding Petitioner's testimony to the contrary, which lacks credibility in that regard.

15. Fowler selected Option 2, whereby she would receive a slightly reduced benefit payable monthly for her lifetime. However, should Fowler die before receiving 120 monthly payments, her designated beneficiary, Cheryl Walker, would receive the monthly benefit until the total number of monthly benefits paid to Fowler and to Cheryl Walker equaled 120.

16. Fowler, either through documents furnished to her by the Division concerning retirement or information furnished by Burmeister during her visits on November 19, 1997, and December 3, 1997, had available to her sufficient information concerning retirement in order to make an intelligent decision

    concerning, among other things, her date of termination, date of retirement, and her Options.

17. The FRS received Fowler's Application on December 9, 1997. However, an attempt to change the date of termination to November 30, 1997, and thereby change the date of retirement to December 1, 1997, was rejected by the FRS in that the FRS did not recognize retroactive terminations.

18. Even though the Clerk's office was paying certain life and health insurance premiums, there is no evidence that this influenced Fowler's decision on retirement.

19. Fowler died on December 14, 1997, and was an active member of the FRS at that time. Therefore, her termination date was established as the date of her death.

20. Fowler also changed her life insurance and deferred compensation documents to name Cheryl Walker as the primary beneficiary.

21. There is no provision in the FRS, nor is the FRS funded to provide a "death benefit" for the beneficiary of an active member who dies before the active member's effective retirement date, unless the beneficiary is a spouse or dependent beneficiary of the deceased member.

22. By letter dated January 29, 1998, the Division notified Petitioner that since Fowler died before her retirement date, the only benefit available to her was a refund of

    retirement contributions paid by Fowler in the amount of

    
    

    $3,811.98. The Division also advised Petitioner that in order to receive the refund she would need to complete an application for beneficiary refund. Petitioner completed and filed the beneficiary refund application with the Division in February 1998. A warrant in the amount of $3,811.98 was mailed to Petitioner, which she cashed on April 8, 1998.

23. Subsequently, Petitioner unsuccessfully challenged the Division's position and this proceeding ensued.

    CONCLUSIONS OF LAW

    
    

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

25. Subsections 121.021(28)(a) and (b), (39)(a), (41), and (46), Florida Statutes, provide in pertinent part as follows:

(28) "Joint annuitant" means any person designated by the member to receive a retirement benefit upon the member's death who is:

1. The spouse of the member;

2. The member's natural or adopted child who is under the age of 25, or is physically or mentally disabled and incapable of self- support, regardless of age; . . . .

(39) (a) "Termination" occurs, except as provided in paragraph (b), when a member ceases all employment relationships with employers under this system, as defined in subsection (10), . . . .

(41) "Effective date of retirement" means the first day of the month in which payments begin to accrue pursuant to s. 121.091.

(46) "Beneficiary" means the joint annuitant or any other person, organization, estate, or trust fund designated by the member to receive a retirement benefit, if any, which may be payable upon the member's death.

1. Fowler applied for service retirement benefits from FRS by Application dated December 3, 1997, which was received by the FRS on December 9, 1997, wherein Fowler chose December 31, 1997, as her date of termination. Therefore, in accordance with Rule 60S-4.0035(3)(a), Florida Administrative Code, January 1, 1998, would have been established as Fowler's effective date of retirement. However, Fowler died on December 14, 1997.

2. Subsection 121.091(7)(b)2., Florida Statutes, provide in pertinent part as follows:

   (7) DEATH BENEFITS.-

   
   

   * * *

   
   

   (b) If the employment of an active member who may or may not have applied for retirement is terminated by reason of his or her death subsequent to becoming vested and prior to his or her effective date of retirement, if established, it shall be assumed that the member retired as of the date of death in accordance with subsection

   1. if eligible for normal retirement benefits, . . . Benefits payable to the designated beneficiary shall be as follows:

      
      

      * * *

      2. For a beneficiary who does not qualify as a joint annuitant, no continuing monthly benefit shall be paid and the beneficiary shall be entitled only to the return of the member's personal contributions. . . .

      
      

3. Petitioner does not come within the definition of a joint annuitant, and Petitioner does not contend that she is eligible for benefits as a joint annuitant. However, Petitioner contends, among other things, that Fowler was incompetent to make a rational, intelligent decision concerning her retirement due to her illness. While Fowler may have been on an emotional strain due to her illness, this is no evidence that Fowler was incompetent to make decisions concerning her retirement. Likewise, there is insufficient evidence to establish facts to show that whatever emotional strain Fowler was under at the time had any effect on her decisions concerning her retirement.

4. Petitioner contends that the Division failed to consider the case of O'Connell v. Department of Administration, Division of Retirement, 557 So. 2d 609 (Fla. 3rd DCA 1990), which held that although a member did not live to his effective retirement date, his beneficiaries were entitled to a benefit because the statute did not impose an "effective retirement date requirement." Subsequent to O'Connell, the Legislature enacted legislation to provide a definition of effective retirement date and to add the requirements that a member must terminate employment and must file an application in the manner prescribed

   by the Division. See: Subsections 121.021(41) and 121.091, Florida Statutes.

5. Petitioner also attempts to base her claim on the theory of "equitable estoppel" and cites the case of Kuge v. Department of Administration, Division of Retirement, 449 So. 2d

   389 (Fla. 3d DCA 1984). However, Petitioner has failed to establish facts to prove the elements of "equitable estoppel" against the Division.

6. The burden of proof is on the party asserting the affirmative of an issue before an administrative tribunal, Florida Department of Transportation v. J.W.C. Company, Inc.,

396 So. 2d 778 (Fla. 1st DCA 1981). Petitioner has the burden of proof in this proceeding. To meet this burden, Petitioner must establish facts upon which her allegations are based by a preponderance of the evidence. Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company, 670 So. 2d 932 (Fla. 1996), and Subsection 120.57(1)(j), Florida Statutes (2001). Petitioner has failed to meet her burden.

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 Petitioner, Cheryl Walker not eligible for an Option 2 benefit from the account of Mary Fowler.

DONE AND ENTERED this 4th day of October, 2002, in Tallahassee, Leon County, Florida.

WILLIAM R. CAVE

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 4th day of October, 2002.

COPIES FURNISHED:

J. David Pobjecky, Esquire Post Office Drawer 7323

Winter Haven, Florida 33883-7323

Larry D. Scott, Esquire Department of Management Services 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

Erin Sjostrom, Director Division of Retirement

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

Monesia Taylor Brown, Acting General Counsel Division of Retirement

Department of Management Services 4050 Esplanade Way

Tallahassee, Florida 32399-1560

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit 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: 02-000213

Orders for Case No: 02-000213