STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HOWARD FABIAN, )

)

Petitioner, )

)

vs. ) Case No. 03-4517

)

DEPARTMENT OF MANAGEMENT )

SERVICES, DIVISION OF )

RETIREMENT, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held in this case on April 27, 2004, in Tallahassee, Florida, before J. D. Parrish, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Richard M. Ellis, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420 Tallahassee, Florida 32301

For Respondent: Larry D. Scott, Esquire

Department of Management Services Division of Retirement

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950 STATEMENT OF THE ISSUE

Whether the Petitioner is entitled to receive benefits pursuant to Option 3 as retirement earned by his deceased

wife, Susana T. Fabian.

PRELIMINARY STATEMENT

On or about April 10, 2003, the Respondent, Department of Management Services, Division of Retirement (DMS), advised the Petitioner, Howard Fabian, that a request to amend the selection of benefits for Susana T. Fabian had been denied.

More specifically, the DMS notice provided that the law governing the selection of an option does not allow a change after a benefit payment has been cashed or deposited. In this case the Petitioner had chosen Option 1 and cashed or deposited payments calculated pursuant to that option.

Accordingly, his request to amend the selection to Option 3 was denied.

The Petitioner timely challenged the Respondent's decision to deny the change. The case was then forwarded to the Division of Administrative Hearings for formal proceedings on December 3, 2003.

The hearing was continued twice at the request of the parties but was eventually heard on April 27, 2004. At the hearing the Petitioner testified in his own behalf. The Respondent presented testimony from Stanley Colvin, Frederica Edwards, and Deena Howell. Petitioner's Exhibits 1-17 were admitted into evidence. Respondent's Exhibits 1-6, 8-12, and

15 were also received in evidence. The deposition testimonies of Henry Calvo, III; Arthur Miles; Deena Howell; Stanley

Colvin; and Nina Barron were received in evidence.

The Petitioner requested and was granted official recognition of the DMS case Slocum v. Department of Management Services, Division of Retirement, DOAH Case No. 99-2399. The Respondent also sought and was granted official recognition for the following decisions: Arnow v. Williams, 343 So. 2d 1309 (Fla. 1st DCA 1977); Lois Hild v. Department of Management Services, Division of Retirement, DOAH Case No. 98- 3548; Salvatore J. Maso v. Division of Retirement, DOAH Case No. 98-0357; Gladys L. Whaley v. Division of Retirement, DOAH Case No. 95-0059; Joe Bazzel v. Department of Administration, Division of Retirement, DOAH Case No. 91-5774; Doris G. Hutchinson v. Division of Retirement, DOAH Case No. 91-3870; and Eugene McRedmond v. Department of Administration, Division of Retirement, DOAH Case No. 91-7104.

The transcript of the proceedings was filed with the Division of Administrative Hearings on May 13, 2004.

Thereafter, the parties timely filed Proposed Recommended Orders that have been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. The Petitioner, Howard Fabian, is the spouse of the late Susana T. Fabian. Mrs. Fabian was a member of the Florida Retirement System (FRS).

2. The Fabians were married for approximately 14 years and have two children from their union. The girls, now teenagers, reside with Mr. Fabian and depend on him for their financial support.

3. The Respondent, DMS, is the state agency charged with the responsibility of administering the FRS. Benefits payable to FRS participants are tendered pursuant to the provisions of Chapter 121, Florida Statutes, and DMS rules.

4. Mrs. Fabian was employed as a teacher in the Miami- Dade County Public Schools on or about December 17, 1984. As such, she was eligible to participate in the FRS. In fact, Mrs. Fabian's employer made contributions to the FRS for her benefit throughout her employment with the school system. Such contributions continued for over 13 years. It is undisputed that Mrs. Fabian was "vested" and was, therefore, entitled to receive retirement benefits from the FRS.

5. Unfortunately, Mrs. Fabian became ill in 1997 and was unable to teach. She requested an extended sick leave for the period August 31, 1997 through May 31, 1998, which her employer granted.

6. Mrs. Fabian returned to teaching the following year and was able to perform her duties until January 2000. At that time her medical condition worsened. Her request for unpaid leave through June 2000 was granted.

7. Despite her best efforts to regain her health,

   
   

   Mrs. Fabian did not improve. Each time her employer asked whether she would return to work, forms were returned seeking an extension of leave. The employer continued to grant the

   extension requests and approved sick leave without pay for the period through June 14, 2002.

8. Mr. Fabian filled out a leave form seeking leave on his wife's behalf through June 2003. By letter dated May 14, 2002, the school system denied that request. Whether or not the employer correctly calculated the time Mrs. Fabian received unpaid leave is unknown. The Petitioner asserts that had Mrs. Fabian received credit for "hardship leave and dire emergency leave" in 1997 and 2000 (for which the union contract provided), the leave request in June 2002 would or could have been granted.

9. The record is clear that the Respondent did not have any part in the internal workings of the Miami-Dade County School District and did not have knowledge as to whether Mrs. Fabian could have been granted additional unpaid leave. The employer's decisions regarding this employee were unknown to the Respondent until the instant action.

10. However, about the time the employer denied the last leave extension request, Mr. Fabian received a FRS application for disability retirement. The application was completed on or about June 2002. The form signed by Mrs. Fabian was out- of-date and did not have a designation of beneficiary space.

11. Pursuant to its policy, DMS accepted the out of date form and sent Mrs. Fabian a form for designating a

    beneficiary. The form for designating a beneficiary listed four options: Option 1, Option 2, Option 3 and Option 4. All (Options 1-4) were clearly and unambiguously described.

    However, only two of the options had estimates included on the form sent to Mrs. Fabian. Estimates for Options 3 and 4 were not noted.

12. Under Option 1 the form indicated a monthly benefit of $895.28. Option 2 indicated a monthly payment of $824.89. At that point in time DMS did not have sufficient information to calculate Options 3 and 4.

13. To calculate Options 3 and 4 DMS must have information regarding a "Joint Annuitant." Had Mr. Fabian included information for Options 3 and 4 those amounts would have been calculated. In this case, the Respondent could not know Mrs. Fabian was married, as the initial (outdated) form did not provide that information. The Respondent could have become aware of Mrs. Fabian's marital status as a result of a telephone call from Mr. Fabian to DMS in August of 2002. At that time DMS still needed information to put Mrs. Fabian on the retirement payroll. The request for information unambiguously listed information needed for a "joint annuitant." The first notice to Mrs. Fabian, dated July 11, 2002, asked for the proof of birth for the joint annuitant.

14. Similarly, the SECOND REQUEST-RETURN WITHIN 30 DAYS

    (Respondent's Ex. 12) dated September 4, 2002, indicated the following:

    Your name cannot be placed on the retired

    
    

    payroll for the reason(s) indicated below:

    
    

    BIRTH VERIFICATION

    Please see the enclosed memo outlining the acceptable means of proving your birth date.

    
    

    BIRTH VERIFICATION OF BENEFICIARY

    If you elect Option 3 or 4, we will need proof of birth for your joint annuitant.

    
    

    FRS-11o, OPTION SELECTION FORM

    The enclosed Option Selection Form is needed. If you elect option 3 or 4, we will need proof of birth for your joint annuitant. You may wait until an estimate of benefits is provided before selecting your option.

    
    

    FORM FST-12, BENEFICIARY DESIGNATION

    This form must be completed to designate a beneficiary. You must designate a beneficiary to receive any benefits due at your date of death. [Emphasis in original]

    
    

15. Nevertheless, when the Option Selection form was submitted to DMS, Mr. Fabian, exercising a power of attorney provided by his wife, chose Option 1. Mr. Fabian claims he did not know Option 3 was available. The Option Selection form clearly and unambiguously listed all four options available to Mrs. Fabian.

16. Mr. Fabian is an educated professional. He has taught school for the Miami-Dade County School District and

    has operated a real estate office for approximately 20 years.

    
    

17. The Option Selection form signed by Mr. Fabian for himself and for his wife on September 3, 2002 (Petitioner's Exhibit. 7) required the Petitioner to complete a "Spousal Acknowledgement," recognizing that the member had chosen Option 1. The section must be completed if the FRS member is married and if Option 1 or 2 is elected. Clearly, the Petitioner knew or should have known that the form contemplated a permanent decision. In fact, the Petitioner acknowledged by signing beneath the section that stated:

    . . . I also understand that I cannot add additional service, change options, or change my type of retirement (Regular, Disability and Early) once my retirement becomes final. My retirement becomes final when any benefit payment is cashed, deposited, or when my Deferred Retirement Option Program participation begins.

    
    

18. DMS received the Beneficiary Designation Form and Option Selection forms on September 12, 2002. The completed file was referred to payroll and Mrs. Fabian then received monthly retirement benefits under Option 1 (the option selected by her husband pursuant to his power of attorney).

    It is undisputed the first payment was negotiated upon its receipt. Prior to cashing the first payment Mrs. Fabian could have changed her option selection.

19. On December 24, 2002, Mrs. Fabian passed away.

    
    

20. The Respondent then notified Mr. Fabian that the

    option he had selected did not provide for continuing benefits beyond the month of Mrs. Fabian's death. Additionally, Mr.

    Fabian was advised that he was not entitled to a refund of any contribution Mrs. Fabian paid to FRS as she had not made any. The employer paid 100 percent of the contributions to Mrs.

    Fabian's account.

    
    

21. Retirement benefits under the FRS are not equivalent to life insurance. That is, the retirement payments are payable to the employee who "earned" benefits or to those who may be "joint annuitants" as defined by law. At all times material to this case, the employer paid the full amount credited to Mrs. Fabian's retirement account, approximately

    $84,046.51. Obviously, Mrs. Fabian sought the benefits from her account prior to her anticipated retirement date. DMS allows disability retirement under such circumstances.

    Therefore, Mrs. Fabian's eligibility to claim her disability retirement is not disputed.

22. The deposition testimony of Nina Barron was admitted into evidence as Respondent's Exhibit 5. Ms. Barron reviewed the retirement options with the Petitioner prior to the time the form was submitted to FRS. Ms. Barron also calculated the amounts payable to Mrs. Fabian pursuant to each option. Ms. Barron also believes she spoke to Mrs. Fabian regarding the options. Ms. Barron mailed the calculated estimates for each

    option to the Petitioner.

    
    

23. The Petitioner's allegation that he was confused regarding the options and which election would best protect his family's interests has not been deemed persuasive in light of the testimony of Ms. Barron. The witness provided an unofficial estimate to Mrs. Fabian that included all 4 options.

    CONCLUSIONS OF LAW

    
    

24. The Division of Administrative Hearings has

    jurisdiction over the parties to and the subject matter of these proceedings. §§ 120.569, and 120.57(1), Fla Stat.

25. The Petitioner bears the burden of proof in this cause and must prove by a preponderance of the evidence that he is entitled to the requested relief. Florida Department of Transportation v. J.W.C. Co., 396 So. 2d 778 (Fla. 1st DCA 1981). He has failed to meet that burden.

26. Section 121.091(6), Florida Statutes, provides, in pertinent part:

    OPTIONAL FORMS OF RETIREMENT BENEFITS AND DISABILITY RETIREMENT BENEFITS.--

    1. 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:

       1. The maximum retirement benefit payable to the member during his or her lifetime.

       2. 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.

       3. 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).

       4. 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. The division shall establish by rule a method for selecting the appropriate actuarial factor for optional forms of benefits selected under subparagraphs 3. and 4., based on the age of the member and the joint annuitant.

       
       

27. Florida Administrative Code Rule 60S-4.010(5) provides:

    A member shall select an option for receiving benefits and may change such option until the time a benefit payment has been cashed or deposited. Thereafter, the member shall not be permitted to change the option he selected and, upon the member's death, benefits shall be in accordance with such option selected.

    
    

28. The Respondent does not have discretion to amend an Option Selection form. The member, Mrs. Fabian, authorized her husband to execute the form on her behalf. It is undisputed he held a power of attorney, completed the form, and submitted it to the Respondent. When the first payment

    was cashed or deposited, Mrs. Fabian lost her ability to change the selection made. Had Mrs. Fabian died without having retired or having filed the Option Selection form the Respondent could have presumed she would have made a selection more favorable to her family. As only the clarity of hindsight shows, Mr. Fabian erred in selecting the higher monthly payment offered by Option 1. The Respondent is required by law to follow the dictates of the statute. There is no provision of law to give the Petitioner a "do-over."

29. The Petitioner's claim that the employer, Miami-Dade School District, failed to correctly compute the leave available for Mrs. Fabian does not support a legal basis for an amendment to the Option Selection form. The Respondent did not have any connection with the acts or omissions of the third party employer. The re-computation of leave time would not change the date the Option Selection form was filed with the Respondent or the date upon which the first payment was negotiated.

30. Finally, the Petitioner's claim of equitable estoppel against the Respondent is also not supported by the record. First, the Respondent did not misrepresent any material fact to the Petitioner. Based upon the information it had at the time submitted, the Respondent provided Mrs. Fabian with an estimate for Options 1 and 2. The Petitioner

    did not request a recalculation for Option 3 and 4, even after he knew that Options 3 and 4 were clearly delineated on the Option Selection form provided to the deceased. Additionally, the testimony of Ms. Barron has been deemed credible and persuasive in connection with the issue of whether or not the Petitioner knew or should have known that there were four options available. Further,

    Ms. Barron provided her estimate of the options to the Petitioner.

31. The Petitioner did not rely on the Respondent's erroneous representation of any fact. Had the Petitioner fully evaluated the options he might have chosen Option 3 at the outset. The Respondent has no way of determining that the Petitioner has elected poorly or that a lesser monthly payment would be acceptable. Perhaps the Petitioner required the higher monthly payment due to personal circumstances and was willing to gamble that his wife would recover (as she had in the previous bout). The Respondent in no way coerced the Petitioner with false information.

32. Both parties cite the case of Kuge v. State, Department of Administration, Division of Retirement, 449 So.

389 (Fla. 3rd DCA 1984) for the elements of equitable estopple. The Petitioner has failed to establish the elements by a preponderance of the evidence. There were no erroneous statements of fact to support estoppel. Plainly stated, the Petitioner chose badly. The Petitioner received not one but at least two forms that clearly and unambiguously set forth the four options. The Option Selection form itself clearly and unambiguously listed all four options. The Petitioner is an educated professional. He had the benefit of rough estimates calculated by Ms. Barron. The submission of the

Option Selection form elected the highest monthly payment. That was his choice. There is no provision of law to allow the Respondent to amend that selection. The Petitioner's arguments to support the claim must fail as a matter of law.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of Retirement, enter a Final Order denying the Petitioner's request.

S

DONE AND ENTERED this 15th day of June, 2004, in Tallahassee, Leon County, Florida.

___________________________________

J. D. PARRISH 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 15th day of June, 2004.

COPIES FURNISHED:

Sarabeth Snuggs, Interim Director Division of Retirement

Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560

Alberto Dominguez, General Counsel Department of Management Services Division of Retirement

4050 Esplande Way

Tallahassee, Florida 32399-1560

Richard M. Ellis, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420 Tallahassee, Florida 32302-0551

Larry D. Scott, Esquire Department of Management Services Division of Retirement

4050 Esplanade Way, Suite 260

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: 03-004517

Orders for Case No: 03-004517